<PAGE>

                             BASIC LEASE INFORMATION
                                 INDUSTRIAL NET

<TABLE>
<S>                                                   <C>
LEASE DATE:                                           September 18, 1998

TENANT:                                               Track 'n Trail, a Delaware corporation

TENANT'S NOTICE ADDRESS:                              4961-A Windplay Drive, El Dorado Hills, CA  95762-9632
                                                      Attention:  Director of Real Estate

TENANT'S BILLING ADDRESS:                             4961-A Windplay Drive, El Dorado Hills, CA  95762-9632

TENANT CONTACT:      Dave Morgan                      PHONE NUMBER:       916/933-4525
                                                      FAX NUMBER:         916/933-4521

LANDLORD:                                             Spieker Properties, L.P., a California limited partnership

LANDLORD'S NOTICE ADDRESS:                            2150 River Plaza Drive, Suite 160, Sacramento, CA  95833

LANDLORD'S REMITTANCE ADDRESS:                        P.O. Box 45587, Department 11551, San Francisco, CA
                                                      94145-0587

PROJECT DESCRIPTION:                                  Two one-story buildings totaling approximately 199,553 square feet in West
                                                      Sacramento, California and more commonly known as Seaport Distribution Center,
                                                      as outlined in green on the attached Exhibit "B".

BUILDING DESCRIPTION:                                 An approximately 100,008 square foot building located at Seaport Distribution
                                                      Center and designated as 3700 Seaport Boulevard, as outlined in blue on the
                                                      attached Exhibit "B".

PREMISES:                                             An approximately 50,240 square feet of warehouse area located in 3700 Seaport
                                                      Boulevard of Seaport Distribution Center, West Sacramento, California, as
                                                      outlined in red on Exhibit "B", commonly known as Suite 40.

PERMITTED USE:                                        General warehousing and distribution of sporting goods and related legal uses
                                                      (including ancillary office) not injurious to the facility.

PARKING DENSITY:                                      40 spaces

SCHEDULED TERM COMMENCEMENT DATE:                     November 1, 1998

SCHEDULED LENGTH OF TERM:                             One Hundred Twenty (120) months

SCHEDULED TERM EXPIRATION DATE:                       October 31, 2008

RENT:

    BASE RENT:                                        Months    01-12:  11/01/98-10/31/99   $15,072.00 per month

                                                      Months    13-24:  11/01/99-10/31/00   $15,448.80 per month

                                                      Months    25-36:  11/01/00-10/31/01   $15,835.02 per month

                                                      Months    37-48:  11/01/01-10/31/02   $16,230.90 per month

                                                      Months    49-60:  11/01/02-10/31/03   $16,636.67 per month

                                                      Months    61-72:  11/01/03-10/31/04   $17,052.58 per month

                                                      Months    73-84:  11/01/04-10/31/05   $17,478.90 per month

                                                      Months    85-96:  11/01/05-10/31/06   $17,915.87 per month

                                                      Months   97-108:  11/01/06-10/31/07   $18,363.77 per month
</TABLE>

                                       -1-
<PAGE>

<TABLE>
<S>                                                   <C>
                                                      Months  109-120:  11/01/07-10/31/08   $18,822.86 per month

    ESTIMATED FIRST YEAR OPERATING EXPENSES:          $2,512.00 per month

SECURITY DEPOSIT:                                     None

TENANT'S PROPORTIONATE SHARE:

    OF BUILDING:                                      50.24%
    OF PROJECT:                                       25.18%
</TABLE>

The foregoing Basic Lease Information is incorporated into and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.


LANDLORD                                     TENANT

Spieker Properties, L.P.,                    Track 'n Trail,
a California limited partnership             a Delaware corporation

By: Spieker Properties, Inc.,
    a Maryland corporation,                  By: /s/ Greg Kilgore
    its general partner                          -------------------------------
                                                 Greg Kilgore
                                                 Its:  President

    By: /s/ Peter C. Thompson                By: /s/ Dan Nahmens
        -----------------------------------      -------------------------------
        Peter C. Thompson                        Dan Nahmens
        Its:  Senior Vice President              Its:  Chief Financial Officer


                                       -2-
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
<S>                                                                         <C>
     Basic Lease Information...................................................1
     Table of Contents.........................................................2
1.   Premises..................................................................4
2.   Possession and Lease Commencement.........................................4
3.   Term......................................................................4
4.   Use.......................................................................4
5.   Rules and Regulations.....................................................6
6.   Rent......................................................................6
7.   Operating Expenses........................................................6
8.   Insurance and Indemnification............................................10
9.   Waiver of Subrogation....................................................11
10.  Landlord's Repairs and Maintenance.......................................12
11.  Tenant's Repairs and Maintenance.........................................12
12.  Alterations..............................................................13
13.  Signs....................................................................13
14.  Inspection/Posting Notices...............................................14
15.  Services and Utilities...................................................14
16.  Subordination............................................................15
17.  Financial Statements.....................................................15
18.  Estoppel Certificate.....................................................15
19.  Security Deposit.........................................................16
20.  Limitation of Tenant's Remedies..........................................16
21.  Assignment and Subletting................................................16
22.  Authority of Tenant......................................................17
23.  Condemnation.............................................................17
24.  Casualty Damage..........................................................18
25.  Holding Over.............................................................19
26.  Default..................................................................19
27.  Liens....................................................................21
28.  Substitution.............................................................21
29.  Transfers by Landlord....................................................21
30.  Right of Landlord to Perform Tenant's Covenants..........................21
31.  Waiver...................................................................21
32.  Notices..................................................................22
33.  Attorney's Fees..........................................................22
34.  Successors and Assigns...................................................22
35.  Force Majeure............................................................22
36.  Surrender of Premises....................................................22
37.  Miscellaneous............................................................23
38.  Additional Provisions....................................................24
39.  Brokers..................................................................24
40.  Jury Trial Waiver........................................................25
41.  Right of First Refusal...................................................25
42.  Renewal Option...........................................................25
     Signatures...............................................................25

Exhibits:
     Exhibit A.............................................Rules and Regulations
     Exhibit B...................................Site Plan, Property Description
     Exhibit C................................Preliminary Space Plan of Premises
     Exhibit D.........................................Non-Disturbance Agreement
</TABLE>


                                      -3-
<PAGE>

                                      LEASE

THIS LEASE is made as of the 18th day of September, 1998, by and between Spieker
Properties, L.P., a California limited partnership (hereinafter called
"LANDLORD"), and Track 'n Trail, a Delaware corporation (hereinafter called
"TENANT").

                                1.    PREMISES

   Landlord leases to Tenant and Tenant leases from Landlord, upon the terms and
conditions hereinafter set forth, those premises (the "PREMISES") outlined in
red on EXHIBIT B and described in the Basic Lease Information. The Premises
shall be all or part of a building (the "BUILDING") and of a project (the
"PROJECT"), which may consist of more than one building and additional
facilities, as described in the Basic Lease Information. The Building and
Project are outlined in blue and green respectively on EXHIBIT B. Landlord and
Tenant acknowledge that physical changes may occur from time to time in the
Premises, Building or Project, and that the number of buildings and additional
facilities which constitute the Project may change from time to time, which may
result in an adjustment in Tenant's Proportionate Share, as defined in the Basic
Lease Information, as provided in Paragraph 7.A.

                   2.    POSSESSION AND LEASE COMMENCEMENT

A.    TERM COMMENCEMENT DATE. The term commencement date ("TERM COMMENCEMENT
DATE") shall be the date on which the improvements to be constructed or
performed in the Premises by Landlord shall have been substantially completed in
accordance with Section 38 below. If for any reason Landlord cannot
substantially complete the improvements by the scheduled Term Commencement Date,
Landlord shall not be subject to any liability therefor, nor shall Landlord be
in default hereunder nor shall such failure affect the validity of this Lease,
and Tenant agrees to accept possession of the Premises at such time as such
improvements have been substantially completed, which date shall then be deemed
the Term Commencement Date. Tenant shall , pursuant to Section 38.B below, have
the right to use and occupy the Premises from and after the parties' full
execution of this Lease; during such period of early occupancy, and until
substantial completion has been achieved, Tenant's total Rent obligation shall
be $10,000.00 per month. "Substantial completion" shall be deemed to have
occurred as of the date that all of the following events have occurred: (i) the
work to be performed by Landlord under this Lease shall have been completed
(with the exception of punchlist items that do not materially interfere with
Tenant's use or enjoyment of the Premises), and (ii) a certificate of occupancy
(or its equivalent) shall have been issued, such that Tenant can lawfully occupy
the Premises for the Permitted Use. Substantial completion shall have occurred
notwithstanding Tenant's submission of a punchlist to Landlord, which Tenant
shall submit, if at all, within ten (10) business days after the Term
Commencement Date or otherwise in accordance with any improvement agreement
appended to this Lease. Upon Landlord's request, Tenant shall promptly execute
and return to Landlord a "Start-Up Letter" in which Tenant shall agree, among
other things, to acceptance of the Premises and to the determination of the Term
Commencement Date, in accordance with the terms of this Lease, but Tenant's
failure or refusal to do so shall not negate Tenant's acceptance of the Premises
or affect determination of the Term Commencement Date.

B.    TENANT DELAY. If, as a direct result of a Tenant Delay (as defined below),
Landlord has not substantially completed the Premises by April 1, 1999, Landlord
may, at its option, thereafter (i) terminate this Lease upon 30 days' prior
written notice to Tenant given prior to the date of substantial completion,


                                       -4-
<PAGE>

in which case each party shall thereafter be released of all further obligations
under this Lease, or (ii) require Tenant to begin payment of the Base Rent
required to be paid pursuant to the "Basic Lease Information" page (i.e.,
$15,072 per month), plus Tenant's Proportionate Share of Operating Expenses. As
used in this Lease, "TENANT DELAY" shall mean any unreasonable interference or
delay caused by Tenant's Parties, provided that no Tenant Delay shall be deemed
to have occurred unless Landlord, within two (2) business days after the
occurrence of the event allegedly constituting a Tenant Delay, advises Tenant in
writing that such a delay has occurred, which notice must specify the corrective
actions to be taken by Tenant.

                                  3.    TERM

   The term of this Lease (the "TERM") shall commence on the Term Commencement
Date and continue in full force and effect for the number of months specified as
the Length of Term in the Basic Lease Information or until this Lease is
terminated as otherwise provided herein. If the Term Commencement Date is a date
other than the first day of the calendar month, the Term shall be the number of
months of the Length of Term in addition to the remainder of the calendar month
following the Term Commencement Date.

                                  4.    USE

A.    GENERAL. Tenant shall use the Premises for the permitted use specified in
the Basic Lease Information, and with prior notice to the Landlord, "warehouse
sales" to the public (provided that such sales are no more frequent than three
(3) times per calendar year) (collectively, "PERMITTED USE") and for no other
use or purpose. Tenant shall control Tenant's employees, agents, customers,
visitors, invitees, licensees, contractors, assignees and subtenants
(collectively, "TENANT'S PARTIES") in such a manner that Tenant and Tenant's
Parties cumulatively do not exceed the parking density specified in the Basic
Lease Information (the "PARKING DENSITY") at any time. So long as Tenant is
occupying the Premises, Tenant and Tenant's Parties shall have the nonexclusive
right to use, in common with other parties occupying the Building or Project,
the parking areas, driveways and other common areas of the Building and Project,
subject to the terms of this Lease and such rules and regulations as Landlord
may from time to time prescribe. Notwithstanding any provision of this Lease or
the rules and regulations, Tenant shall be entitled to the use of the number of
spaces specified as the Parking Density, and if reasonably necessary, Landlord
shall designate a portion of the parking facility as being reserved exclusively
for Tenant's use. Landlord reserves the right, without notice or liability to
Tenant, and without the same constituting an actual or constructive eviction, to
alter or modify the common areas from time to time, including the location and
configuration thereof, and the amenities and facilities which Landlord may
determine to provide from time to time.

B.    LIMITATIONS. Tenant shall not permit any odors, smoke, dust, gas,
substances, noise or vibrations to emanate from the Premises or from any portion
of the common areas as a result of Tenant's or any Tenant's Party's use thereof,
nor take any action which would constitute a nuisance or would unreasonably
disturb, obstruct or endanger any other tenants or occupants of the Building or
Project or elsewhere, or interfere with their use of their respective premises
or common areas. Storage outside the Premises of materials, vehicles or any
other items is prohibited. Tenant shall not use or allow the Premises to be used
for any immoral, improper or unlawful purpose, nor shall Tenant cause or
maintain or permit any nuisance in, on or about the Premises. Tenant shall not
commit or suffer the commission of any waste in, on or about the Premises.
Tenant shall not allow any sale by auction upon the Premises, or place any loads
upon the floors, walls or ceilings which could endanger the structure, or place
any harmful substances in the drainage system of the Building or Project. No
waste, materials or refuse shall be dumped upon or permitted to remain outside
the Premises except in trash containers placed inside exterior enclosures
designated for that purpose by Landlord. Landlord shall not be responsible to
Tenant for the non-compliance by any other tenant or occupant of the Building or
Project with any of the above-referenced rules or any other terms or provisions
of such tenant's or occupant's lease or other contract.

C.    COMPLIANCE WITH REGULATIONS. By entering the Premises, Tenant accepts the
Premises in the condition existing as of the date of such entry, subject,
however, to the terms of this Section 4.C below. Tenant shall at its sole cost
and expense strictly comply with all existing or future applicable municipal,
state


                                      -5-
<PAGE>

and federal and other governmental statutes, rules, requirements, regulations,
laws and ordinances, including zoning ordinances and regulations, and covenants,
easements and restrictions of record governing and relating to the use,
occupancy or possession of the Premises, to Tenant's use of the common areas, or
to the use, storage, generation or disposal of Hazardous Materials (hereinafter
defined) (collectively "REGULATIONS"). Tenant shall at its sole cost and expense
obtain any and all licenses or permits necessary for Tenant's use of the
Premises. Tenant shall at its sole cost and expense promptly comply with the
requirements of any board of fire underwriters or other similar body now or
hereafter constituted. Tenant shall not do or permit anything to be done in, on,
under or about the Project or bring or keep anything which will in any way
increase the rate of any insurance upon the Premises, Building or Project or
upon any contents therein or cause a cancellation of said insurance or otherwise
affect said insurance in any manner. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect and hold Landlord harmless from and
against any loss, cost, expense, damage, attorneys' fees or liability arising
out of the failure of Tenant to comply with any Regulation. Tenant's obligations
pursuant to the foregoing indemnity shall survive the expiration or earlier
termination of this Lease. Nothing in this Section 4.C shall, however: (i)
diminish Landlord's obligations under Section 38 below; (ii) relieve Landlord of
its obligation to correct any latent defects; (iii) impose any obligation on
Tenant to make any alterations to the Premises, except to the extent that such
alterations are required as a result of (x) Tenant's specific use of the
Premises (as opposed to general warehouse and ancillary office use); or (y)
Alterations to the Premises made by Tenant.

D.    HAZARDOUS MATERIALS. As used in this Lease, "HAZARDOUS MATERIALS" shall
include, but not be limited to, hazardous, toxic and radioactive materials and
those substances defined as "hazardous substances," "hazardous materials,"
"hazardous wastes," "toxic substances," or other similar designations in any
Regulation. Tenant shall not cause, or allow any of Tenant's Parties to cause,
any Hazardous Materials to be handled, used, generated, stored, released or
disposed of in, on, under or about the Premises, the Building or the Project or
surrounding land or environment in violation of any Regulations. Tenant must
obtain Landlord's written consent prior to the introduction of any Hazardous
Materials onto the Project. Notwithstanding the foregoing, Tenant may handle,
store, use and dispose of products containing small quantities of Hazardous
Materials for "warehouse and general office purposes" (such as toner for
copiers) to the extent customary and necessary for the Permitted Use of the
Premises; provided that Tenant shall always handle, store, use, and dispose of
any such Hazardous Materials in a safe and lawful manner and never allow such
Hazardous Materials to contaminate the Premises, Building, or Project or
surrounding land or environment. Tenant shall immediately notify Landlord in
writing of any Hazardous Materials' contamination of any portion of the Project
of which Tenant becomes aware, whether or not caused by Tenant. Landlord shall
have the right at all reasonable times to inspect the Premises and to conduct
tests and investigations to determine whether Tenant is in compliance with the
foregoing provisions, the costs of all such inspections, tests and
investigations to be borne by Tenant. Tenant shall indemnify, defend (by counsel
reasonably acceptable to Landlord), protect and hold Landlord harmless from and
against any and all claims, liabilities, losses, costs, loss of rents, liens,
damages, injuries or expenses (including attorneys' and consultants' fees and
court costs), demands, causes of action, or judgments directly or indirectly
arising out of or related to the use, generation, storage, release, or disposal
of Hazardous Materials by Tenant or any of Tenant's Parties in, on, under or
about the Premises, the Building or the Project or surrounding land or
environment, which indemnity shall include, without limitation, damages for
personal or bodily injury, property damage, damage to the environment or natural
resources occurring on or off the Premises, losses attributable to diminution in
value or adverse effects on marketability, the cost of any investigation,
monitoring, government oversight, repair, removal, remediation, restoration,
abatement, and disposal, and the preparation of any closure or other required
plans, whether such action is required or necessary prior to or following the
expiration or earlier termination of this Lease. Neither the consent by Landlord
to the use, generation, storage, release or disposal of Hazardous Materials nor
the strict compliance by Tenant with all laws pertaining to Hazardous Materials
shall excuse Tenant from Tenant's obligation of indemnification pursuant to this
Paragraph 4.D. Tenant's obligations pursuant to the foregoing indemnity shall
survive the expiration or earlier termination of this Lease.

E.    LANDLORD'S RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES.

           (a)   Landlord represents, warrants (to the best of Landlord's
knowledge), and covenants to Tenant that, as of the Commencement Date, the
Premises and Building, are free of Hazardous Materials (other than reasonable
quantities typically associated with normal warehouse and office activities) and
are presently and shall remain in compliance in all material respects with all
laws governing Hazardous Materials. Landlord shall indemnify and hold harmless
Tenant from and against any and all claims, demands, liabilities, actions,
suits, proceedings, judgments, losses, damages (including punitive damages),
fines, penalties, costs and expenses (including attorneys', consultants', and
experts' fees) arising from (i) a breach of any representation or warranty of
Landlord set forth in this paragraph; (ii) the presence, use, generation,
storage, disposal, discharge or release of Hazardous Materials in, on, under or
about the Premises or Building as of the Commencement Date; and (iii) any
violation or alleged violation of any applicable laws governing Hazardous
Materials, to the extent caused by Landlord or Landlord's representatives. The
foregoing indemnification obligation shall survive the expiration or earlier
termination of this Lease.


                                      -6-
<PAGE>

           (b)   Landlord shall, at Landlord's sole expense, remove from the
Premises any existing Hazardous Materials, not later than the Commencement Date.

                         5.    RULES AND REGULATIONS

   Tenant shall faithfully observe and comply with the building rules and
regulations attached hereto as EXHIBIT A and any other rules and regulations and
any modifications or additions thereto which Landlord may from time to time
prescribe in writing for the purpose of maintaining the proper care,
cleanliness, safety, traffic flow and general order of the Premises or the
Building or Project. Tenant shall cause Tenant's Parties to comply with such
rules and regulations provided that Tenant's quiet enjoyment of the Premises is
not disturbed. Landlord shall not be responsible to Tenant for the
non-compliance by any other tenant or occupant of the Building or Project with
any of such rules and regulations, any other tenant's or occupant's lease or any
Regulations. In the event of any inconsistency between such rules and
regulations and this Lease, the terms of this Lease shall govern. All existing
and future rules and regulations must be reasonable and nondiscriminatory. Any
consent required to be obtained by Tenant pursuant to the rules and regulations
shall not be unreasonably withheld or delayed.

                                  6.    RENT

A.    BASE RENT. Tenant shall pay to Landlord and Landlord shall receive,
without notice or demand throughout the Term, Base Rent as specified in the
Basic Lease Information, payable in monthly installments in advance on or before
the first day of each calendar month, in lawful money of the United States,
without deduction or offset whatsoever (except as provided in this Lease or by
applicable law), at the Remittance Address specified in the Basic Lease
Information or to such other place as Landlord may from time to time designate
in writing. Base Rent for the first full month of the Term shall be paid by
Tenant upon Tenant's execution of this Lease. If the obligation for payment of
Base Rent commences on a day other than the first day of a month, then Base Rent
shall be prorated and the prorated installment shall be paid on the first day of
the calendar month next succeeding the Term Commencement Date. The Base Rent
payable by Tenant hereunder is subject to adjustment as provided elsewhere in
this Lease, as applicable. As used herein, the term "Base Rent" shall mean the
Base Rent specified in the Basic Lease Information as it may be so adjusted from
time to time.

B.    ADDITIONAL RENT. All monies other than Base Rent required to be paid by
Tenant hereunder, including, but not limited to, Tenant's Proportionate Share of
Operating Expenses, as specified in Paragraph 7 of this Lease, charges to be
paid by Tenant under Paragraph 15, the interest and late charge described in
Paragraphs 26.C. and D., and any monies spent by Landlord pursuant to Paragraph
30, shall be considered additional rent ("ADDITIONAL RENT"). "RENT" shall mean
Base Rent and Additional Rent.

                           7.    OPERATING EXPENSES

A.    OPERATING EXPENSES. In addition to the Base Rent required to be paid
hereunder, Tenant shall pay as Additional Rent, Tenant's Proportionate Share of
the Building and/or Project (as applicable), as defined in the Basic Lease
Information, of Operating Expenses (defined below) in the manner set forth
below. Tenant shall pay the applicable Tenant's Proportionate Share of each such
Operating Expenses. Landlord and Tenant acknowledge that if the number of
buildings which constitute the Project increases or decreases, or if physical
changes are made to the Premises, Building or Project or the configuration of
any thereof, Landlord may at its discretion reasonably adjust Tenant's
Proportionate Share of the Building or Project to reflect the change. Landlord's
determination of Tenant's Proportionate Share of the Building and of the Project
shall be conclusive so long as it is reasonably and consistently applied, and
provided furthermore, that such Proportionate Share shall not exceed, in case of
the Building, the number (expressed as a percentage) obtained by dividing the
leasable area of the Premises by the leasable area of the Building, and in terms
of the Project, the number (expressed as a percentage) obtained by dividing the
leasable area of the Premises by the leasable area of the Project. "OPERATING
EXPENSES" shall mean all expenses and costs of every kind and nature which
Landlord shall pay or become obligated to pay, because of or in connection with
the ownership, management, maintenance, repair, preservation, replacement and
operation of the Building or Project and its supporting facilities and such
additional facilities now and in subsequent years as may be determined by
Landlord to be necessary or desirable to the Building and/or Project (as
determined in a reasonable manner) other than those expenses and costs which are
specifically attributable to Tenant or which are expressly made the financial
responsibility of Landlord or specific tenants of the Building or Project
pursuant to this Lease. Operating Expenses shall include, but are not limited
to, the following:

         (1)    TAXES. All real property taxes and assessments, possessory
         interest taxes, sales taxes, personal property taxes, business or
         license taxes or fees, gross receipts taxes, service payments in lieu
         of such taxes or fees, annual or periodic license or use fees, excises,
         transit charges, and other impositions, general and special, ordinary
         and extraordinary, unforeseen as well as foreseen, of any kind
         (including fees "in-lieu" of any such tax or assessment) which are now
         or hereafter assessed, levied, charged, confirmed, or imposed by any
         public authority upon the Building or Project, its operations or the
         Rent (or any portion or component thereof), or any tax, assessment or
         fee imposed


                                      -7-
<PAGE>

         in substitution, partially or totally, of any of the above. Operating
         Expenses shall also include any taxes, assessments, reassessments, or
         other fees or impositions with respect to the development, leasing,
         management, maintenance, alteration, repair, use or occupancy by Tenant
         of the Premises, Building or Project or any portion thereof, including,
         without limitation, by or for Tenant, and all increases therein or
         reassessments thereof whether the increases or reassessments result
         from increased rate and/or valuation (whether upon a transfer of the
         Building or Project or any portion thereof or any interest therein or
         for any other reason). Operating Expenses shall not include inheritance
         or estate taxes imposed upon or assessed against the interest of any
         person in the Project, or taxes computed upon the basis of the net
         income of any owners of any interest in the Project. If it shall not be
         lawful for Tenant to reimburse Landlord for all or any part of such
         taxes, the monthly rental payable to Landlord under this Lease shall be
         revised to net Landlord the same net rental after imposition of any
         such taxes by Landlord as would have been payable to Landlord prior to
         the payment of any such taxes.

         (2)    INSURANCE. All insurance premiums and costs, including, but not
         limited to, any deductible amounts, premiums and other costs of
         insurance incurred by Landlord, including for the insurance coverage
         set forth in Paragraph 8.A. herein.

         (3)    COMMON AREA MAINTENANCE.

                (a)   Repairs, replacements, and general maintenance of and for
                the Building and Project and public and common areas and
                facilities of and comprising the Building and Project,
                including, but not limited to, the roof and roof membrane,
                elevators, mechanical rooms, alarm systems, pest extermination,
                landscaped areas, parking and service areas, driveways,
                sidewalks, truck staging areas, rail spur areas, fire sprinkler
                systems, sanitary and storm sewer lines, utility services,
                heating/ventilation/air conditioning systems, electrical,
                mechanical or other systems, telephone equipment and wiring
                servicing, plumbing, lighting, and any other items or areas
                which affect the operation or appearance of the Building or
                Project, which determination shall be at Landlord's reasonable
                discretion, except for: those items expressly made the financial
                responsibility of Landlord pursuant to Paragraph 10 hereof;
                those items to the extent paid for by the proceeds of insurance;
                and those items attributable solely or jointly to specific
                tenants of the Building or Project.

                (b)   Repairs, replacements, and general maintenance shall
                include the cost of any capital improvements made to or capital
                assets acquired for the Project or Building that in Landlord's
                discretion will reduce any other Operating Expenses (but only to
                the extent of the reduction reasonably anticipated), including
                present or future repair work, are reasonably necessary for the
                health and safety of the occupants of the Building or Project,
                or are required to comply with any Regulation that was not in
                effect on the Commencement Date, such costs or allocable
                portions thereof to be amortized over such reasonable period as
                Landlord shall determine (in accordance with applicable IRS
                regulations), together with interest on the unamortized balance
                at the publicly announced "prime rate" charged by Wells Fargo
                Bank, N.A. (San Francisco) or its successor at the time such
                improvements or capital assets are constructed or acquired, plus
                two (2) percentage points, or in the absence of such prime rate,
                then at the U.S. Treasury six-month market note (or bond, if so
                designated) rate as published by any national financial
                publication selected by Landlord, plus four (4) percentage
                points, but in no event more than the maximum rate permitted by
                law. In no event shall the total amount of capital expenditures
                in any single year included in Operating Expenses for the
                Project exceed $15,000.00. 

                (c) Payment under or for any easement, license, permit, 
                operating agreement, declaration, restrictive covenant or 
                instrument relating to the Building or Project.

                (d)   All expenses and rental related to services and costs of
                supplies, materials and equipment used in operating, managing
                and maintaining the Premises, Building and Project, the
                equipment therein and the adjacent sidewalks, driveways, parking
                and service areas, including, without limitation, expenses
                related to service agreements regarding security, fire and other
                alarm systems, janitorial services to the extent not addressed
                in Paragraph 11 hereof, window cleaning, building exterior
                maintenance, landscaping and expenses related to the
                administration, management and operation of the Project
                (provided that such management and administrative fees are
                included within the fee referred in subparagraph (g) below),
                including without limitation salaries, wages and benefits and
                management office rent.

                (e)   The cost of supplying any services and utilities which
                benefit all or a portion of the Premises, Building or Project to
                the extent not addressed in Paragraph 15 hereof.


                                      -8-
<PAGE>

                (f)   Legal expenses and the cost of audits by certified public
                accountants in connection with calculating or reducing Operating
                Expenses; provided, however, that legal expenses chargeable as
                Operating Expenses shall not include the cost of negotiating
                leases, collecting rents, evicting tenants nor shall it include
                costs incurred in legal proceedings with or against any tenant
                or to enforce the provisions of any lease.

                (g)   A management and accounting cost recovery fee equal to
                five percent (5%) of the sum of the Project's base rents and
                Operating Expenses (other than such management fee).

Operating Expenses shall not include the cost of providing tenant improvements
or other specific costs incurred for the account of, separately billed to and
paid by specific tenants of the Building or Project, the initial construction
cost of the Building or Project, or debt service on any mortgage or deed of
trust recorded with respect to the Project other than pursuant to Paragraph
7.A.(3)(b) above, nor shall it include any of the following:

                (a)   Any ground lease rental.

                (b)   Costs incurred by Landlord for the repair of damage to the
                Building and/or the Project to the extent that Landlord is
                reimbursed by insurance or condemnation proceeds or by tenants,
                warrantors or other third parties.

                (c)   Salaries, bonuses and other compensation of officers and
                executives of Landlord above the level of Project Manager.

                (d)   Except as expressly permitted pursuant to Section 7.A
                (3)(b) above, costs of a capital nature, including, without
                limitation, capital improvements, capital replacements, capital
                repairs, capital equipment and capital tools, all as determined
                in accordance with generally accepted accounting practices,
                consistently applied.

                (e)   Brokerage commissions, finders' fees, attorneys' fees and
                other costs incurred by Landlord in leasing or attempting to
                lease space in the Project.

                (f)   Expenses in connection with services or other benefits
                which are not offered to Tenant or for which Tenant is charged
                directly but which are provided to another tenant or occupant of
                the Project.

                (g)   Costs incurred by Landlord due to the violation by
                Landlord of the terms and conditions of any lease of space in
                the Project.

                (h)   Any cost representing an amount paid to any person, firm,
                corporation or other entity related to or affiliated with
                Landlord, which amount is in excess of the amount which would
                have reasonably been paid in the absence of such relationship
                for comparable work or services involving the Project or
                comparable buildings in the general vicinity of the Project

                (i)   Costs due to Landlord's violation of law.

                (j)   The amount of any deductible (in excess of $5,000 as to
                any occurrence) with respect to Landlord's insurance, the costs
                of self-insurance or any risk against which Landlord has elected
                to self-insure.

                (k)   Curing of construction defects.

                (l)   Except as expressly permitted pursuant to Section 7.A
                (3)(b) above, any and all costs of Landlord in bringing the
                Building into compliance with building codes and other laws,
                unless such compliance is necessitated by Tenant's acts or
                omissions.

                (m)   Any and all costs of Landlord in complying with
                environmental regulations including, but not limited to, the
                costs and expenses of clean-up, remediation, environmental


                                      -9-
<PAGE>

                surveys/assessments, compliance with environmental laws,
                consulting fees, treatment and monitoring charges,
                transportation expenses and disposal fees, etc.

                (n)   Any real estate taxes and assessments to the extent they
                exceed the amount payable to the taxing/assessing authority if
                paid over the longest period of time allowed by law.

                (o)   Any increase in Operating Expenses for any calendar year
                over the immediately preceding year in excess of five percent
                (5%).

         Notwithstanding anything herein to the contrary, in any instance
wherein Landlord, in Landlord's reasonable discretion, deems Tenant (because of
some use of the Premises that varies dramatically from that of other tenants in
the Project) to be responsible for usage of water or sewer service in an amount
greater than Tenant's Proportionate Share, Landlord shall have the right to
allocate costs in any manner Landlord deems appropriate, provided that such
allocation is fair to Tenant and is supported by reasonable documentation. The
above enumeration of services and facilities shall not be deemed to impose an
obligation on Landlord to make available or provide such services or facilities
except to the extent if any that Landlord has specifically agreed elsewhere in
this Lease to make the same available or provide the same. Without limiting the
generality of the foregoing, Tenant acknowledges and agrees that it shall be
responsible for providing adequate security for its use of the Premises, the
Building and the Project and that Landlord shall have no obligation or liability
with respect thereto, except to the extent if any that Landlord has specifically
agreed elsewhere in this Lease to provide the same.

A.    PAYMENT OF ESTIMATED OPERATING EXPENSES. "ESTIMATED OPERATING EXPENSES"
for any particular year shall mean Landlord's estimate of the Operating Expenses
for such fiscal year made with respect to such fiscal year as hereinafter
provided. Landlord shall have the right from time to time to revise its fiscal
year and interim accounting periods so long as the periods as so revised are
reconciled with prior periods in a reasonable manner. During the last month of
each fiscal year during the Term, or as soon thereafter as practicable, Landlord
shall give Tenant written notice of the Estimated Operating Expenses for the
ensuing fiscal year. Tenant shall pay Tenant's Proportionate Share of the
Estimated Operating Expenses with installments of Base Rent for the fiscal year
to which the Estimated Operating Expenses applies in monthly installments on the
first day of each calendar month during such year, in advance. Such payment
shall be construed to be Additional Rent for all purposes hereunder. If at any
time during the course of the fiscal year, Landlord determines that Operating
Expenses are projected to vary from the then Estimated Operating Expenses by
more than five percent (5%), Landlord may, by written notice to Tenant, revise
the Estimated Operating Expenses for the balance of such fiscal year, and
Tenant's monthly installments for the remainder of such year shall be adjusted
so that by the end of such fiscal year Tenant has paid to Landlord Tenant's
Proportionate Share of the revised Estimated Operating Expenses for such year,
such revised installment amounts to be Additional Rent for all purposes
hereunder.

B.    COMPUTATION OF OPERATING EXPENSE ADJUSTMENT. "OPERATING EXPENSE
ADJUSTMENT" shall mean the difference between Estimated Operating Expenses and
actual Operating Expenses for any fiscal year determined as hereinafter
provided. Within one hundred twenty (120) days after the end of each fiscal
year, or as soon thereafter as practicable, Landlord shall deliver to Tenant a
statement of actual Operating Expenses for the fiscal year just ended,
accompanied by a computation of Operating Expense Adjustment. If such statement
shows that Tenant's payment based upon Estimated Operating Expenses is less than
Tenant's Proportionate Share of Operating Expenses, then Tenant shall pay to
Landlord the difference within thirty (30) days after receipt of such statement,
such payment to constitute Additional Rent for all purposes hereunder. If such
statement shows that Tenant's payments of Estimated Operating Expenses exceed
Tenant's Proportionate Share of Operating Expenses, then (provided that Tenant
is not in default under this Lease) Landlord shall pay to Tenant the difference
within thirty (30) days after delivery of such statement to Tenant. If this
Lease has been terminated or the Term hereof has expired prior to the date of
such statement, then the Operating Expense Adjustment shall be paid by the
appropriate party within thirty (30) days after the date of delivery of the
statement. Should this Lease commence or terminate at any time other than the
first day of the fiscal year, Tenant's Proportionate Share of the Operating
Expense Adjustment shall be prorated based on a month of 30 days and the number
of calendar months during such fiscal year that this Lease is in effect.
Notwithstanding anything to the contrary contained in Paragraph 7.A or 7.B,
Landlord's failure to provide any notices or statements within the time periods
specified in those paragraphs shall in no way excuse Tenant from its obligation
to pay Tenant's Proportionate Share of Operating Expenses. As a condition to
Tenant's obligation to pay any Additional Rent, the Additional Rent must be
billed to Tenant within one hundred eighty (180) days after the expiration of
the calendar year during the term of this Lease to which such Additional Rent
applies and within one hundred eighty (180) days after the termination of this
Lease with respect to Additional Rent applicable to the calendar year during
which this Lease terminates.

C.    NET LEASE. This shall be a triple net Lease and Base Rent shall be paid to
Landlord absolutely net of all costs and expenses, except as specifically
provided to the contrary in this Lease. The provisions for payment of Operating
Expenses and the Operating Expense Adjustment are intended to pass on to Tenant
and


                                      -10-
<PAGE>

reimburse Landlord for all costs and expenses of the nature described in
Paragraph 7.A. incurred in connection with the ownership, management,
maintenance, repair, preservation, replacement and operation of the Building
and/or Project and its supporting facilities and such additional facilities now
and in subsequent years as may be determined by Landlord to be necessary or
desirable to the Building and/or Project.

D.    TENANT AUDIT. If Tenant shall dispute the amount set forth in any
statement provided by Landlord under Paragraph 7.B. or 7.C. above, Tenant shall
have the right, not later than one hundred eighty (180) days following receipt
of such statement and upon the condition that Tenant shall first deposit with
Landlord the full amount in dispute, to cause Landlord's books and records with
respect to Operating Expenses for such fiscal year to be audited by certified
public accountants selected by Tenant and subject to Landlord's reasonable right
of approval. The Operating Expense Adjustment shall be appropriately adjusted on
the basis of such audit. If such audit discloses a liability for a refund in
excess of five percent (5%) of Tenant's Proportionate Share of the Operating
Expenses previously reported, the cost of such audit shall be borne by Landlord;
otherwise the cost of such audit shall be paid by Tenant. If Tenant shall not
request an audit in accordance with the provisions of this Paragraph 7.E. within
one hundred twenty (120) days after receipt of Landlord's statement provided
pursuant to Paragraph 7.B. or 7.C., such statement shall be final and binding
for all purposes hereof.

E.    100% LIMIT ON OPERATING EXPENSES. Landlord will not collect or be entitled
to collect Operating Expenses from all of the Building tenants and occupants in
an amount which is in excess of one hundred percent (100%) of the Operating
Expenses actually paid by Landlord in connection with the operation of the
Building, and Landlord shall make no profit from Landlord's collection of
Operating Expenses. All Operating Expenses must be actually and reasonably
incurred by Landlord.

                     8.    INSURANCE AND INDEMNIFICATION

A.    LANDLORD'S INSURANCE. All insurance maintained by Landlord shall be for
the sole benefit of Landlord and under Landlord's sole control.

      (1)    PROPERTY INSURANCE. Landlord agrees to maintain property insurance
      insuring the Building against damage or destruction due to risk including
      fire, vandalism, and malicious mischief in an amount not less than the
      replacement cost thereof, in the form and with deductibles and
      endorsements as selected by Landlord. At its election, Landlord may
      instead (but shall have no obligation to) obtain "All Risk" coverage, and
      may also obtain earthquake, pollution, and/or flood insurance in amounts
      selected by Landlord.

      (2)    OPTIONAL INSURANCE. Landlord, at Landlord's option, may also (but
      shall have no obligation to) carry insurance against loss of rent, in an
      amount equal to the amount of Base Rent and Additional Rent that Landlord
      could be required to abate to all Building tenants in the event of
      condemnation or casualty damage for a period of twelve (12) months.
      Landlord may also (but shall have no obligation to) carry such other
      insurance as Landlord may deem prudent or advisable, including, without
      limitation, liability insurance in such amounts and on such terms as
      Landlord shall determine. Landlord shall not be obligated to insure, and
      shall have no responsibility whatsoever for any damage to, any furniture,
      machinery, goods, inventory or supplies, or other personal property or
      fixtures which Tenant may keep or maintain in the Premises, or any
      leasehold improvements, additions or alterations within the Premises.

B.    TENANT'S INSURANCE.

      (1)     PROPERTY INSURANCE. Tenant shall procure at Tenant's sole cost and
              expense and keep in effect from the date of this Lease and at all
              times until the end of the Term, insurance on all personal
              property and fixtures of Tenant and all improvements, additions or
              alterations made by or for Tenant to the Premises on an "All Risk"
              basis, insuring such property for the full replacement value of
              such property, or, in the alternative, Tenant may self-insure such
              risks.

      (2)     LIABILITY INSURANCE. Tenant shall procure at Tenant's sole cost
              and expense and keep in effect from the date of this Lease and at
              all times until the end of the Term Commercial General Liability
              insurance covering bodily injury and property damage liability
              occurring in or about the Premises or arising out of the use and
              occupancy of the Premises and the Project, and any part of either,
              and any areas adjacent thereto, and the business operated by
              Tenant or by any other occupant of the Premises. Such insurance
              shall include contractual liability coverage insuring all of
              Tenant's indemnity obligations under this Lease. Such coverage
              shall have a minimum combined single limit of liability of at
              least Two Million Dollars ($2,000,000.00), and a minimum general
              aggregate limit of Three Million Dollars ($3,000,000.00), with an
              "Additional Insured - Managers or Lessors of Premises Endorsement"
              and the "Amendment of the Pollution Exclusion Endorsement." All
              such policies shall be written to apply to all bodily injury
              (including death), property damage or loss, personal and
              advertising injury and other covered loss, however occasioned,
              occurring during the policy term, shall be endorsed to add
              Landlord and any party holding an interest to which this Lease


                                      -11-
<PAGE>

              may be subordinated as an additional insured, and shall provide
              that such coverage shall be "PRIMARY" and non-contributing with
              any insurance maintained by Landlord, which shall be excess
              insurance only. Such coverage shall also contain endorsements
              including employees as additional insureds if not covered by
              Tenant's Commercial General Liability Insurance. All such
              insurance shall provide for the severability of interests of
              insureds; and shall be written on an "OCCURRENCE" basis, which
              shall afford coverage for all claims based on acts, omissions,
              injury and damage, which occurred or arose (or the onset of which
              occurred or arose) in whole or in part during the policy period.

              (3)    WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY INSURANCE.
              Tenant shall carry Workers' Compensation Insurance as required by
              any Regulation, throughout the Term at Tenant's sole cost and
              expense. Tenant shall also carry Employers' Liability Insurance in
              amounts not less than One Million Dollars ($1,000,000) each
              accident for bodily injury by accident; One Million Dollars
              ($1,000,000) policy limit for bodily injury by disease; and One
              Million Dollars ($1,000,000) each employee for bodily injury by
              disease, throughout the Term at Tenant's sole cost and expense.

              (4)    COMMERCIAL AUTO LIABILITY INSURANCE. Tenant shall procure
              at Tenant's sole cost and expense and keep in effect from the date
              of this Lease and at all times until the end of the Term
              commercial auto liability insurance with a combined limit of not
              less than One Million Dollars ($1,000,000) for bodily injury and
              property damage for each accident. Such insurance shall cover
              liability relating to any auto (including owned, hired and
              non-owned autos).

              (5)    GENERAL INSURANCE REQUIREMENTS. All coverages described in
              this Paragraph 8.B. shall be endorsed to (i) provide Landlord with
              thirty (30) days' notice of cancellation or change in terms; and
              (ii) waive all rights of subrogation by the insurance carrier
              against Landlord (subject, however, to the limitations set forth
              in Section 9 below). If at any time during the Term the amount or
              coverage of insurance which Tenant is required to carry under this
              Paragraph 8.B. is, in Landlord's reasonable judgment, materially
              less than the amount or type of insurance coverage typically
              carried by owners or tenants of properties located in the general
              area in which the Premises are located which are similar to and
              operated for similar purposes as the Premises or if Tenant's use
              of the Premises should change with or without Landlord's consent,
              Landlord shall have the right to require Tenant to increase the
              amount or change the types of insurance coverage required under
              this Paragraph 8.B. All insurance policies required to be carried
              by Tenant under this Lease shall be written by companies rated A X
              or better in "Best's Insurance Guide" and authorized to do
              business in the State of California. In any event deductible
              amounts under all insurance policies required to be carried by
              Tenant under this Lease shall not exceed Five Thousand Dollars
              ($5,000.00) per occurrence. Tenant shall deliver to Landlord on or
              before the Term Commencement Date, and thereafter at least thirty
              (30) days before the expiration dates of the expired policies,
              certified copies of Tenant's insurance policies, or a certificate
              evidencing the same issued by the insurer thereunder; and, if
              Tenant shall fail to procure such insurance, or to deliver such
              policies or certificates, Landlord may, at Landlord's option and
              in addition to Landlord's other remedies in the event of a default
              by Tenant hereunder, procure the same for the account of Tenant,
              and the cost thereof shall be paid to Landlord as Additional Rent.

C.    TENANT INDEMNIFICATION. Tenant shall indemnify, defend by counsel
reasonably acceptable to Landlord, protect and hold Landlord harmless from and
against any and all claims, liabilities, losses, costs, loss of rents, liens,
damages, injuries or expenses, including reasonable attorneys' and consultants'
fees and court costs, demands, causes of action, or judgments, directly or
indirectly arising out of or related to: (1) claims of injury to or death of
persons or damage to property occurring or resulting directly or indirectly from
the use or occupancy of the Premises, Building or Project by Tenant or Tenant's
Parties, or from activities or failures to act of Tenant or Tenant's Parties;
(2) claims arising from work or labor performed, or for materials or supplies
furnished to or at the request of Tenant in connection with performance of any
work done for the account of Tenant within the Premises or Project; (3) claims
arising from any breach or default on the part of Tenant in the performance of
any covenant contained in this Lease; and (4) claims arising from the negligence
or intentional acts or omissions of Tenant or Tenant's Parties. The foregoing
indemnity by Tenant shall not be applicable to claims to the extent arising from
the negligence or willful misconduct of Landlord. Landlord shall not be liable
to Tenant and Tenant hereby waives all claims against Landlord for any injury or
damage to any person or property in or about the Premises, Building or Project
by or from any cause whatsoever (other than Landlord's negligence or willful
misconduct) and, without limiting the generality of the foregoing, whether
caused by water leakage of any character from the roof, walls, basement or other
portion of the Premises, Building or Project, or caused by gas, fire, oil or
electricity in, on or about the Premises, Building or Project. The provisions of
this Paragraph shall survive the expiration or earlier termination of this
Lease. Notwithstanding this Section 8.C or any other provision of this Lease to
the contrary, Tenant is not waiving any claim against Landlord arising from
Landlord's intentional misconduct or negligence resulting in any loss to Tenant
except to the extent that such loss is to property (rather than injury to
persons) and Tenant is fully compensated for such loss by insurance proceeds.


                                      -12-
<PAGE>

D.    LANDLORD Indemnification Subject to the releases and waivers of
subrogation contained in this Lease, Landlord shall indemnify, defend by counsel
reasonably acceptable to Tenant, protect and hold Tenant harmless from and
against any and all claims, liabilities, losses, costs, damages, injuries or
expenses, including reasonable attorneys' and consultants' fees and court costs,
demands, causes of action, or judgments directly or indirectly arising out of or
relating to the negligence or willful misconduct of the Landlord.
Notwithstanding the foregoing or anything to the contrary contained in this
Lease, Landlord shall in no event be liable to Tenant and Tenant hereby waives
all claims against Landlord for any injury or damage to any person or property
in or about the Premises, Building or Project, including without limitation the
common areas, by or from any cause whatsoever (other than Landlord's negligence
or willful misconduct) and, without limiting the generality of the foregoing,
whether caused by theft, fire, rain or water leakage of any character from the
roof, walls, plumbing, sprinklers, pipes, basement or any other portion of the
Premises, Building or Project, or caused by gas, fire, oil or electricity in, on
or about the Premises, Building or Project, or from any other systems, or by
acts of God (including without limitation flood or earthquake), acts of a public
enemy, riot, strike, insurrection, war, court order, requisition or order of
governmental body or authority or for any damage or inconvenience which may
arise through repair, except as expressly otherwise provided in Paragraph 10 of
this Lease. In addition, Landlord shall in no event be liable for (i) injury to
Tenant's business or any loss of income or profit therefrom or from
consequential damages, or (ii) sums up to the amount of insurance proceeds
received by Tenant. The foregoing indemnity by Landlord shall not be applicable
to claims to the extent arising from the negligence or willful misconduct of
Tenant or Tenant's Parties.

                         9.    WAIVER OF SUBROGATION

   To the extent permitted by law and without affecting the coverage provided by
insurance to be maintained hereunder or any other rights or remedies, Landlord
and Tenant each waive any right to recover against the other for: (a) damages
for injury to or death of persons; (b) damages to property, including personal
property; (c) damages to the Premises or any part thereof; and (d) claims
arising by reason of the foregoing due to hazards covered by insurance
maintained or required to be maintained pursuant to this Lease to the extent of
proceeds recovered therefrom, or proceeds which would have been recoverable
therefrom in the case of the failure of any party to maintain any insurance
coverage required to be maintained by such party pursuant to this Lease. This
provision is intended to waive fully, any rights and/or claims arising by reason
of the foregoing, but only to the extent that any of the foregoing damages
and/or claims referred to above are covered or would be covered, and only to the
extent of such coverage, by insurance actually carried or required to be
maintained pursuant to this Lease by either Landlord or Tenant. This provision
is also intended to waive fully, and for the benefit of each party, any rights
and/or claims which might give rise to a right of subrogation on any insurance
carrier. Subject to all qualifications of this Paragraph 9, Landlord waives its
rights as specified in this Paragraph 9 with respect to any subtenant that it
has approved pursuant to Paragraph 21 but only in exchange for the written
waiver of such rights to be given by such subtenant to Landlord upon such
subtenant taking possession of the Premises or a portion thereof. Each party
shall cause each insurance policy obtained by it to provide that the insurance
company waives all right of recovery by way of subrogation against either party
in connection with any damage covered by any policy.

                     10.  LANDLORD'S REPAIRS AND MAINTENANCE

   Landlord shall at Landlord's expense maintain in good repair, reasonable wear
and tear excepted, the structural soundness of the roof, foundations, and
exterior walls of the Building; in addition, and subject to reimbursement as
Operating Expenses to the extent permitted under Section 7 above, Landlord
shall, throughout the term of this Lease, maintain, repair, and, if necessary,
replace (i) the roof membrane and otherwise assure that the Premises remain
watertight, and (ii) all unexposed plumbing, electrical and other utility
systems. The Premises shall be delivered to Tenant with the HVAC, electrical,
plumbing and Building components in good condition and repair. The term
"exterior walls" as used herein shall not include windows, glass or plate glass,
doors, dock bumpers or dock plates, special store fronts or office entries. Any
damage caused by or repairs necessitated by any negligence or act of Tenant or
Tenant's Parties may be repaired by Landlord at Landlord's option and Tenant's
expense. Tenant shall immediately give Landlord written notice of any defect or
need of repairs in such components of the Building for which Landlord is
responsible, after which Landlord shall have a reasonable opportunity and the
right to enter the Premises at all reasonable times to repair same. Landlord's
liability with respect to any defects, repairs, or maintenance for which
Landlord is responsible under any of the provisions of this Lease shall be
limited to the cost of such repairs or maintenance, and there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of repairs,
alterations or improvements in or to any portion of the Premises, the Building
or the Project or to fixtures, appurtenances or equipment in the Building,
except as provided in Paragraph 24. By taking possession of the Premises, Tenant
accepts them "as is," as being in good order, condition and repair and the
condition in which Landlord is obligated to deliver them and suitable for the
Permitted Use and Tenant's intended operations in the Premises, whether or not
any notice of acceptance is given, subject, however, to all the other terms and
conditions of this Lease, including, but not limited to, Section 38 below.


                                      -13-
<PAGE>

                      11. TENANT'S REPAIRS AND MAINTENANCE

   Except as provided in Section 10 above, Tenant shall at all times during the
Term at Tenant's expense maintain all parts of the Premises and such portions of
the Building as are within the exclusive control of Tenant in a first-class,
good, clean and secure condition and promptly make all necessary repairs and
replacements (subject to the limitations set forth in the final sentence of this
Section 11) including but not limited to, all windows, glass, doors, walls,
including demising walls, and wall finishes, floors and floor covering, heating,
ventilating and air conditioning systems, ceiling insulation, truck doors,
hardware, dock bumpers, dock plates and levelers, plumbing work and fixtures,
downspouts, entries, skylights, smoke hatches, roof vents, electrical and
lighting systems, and fire sprinklers, with materials and workmanship of the
same character, kind and quality as the original. Tenant shall at Tenant's
expense also perform regular removal of trash and debris. If Tenant uses rail
and if required by the railroad company, Tenant agrees to sign a joint
maintenance agreement governing the use of the rail spur, if any. Tenant shall,
at Tenant's own expense, enter into a regularly scheduled preventative
maintenance/service contract with a maintenance contractor for servicing all hot
water, heating and air conditioning systems and equipment within or serving the
Premises. The maintenance contractor and the contract must be approved by
Landlord. The service contract must include all services suggested by the
equipment manufacturer within the operation/maintenance manual and must become
effective and a copy thereof delivered to Landlord within thirty (30) days after
the Term Commencement Date. Landlord may, upon notice to Tenant, enter into such
a service contract on behalf of Tenant or perform the work and in either case
charge Tenant the cost thereof along with a reasonable amount for Landlord's
overhead. Notwithstanding anything to the contrary contained herein, Tenant
shall, at its expense, promptly repair any damage to the Premises or the
Building or Project resulting from or caused by any negligence or act of Tenant
or Tenant's Parties. Nothing herein shall expressly or by implication render
Tenant Landlord's agent or contractor to effect any repairs or maintenance
required of Tenant under this Paragraph 11, as to all of which Tenant shall be
solely responsible. Provided that Tenant has faithfully and fully performed its
maintenance and repair obligations under this Lease, Tenant's responsibility
under this Lease is limited to repairs and maintenance, and Tenant shall have no
responsibility for the replacement or renovation of any fixtures, equipment,
appurtenances or other components of the Premises.

                                 12. ALTERATIONS

      A.    Tenant shall not make, or allow to be made, any alterations,
physical additions, improvements or partitions, including without limitation the
attachment of any fixtures or equipment, in, about or to the Premises
("ALTERATIONS") without obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld with respect to proposed Alterations
which: (a) comply with all applicable Regulations; (b) are, in Landlord's
reasonable opinion, compatible with the Building or the Project and its
mechanical, plumbing, electrical, heating/ventilation/air conditioning systems,
and will not cause the Building or Project or such systems to be required to be
modified to comply with any Regulations (including, without limitation, the
Americans With Disabilities Act), unless Tenant agrees to pay for such
modifications; and (c) will not interfere with the use and occupancy of any
other portion of the Building or Project by any other tenant or its invitees.
Specifically, but without limiting the generality of the foregoing, Landlord
shall have the right of written consent for all plans and specifications for the
proposed Alterations, construction means and methods, all appropriate permits
and licenses, any contractor or subcontractor to be employed on the work of
Alterations, and the time for performance of such work, and may impose rules and
regulations for contractors and subcontractors performing such work. Tenant
shall also supply to Landlord any documents and information reasonably requested
by Landlord in connection with Landlord's consideration of a request for
approval hereunder. Tenant shall cause all Alterations to be accomplished in a
first-class, good and workmanlike manner, and to comply with all applicable
Regulations and Paragraph 27 hereof. Tenant shall at Tenant's sole expense,
perform any additional work required under applicable Regulations due to the
Alterations hereunder. No review or consent by Landlord of or to any proposed
Alteration or additional work shall constitute a waiver of Tenant's obligations
under this Paragraph 12. Tenant shall reimburse Landlord for all reasonable,
out-of-pocket costs which Landlord may incur in connection with granting
approval to Tenant for any such Alterations, including any costs or expenses
which Landlord may incur in electing to have outside architects and engineers
review said plans and specifications, and shall pay Landlord an administration
fee of fifteen percent (15%) . All such Alterations shall remain the property of
Tenant until the expiration or earlier termination of this Lease, at which time
they shall be and become the property of Landlord; provided, however, that
Landlord may, at Landlord's option, require that Tenant, at Tenant's expense,
remove any or all Alterations made by Tenant and restore the Premises by the
expiration or earlier termination of this Lease, to their condition existing
prior to the construction of any such Alterations, provided that such
requirement is communicated in writing to Tenant at the time that Landlord
consents to such alterations. In no event shall Landlord's consent be required
for (but all the other terms and conditions of this Section 12 shall apply to)
any Alteration costing less than $10,000.00 that does not require a building
permit. All such removals and restoration shall be accomplished in a first-class
and good and workmanlike manner so as not to cause any damage to the Premises or
Project whatsoever. If Tenant fails to remove such Alterations or Tenant's trade
fixtures or furniture or other personal property, Landlord may keep and use them
or remove any of them and cause them


                                      -14-
<PAGE>

to be stored or sold in accordance with applicable law, at Tenant's sole
expense. In addition to and wholly apart from Tenant's obligation to pay
Tenant's Proportionate Share of Operating Expenses, Tenant shall be responsible
for and shall pay prior to delinquency any taxes or governmental service fees,
possessory interest taxes, fees or charges in lieu of any such taxes, capital
levies, or other charges imposed upon, levied with respect to or assessed
against its fixtures or personal property, on the value of Alterations within
the Premises, and on Tenant's interest pursuant to this Lease, or any increase
in any of the foregoing based on such Alterations. To the extent that any such
taxes are not separately assessed or billed to Tenant, Tenant shall pay the
amount thereof as invoiced to Tenant by Landlord.


      A.    Landlord may require Tenant to remove, at the expiration or earlier
termination of this Lease, any Alterations made by Tenant without Landlord's
prior approval (even if, as is the case with respect to certain Alterations
costing less than $10,000.00 as noted above, Landlord's consent to such
Alterations was not required). In compliance with Paragraph 27 hereof, at least
ten (10) business days before beginning construction of any Alteration, Tenant
shall give Landlord written notice of the expected commencement date of that
construction to permit Landlord to post and record a notice of
non-responsibility. Upon substantial completion of construction, if the law so
provides, Tenant shall cause a timely notice of completion to be recorded in the
office of the recorder of the county in which the Building is located.

                                  13.   SIGNS

Tenant shall not place, install, affix, paint or maintain any signs, notices,
graphics or banners whatsoever or any window decor which is visible in or from
public view or corridors, the common areas or the exterior of the Premises or
the Building, in or on any exterior window or window fronting upon any common
areas or service area or upon any truck doors or man doors without Landlord's
prior written approval which Landlord shall have the right to withhold in its
absolute and sole discretion; provided that Tenant's name shall be included in
any Building-standard door and directory signage, if any, in accordance with
Landlord's Building signage program, including without limitation, payment by
Tenant of any reasonable, nondiscriminatory fee charged by Landlord for
maintaining such signage, which fee shall constitute Additional Rent hereunder.
Any installation of signs, notices, graphics or banners on or about the Premises
or Project approved by Landlord shall be subject to any Regulations and to any
other requirements imposed by Landlord. Tenant shall remove all such signs or
graphics by the expiration or any earlier termination of this Lease. Such
installations and removals shall be made in such manner as to avoid injury to or
defacement of the Premises, Building or Project and any other improvements
contained therein, and Tenant shall repair any injury or defacement including
without limitation discoloration caused by such installation or removal.

                       14.   INSPECTION/POSTING NOTICES

After reasonable notice and during Tenant's regular business hours, except in
emergencies where no such notice shall be required, Landlord and Landlord's
agents and representatives, shall have the right to enter the Premises to
inspect the same, to clean, to perform such work as may be permitted or required
hereunder, to make repairs, improvements or alterations to the Premises,
Building or Project or to other tenant spaces therein, to deal with emergencies,
to post such notices as may be permitted or required by law to prevent the
perfection of liens against Landlord's interest in the Project or to exhibit the
Premises to prospective tenants (during the last six (6) months of the term),
purchasers, encumbrancers or to others, or for any other purpose as Landlord may
deem necessary or desirable; provided, however, that Landlord shall use
reasonable efforts not to unreasonably interfere with Tenant's business
operations. Tenant shall not be entitled to any abatement of Rent by reason of
the exercise of any such right of entry. Tenant waives any claim for damages for
any injury or inconvenience to or interference with Tenant's business, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby. Landlord shall at all times have and retain a key with which to unlock
all of the doors in, upon and about the Premises, excluding Tenant's vaults ,
safes, and other special security areas; provided, however, that Landlord shall
only enter the Premises without a representative of Tenant in the case of an
emergency; in all other instances, Landlord shall give Tenant prior notice,
which may be telephonic. Landlord shall have the right to use any and all means
which Landlord may deem necessary or proper to open said doors in an emergency,
in order to obtain entry to any portion of the Premises, and any entry to the
Premises or portions thereof obtained by Landlord by any of said means, or
otherwise, shall not be construed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an eviction, actual or constructive, of Tenant
from the Premises or any portions thereof. At any time within six (6) months
prior to the expiration of the Term or following any earlier termination of this
Lease or agreement to terminate this Lease, Landlord shall have the right to
erect on the Premises, Building and/or Project a suitable sign indicating that
the Premises are available for lease.


                                      -15-
<PAGE>

                         15.   SERVICES AND UTILITIES

A.    Tenant shall pay directly for all water, gas, heat, air conditioning,
light, power, telephone, sewer, sprinkler charges and other utilities and
services used on or from the Premises, together with any taxes, penalties,
surcharges or the like pertaining thereto, and maintenance charges for utilities
and shall furnish all electric light bulbs, ballasts and tubes. If any such
services are not separately billed or metered to Tenant, Tenant shall pay a
proportion, as reasonably determined by Landlord, of all charges jointly serving
other premises (Tenant acknowledges that, pursuant to Section 7 above, if Tenant
uses an amount of water or sewer service that exceeds Tenant's Proportionate
Share, it may be charged for such excess usage). All sums payable under this
Paragraph 15 shall constitute Additional Rent hereunder.

B.    Tenant acknowledges that Tenant has inspected and accepts the water,
electricity, heat and air conditioning and other utilities and services being
supplied or furnished to the Premises as of the date Tenant takes possession of
the Premises, if any, as being sufficient in their present condition, "as is,"
for the Permitted Use, and for Tenant's intended operations in the Premises,
subject, however, to the other terms of this Lease. Tenant also agrees at all
times to cooperate fully with Landlord and to abide by all of the regulations
and requirements which Landlord may prescribe for the proper functioning and
protection of electrical, heating, ventilating and air conditioning systems.

C.    Landlord shall not be liable for any damages directly or indirectly
resulting from : (a) the installation, use or interruption of use of any
equipment used in connection with the furnishing of any such utilities or
services, or any change in the character or means of supplying or providing any
such utilities or services or any supplier thereof; (b) the failure to furnish
or delay in furnishing any such utilities or services when such failure or delay
is caused by acts of God or the elements, labor disturbances of any character,
or any other accidents or other conditions beyond the reasonable control of
Landlord or because of any interruption of service due to Tenant's use of water,
electric current or other resource in excess of that being supplied or furnished
for the use of the Premises as of the date Tenant takes possession of the
Premises; or (c) the inadequacy, limitation, curtailment, rationing or
restriction on use of water, electricity, gas or any other form of energy or any
other service or utility whatsoever serving the Premises or Project otherwise;
or (d) the partial or total unavailability of any such utilities or services to
the Premises or the Building, whether by Regulation or otherwise; nor shall any
such occurrence constitute an actual or constructive eviction of Tenant. If any
utility or other service to the Premises is interrupted, and the cause of such
interruption is reasonably curable by Landlord, Tenant shall, as of the tenth
(10th) consecutive business day of such interruption, thereafter be entitled to
an abatement of Rent (proportionate to the degree to which Tenant's use of the
Premises for the Permitted Use is interfered with) until such interruption is
cured by Landlord. Landlord shall use diligent and good faith efforts to
promptly restore utility service. Landlord shall further have no obligation to
protect or preserve any apparatus, equipment or device installed by Tenant in
the Premises, including without limitation by providing


                                      -16-
<PAGE>

additional or after-hours heating or air conditioning. Landlord shall be
entitled to cooperate voluntarily and in a reasonable manner with the efforts of
national, state or local governmental agencies or utility suppliers in reducing
energy or other resource consumption. The obligation to make services available
hereunder shall be subject to the limitations of any such voluntary, reasonable
program. In addition, Landlord reserves the right to change the supplier or
provider of any such utility or service from time to time, provided that such
supplier or provider is competitively priced and is otherwise acceptable to
Tenant. Landlord may, but shall not be obligated to, upon notice to Tenant,
contract with or otherwise obtain any electrical or other such service for or
with respect to the Premises or Tenant's operations therein from any supplier or
provider of any such service, provided that such supplier or provider is
competitively priced and is otherwise acceptable to Tenant. Tenant shall
cooperate with Landlord and any supplier or provider of such services designated
by Landlord from time to time to facilitate the delivery of such services to
Tenant at the Premises and to the Building and Project, including without
limitation allowing Landlord and Landlord's suppliers or providers, and their
respective agents and contractors, reasonable access to the Premises for the
purpose of installing, maintaining, repairing, replacing or upgrading such
service or any equipment or machinery associated therewith.

                               16. SUBORDINATION

         Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, this Lease shall be and is
hereby declared to be subject and subordinate at all times to: (a) all ground
leases or underlying leases which may now exist or hereafter be executed
affecting the Premises and/or the land upon which the Premises and Project are
situated, or both; and (b) any mortgage or deed of trust which may now exist or
be placed upon the Building, the Project and/or the land upon which the Premises
or the Project are situated, or said ground leases or underlying leases, or
Landlord's interest or estate in any of said items which is specified as
security. Notwithstanding the foregoing, Landlord shall have the right to
subordinate or cause to be subordinated any such ground leases or underlying
leases or any such liens to this Lease. If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
conveyance in lieu of foreclosure is made for any reason, Tenant shall,
notwithstanding any subordination, attorn to and become the Tenant of the
successor in interest to Landlord provided that Tenant shall not be disturbed in
its possession under this Lease by such successor in interest so long as Tenant
is not in default under this Lease. Within thirty (30) days after request by
Landlord, Tenant shall execute and deliver any additional documents evidencing
Tenant's attornment or the subordination of this Lease with respect to any such
ground leases or underlying leases or any such mortgage or deed of trust, in the
form requested by Landlord or by any ground landlord, mortgagee, or beneficiary
under a deed of trust, subject to such nondisturbance requirement. Landlord
shall promptly obtain a commercially reasonable nondisturbance agreement (in
substantially the form attached hereto as Exhibit D) from the landlord under any
ground lease or other underlying leasehold interest and from the holder and/or
beneficiary under any mortgage or deed of trust (collectively "ENCUMBRANCE") in
existence as of the Commencement Date (Landlord has advised Tenant that no
Encumbrance will be in effect as of the Commencement Date), and from the holder
of any Encumbrance to whom Tenant is required to subordinate pursuant to this
Section 16. The subordination of this Lease pursuant to this Section 16 and any
requirement of Tenant to attorn pursuant to this Section 16 is conditioned upon
receipt of such nondisturbance agreements.

                          17.   FINANCIAL STATEMENTS

At the request of Landlord from time to time, Tenant shall provide to Landlord
Tenant's and any guarantor's current financial statements or other information
discussing financial worth of Tenant and any guarantor, which Landlord shall use
solely for purposes of this Lease and in connection with the ownership,
management, financing and disposition of the Project. In no event shall Landlord
request financial statements of Tenant more frequently than one (l) time per
calendar year, and Tenant shall only be obligated to provide such financial
statements as are readily available to Tenant without incurring any expense.
Landlord shall keep all financial information regarding Tenant strictly
confidential.

                          18.   ESTOPPEL CERTIFICATE

Tenant agrees from time to time, within thirty (30) days after request of
Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
certificate stating that this Lease is in full force and effect, that this Lease
has not been modified (or stating all modifications, written or oral, to this
Lease), the date to which Rent has been paid, the unexpired portion of this
Lease, that there are no current defaults by Landlord or Tenant under this Lease
(or specifying any such defaults), that the leasehold estate granted by this
Lease is the sole interest of Tenant in the Premises and/or the land at which
the Premises are situated, and such other matters pertaining to this Lease as
may be reasonably requested by Landlord or any mortgagee, beneficiary, purchaser
or prospective purchaser of the Building or Project or any interest therein.
Failure by Tenant to execute and deliver such certificate shall constitute an
acceptance of the Premises and acknowledgment by


                                      -17-
<PAGE>

Tenant that the statements included are true and correct without exception.
Tenant agrees that if Tenant fails to execute and deliver such certificate
within such thirty (30) day period, Landlord may execute and deliver such
certificate on Tenant's behalf and that such certificate shall be binding on
Tenant. Landlord and Tenant intend that any statement delivered pursuant to this
Paragraph may be relied upon by any mortgagee, beneficiary, purchaser or
prospective purchaser of the Building or Project or any interest therein. The
parties agree that Tenant's obligation to furnish such estoppel certificates in
a timely fashion is a material inducement for Landlord's execution of this
Lease, and shall be an event of default if Tenant fails to fully comply
(provided that Landlord has given Tenant a second written notice affording an
additional five (5) business day cure period) or makes any material misstatement
in any such certificate.

                            19.   SECURITY DEPOSIT

Tenant agrees to deposit with Landlord upon execution of this Lease, a security
deposit as stated in the Basic Lease Information (the "SECURITY DEPOSIT"), which
sum shall be held and owned by Landlord, without obligation to pay interest, as
security for the performance of Tenant's covenants and obligations under this
Lease. The Security Deposit is not an advance rental deposit or a measure of
damages incurred by Landlord in case of Tenant's default. Upon the occurrence of
any event of default by Tenant, Landlord may from time to time, without
prejudice to any other remedy provided herein or by law, use such fund as a
credit to the extent necessary to credit against any arrears of Rent or other
payments due to Landlord hereunder, and any other damage, injury, expense or
liability caused by such event of default, and Tenant shall pay to Landlord, on
demand, the amount so applied in order to restore the Security Deposit to its
original amount. Although the Security Deposit shall be deemed the property of
Landlord, any remaining balance of such deposit shall be returned by Landlord to
Tenant at such time after termination of this Lease that all of Tenant's
obligations under this Lease have been fulfilled, reduced by such amounts as may
be required by Landlord to remedy defaults on the part of Tenant in the payment
of Rent or other obligations of Tenant under this Lease, to repair damage to the
Premises, Building or Project caused by Tenant or any Tenant's Parties and to
clean the Premises. Landlord may use and commingle the Security Deposit with
other funds of Landlord.

                     20.   LIMITATION OF TENANT'S REMEDIES

The obligations and liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease are not personal obligations of Landlord or of the
individual or other partners of Landlord or its or their partners, directors,
officers, or shareholders, and Tenant agrees to look solely to Landlord's
interest in the Project for the recovery of any amount from Landlord, and shall
not look to other assets of Landlord nor seek recourse against the assets of the
individual or other partners of Landlord or its or their partners, directors,
officers or shareholders. Any lien obtained to enforce any such judgment and any
levy of execution thereon shall be subject and subordinate to any lien, mortgage
or deed of trust on the Project. Under no circumstances shall Tenant have the
right to offset against or recoup Rent or other payments due and to become due
to Landlord hereunder except as expressly provided in this Lease, which Rent and
other payments shall be absolutely due and payable hereunder in accordance with
the terms hereof.

                        21.   ASSIGNMENT AND SUBLETTING

A.    (1)    GENERAL.  This Lease has been negotiated to be and is granted as
      an accommodation to Tenant. Accordingly, this Lease is personal to Tenant,
      and Tenant's rights granted hereunder do not include the right to assign
      this Lease or sublease the Premises, or to receive any excess, either in
      installments or lump sum, over the Rent which is expressly reserved by
      Landlord as hereinafter provided, except as otherwise expressly
      hereinafter provided. Tenant shall not assign or pledge this Lease or
      sublet the Premises or any part thereof, whether voluntarily or by
      operation of law, or permit the use or occupancy of the Premises or any
      part thereof by anyone other than Tenant, or suffer or permit any such
      assignment, pledge, subleasing or occupancy, without Landlord's prior
      written consent except as provided herein. If Tenant desires to assign
      this Lease or sublet any or all of the Premises, Tenant shall give
      Landlord written notice (the "TRANSFER NOTICE") at least thirty (30) days
      prior to the anticipated effective date of the proposed assignment or
      sublease, which shall contain all of the information reasonably requested
      by Landlord to address Landlord's decision criteria specified hereinafter.
      Landlord shall then have a period of twenty (20) days following receipt of
      the Transfer Notice to notify Tenant in writing that Landlord elects
      either: (i) to terminate this Lease as to the space so affected as of the
      date so requested by Tenant (provided, however, that such termination
      right shall not apply to or transfer to an Affiliate (as defined below));
      or (ii) to consent to the proposed assignment or sublease, subject,
      however, to Landlord's prior written consent of the proposed assignee or
      subtenant and of any related documents or agreements associated with the
      assignment or sublease. If Landlord should fail to notify Tenant in
      writing of such election within said period, Landlord shall be deemed to
      have waived option (i) above, but written consent by Landlord of the
      proposed assignee or subtenant shall still be required. If Landlord does
      not exercise option (i) above, Landlord's consent to a proposed assignment
      or sublease shall not be unreasonably withheld, conditioned or delayed.
      Consent to any assignment or subletting shall not constitute consent to
      any subsequent transaction to which this Paragraph 21 applies.


                                      -18-
<PAGE>

(2)   CONDITIONS OF LANDLORD'S CONSENT. Without limiting the other instances
      in which it may be reasonable for Landlord to withhold Landlord's consent
      to an assignment or subletting, Landlord and Tenant acknowledge that it
      shall be reasonable for Landlord to withhold Landlord's consent in the
      following instances: if the proposed assignee does not agree to be bound
      by and assume the obligations of Tenant under this Lease in form and
      substance reasonably satisfactory to Landlord; the use of the Premises by
      such proposed assignee or subtenant would not be a Permitted Use or would
      violate any exclusivity or other arrangement which Landlord has with any
      other tenant or occupant or any Regulation or would increase the Occupancy
      Density or Parking Density of the Building or Project, or would otherwise
      result in an undesirable tenant mix for the Project as reasonably
      determined by Landlord; the proposed assignee or subtenant is not of sound
      financial condition as determined by Landlord in Landlord's reasonable
      discretion (taking into account the continuing, primary liability of
      Tenant); the proposed assignee or subtenant is a governmental agency; the
      proposed assignee or subtenant does not have a good reputation as a tenant
      of property or a good business reputation; the proposed assignee or
      subtenant is a person with whom Landlord is negotiating to lease space in
      the Project or is a present tenant of the Project (and Landlord has space
      available on terms acceptable to that party); the assignment or subletting
      would entail any Alterations which would lessen the value of the leasehold
      improvements in the Premises or use of any Hazardous Materials or other
      noxious use or use which may disturb other tenants of the Project; or
      Tenant is in default of any obligation of Tenant under this Lease
      (following notice and passage of the applicable cure period under Section
      26 below). Upon a termination under Paragraph 21.A.(1)(i), Landlord may
      lease the Premises to any party, including parties with whom Tenant has
      negotiated an assignment or sublease, without incurring any liability to
      Tenant. At the option of Landlord, a surrender and termination of this
      Lease shall operate as an assignment to Landlord of some or all subleases
      or subtenancies. Landlord shall exercise this option by giving notice of
      that assignment to such subtenants on or before the effective date of the
      surrender and termination. In connection with each request for assignment
      or subletting, Tenant shall pay to Landlord Landlord's standard fee for
      approving such requests (not to exceed $500.00), as well as all
      reasonable, out-of-pocket costs incurred by Landlord or any mortgagee or
      ground lessor in approving each such request and effecting any such
      transfer, including, without limitation, reasonable attorneys' fees.

      B.   BONUS RENT. Any Rent or other consideration realized by Tenant under
any such sublease or assignment in excess of the Rent payable hereunder, after
amortization of a reasonable brokerage commission and other out-of-pocket costs
incurred by Tenant, shall be divided and paid, twenty percent (20%) to Tenant,
eighty percent (80%) to Landlord. In any subletting or assignment undertaken by
Tenant, Tenant shall diligently seek to obtain the maximum rental amount
available in the marketplace for comparable space available for primary leasing.

      C.   CORPORATION. If Tenant is a corporation, a transfer of corporate 
shares by sale, assignment, bequest, inheritance, operation of law or other
disposition (including such a transfer to or by a receiver or trustee in federal
or state bankruptcy, insolvency or other proceedings) resulting in a change in
the present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of this Lease. This Section 21.C shall not apply to
Tenant if Tenant is a publicly traded corporation.

      D.   UNINCORPORATED ENTITY. If Tenant is a partnership, joint venture,
unincorporated limited liability company or other unincorporated business form,
a transfer of the interest of persons, firms or entities responsible for
managerial control of Tenant by sale, assignment, bequest, inheritance,
operation of law or other disposition, so as to result in a change in the
present control of said entity and/or of the underlying beneficial interests of
said entity and/or a change in the identity of the persons responsible for the
general credit obligations of said entity shall constitute an assignment for all
purposes of this Lease.

      E.   LIABILITY. No assignment or subletting by Tenant, permitted or
otherwise, shall relieve Tenant of any obligation under this Lease or alter the
primary liability of the Tenant named herein for the payment of Rent or for the
performance of any other obligations to be performed by Tenant, including
obligations contained in Paragraph 25 with respect to any assignee or subtenant.
Landlord may collect rent or other amounts or any portion thereof from any
assignee, subtenant, or other occupant of the Premises, permitted or otherwise,
and apply the net rent collected to the Rent payable hereunder, but no such
collection shall be deemed to be a waiver of this Paragraph 21, or the
acceptance of the assignee, subtenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of the obligations of Tenant under
this Lease. Any assignment or subletting which conflicts with the provisions
hereof shall be void.

      F.   AFFILIATES. Tenant may assign this Lease at any time, or sublease all
or part of the Premises, without receipt of Landlord's consent (but with prior
notice to Landlord), to any entity which acquires all or part of Tenant, or
which is acquired in whole or in part by Tenant, or which is controlled directly
or indirectly by Tenant, or which entity controls, directly or indirectly,
Tenant ("Affiliate"), or which owns or is owned by


                                      -19-
<PAGE>

the Affiliate, so long as such transaction was not entered into as a subterfuge
to avoid the obligations and restrictions of this Lease.

                                22.   AUTHORITY

Landlord represents and warrants that it has full right and authority to enter
into this Lease and to perform all of Landlord's obligations hereunder and that
all persons signing this Lease on its behalf are authorized to do. Tenant and
the person or persons, if any, signing on behalf of Tenant, jointly and
severally represent and warrant that Tenant has full right and authority to
enter into this Lease, and to perform all of Tenant's obligations hereunder, and
that all persons signing this Lease on its behalf are authorized to do so.

                              23.   CONDEMNATION

      A.   CONDEMNATION RESULTING IN TERMINATION. If the whole or any
substantial part of the Premises should be taken or condemned for any public use
under any Regulation, or by right of eminent domain, or by private purchase in
lieu thereof, and the taking would prevent or materially interfere with the
Permitted Use of the Premises, either party shall have the right to terminate
this Lease at its option. If any material portion of the Building or Project is
taken or condemned for any public use under any Regulation, or by right of
eminent domain, or by private purchase in lieu thereof, Landlord may terminate
this Lease at its option. In either of such events, the Rent shall be abated
during the unexpired portion of this Lease, effective when the physical taking
of said Premises shall have occurred.

      B.   CONDEMNATION NOT RESULTING IN TERMINATION. If a portion of the
Project of which the Premises are a part should be taken or condemned for any
public use under any Regulation, or by right of eminent domain, or by private
purchase in lieu thereof, and the taking prevents or materially interferes with
the Permitted Use of the Premises, and this Lease is not terminated as provided
in Paragraph 23.A. above, the Rent payable hereunder during the unexpired
portion of this Lease shall be reduced, beginning on the date when the physical
taking shall have occurred, to such amount as may be fair and reasonable under
all of the circumstances, but only after giving Landlord credit for all sums
received or to be received by Tenant by the condemning authority.
Notwithstanding anything to the contrary contained in this Paragraph, if the
temporary use or occupancy of any part of the Premises shall be taken or
appropriated under power of eminent domain during the Term, this Lease shall be
and remain unaffected by such taking or appropriation and Tenant shall continue
to pay in full all Rent payable hereunder by Tenant during the Term; in the
event of any such temporary appropriation or taking, Tenant shall be entitled to
receive that portion of any award which represents compensation for the use of
or occupancy of the Premises during the Term, and Landlord shall be entitled to
receive that portion of any award which represents the cost of restoration of
the Premises and the use and occupancy of the Premises.

      C.   AWARD. Landlord shall be entitled to (and Tenant shall assign to
Landlord) any and all payment, income, rent, award or any interest therein
whatsoever which may be paid or made in connection with such taking or
conveyance and Tenant shall have no claim against Landlord or otherwise for any
sums paid by virtue of such proceedings, whether or not attributable to the
value of any unexpired portion of this Lease, except as expressly provided in
this Lease. Notwithstanding the foregoing, any compensation specifically and
separately awarded Tenant for Tenant's personal property and moving costs, shall
be and remain the property of Tenant.

      D.   WAIVER OF CCP Section 1265.130. Each party waives the provisions of
California Civil Code Procedure Section 1265.130 allowing either party to
petition the superior court to terminate this Lease as a result of a partial
taking.

                             24.   CASUALTY DAMAGE

      A.   GENERAL. If the Premises or Building should be damaged or destroyed
by fire, tornado, or other casualty (collectively, "CASUALTY"), Tenant shall
give immediate written notice thereof to Landlord. Within thirty (30) days after
Landlord's receipt of such notice, Landlord shall notify Tenant whether in
Landlord's estimation material restoration of the Premises can reasonably be
made within one hundred eighty (180) days from the date of such notice and
receipt of required permits for such restoration. Landlord's reasonable
determination shall be binding on Tenant.

      B.   WITHIN 180 DAYS. If the Premises or Building should be damaged by
Casualty to such extent that material restoration can in Landlord's estimation
be reasonably completed within one hundred eighty (180) days after the date of
such notice and receipt of required permits for such restoration, this Lease
shall not terminate. Provided that insurance proceeds are received by Landlord
to fully repair the damage, Landlord shall proceed to rebuild and repair the
Premises in the manner determined by Landlord, except that Landlord shall not be
required to rebuild, repair or replace any part of the Alterations which may
have been placed on or about the Premises by Tenant. If the Premises are
untenantable in whole or in part following such damage, the Rent payable
hereunder during the period in which they are untenantable shall be abated
proportionately, but only to the extent of rental abatement insurance proceeds
received by Landlord during the time and to the extent the Premises are unfit
for occupancy.


                                      -20-
<PAGE>

      C.   GREATER THAN 180 DAYS. If the Premises or Building should be damaged
by Casualty to such extent that rebuilding or repairs cannot in Landlord's
estimation be reasonably completed within one hundred eighty (180) days after
the date of such notice and receipt of required permits for such rebuilding or
repair, then Landlord shall have the option of either: (1) terminating this
Lease effective upon the date of the occurrence of such damage, in which event
the Rent shall be abated during the unexpired portion of this Lease; or (2)
electing to rebuild or repair the Premises diligently and in the manner
determined by Landlord. Landlord shall notify Tenant of its election within
thirty (30) days after Landlord's receipt of notice of the damage or
destruction. Notwithstanding the above, Landlord shall not be required to
rebuild, repair or replace any part of any Alterations which may have been
placed, on or about the Premises by Tenant. If the Premises are untenantable in
whole or in part following such damage, the Rent payable hereunder during the
period in which they are untenantable shall be abated proportionately, but only
to the extent of rental abatement insurance proceeds received by Landlord during
the time and to the extent the Premises are unfit for occupancy.

      D.   TENANT'S FAULT.

      E.   INSURANCE PROCEEDS. Notwithstanding anything herein to the contrary,
if the Premises or Building are damaged or destroyed and are not fully covered
by the insurance proceeds received by Landlord or if the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises
requires that the insurance proceeds be applied to such indebtedness, then in
either case Landlord shall have the right to terminate this Lease by delivering
written notice of termination to Tenant within thirty (30) days after the date
of notice to Landlord that said damage or destruction is not fully covered by
insurance or such requirement is made by any such holder, as the case may be,
whereupon this Lease shall terminate.

      F.   WAIVER. This Paragraph 24 shall be Tenant's sole and exclusive remedy
in the event of damage or destruction to the Premises or the Building. As a
material inducement to Landlord entering into this Lease, Tenant hereby waives
any rights it may have under Sections 1932, 1933(4), 1941 or 1942 of the Civil
Code of California with respect to any destruction of the Premises, Landlord's
obligation for tenantability of the Premises and Tenant's right to make repairs
and deduct the expenses of such repairs, or under any similar law, statute or
ordinance now or hereafter in effect.

      G.   TENANT'S PERSONAL PROPERTY. In the event of any damage or destruction
of the Premises or the Building, under no circumstances shall Landlord be
required to repair any injury or damage to, or make any repairs to or
replacements of, Tenant's personal property.

      H.   TENANT'S RIGHTS. In no event shall Landlord be entitled to terminate
this Lease pursuant to this Section 24 unless Landlord simultaneously terminates
the leases of all other similarly affected tenants within the Building. Tenant
may elect to terminate this Lease, effective as of the date of any Casualty
described in Section 24.C under either of the following circumstances: (i) if
the Premises are not, or cannot reasonably be, completed within two hundred
seventy (270) days from the date of the Casualty, or (ii) if damage or
destruction of the Premises is such that it materially affects the habitability
of the Premises and occurs during the last twelve (12) months of the term,
including any extended terms.

                              25.   HOLDING OVER

Unless Landlord expressly consents in writing to Tenant's holding over, Tenant
shall be unlawfully and illegally in possession of the Premises, whether or not
Landlord accepts any rent from Tenant or any other person while Tenant remains
in possession of the Premises without Landlord's written consent. If Tenant
shall retain possession of the Premises or any portion thereof without
Landlord's consent following the expiration of this Lease or sooner termination
for any reason, then Tenant shall pay to Landlord for each day of such retention
two hundred percent (200%) of the amount of daily rental as of the last month
prior to the date of expiration or earlier termination. Tenant shall also
indemnify, defend, protect and hold Landlord harmless from any loss, liability
or cost, including consequential and incidental damages and reasonable
attorneys' fees, incurred by Landlord resulting from delay by Tenant in
surrendering the Premises, including, without limitation, any claims made by the
succeeding tenant founded on such delay. Acceptance of Rent by Landlord
following expiration or earlier termination of this Lease, or following demand
by Landlord for possession of the Premises, shall not constitute a renewal of
this Lease, and nothing contained in this Paragraph 25 shall waive Landlord's
right of reentry or any other right. Additionally, if upon expiration or earlier
termination of this Lease, or following demand by Landlord for possession of the
Premises, Tenant has not fulfilled its obligation with respect to repairs and
cleanup of the Premises or any other Tenant obligations as set forth in this
Lease, then Landlord shall have the right to perform any such obligations as it
deems necessary at Tenant's sole cost and expense, and any time required by
Landlord to complete such obligations


                                      -21-
<PAGE>

shall be considered a period of holding over and the terms of this Paragraph 25
shall apply. The provisions of this Paragraph 25 shall survive any expiration or
earlier termination of this Lease.

                                 26.   DEFAULT

      A.    EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an event of default on the part of Tenant:

      (1)   ABANDONMENT OR VACATION OF THE PREMISES . Tenant waives any right to
      notice Tenant may have under Section 1951.3 of the Civil Code of the State
      of California, the terms of this Paragraph 26.A being deemed such notice
      to Tenant as required by said Section 1951.3. In no event shall Tenant be
      deemed to have "abandoned" or "vacated" the Premises unless Tenant shall
      have vacated the Premises, and failed to pay rent within the fourteen
      (14)-day period required by said Section 1951.3.

      (2)   NONPAYMENT OF RENT. Failure to pay any installment of Rent or any
      other amount due and payable hereunder within five (5) days after written
      notice that said payment is due, as to which time is of the essence.

      (3)   OTHER OBLIGATIONS. Failure to perform any obligation, agreement or
      covenant under this Lease other than those matters specified in
      subparagraphs (1) and (2) of this Paragraph 26.A., such failure continuing
      for fifteen (15) business days after written notice of such failure, as to
      which time is of the essence.

      (4)   GENERAL ASSIGNMENT. A general assignment by Tenant for the benefit
      of creditors.

      (5)   BANKRUPTCY. The filing of any voluntary petition in bankruptcy by
      Tenant, or the filing of an involuntary petition by Tenant's creditors,
      which involuntary petition remains undischarged for a period of thirty
      (30) days. If under applicable law, the trustee in bankruptcy or Tenant
      has the right to affirm this Lease and continue to perform the obligations
      of Tenant hereunder, such trustee or Tenant shall, in such time period as
      may be permitted by the bankruptcy court having jurisdiction, cure all
      defaults of Tenant hereunder outstanding as of the date of the affirmance
      of this Lease and provide to Landlord such adequate assurances as may be
      necessary to ensure Landlord of the continued performance of Tenant's
      obligations under this Lease.

      (6)   RECEIVERSHIP. The employment of a receiver to take possession of
      substantially all of Tenant's assets or the Premises, if such appointment
      remains undismissed or undischarged for a period of fifteen (15) days
      after the order therefor.

      (7)   ATTACHMENT. The attachment, execution or other judicial seizure of
      all or substantially all of Tenant's assets or Tenant's leasehold of the
      Premises, if such attachment or other seizure remains undismissed or
      undischarged for a period of fifteen (15) days after the levy thereof.

      (8)   INSOLVENCY. The admission by Tenant in writing of its inability to
      pay its debts as they become due.

      B.    REMEDIES UPON DEFAULT.

      (1)   TERMINATION. In the event of the occurrence of any event of default,
      Landlord shall have the right to give a written termination notice to
      Tenant, and on the date specified in such notice, Tenant's right to
      possession shall terminate, and this Lease shall terminate unless on or
      before such date all Rent in arrears and all costs and expenses incurred
      by or on behalf of Landlord hereunder shall have been paid by Tenant and
      all other events of default of this Lease by Tenant at the time existing
      shall have been fully remedied to the satisfaction of Landlord. At any
      time after such termination, Landlord may recover possession of the
      Premises or any part thereof and expel and remove therefrom Tenant and any
      other person occupying the same, including any subtenant or subtenants
      notwithstanding Landlord's consent to any sublease, by any lawful means,
      and again repossess and enjoy the Premises without prejudice to any of the
      remedies that Landlord may have under this Lease, or at law or equity by
      any reason of Tenant's default or of such termination. Landlord hereby
      reserves the right, but shall not have the obligation, to recognize the
      continued possession of any subtenant. The delivery or surrender to
      Landlord by or on behalf of Tenant of keys, entry codes, or other means to
      bypass security at the Premises shall not terminate this Lease.

      (2)   CONTINUATION AFTER DEFAULT. Even though an event of default may have
      occurred, this Lease shall continue in effect for so long as Landlord does
      not terminate Tenant's right to possession under Paragraph 26.B.(1)
      hereof, and Landlord may enforce all of Landlord's rights and remedies
      under this Lease and at law or in equity, including without limitation,
      the right to recover Rent as it becomes due, and Landlord, without
      terminating this Lease, may exercise all of the rights and remedies of a
      landlord under Section 1951.4 of the Civil Code of the State of California
      or any successor code section. Acts of maintenance, preservation or
      efforts to lease the Premises or the


                                      -22-
<PAGE>

      appointment of a receiver under application of Landlord to protect
      Landlord's interest under this Lease or other entry by Landlord upon the
      Premises shall not constitute an election to terminate Tenant's right to
      possession.

      C.    DAMAGES AFTER DEFAULT. Should Landlord terminate this Lease pursuant
to the provisions of Paragraph 26.B.(1) hereof, Landlord shall have the rights
and remedies of a Landlord provided by Section 1951.2 of the Civil Code of the
State of California, or any successor code sections. Upon such termination, in
addition to any other rights and remedies to which Landlord may be entitled
under applicable law or at equity, Landlord shall be entitled to recover from
Tenant: (1) the worth at the time of award of the unpaid Rent and other amounts
which had been earned at the time of termination, (2) the worth at the time of
award of the amount by which the unpaid Rent and other amounts that would have
been earned after the date of termination until the time of award exceeds the
amount of such Rent loss that Tenant proves could have been reasonably avoided;
(3) the worth at the time of award of the amount by which the unpaid Rent and
other amounts for the balance of the Term after the time of award exceeds the
amount of such Rent loss that the Tenant proves could be reasonably avoided; and
(4) any other amount and court costs necessary to compensate Landlord for all
detriment proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom. The "worth at the time of award" as used in (1) and (2) above
shall be computed at the Applicable Interest Rate (defined below). The "worth at
the time of award" as used in (3) above shall be computed by discounting such
amount at the Federal Discount Rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%). If this Lease provides for any
periods during the Term during which Tenant is not required to pay Base Rent or
if Tenant otherwise receives a Rent concession, then upon the occurrence of an
event of default, Tenant shall owe to Landlord the full amount of such Base Rent
or value of such Rent concession, plus interest at the Applicable Interest Rate,
calculated from the date that such Base Rent or Rent concession would have been
payable.

      D.    LATE CHARGE. In addition to its other remedies, Landlord shall have
the right without notice or demand to add to the amount of any payment required
to be made by Tenant hereunder, and which is not paid and received by Landlord
on or before the sixth day after its due date, an amount equal to eight percent
(8%) of the delinquency for each month or portion thereof that the delinquency
remains outstanding to compensate Landlord for the loss of the use of the amount
not paid and the administrative costs caused by the delinquency, the parties
agreeing that Landlord's damage by virtue of such delinquencies would be
extremely difficult and impracticable to compute and the amount stated herein
represents a reasonable estimate thereof. Any waiver by Landlord of any late
charges or failure to claim the same shall not constitute a waiver of other late
charges or any other remedies available to Landlord.

      E.    INTEREST. Interest shall accrue on all sums not paid when due
hereunder at the lesser of eighteen percent (18%) per annum or the maximum
interest rate allowed by law ("APPLICABLE INTEREST RATE") from the due date
until paid. Any sum owing from Landlord to Tenant shall accrue interest at the
Applicable Interest Rate.

      F.    REMEDIES Cumulative. All rights, privileges and elections or
remedies of the parties are cumulative and not alternative, to the extent
permitted by law and except as otherwise provided herein.

                                  27.   LIENS

Tenant shall at all times keep the Premises and the Project free from liens
arising out of or related to work or services performed, materials or supplies
furnished or obligations incurred by or on behalf of Tenant or in connection
with work made, suffered or done by or on behalf of Tenant in or on the Premises
or Project. If Tenant shall not, within ten (10) days following the imposition
of any such lien, cause the same to be released of record by payment or posting
of a proper bond, Landlord shall have, in addition to all other remedies
provided herein and by law, the right, but not the obligation, to cause the same
to be released by such means as Landlord shall deem proper, including payment of
the claim giving rise to such lien. All sums paid by Landlord on behalf of
Tenant and all expenses incurred by Landlord in connection therefor shall be
payable to Landlord by Tenant on demand with interest at the Applicable Interest
Rate as Additional Rent. Landlord shall have the right at all times to post and
keep posted on the Premises any notices permitted or required by law, or which
Landlord shall deem proper, for the protection of Landlord, the Premises, the
Project and any other party having an interest therein, from mechanics' and
materialmen's liens, and Tenant shall give Landlord not less than ten (10)
business days prior written notice of the commencement of any work in the
Premises or Project which could lawfully give rise to a claim for mechanics' or
materialmen's liens to permit Landlord to post and record a timely notice of
non-responsibility, as Landlord may elect to proceed or as the law may from time
to time provide, for which purpose, if Landlord shall so determine, Landlord may
enter the Premises. Tenant shall not remove any such notice posted by Landlord
without Landlord's consent, and


                                      -23-
<PAGE>

in any event not before completion of the work which could lawfully give rise to
a claim for mechanics' or materialmen's liens.

                              28.   SUBSTITUTION


                         29.   TRANSFERS BY LANDLORD

In the event of a sale or conveyance by Landlord of the Building or a
foreclosure by any creditor of Landlord, the same shall operate to release
Landlord from any liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Tenant, to the extent required to be
performed after the passing of title to Landlord's successor-in-interest. In
such event, Tenant agrees to look solely to the responsibility of the
successor-in-interest of Landlord under this Lease with respect to the
performance of the covenants and duties of "Landlord" to be performed after the
passing of title to Landlord's successor-in-interest. This Lease shall not be
affected by any such sale and Tenant agrees to attorn to the purchaser or
assignee. Landlord's successor(s)-in-interest shall not have liability to Tenant
with respect to the failure to perform any of the obligations of "Landlord," to
the extent required to be performed prior to the date such
successor(s)-in-interest became the owner of the Building.

             30.   RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be performed by Tenant at Tenant's sole cost and expense and
without any abatement of Rent. If Tenant shall fail to pay any sum of money,
other than Base Rent, required to be paid by Tenant hereunder or shall fail to
perform any other act on Tenant's part to be performed hereunder, including
Tenant's obligations under Paragraph 11 hereof, and such failure shall continue
for fifteen (15) days after notice thereof by Landlord, in addition to the other
rights and remedies of Landlord, Landlord may make any such payment and perform
any such act on Tenant's part. In the case of an emergency, no prior
notification by Landlord shall be required. Landlord may take such actions
without any obligation and without releasing Tenant from any of Tenant's
obligations. All sums so paid by Landlord and all incidental costs incurred by
Landlord and interest thereon at the Applicable Interest Rate, from the date of
payment by Landlord, shall be paid to Landlord on demand as Additional Rent.

                                31.   WAIVER

If either Landlord or Tenant waives the performance of any term, covenant or
condition contained in this Lease, such waiver shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition contained herein, or constitute a course of dealing contrary to the
expressed terms of this Lease. The acceptance of Rent by Landlord shall not
constitute a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, regardless of Landlord's knowledge of such preceding
breach at the time Landlord accepted such Rent. Failure by Landlord to enforce
any of the terms, covenants or conditions of this Lease for any length of time
shall not be deemed to waive or decrease the right of Landlord to insist
thereafter upon strict performance by Tenant. Waiver by Landlord of any term,
covenant or condition contained in this Lease may only be made by a written
document signed by Landlord, based upon full knowledge of the circumstances.

                                 32.   NOTICES

Each provision of this Lease or of any applicable governmental laws, ordinances,
regulations and other requirements with reference to sending, mailing, or
delivery of any notice or the making of any payment by Landlord or Tenant to the
other shall be deemed to be complied with when and if the following steps are
taken:

      A.    RENT. All Rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at Landlord's Remittance Address
set forth in the Basic Lease Information, or at such other address as Landlord
may specify from time to time by written notice delivered in accordance
herewith. Tenant's obligation to pay Rent and any other amounts to Landlord
under the terms of this Lease shall not be deemed satisfied until such Rent and
other amounts have been actually received by Landlord.


                                      -24-
<PAGE>

      B.    OTHER. All notices, demands, consents and approvals which may or are
required to be given by either party to the other hereunder shall be in writing
and either personally delivered, sent by commercial overnight courier, mailed,
certified or registered, postage prepaid or sent by facsimile with confirmed
receipt (and with an original sent by commercial overnight courier), and in each
case addressed to the party to be notified at the Notice Address for such party
as specified in the Basic Lease Information or to such other place as the party
to be notified may from time to time designate by at least fifteen (15) days
notice to the notifying party. Notices shall be deemed served upon receipt or
refusal to accept delivery.

      C.    REQUIRED NOTICES. Tenant shall immediately notify Landlord in
writing of any notice of a violation or a potential or alleged violation of any
Regulation that relates to the Premises or the Project, or of any inquiry,
investigation, enforcement or other action that is instituted or threatened by
any governmental or regulatory agency against Tenant or any other occupant of
the Premises, or any claim that is instituted or threatened by any third party
that relates to the Premises or the Project.

                             33.   ATTORNEYS' FEES

If Landlord places the enforcement of this Lease, or any part thereof, or the
collection of any Rent due, or to become due hereunder, or recovery of
possession of the Premises in the hands of an attorney, Tenant shall pay to
Landlord, upon demand, Landlord's reasonable attorneys' fees and court costs,
whether incurred at trial, appeal or review. In any action which Landlord or
Tenant brings to enforce its respective rights hereunder, the unsuccessful party
shall pay all costs incurred by the prevailing party including reasonable
attorneys' fees, to be fixed by the court, and said costs and attorneys' fees
shall be a part of the judgment in said action.

                         34.   SUCCESSORS AND ASSIGNS

This Lease shall be binding upon and inure to the benefit of Landlord, its
successors and assigns, and shall be binding upon and inure to the benefit of
Tenant, its successors, and to the extent assignment is approved by Landlord as
provided hereunder, Tenant's assigns.

                              35.   FORCE MAJEURE

If performance by a party of any portion of this Lease is made impossible by any
prevention, delay, or stoppage caused by strikes, lockouts, labor disputes, acts
of God, inability to obtain services, labor, or materials or reasonable
substitutes for those items, government actions, civil commotions, fire or other
casualty, or other causes beyond the reasonable control of the party obligated
to perform, performance by that party for a period equal to the period of that
prevention, delay, or stoppage is excused. Tenant's obligation to pay Rent,
however, is not excused by this Paragraph 35.

                          36.   SURRENDER OF PREMISES

Tenant shall, upon expiration or sooner termination of this Lease, surrender the
Premises to Landlord in the same condition as existed (reasonable wear and tear,
and damage by Casualty excepted) on the date Tenant originally took possession
thereof (subject, however, to Section 38 below), including, but not limited to,
all interior walls cleaned, all interior painted surfaces repainted in the
original color, all holes in walls repaired, all carpets shampooed and cleaned,
all HVAC equipment in operating order and in good repair, and all floors
cleaned, waxed, and free of any Tenant-introduced marking or painting, all to
the reasonable satisfaction of Landlord. Tenant shall remove all of its debris
from the Project. At or before the time of surrender, Tenant shall comply with
the terms of Paragraph 12.A. hereof with respect to Alterations to the Premises
and all other matters addressed in such Paragraph. If the Premises are not so
surrendered at the expiration or sooner termination of this Lease, the
provisions of Paragraph 25 hereof shall apply. All keys to the Premises or any
part thereof shall be surrendered to Landlord upon expiration or sooner
termination of the Term. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the Premises and shall meet with Landlord for
a joint inspection of the Premises at the time of vacating, but nothing
contained herein shall be construed as an extension of the Term or as a consent
by Landlord to any holding over by Tenant. In the event of Tenant's failure to
give such notice or participate in such joint inspection, Landlord's inspection
at or after Tenant's vacating the Premises shall conclusively be deemed correct
for purposes of determining Tenant's responsibility for repairs and restoration.
Any delay caused by Tenant's failure to carry out its obligations under this
Paragraph 36 beyond the term hereof, shall constitute unlawful and illegal
possession of Premises under Paragraph 25 hereof.


                                      -25-
<PAGE>

                              37.   MISCELLANEOUS

      A.    GENERAL. The term "Tenant" or any pronoun used in place thereof
shall indicate and include the masculine or feminine, the singular or plural
number, individuals, firms or corporations, and their respective successors,
executors, administrators and permitted assigns, according to the context
hereof.

      B.    TIME. Time is of the essence regarding this Lease and all of its
provisions.

      C.    CHOICE OF LAW. This Lease shall in all respects be governed by the
laws of the State of California.

      D.    ENTIRE AGREEMENT. This Lease, together with its Exhibits, addenda
and attachments and the Basic Lease Information, contains all the agreements of
the parties hereto and supersedes any previous negotiations. There have been no
representations made by the Landlord or understandings made between the parties
other than those set forth in this Lease and its Exhibits, addenda and
attachments and the Basic Lease Information.

      E.    MODIFICATION. This Lease may not be modified except by a written
instrument signed by the parties hereto. Tenant accepts the area of the Premises
as specified in the Basic Lease Information as the approximate area of the
Premises for all purposes under this Lease, and acknowledges and agrees that no
other definition of the area (rentable, usable or otherwise) of the Premises
shall apply. Tenant shall in no event be entitled to a recalculation of the
square footage of the Premises, rentable, usable or otherwise, and no
recalculation, if made, irrespective of its purpose, shall reduce Tenant's
obligations under this Lease in any manner, including without limitation the
amount of Base Rent payable by Tenant or Tenant's Proportionate Share of the
Building and of the Project.

      F.    SEVERABILITY. If, for any reason whatsoever, any of the provisions
hereof shall be unenforceable or ineffective, all of the other provisions shall
be and remain in full force and effect.

      G.    RECORDATION. Tenant shall not record this Lease, but may record a
short form memorandum hereof.

      H.    EXAMINATION OF LEASE. Submission of this Lease to Tenant does not
constitute an option or offer to lease and this Lease is not effective otherwise
until execution and delivery by both Landlord and Tenant.

      I.    ACCORD AND SATISFACTION. No payment by Tenant of a lesser amount
than the total Rent due nor any endorsement on any check or letter accompanying
any check or payment of Rent shall be deemed an accord and satisfaction of full
payment of Rent, and Landlord may accept such payment without prejudice to
Landlord's right to recover the balance of such Rent or to pursue other
remedies. All offers by or on behalf of Tenant of accord and satisfaction are
hereby rejected in advance.

      J.    EASEMENTS. Landlord may grant easements on the Project and dedicate
for public use portions of the Project without Tenant's consent; provided that
no such grant or dedication shall materially interfere with Tenant's Permitted
Use of the Premises. Upon Landlord's request, Tenant shall execute, acknowledge
and deliver to Landlord documents, instruments, maps and plats necessary to
effectuate Tenant's covenants hereunder.

      K.    DRAFTING AND DETERMINATION PRESUMPTION. The parties acknowledge that
this Lease has been agreed to by both the parties, that both Landlord and Tenant
have consulted with attorneys with respect to the terms of this Lease and that
no presumption shall be created against Landlord because Landlord drafted this
Lease. Whenever a provision of this Lease (i) requires that the consent of a
party be obtained, such consent shall not be unreasonably withheld or delayed,
or (ii) provides that a party may make a demand or request of the other party,
such demand or request shall be reasonable and made in good faith. If Landlord
fails to respond to any request for its consent within the time period, if any,
specified in this Lease, Landlord shall be deemed to have disapproved such
request.

      L.    EXHIBITS. The Basic Lease Information, and the Exhibits, addenda and
attachments attached hereto are hereby incorporated herein by this reference and
made a part of this Lease as though fully set forth herein.

      M.    NO LIGHT, AIR OR VIEW EASEMENT. Any diminution or shutting off of
light, air or view by any structure which may be erected on lands adjacent to or
in the vicinity of the Building shall in no way affect this Lease or impose any
liability on Landlord.

      N.    NO THIRD PARTY BENEFIT. This Lease is a contract between Landlord
and Tenant and nothing herein is intended to create any third party benefit.


                                      -26-
<PAGE>

      O.    QUIET ENJOYMENT. Upon payment by Tenant of the Rent, and upon the
observance and performance of all of the other covenants, terms and conditions
on Tenant's part to be observed and performed, Tenant shall peaceably and
quietly hold and enjoy the Premises for the term hereby demised without
hindrance or interruption by Landlord or any other person or persons lawfully or
equitably claiming by, through or under Landlord, subject, nevertheless, to all
of the other terms and conditions of this Lease. Except as provided by this
Lease, Landlord shall not be liable for any hindrance, interruption,
interference or disturbance by other tenants or third persons, nor shall Tenant
be released from any obligations under this Lease because of such hindrance,
interruption, interference or disturbance.

      P.    COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original.

      Q.    MULTIPLE PARTIES. If more than one person or entity is named herein
as Tenant, such multiple parties shall have joint and several responsibility to
comply with the terms of this Lease.

      R.    PRORATIONS. Any Rent or other amounts payable to Landlord by Tenant
hereunder for any fractional month shall be prorated based on a month of 30
days. As used herein, the term "fiscal year" shall mean the calendar year or
such other fiscal year as Landlord may deem appropriate.

                          38.   ADDITIONAL PROVISIONS

A.    TENANT IMPROVEMENTS. In accordance with the space plan and detailed
specifications in accordance to Exhibit C attached hereto, Landlord, at
Landlord's sole cost and expense, shall construct the following Tenant
Improvements:

      1.   OFFICE:  Approximately 1,700 square feet of office space consisting
      of the following:

           a.  three (3) private offices, two (2)  with windows to the warehouse

           b.  one (1) bull pen area

           c.  one (1) break room, including sink, counter facilities to
           accommodate refrigerator, microwave and vending machines 

           d. two (2) ADA compliant rest rooms to code for approximately 40
           employees.

      2.   WAREHOUSE: Approximately 48,540 square feet consisting of the
      following:

           a.  ELECTRICAL:  one (1) 400 AMP, 277/480 volt electrical service
           distributed as follows:

               -  three (3) dedicated 208V/3 phase circuits
               -  208V/3 phase service to the center of the warehouse for
                  conveyor system
               -  two (2) forklift charging stations, location to be mutually
                  agreed upon 
               -  110V service along the east wall, 1-4 plex outlet every 30
                  feet

           b.  DOCK EQUIPMENT:  ten (10) edge of dock load levelers

           c.  INSULATION:  insulation (R-19) throughout warehouse ceiling

      3.   All work performed by Landlord shall comply with all applicable
      building Regulations.

B.  EARLY ACCESS: On or after October 1, 1998, subject to existing tenant Crum
    and Crum Enterprises vacating Premises, and prior to Landlord's completion
    of Tenant Improvements as stated above, Landlord shall grant Tenant access
    to Premises for warehousing and distribution purposes only. Said access and
    occupancy to warehouse shall be conducted as not to interfere with or delay
    Landlord's completion of the improvements to the Premises.

                                 39.   BROKERS

         Tenant represents that, with the exception of Tenant's agent, Tom 
Shuler of Tom Shuler Real Estate ("Tenant's Broker") and Landlord's agents, 
Tenant has not worked with any other broker to consummate this transaction. 
Landlord shall pay Tenant's Broker a commission equal to five percent (5%) of 
the total Base Rent for years 1 through 5 of the Term, and two and one half 
percent (2 1/2%) for years 6 through 10 of the Term, one half of which 
commission shall be paid upon the full execution of this Lease, with the 
balance paid upon the date that Tenant commences the payment of Base Rent.

                            40.   JURY TRIAL WAIVER

EACH PARTY HERETO (WHICH INCLUDES ANY ASSIGNEE, SUCCESSOR HEIR OR PERSONAL
REPRESENTATIVE OF A PARTY) SHALL NOT SEEK A JURY TRIAL, HEREBY WAIVES TRIAL BY
JURY, AND HEREBY FURTHER WAIVES ANY OBJECTION TO VENUE IN THE COUNTY IN


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WHICH THE BUILDING IS LOCATED, AND AGREES AND CONSENTS TO PERSONAL JURISDICTION
OF THE COURTS OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IN ANY ACTION OR
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER ON ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES,
OR ANY CLAIM OF INJURY OR DAMAGE, OR THE ENFORCEMENT OF ANY REMEDY UNDER ANY
STATUTE, EMERGENCY OR OTHERWISE, WHETHER ANY OF THE FOREGOING IS BASED ON THIS
LEASE OR ON TORT LAW. EACH PARTY REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO
CONSULT WITH LEGAL COUNSEL CONCERNING THE EFFECT OF THIS PARAGRAPH 39. THE
PROVISIONS OF THIS PARAGRAPH 39 SHALL SURVIVE THE EXPIRATION OR EARLIER
TERMINATION OF THIS LEASE.

                         41.   RIGHT OF FIRST REFUSAL

Tenant shall, provided that Tenant is not in default under this Lease, have the
right of first refusal to lease the balance of the Building (for purposes of
this paragraph only, the "REFUSAL SPACE") on the terms set forth in this
Paragraph. If at any time during the term of this Lease, Landlord receives a
bona fide offer from a third person for the lease of all or any part of the
Refusal Space, which offer Landlord desires to accept (the "LEASE OFFER"),
Landlord shall promptly deliver to Tenant a copy of such Lease Offer. Tenant
may, within ten (10) business days thereafter, elect to lease the Refusal Space
or the portion thereof offered to be leased on the same terms as those set forth
in such Lease Offer. If Tenant declines to lease the Refusal Space, or fails to
respond to the Lease Offer, then Landlord shall be free to lease the Refusal
Space on the terms set forth in the Lease Offer for a period of six (6) months
after the Lease Offer is delivered to Tenant; if such lease is not consummated
within said six (6)-month period, then Landlord shall again be obligated to
offer the Refusal Space to Tenant on the terms set forth in the Lease Offer. If
any acceptable Lease Offer for the Refusal Space shall include other property,
Tenant's right of first refusal shall be applicable to the entire property
covered by such offer.

                             42.   RENEWAL OPTION

A.    OPTION TO RENEW. Tenant shall, provided that Tenant is not in default
under this Lease, have one (1) option to renew this Lease for a term of five (5)
years, for the Premises on the same terms and conditions set forth in this
Lease, except as modified by the terms, covenants and conditions set forth
below:

    (1) If Tenant elects to exercise such option, then Tenant shall provide
    Landlord with written notice no earlier than the date which is 270 days
    prior to the expiration of the then current term of this Lease, but no later
    than 5:00 p.m. (Pacific Standard Time) on the date which is 210 days prior
    to the expiration of the then current term of this Lease. If Tenant fails to
    provide such notice, Tenant shall have no further or additional right to
    extend or renew the term of this Lease.

    (2) The Base Rent in effect at the expiration of the then current term of
    this Lease shall be increased to reflect the current fair market rental for
    comparable space in the Building or Project and in other similar buildings
    in the same rental market as of the date the renewal term is to commence,
    taking into account the specific provisions of this Lease which will remain
    constant, and the Building amenities, location, quality, age, term of lease,
    tenant improvements, services provided, and other pertinent items.

    (3) Landlord shall advise Tenant of the new Base Rent for the Premises for
    the applicable renewal term based on Landlord's determination of fair market
    rental value, as well as additional terms and conditions for the renewal
    term, no later than fifteen (15) days after receipt of notice of Tenant's
    exercise of its option to renew.

    (4) If Landlord and Tenant cannot agree on the rental rate for the renewal
    term within thirty (30) days of the date that Landlord provides Tenant with
    Landlord's determination of the new rent, then within thirty (30) days after
    such failure to reach agreement, Landlord shall furnish to Tenant a notice
    in writing ("LANDLORD'S NOTICE") stating what Landlord perceives to be the
    fair market rent projected to the commencement date of the renewal term.
    Landlord's Notice shall be accompanied by a statement from a qualified real
    estate broker stating the broker's opinion of fair market rent and that it
    has been determined in accordance with this Paragraph.

    (5) If Tenant disagrees with the estimate of fair market rent submitted by
    Landlord with Landlord's Notice, then within thirty (30) days after receipt
    of Landlord's Notice, Tenant shall have the right to submit to Landlord an
    estimate by a qualified real estate broker of fair market rent effective as
    of the commencement date of the renewal term. If the higher estimate is not
    more than one hundred five percent (105%) of the lower estimate, the new
    rent shall be established as the average of the two estimates. If not, the
    two brokers acting on behalf of Landlord and Tenant, shall, within fifteen
    (15) days after Tenant's estimate has been submitted, jointly appoint a
    third qualified real estate broker (the "Referee"). If the two brokers are
    unable to agree upon the selection of a Referee, then the Referee shall


                                      -28-
<PAGE>

    be selected within fifteen (15) days thereafter by an arbitrator pursuant to
    the rules of the American Arbitration Association.

    (6) The Referee shall, within thirty (30) days after appointment, render his
    decision which decision shall be strictly limited to choosing one of the two
    determinations made by the two brokers chosen by Landlord and Tenant with
    respect to fair market rent. The decision of the Referee shall be binding
    upon Landlord and Tenant and shall constitute the Base Rent for the
    applicable renewal term. Landlord and Tenant shall each pay for their own
    estimate, and the cost of the Referee shall be shared equally by Landlord
    and Tenant. In determining fair market rent, the brokers shall each take
    into account the following: (i) the amount of space and length of term taken
    by the Tenant; (ii) the credit worthiness and quality of Tenant; and (iii)
    rent in comparable buildings in the relevant competitive market including
    concessions offered to new tenants such as free rent, tenant improvement
    allowances, moving allowances and other such concessions.

    (7) Any real estate broker used by the parties pursuant to this Section 42
    must be an active, licensed broker having a minimum of five years'
    experience in leasing properties similar to the Premises, and must be
    unbiased and have not represented either party in real estate transactions
    within the immediately preceding five years.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and the year first above written.


                              LANDLORD

                              Spieker Properties, L.P.,
                              a California limited partnership

                              By: Spieker Properties, Inc.,
                                  a Maryland corporation,
                                  its general partner


                                  By: /s/ Peter C. Thompson
                                      ------------------------------------------
                                     Peter C. Thompson
                                     Its:  Senior Vice President

                              Date:        10/2/98
                                     -------------------------------------------

                              TENANT

                              Track 'n Trail,
                              a Delaware corporation


                              By:  /s/ Greg Kilgore
                                   ---------------------------------------------
                                   Greg Kilgore
                                   Its:  President

                              Date:        10/2/98
                                   ---------------------------------------------


                              By:  /s/ Dan Nahmens
                                   ---------------------------------------------
                                   Dan Nahmens
                                   Its:  Chief Financial Officer

                              Date:        10/2/98
                                   ---------------------------------------------



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