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                                                                EXHIBIT 10.5


            STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE--GROSS
               [AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION LOGO]

1.   BASIC PROVISIONS ("BASIC PROVISIONS").

     1.1  PARTIES: This Lease ("LEASE"), dated for reference purposes only,
February 1, 1995, is made by and between TORREY SORRENTO ASSOCIATES, LTD., a
California Limited Partnership ("LESSOR") and SWEET FACTORY, INC., a Delaware
Corporation ("LESSEE"), (collectively the "PARTIES," or individually a "PARTY").

     1.2(a) PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 10343 Roselle Street*, located in the
City of San Diego, County of San Diego, State of California, with zip code
92121, as outlined on Exhibit __ attached hereto ("PREMISES"). The "Building"
is that certain building containing the Premises and generally described as
(describe briefly the nature of the Building): *Units 1, 2, 3, 4, 5, 6, 11, 12,
E, F, and D-9 which totals approximately 23,290 square feet. In addition to
Lessee's rights to use and occupy the Premises as hereinafter specified, Lessee
shall have non-exclusive rights to the Common Areas (as defined in Paragraph
2.7 below) as hereinafter specified, but shall not have any rights to the roof,
exterior walls or utility raceways of the Building or to any other buildings in
the Industrial Center. The Premises, the Building, the Common Areas, the land
upon which they are located, along with all other buildings and Improvements
thereon, are herein collectively referred to as the "INDUSTRIAL CENTER." (Also
see Paragraph 2.)

     1.2(b) PARKING: 46 unreserved vehicle parking spaces ("UNRESERVED PARKING
SPACES"); and N/A reserved vehicle parking spaces ("RESERVED PARKING SPACES").
(Also see Paragraph 2.6.)

     1.3    TERM: 3 years and 9 months ("ORIGINAL TERM") commencing February 1,
1995 ("COMMENCEMENT DATE") and ending October 31, 1998 ("EXPIRATION DATE").
(Also see Paragraph 3.)

     1.4    EARLY POSSESSION: N/A ("EARLY POSSESSION DATE). (Also see
Paragraphs 3.2 and 3.3.)

     1.5    BASE RENT: $13,974 per month ("BASE RENT"), payable on the 1st day
of each month commencing February 1, 1995 (Also see Paragraph 4.)

[X]  If this box is checked, this Lease provides for the Base Rent to be
     adjusted per Addendum Paragraphs 49, 50 and 51 attached hereto.

     1.6(a) BASE RENT PAID UPON EXECUTION: $ N/A as Base Rent for the period
N/A.

     1.6(b) LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: N/A percent (__%)
("LESSEE'S SHARE") as determined by [ ] prorata square footage of the Premises
as compared to the total square footage of the Building or [ ] other criteria
as described in Addendum ___.

     1.7    SECURITY DEPOSIT: $ N/A ("SECURITY DEPOSIT"). (Also see Paragraph
5.)

     1.8    PERMITTED USE: Corporate offices and warehousing/distribution of
candy and related products. ("PERMITTED USE") (Also see Paragraph 6.)

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

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

[X] Business Real Estate represents Lessor exclusively ("LESSOR'S BROKER");
[X] John Burnham represents Lessee exclusively ("LESSEE'S BROKER"); or
[ ] _________ represents both Lessor and Lessee ("DUAL AGENCY"). (Also see
Paragraph 15.)

     1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s) (or in the event there is
no separate written agreement between Lessor and said Broker(s), the sum of
$**) for brokerage services rendered by said Broker(s) in connection with this
transaction.

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

     1.12   ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 57, and Exhibits A through ___, all of
which constitute a part of this Lease.

2.   PREMISES, PARKING AND COMMON AREAS.

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

     2.2    CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the
existing plumbing, electrical systems, fire sprinkler system, lighting, air
conditioning and heating systems and loading doors, if any, in the Premises,
other than those constructed by Lessee, shall be in good operating condition on
the Commencement Date. If a non-compliance with said warranty exists as of the
Commencement Date, Lessor shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within thirty (30) days after the
Commencement Date, correction of that non-compliance shall be the obligation of
Lessee at Lessee's sole cost and expense. See Addendum to Lease Paragraph 57.1

     2.3    COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date.
Lessor further warrants to Lessee that Lessor has no knowledge of any claim
having been made by any governmental agency that a violation or violations of
applicable building codes, regulations, or ordinances exist with regard to the
Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to
be made by Lessee. If the Premises do not comply with said warranties, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee given within six (6) months following the
Commencement Date and setting forth with specificity the nature and extent of
such non-compliance, take such action, at Lessor's expense, as may be
reasonable or appropriate to rectify the non-compliance. Lessor makes no
warranty that the Permitted Use in Paragraph 1.8 is permitted for the Premises
under Applicable Laws (as defined in Paragraph 2.4).

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

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

                                 FULLY EXECUTED


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     2.6  VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called "Permitted Size
Vehicles."

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

          (b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

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

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

     2.8  COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

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

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

          (b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available; See
Addendum to Lease Paragraph 57.2.

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

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

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

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

3.   TERM.

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

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

     3.3  DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall
not, except as otherwise provided herein, be obligated to pay rent or perform
any other obligation of Lessee under the terms of this Lease until Lessor
delivers possession of the Premises to Lessee. If possession of the Premises is
not delivered to Lessee within sixty (60) days after the Commencement Date,
Lessee may, at its option, by notice in writing to Lessor within ten (10) days
after the end of said sixty (60) day period, cancel this Lease, in which event
the parties shall be discharged from all obligations hereunder; provided
further, however, that if such written notice of Lessee is not received by
Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect. Except as may
be otherwise provided, and regardless of when the Original Term actually
commences, if possession is not tendered to Lessee when required by this Lease
and Lessee does not terminate this Lease, as aforesaid, the period free of the
obligation to pay Base Rent, if any, that Lessee would otherwise have enjoyed
shall run from the date of delivery of possession and continue for a period
equal to the period during which the Lessee would have otherwise enjoyed under
the terms hereof, but minus any days of delay caused by the acts, changes or
omissions of Lessee.

4.   RENT.

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


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6.   USE.

     6.1  PERMITTED USE.

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

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

     6.2  HAZARDOUS SUBSTANCES. See Addendum to Lease Paragraph 57.2

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

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

          (c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's
obligations under this Paragraph 6.2(c) shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances, unless specifically so agreed by Lessor in writing at the
time of such agreement.

     6.4  INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDERS") shall have the right
to enter the Premises at any time in the case of an emergency, and otherwise at
reasonable times, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease and all Applicable
Requirements (as defined in Paragraph 6.3), and Lessor shall be entitled to
employ experts and/or consultants in connection therewith to advise Lessor with
respect to Lessee's activities, including but not limited to Lessee's
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance on or from the Premises. The costs and expenses of any such
inspections shall be paid by the party requesting same, unless a Default or
Breach of this Lease by Lessee or a violation of Applicable Requirements or a
contamination, caused or materially contributed to by Lessee, is found to exist
or to be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In such case, Lessee shall upon request reimburse Lessor or
Lessor's Lender, as the case may be, for the costs and expenses of such
inspections. See Addendum to Lease Paragraph 57.4

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

     7.1  LESSEE'S OBLIGATIONS. See Addendum to Lease Paragraph 57.5

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

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

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

     7.2  LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraph 2.2
(CONDITION), 2.3 (COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE),
4.2 (COMMON AREA OPERATING EXPENSES), 6 (USE), 7.1 (LESSEE'S OBLIGATIONS), 9
(DAMAGE OR DESTRUCTION) and 14 (CONDEMNATION), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof fire sprinkler and/or standpipe and hose (if located in the Common
Areas) or other automatic fire extinguishing system including fire alarm and/or
smoke detection


<PAGE>   4

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

     7.3  UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

          (a)  DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "TRADE FIXTURES"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined
as Alterations and/or Utility Installations made by Lessee that are not yet
owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause
to be made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-structural Utility Installations to the interior of the Premises (excluding
the roof) without Lessor's consent but upon notice to Lessor, so long as they
are not visible from the outside of the Premises, do not involve puncturing,
relocating or removing the roof or any existing walls, or changing or
interfering with the fire sprinkler or fire detection systems and the cumulative
cost thereof during the term of this Lease as extended does not exceed
$2,500.00 See Addendum to Lease Paragraph 57.6.

          (b)  CONSENT. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(ii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alternations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may, (but without obligation
to do so) condition its consent to any requested Alteration or Utility
Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation.

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

     7.4  OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

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

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

8.   INSURANCE; INDEMNITY.

     8.1  PAYMENT OF PREMIUM INCREASES.

          (a)  As used herein, the term "INSURANCE COST INCREASE" is defined as
any increase in the actual cost of the insurance applicable to the Building and
required to be carried by Lessor pursuant to Paragraphs 8.2(b), 8.3(a) and
8.3(b), ("REQUIRED INSURANCE"), over and above the Base Premium, as hereinafter
defined, calculated on an annual basis. "Insurance Cost Increase" shall
include, but not be limited to, requirements of the holders of a mortgage or
deed of trust covering the Premises, increase valuation of the Premises, and/or
a general premium rate increase. The term "Insurance Cost Increase" shall not,
however, include any premium increases resulting from the nature of the
occupancy of any other lessee of the Building. If the parties insert a dollar
amount in Paragraph 1.9, such amount shall be considered the "BASE PREMIUM." If
a dollar amount has not been inserted in Paragraph 1.9 and if the Building has
been previously occupied during the twelve (12) month period immediately
preceding the Commencement Date, the "Base Premium" shall be the annual premium
applicable to such twelve (12) month period. If the Building was not fully
occupied during such twelve (12) month period, the "Base Premium" shall be the
lowest annual premium reasonably obtainable for the Required Insurance as of
the Commencement Date, assuming the most nominal use possible of the Building.
In no event, however, shall Lessee be responsible for any portion of the
premium cost attributable to liability insurance coverage in excess of
$1,000,000 procured under Paragraph 8.2(b).

     8.2  LIABILITY INSURANCE.

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

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

     8.3  PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

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

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

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





<PAGE>   5
          (d)  LESSEE'S IMPROVEMENTS. Since Lessor is the Insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.

     8.4  LESSEE'S PROPERTY INSURANCE. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or, at Lessor's option,
by endorsement to a policy already carried, maintain insurance coverage on all
of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and
Utility Installations in, on, or about the Premises similar in coverage to that
carried by Lessor as he Insuring Party under Paragraph 8.3(a). Such insurance
shall be full replacement cost coverage with a deductible not to exceed $1,000
per occurrence. The proceeds from any such insurance shall be used by Lessee for
the replacement of personal property and the restoration of Trade Fixtures and
Lessee-Owned Alterations and Utility Installations. Upon request from Lessor,
Lessee shall provide Lessor with written evidence that such insurance is in
force. See Addendum to Lease Paragraph 57.7

     8.5  INSURANCE POLICIES. Insurance required hereunder shall be in companies
duly licensed to transact business in the state where the Premises are located,
and maintaining during the policy term a "General Policyholders Rating" of at
least B+, V, or such other rating as may be required by a Lender, as set forth
in the most current issue of "Best's Insurance Guide." Lessee shall not do or
permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall at least thirty (30) days
prior to the expiration of such policies, furnish Lessor with evidence of
renewals or "insurance binders" evidencing renewal thereof, or Lessor may order
such insurance and charge the cost thereof to Lessee, which amount shall be
payable by Lessee to Lessor upon demand.

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

     8.7  INDEMNITY. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnity, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, loss of permits, attorneys' and consultants'
fees, expenses and/or liabilities arising out of, involving, or in connection
with, the occupancy of the Premises by Lessee, the conduct of Lessee's business,
any act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. See Addendum to Lease Paragraph 57.8

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

9.   DAMAGE OR DESTRUCTION.

     9.1  DEFINITIONS.

          (a)  "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction. See Addendum to Lease
Paragraph 57.10

          (b)  "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and
Utility Installations and Trade Fixtures) immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any
lessees of the Building, the cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building shall, at the option of Lessor, be deemed to be
Premises Total Destruction. See Addendum to Lease Paragraph 57.11

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

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

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

     9.2  PREMISES PARTIAL DAMAGE--INSURED LOSS. If Premises Partial Damage that
is an Insurance Loss occurs, the Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect. In the event, however, that there is a shortage of
insurance proceeds and such shortage is due to the fact that, by reason of the
unique nature of the improvements in the Premises, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within ten (10) days
following receipt of written notice of such shortage and request therefor. If
Lessor receives said funds or adequate assurance thereof within said ten (10)
day period, Lessor shall complete them as soon as reasonably possible and this
Lease shall remain in full force and effect. If Lessor does not receive such
funds or assurance within said period, Lessor may nevertheless elect by written
notice to Lessee within ten (10) days thereafter to make such restoration and
repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within such ten (10) day period,
and if Lessor does not so elect to restore and repair, then this Lease shall
terminate sixty (60) days following the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction. Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made available for the repairs if made by either Party.

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

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

     9.5  DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of
Lessor's election to do so within thirty (30) days after the date of occurrence
of such damage. Provided, however, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by (a) exercising such option, and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (i) the date which is ten (10)
days after Lessee's receipt of Lessor's written notice purporting to terminate
this Lease, or (ii) the day prior to the date upon which such option expires.
If Lessee duly exercises such option during such period and provides Lessor
with funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's expense repair such damage as soon as
reasonably possible and this Lease shall continue in full force and effect. If
Lessee fails to exercise such option and provide such funds or assurance during
such period, then this Lease shall terminate as of the date set forth in the
first sentence of this Paragraph 9.5. See Addendum to Lease Paragraphs 57.12
and 57.13

     9.6  ABATEMENT OF RENT; LESSEE'S REMEDIES.

          (a)  In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired, but not in excess of
proceeds from insurance required to be carried under Paragraph 8.3(b). Except
for abatement of Base Rent, Common Area Operating Expenses and other charges,
if any, as aforesaid, all other obligations of Lessee hereunder shall be
performed by Lessee, and Lessee shall have no claim against Lessor for any
damage suffered by reason of any such damage, destruction, repair, remediation
or restoration.


<PAGE>   6
          (b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect. "COMMENCE" as used in this Paragraph
9.6 shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever
occurs first.

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

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

10.  REAL PROPERTY TAXES.

     10.1 PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2(a), applicable to the Industrial Center, and receipt
as otherwise provided in Paragraph 10.3.

     10.2 REAL PROPERTY TAX DEFINITIONS.

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

          (b)  AS used herein, the term "BASE REAL PROPERTY TAXES" shall be the
amount of Real Property Taxes, which are assessed against the Premises, Building
or Common Areas in the calendar year during which the Lease is executed, in
calculating Real Property Taxes for any calendar year, the Real Property Taxes
for any real estate tax year shall be included in the calculation of Real
Property Taxes for such calendar year based upon the number of days which such
calendar year and tax year have in common.

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

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

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

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

12.  ASSIGNMENT AND SUBLETTING. See Addendum to Lease Paragraph 57.14.

     12.1 LESSOR'S CONSENT REQUIRED.

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

          (b) A change in the control of Lessee shall constitute an assignment
requiring Lessor's consent. The transfer, on a cumulative basis, of twenty-five
percent (25%) or more of the voting control of Lessee shall constitute a
change in control for this purpose.

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

          (d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall, at Lessor's option, be a
Default curable after notice per Paragraph 13.1, or a non-curable Breach without
the necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a non-curable Breach, Lessor shall
have the right to either: (i) terminate this Lease, or (ii) upon thirty (30)
days' written notice ("LESSOR'S NOTICE"), increase the monthly Base Rent for the
Premises to the greater of the then fair market rental value of the Premises, as
reasonably determined by Lessor, or one hundred ten percent (110%) of the Base
Rent then in effect. Pending determination of the new fair market rental value,
if disputed by Lessee, Lessee shall pay the amount set forth in Lessor's Notice,
with any overpayment credited against the next installment(s) of Base Rent
coming due, and any underpayment for the period retroactively to the effective
date of the adjustment being due and payable immediately upon the determination
thereof. Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to the then fair market value as reasonably
determined by Lessor (without the Lease being considered an encumbrance or any
deduction for depreciation or obsolescence, and considering the Premises at its
highest and best use and in good condition or one hundred ten percent (110%) of
the price previously in effect, (ii) any index-oriented rental or price
adjustment formulas contained in this Lease shall be adjusted to require that
the base index be determined with reference to the index applicable to the time
of such adjustment, and (iii) any fixed rental adjustments scheduled during the
remainder of the Lease term shall be increased in the same ratio as the new
rental bears to the Base Rent in effect immediately prior to the adjustment
specified in Lessor's Notice.

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

     12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING. See
Addendum to Lease Paragraph 57.15.

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

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

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
















<PAGE>   7
        (d) In the event of any Default or Breach of Lessee's obligation under
this Lease, Lessor may proceed directly against Lessee, any Guarantors or anyone
else responsible for the performance of the Lessee's obligations under this
Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

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

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

        (h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment schedule of the rent
payable under this Lease be adjusted to what is then the market value and/or
adjustment schedule for property similar to the Premises as then constituted, as
determined by Lessor.

    12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

        (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublease shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.

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

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

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

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

13. Default; Breach; Remedies.

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

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

        (b) Except as expressly otherwise provided in this Lease, the failure
by Lessee to make any payment of Base Rent, Lessee's Share of Common Area
Operating Expenses, or any other monetary payment required to be made by Lessee
hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which
endangers or threatens life or property, where such failure continues for a
period of three (3) days following written notice thereof by or on behalf of
Lessor to Lessee. See Addendum to Lease Paragraph 57.16

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

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

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

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

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

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

        (a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease and the term hereof shall terminate and Lessee
shall immediately surrender possession of the Premises to Lessor. In such event
Lessor shall be entitled to recover from Lessee: (i) the worth at the time of
the award of the unpaid rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to the cost of recovering possession of the
Premises, expenses or reletting, including necessary renovation and alteration
of the Premises, reasonable attorneys' fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to the
unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco or the Federal Reserve Bank District in which the Premises
are located at the time of award plus one percent (1%). Efforts by Lessor to
mitigate damages caused by Lessee's Default or Breach of this Lease shall not
waive Lessor's right to recover damages under this Paragraph 13.2. If
termination of this Lease is obtained through the provisional remedy of unlawful
detainer, Lessor shall have the right to recover in such (??) ex-



<PAGE>   8

ceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and/or damages. If a notice and grace period required under Subparagraph
13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or
to perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
Subparagraph 13.1(b), (c) or (d). In such case, the applicable grace period
under the unlawful detainer statute shall run concurrently after the one such
statutory notice, and the failure of Lessee to cure the Default within the
greater of the two (2) such grace periods shall constitute both an unlawful
detainer and a Breach of this Lease entitling Lessor to the remedies provided
for in this Lease and/or by said statute.

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

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

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

     13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor for
free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "Inducement Provisions" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be amended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time
of such acceptance.

     13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by
the terms of any ground lease, mortgage or deed of trust covering the Premises.
Accordingly, if any installment of rent or other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.

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

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

15.  BROKERS' FEES.

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

     15.2 ADDITIONAL TERMS. Unless Lessor and Broker(s) have otherwise agreed
in writing, Lessor agrees that: (a) if Lessee exercises any Option (as defined
in Paragraph 39.1) granted under this Lease or any Option subsequently granted,
or (b) if Lessee acquires any rights to the Premises or other premises in which
Lessor has an interest, or (c) if Lessee remains in possession of the Premises
with the consent of Lessor after the expiration of the term of this Lease after
having failed to exercise an Option, or (d) if said Brokers are the procuring
cause of any other lease or sale entered into between the Parties pertaining to
the Premises and/or any adjacent property in which Lessor has an interest, or
(e) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then as to any of said transactions, Lessor shall pay
said Broker(s) a fee in accordance with the schedule of said Broker(s) in
effect at the time of the execution of this Lease.

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

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

16.  TENANCY AND FINANCIAL STATEMENTS.

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

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

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

19.  INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due
at the prime rate charged by the largest state chartered bank in the state in
which the Premises are located plus four percent (4%) per annum, but not
exceeding the maximum rate allowed by law, in addition to the potential late
charge provided for in Paragraph 13.4.

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

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

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


<PAGE>   9
23.  NOTICES.

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

     23.2  DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail, the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier. If any
notice is transmitted by facsimile transmission or similar means, the same
shall be deemed served or delivered upon telephone of facsimile confirmation of
receipt of the transmission thereof, provided a copy is also delivered via
delivery or mail. If notice is received on a Saturday or a Sunday or a legal
holiday, it shall be deemed received on the next business day.

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

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

26.  NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26, then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to two hundred percent
(200%) of the Base Rent applicable during the month immediately preceding such
expiration or earlier termination. Nothing contained herein shall be construed
as a consent by Lessor to any holding over by Lessee.

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

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

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

30.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

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

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

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

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

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

32.  LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchases, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the Building, as
Lessor may reasonably deem necessary. Lessor may at any time place on or about
the Premises or Building any ordinary "For Sale" signs and Lessor may at any
time during the last one hundred eighty (180) days of the term hereof place on
or about the Premises any ordinary "For Sale" signs. All such activities or
Lessor shall be without abatement of rent or liability. See Addendum to Lease
Paragraph 57.17.

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

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

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

36.  CONSENTS.

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

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

37.  GUARANTOR.

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





<PAGE>   10
     37.2 ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default of
the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor (and
of the party signing on Guarantor's behalf) to obligate such Guarantor on said
guaranty, and resolution of its board of directors authorizing the making of
such guaranty, together with a certificate of incumbency showing the signatures
of the persons authorized to sign on its behalf, (b) current financial
statements of Guarantor as may from time to time be requested by Lessor, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.

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

39.  OPTIONS. See Paragraph 56 of Addendum

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

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

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

     39.4 EFFECT OF DEFAULT ON OPTIONS.

          (a)  Lessee shall have no right to exercise an Option, notwithstanding
any provision in the grant of Option to the contrary, (i) during the period
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice hereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of separate Defaults under Paragraph 13.1 during the twelve
(12) month period immediately preceding the exercise of the Option, whether or
not the Defaults are cured.

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

          (c)  All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during any twelve (12) month period, whether or not the Defaults are cured, or
(iii) if Lessee commits a Breach of this Lease.

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

42.  RESERVATIONS. Lessor reserves the right, from time to time, to grant,
without the consent or joinder of Lessee, such easements, rights of way, utility
raceways, and dedications that Lessor deems necessary, and to cause the
recordation of parcel maps and restrictions, so long as such easements, rights
of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any
documents reasonably requested by Lessor to effectuate any such easement rights,
dedication, map or restrictions. See Addendum to Lease, Paragraph 57.18

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

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

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

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

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

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


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

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

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


<TABLE>
<S>                                                <C>
Executed at:  Los Angeles                          Executed at:  Los Angeles
            -----------------------------------                -------------------------------

on:  (Date)                                        on:  (Date)
   --------------------------------------------        ----------------------------------------


By LESSOR:                                         By LESSEE:

TORREY SORRENTO ASSOCIATES, LTD.                   SWEET FACTORY, INC.
-----------------------------------------------    -------------------------------------------

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

By:  /s/ NORTON N. BROWN                           By:  /s/ T. ROBERT BELL
   --------------------------------------------       ----------------------------------------

Name Printed: Norton N. Brown                      Name Printed: T. Robert Bell
             ----------------------------------                 ------------------------------

Title: Gen. Partner                                Title: President/COO
      -----------------------------------------          -------------------------------------

By:                                                By:  /s/ JERRY B. SILVERMAN
   --------------------------------------------       ----------------------------------------

Name Printed:                                      Name Printed: Jerry B. Silverman
             ----------------------------------                 ------------------------------

Title:                                             Title: Vice President-Real Estate
      -----------------------------------------          -------------------------------------

Address: 11911 San Vicente Blvd., Suite 275        Address: 10343 Roselle Street
        ---------------------------------------            ------------------------------------

         Los Angeles, CA 90049                              San Diego, CA 92121
        ---------------------------------------            ------------------------------------

Telephone: (310) 471-7150                          Telephone: (619) 558-6771
          -------------------------------------              ----------------------------------

Facsimile: (310) 472-9676                          Facsimile: (619) 558-8911
          -------------------------------------              ----------------------------------


BROKER: Business Real Estate                       BROKER: John Burnham & Co.

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

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

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

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

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

Address: 4380 La Jolla Village Drive, Suite 200    Address: 4520 Executive Drive, Suite 111
        ---------------------------------------            ------------------------------------

         San Diego, CA 92122                                San Diego, CA 92121
        ---------------------------------------            ------------------------------------

Telephone: (619) 546-5400                          Telephone: (619) 452-6500
          -------------------------------------              ----------------------------------

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

NOTE: These forms are often modified to meet changing requirements of law and needs of the industry.
      Always write or call to make sure you are utilizing the most current form: AMERICAN INDUSTRIAL
      REAL ESTATE ASSOCIATION, 345 So Figueroa St., M-1, Los Angeles, CA 90071. (213) 687-8777.
</TABLE>

<PAGE>   12
ADDENDUM TO LEASE DATED SEPTEMBER 1, 1995 BETWEEN TORREY SORRENTO ASSOCIATES,
LTD. AS LESSOR AND THE SWEET FACTORY, INC. AS LESSEE FOR APPROXIMATELY 23,290
SQUARE FEET LOCATED AT 10343 ROSELLE STREET, UNITS 1, 2, 3, 4, 5, 6, 11, 12, E,
F AND D-9, SAN DIEGO, CALIFORNIA                                   PAGE 1 OF 4
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
        <S>                                    <C>
        UNIT #                                 SQUARE FOOTAGE
        ------                                 --------------
        1, 2                                   3,250 sf
        3, 4, 5                                5,080 sf
        6                                      960 sf
        11, 12                                 5,600 sf
        E                                      2,800 sf
        F                                      2,800 sf
        D-9                                    2,800 sf
                                               --------
                               TOTAL:                    23,290 sf
</TABLE>

49.  RENT SCHEDULE:

Year 1:  02-01-95 through 01-31-96 ..................................$13,974.00
Year 2:  02-01-96 through 01-31-97 ..................................$14,533.00
Year 3:  02-01-97 through 01-31-98 ..................................$15,114.00
Year 4:  02-01-98 through 10-31-98 ..................................$15,719.00

50. RENT ABATEMENT:  Tenant to receive a total of three (3) months rent
abatement, taken in the form of half (1/2) rent during the months of February
and March - 1995, February and March - 1996, and February and March - 1997.

51. RENT ABATEMENT FROM PREVIOUS LEASE AGREEMENT:  Tenant to be credited a
total of $5,464, to be taken in the form of a $2,732 credit towards rent during
each of the months of August and September - 1995 which Tenant has earned and
accrued under the prior lease dated August 1, 1992.

52. TENANT IMPROVEMENT AMORTIZATION:  Landlord agrees to reimburse Tenant up to
$50,000 for expenses incurred by Tenant for tenant improvements performed to
the Premises. Monies will be paid to Tenant within twenty (20) days of Tenant's
presentation of construction invoices to Landlord verifying cost and completion
of such improvements.

53. CANCELLATION OF PRIOR AGREEMENTS:  Except as otherwise provided for in this
Lease agreement and Addendum to Lease, upon mutual execution of this new
agreement, all prior Lease Agreements, Lease Addendums and Amendments to Lease
shall become null and void, including but not limited to Lease and Addendum
dated November 1, 1991 and Lease Amendment effective July 1, 1992.

54. FIRST RIGHT OF REFUSAL: Subject to the rights of any existing tenants, Sweet
Factory shall be given first right of refusal for the following spaces as those
spaces become available, at the rental rate Sweet Factory is then paying for its
existing space, and on a lease term that co-terminates with this lease:

    10343 Roselle Street, Unit 7 and 8, consisting of 5,640 sq. ft.
    10373 Roselle Street, Unit 6, consisting of 6,040 square feet
    10373 Roselle Street, Unit 2, consisting of 2,800 square feet
    10373 Roselle Street, Unit 10, consisting of 2,800 square feet
    10373 Roselle Street, Unit 9, consisting of 2,632 square feet

If Lessor receives from another party a bona fide offer to lease any of these
spaces, Lessor shall notify Lessee who shall then be allowed seven (7) business
days to enter into an agreement to lease
<PAGE>   13
ADDENDUM TO LEASE DATED SEPTEMBER 1, 1995 BETWEEN TORREY SORRENTO ASSOCIATES,
LTD. AS LESSOR AND THE SWEET FACTORY, INC. AS LESSEE FOR APPROXIMATELY 23,290
SQUARE FEET LOCATED AT 10343 ROSELLE STREET, UNITS 1,2,3,4,5,6, 11, 12, E, F
AND D-9 SAN DIEGO, CALIFORNIA.
                                                                     PAGE 2 OF 4
--------------------------------------------------------------------------------

55.  SIGNAGE: Lessee shall have the right to have signage installed at its sole
cost and expense to the area above the leased premises in a manner consistent
with other signage in the park for similar space. Lessee shall submit a plan of
sign design to Lessor for approval prior to installation.

56.  OPTION TO RENEW: Lessee shall be given one (1) option to renew the term of
the lease for an addition three (3) year period at the then prevailing market
rate for similar space in the area, provided Lessee gives Lessor 120 days prior
written notice.

57.  MISCELLANEOUS PROVISIONS AND LEASE MODIFICATIONS:

57.1  Add to the end of Lease Paragraph 2.2 the following language: "Lessor by
written Lease has previously leased to Lessee Units 1, 2, 3, 4, 5 and 6, 10343
Roselle Street, San Diego, California 92121. Lessee by this Lease is leasing
additional units, namely Units 11, 12, E, F and D-9 ("New Units"). Lessor will
ensure proper working order of the heating, ventilation and air conditioning
systems (HVAC) of the New Units leased by Lessee herein. With respect to the
entire premises, Lessee at Lessee's cost shall procure an HVAC maintenance
contract during the term of the Lease, and Lessor will be responsible for
repairs to the HVAC system, provided that such repairs are not caused due to
the negligence on Lessee's part."

57.2  Add to the end of Lease Paragraph 2.10(b) the following language: "Not to
exceed 24 hours in any 6 month period."

57.3  Add to the end of Lease Paragraph 6.2(a) the following language: "Lessee
may use ordinary and normal business equipment and machines that contain and
use hazardous substances, including but not limited to photocopy equipment,
facsimile machines, optical character readers, and the like."

57.4  Add to the end of Lease Paragraph 6.4 the following language: "Landlord
must give 24 hours prior notice except in cases of emergencies."

57.5  Add to the end of Lease Paragraph 7.1 the following language:
"Notwithstanding the provisions of this paragraph 7.1, Lessee shall not be
responsible to repair, reconstruct, improve, remodel any structural member of
the premises, including but not limited to the roof, exterior walls, windows,
doors, the HVAC system, the electrical and plumbing systems, and skylights."

57.6  In Lease Paragraph 7.3(a), replace "$2,500" with "$25,000".

57.7  In Lease Paragraph 8.4, replace the words; "not to exceed $1,000 per
occurrence" with: "in such amount as Lessee provides".

57.8  Add to the end of Lease Paragraph 8.7 the following language:
"Notwithstanding any other provision of paragraph 8.7 to the contrary, Lessee
shall not be liable for any damages nor indemnity arising from any act or
neglect of any other Lessee, occupant,
<PAGE>   14
ADDENDUM TO LEASE DATED SEPTEMBER 1, 1995 BETWEEN TORREY SORRENTO ASSOCIATES,
LTD. AS LESSOR AND THE SWEET FACTORY, INC. AS LESSEE FOR APPROXIMATELY 23,290
SQUARE FEET LOCATED AT 10343 ROSELLE STREET, UNITS 1,2,3,4,5,6, 11, 12, E, F
AND D-9, SAN DIEGO, CALIFORNIA.                                   PAGE 3 OF 4
------------------------------------------------------------------------------


invitee or user of the center from any loss or damage sustained by Lessor in
which Lessee or Lessee's employees were not negligent, nor from any failure of
Lessor to enforce the provisions of any other Lease of the center."

57.9      Add to Lease Paragraph 9, as Paragraph 9.9 the following language:
"Notwithstanding any provisions of Article 9 to the contrary, in the event of
any damage to or destruction of the premises for which substantial and
meaningful repairs or reconstruction is not commenced within 90 days from and
after the event causing the damage or destruction, or the repairs or
reconstruction is not completed within 150 days after the event of damage or
destruction, so that Lessee may use and occupy the premises fully, Lessee may
terminate this Lease forthwith upon notice to Lessor."

57.10        In Lease Paragraph 9.1(a) replace "fifty percent (50%)" with
"twenty-five percent (25%)".

57.11        In Lease Paragraph 9.1(b) replace "fifty percent (50%)" with
"seventy-five percent (75%)".

57.12        In Lease Paragraph 9.5 replace "six (6) months" with "twelve (12)
months".

57.13        In Lease Paragraph 9.5, line 2, replace "Lessor may, at Lessor's
option" with "Lessor or Lessee may each have the option".

57.14        Add to the end of Lease Paragraph 12 as Paragraph 12.4 the
following language: "Notwithstanding anything to the contrary contained in this
Article, Lessee shall have the right, without the consent of Lessor, but upon
not less than 15 days prior notice to Lessor to assign this Lease or sublet the
entire demised premises (i) to any parent, subsidiary or affiliate corporation
or entity, or (ii) to any corporation resulting from the consolidation or
merger of Lessee into or within any other entity, or (iii) to a bona fide
qualified franchisee of Lessee whose name and address has been furnished to
Lessor, or (iv) to any person, firm, entity or corporation acquiring in one
contemporaneous transaction all or substantially all of Lessee's stock, to any
person, firm, entity or corporation acquiring in one contemporaneous
transaction all or substantially all of Lessee's assets, or to any person,
firm, entity or corporation acquiring in one contemporaneous transaction all of
the assets of Lessee located in the State of California. Any transfer pursuant
to (i), (ii), (iii) or (iv) above shall be subject to the following conditions:
(a) Lessee shall remain fully liable during the unexpired term of this Lease;
(b) any such assignment, sublease or transfer shall be subject to all of the
terms, covenants and conditions of this Lease including but not limited to, the
permitted use hereof and such assignee, sublessee or transferee shall expressly
assume for the benefit of Lessor the obligations of Lessee under the Lease by a
document reasonably satisfactory to Lessor. As used herein, the expression
"affiliate corporation or entity" means a person or business entity, corporate
or otherwise, that directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common

<PAGE>   15
ADDENDUM TO LEASE DATED SEPTEMBER 1, 1995 BETWEEN TORREY SORRENTO ASSOCIATES,
LTD. AS LESSOR AND THE SWEET FACTORY, INC. AS LESSEE FOR APPROXIMATELY 23,290
SQUARE FEET LOCATED AT 10343 ROSELLE STREET, UNITS 1, 2, 3, 4, 5, 6, 11, 12, E,
F AND D-9 SAN DIEGO, CALIFORNIA.                                     PAGE 4 OF 4
--------------------------------------------------------------------------------

control with Lessee. The word "control" means the right and power, direct or
indirect, to direct or cause the direction of the management and policies of a
person or business entity, corporation or otherwise, through ownership or
voting securities, by contract or otherwise. Further, transfer of any of
Lessee's capital stock to a transferee having a net worth of not less than
$1,000,000.00 or a registered "public offering" of Lessee's capital stock under
the Securities Act of 1933 or the issuance of additional capital stock for fair
value or the transfer of Lessee's capital stock in connection with any venture
capital or other financing provided to Lessee shall not be deemed a transfer
for the purposes of this Article even though the same results in a change in
control."

57.15     Add to the end of Lease Paragraph 12.2 as sub-paragraph (i) the
following language: "Notwithstanding the provisions of paragraph 12.2 to the
contrary, Lessee may sublet not more than 75 percent of the premises without
Lessor's consent provided Lessee remains in occupancy and use of not less than
25 percent of the Lease premises."

57.16     In Lease Paragraph 13.1(b) replace "three (3) days" with "ten (10)
days",

57.17     Add to the end of Lease Paragraph 32 the following language:
"Landlord must give 24 hours prior notice except in cases of emergencies."


57.18     In Lease Paragraph 42, line 3, after the word "Premises" add "or
Parking and Common area".


<PAGE>   16

                        CONSENT OF LANDLORD TO SUBLEASE

     TORREY SORRENTO ASSOCIATES, LTD., a California limited partnership
("Landlord") is the landlord and Sweet Factory, Inc., a Delaware corporation
("Tenant") is the tenant, under that certain lease ("Master Lease") dated
February 1, 1995 in that certain building located at 10343 Roselle Street, San
Diego, California 92121 (the "Premises"). Subject to the following provisions
of this consent agreement, Landlord hereby consents to the sublease
("Sublease") of the Premises by Tenant to Astro Terra Corporation, a California
corporation ("Subtenant"). Landlord's consent is not intended, and shall not be
construed (i) to modify or otherwise affect any of the provisions of the Master
Lease (except as expressly provided below with respect to Subtenant's use of
the Premises), or to release Tenant from any of its obligations and duties
under the Master Lease, (ii) as a waiver of any of Landlord's rights under the
Master Lease, (iii) as an authorization or a consent by Landlord to any
assignment of the interest of Tenant in the Master Lease or to the further
subleasing of the Premises, or (iv) as binding or obligating Landlord in any
manner whatsoever with respect to any of the covenants, undertakings,
representations, warranties or agreements contained in the sublease agreement
(the "Sublease Agreement"), if any, between Tenant and Subtenant.

     Notwithstanding the foregoing, it is a condition to Landlord's consent to
the Sublease that Subtenant's occupancy of the Premises and any Sublease
Agreement are subject to the following: (i) Tenant agrees (a) promptly to pay
and discharge, or cause to be paid and discharged, all liens arising out of any
construction, alteration or repair work done, or suffered or permitted to be
done, by it or by Subtenant on the Premises, and if Tenant fails to do so,
Landlord, at its option, may terminate the Lease by serving five (5) days'
notice, in writing, upon Tenant, (b) to indemnify and save and hold harmless
Landlord from and against all liability, loss, damage or expense paid or
incurred by Landlord on account of any such liens, and (c) that Landlord is
hereby authorized to post any notices or take any other action upon or with
respect to such property that is, or may be permitted by law to prevent the
attachment thereto of any such liens, but that neither failure of Landlord to
take any such action nor any termination of the Lease for failure to pay and
discharge any such liens as above provided, shall relieve Tenant from the
obligation of indemnity set forth hereinabove; (ii) nothing herein contained
shall release or relieve Tenant from any obligation under the Master Lease, but
Tenant shall be and remain as fully responsible to landlord for the acts and
omissions of Subtenant as if such acts and omissions of Tenant; (iii) in the
event either Tenant or Subtenant, or both, consist of two or more parties, all
the covenants and agreements herein shall be the joint and several covenants and
agreements of such parties; (iv) Subtenant's occupancy of the Premises and any
Sublease Agreement will be subject and subordinate to the Master Lease and to
all mortgages which are secured, in whole or by part, by the Premises' (v)
Landlord may enforce the provisions of the Sublease Agreement, if any, including
collection of rent directly from Subtenant; (vi) in the event of termination of
the Master Lease for any reason whatsoever, including, without limitation, a
voluntary surrender by Tenant, or any default by Tenant, or in the event of any
re-entry or repossession of the Premises by Landlord, Landlord may, at its
option, either (a) terminate the sublease Agreement and Subtenant's occupancy of
the Premises, or (b) take over all of the right, title and interest of Tenant,
as sublandlord, under the Sublease Agreement, in which case the Subtenant will
attorn to Landlord, but that nevertheless Landlord will not (1) be liable for
any previous act or omission of Tenant under the Sublease, (2) be subject to any
defense or offset previously accrued in favor of the Subtenant against Tenant,
or (3) be bound by any previous prepayment by Subtenant of more than one month's
rent.


<PAGE>   17
     Notwithstanding the provisions of the Master Lease, Landlord hereby
consents to Subtenant's use of the Premises for corporate office, light
manufacturing, shipping and receiving and for no other use or purpose
("Subtenant's Permitted Use"). Subtenant's Permitted Use shall continue to be
subject to the terms and conditions of the Master Lease, including, without
limitation, the provisions of Article 6 of the Master Lease. As a condition to
Landlord's consent to Subtenant's Permitted Use, Subtenant and Tenant hereby
acknowledge and agree that Landlord makes no representation or warranty
whatsoever that subtenant's Permitted Use is or will be in compliance with or
permitted by applicable laws (including, without limitation, any zoning laws
applicable thereto) and subtenant and Tenant hereby acknowledge and agree that
they assume all liability with respect thereto.

     This Consent of Landlord has been executed this ___ day of ________, 1999.

                                   TORREY SORRENTO ASSOCIATES, LTD.,
                                   a California general partnership

                                   By: /s/ SID TESSLER
                                      ----------------------------------

                                      Name: Sid Tessler

                                      Its: Partner


     The undersigned Tenant and Subtenant referred to hereinabove hereby
acknowledge and accept the conditions of Landlord's consent to the Sublease as
described hereinabove.

Tenant:                                     Subtenant:

SWEET FACTORY, INC.,                        ASTRO TERRA CORPORATION,
a Delaware corporation                      a California
                                              ----------------------------
                                            corporation

By: /s/ [Signature Illegible]               By: /s/ ERIC KOREVAAR
   ----------------------------                ---------------------------

Name: [Printed Name Illegible]              Name: Eric Korevaar
     --------------------------                  -------------------------

Its:  V.P.                                  Its:  President
    ---------------------------                  --------------------------






<PAGE>   18
                            SECOND ADDENDUM TO LEASE

     This second Addendum To Lease is dated for reference purposes only
February 1, 1995 and is by and between TORREY SORRENTO ASSOCIATES, LTD., a
California Limited Partnership ("Lessor") and SWEET FACTORY, INC., a Delaware
Corporation ("Lessee") and is with respect to that certain Lease and Addendum
effective February 1, 1995 for premises described as follows: Units 1, 2, 3, 4,
5, 6, 11, 12, E, F and D9, 10343 Roselle Street, San Diego, California, 92121
("Premises").

1.   Paragraph 58 is added to the Lease to provide as follows:

          58. Correction To Premises: Lessor is required by the City of San
Diego to complete and cure certain violations ("Violations") pursuant to that
certain directive of the City of San Diego Dated April 6, 1994, a copy of which
is attached hereto as Exhibit "A" and incorporated herein by this reference.
Lessor represents that Lessor and the City of San Diego Housing and Code
Enforcement Division ("Division") have agreed to the nature and extent of the
Violations and have further agreed as to the remedial and corrective action to
be undertaken. To this end, Lessor further represents that it has caused plans
and specifications to be prepared and submitted to the City of San Diego
Building Department ("Department") and that Lessor has applied to the Department
for a building permit. Lessor expects issuance of the Building Permit on or
before April 15, 1995 and to complete the improvements pursuant to said Building
Permit on or before August 15, 1995. Lessor will exercise diligence and take all
steps reasonably necessary to obtain the Building Permit and complete the
improvements. Notwithstanding any term, covenant, or condition of this Lease to
the contrary, in the event Lessor shall not complete and cure all Violations in
accord with plans and specifications approved and Building Permit issued by the
Department within one hundred twenty (120) days from the date Lessor obtains the
permit, Lessee may, but is not obligated to do so, (1) prepare plans and
specifications to correct the Violations, (2) submit said plans and
specifications to the City of San Diego, (3) obtain a Building Permit, and (4)
undertake construction to cure and correct such Violations. However, Lessee
shall not perform any of the four (4) preceding conditions to the extent that
(a) Lessor has prepared plans and specifications acceptable to the City of San
Diego to cure the violations, (b) submitted the plans and specifications to the
City of San Diego which plans and specifications do not require modification or
correction, (c) the City of San Diego has issued its Building Permit, and (d)
Lessor has undertaken construction to cure and correct the defects which
construction is acceptable to the City of San Diego. In the event Lessee shall
undertake any or all of the preceding actions to correct and cure any
Violations, all expenses and costs incurred or paid by Lessee in connection
therewith, shall be paid by Lessor to Lessee upon Lessee's demand. In
alternative, or upon failure of Lessor to pay Lessee the sums due within thirty
(30) days of invoicing, Lessee may deduct such amounts from rents next falling
due, in Lessee's sole discretion.

     Lessor:

     TORREY SORRENTO ASSOCIATES, LTD.


     Dated: April 7, 1995                By: /s/ NORTON N. BROWN
                                             -------------------------------

     Lessee:

     SWEET FACTORY, INC.

     Dated: April 10, 1995              By: /s/ T. ROBERT BELL
                                            --------------------------------
                                             T. Robert Bell,
                                             President/COO

     Dated: April 10, 1995              By: /s/ JERRY B. SILVERMAN
                                            --------------------------------
                                             Jerry B. Silverman,
                                             Vice President - Real Estate


<PAGE>   19
                               AMENDMENT TO LEASE


That certain lease, dated February 1, 1995 by and between TORREY SORRENTO
ASSOCIATES, LTD, as Lessor and SWEET FACTORY as Lessee for the approximately
23,290 square foot Premises located at 10343 Roselle Street, Units 1, 2, 3, 4,
5, 6, 11, 12, E, F, and D-9, San Diego California shall be modified by the
following provisions contained herein:

1)  EXPANSION OF PREMISES: Lessee's Premises shall be expanded to include the
suite located in the adjacent building with the address of 10373 Roselle
Street, Unit 6, and which is comprised of approximately 6,040 square feet,
"Expansion Premises".

2)  LEASE TERM/COMMENCEMENT FOR THE EXPANSION PREMISES: The lease term for the
Expansion Premises shall be twelve months, commencing March 1, 1996 and ending
February 28, 1997. After February 28, 1997, either party may terminate this
Amendment to Lease for the Expansion Premises with thirty (30) days prior
written notice.

3)  RENT SCHEDULE: Rent for the Expansion Premises shall be $2,416.00 per month
for the term stated in paragraph 2 above.

4)  IMPROVEMENTS: Lessee agrees to take the Expansion Premises in "as is"
condition and agrees to return the Expansion Premises in the same condition as
received, normal wear and tear excepted.

5)  PERMITTED USE: Paragraph 1.8 of the lease shall be modified, by adding the
words "and light assembly".

6)  AMERICANS WITH DISABILITIES ACT (ADA): Tenant at Tenant's sole cost and
expense shall be responsible for any improvements to the Expansion Premises
which are required for the expansion Premises to comply with the ADA act or
code.

7)  CORRECTION: In paragraph 6.2 of the lease, the reference, "See Addendum to
Lease Paragraph 57.2" shall be modified to read: "See Addendum to Lease
Paragraph 57.3".

8)  ASSIGNMENT AND SUBLETTING: Pertaining to this Expansion Premises only, 75%
shall be increased to 90% in the Addendum Paragraph 57.15 of the lease. If
Sweet Factory elects to enter into a sublease for this Premises, it shall do so
at no rental increase or profit for Sweet Factory.

9)  OTHER TERMS AND CONDITIONS: Except as specifically set forth in this
Amendment to lease, all other terms and conditions set forth in original lease
and its attached addendums shall apply.

AGREED BY THE PARTIES:

LESSOR: TORREY SORRENTO ASSOCIATES, LTD.


By: /s/ [Signature Illegible]
   ---------------------------------

Dated: 3/1/96


LESSEE: SWEET FACTORY, INC.


By: /s/ T. ROBERT BELL                  By: /s/ JERRY B. SILVERMAN
   -------------------------------         -----------------------------------
   T. Robert Bell, President/CEO            Jerry B. Silverman, VP/Real Estate

Dated: February 28, 1992
<PAGE>   20
                               AMENDMENT TO LEASE

     This Amendment to Lease is dated April 10, 1997, and is by and between
TORREY SORRENTO ASSOCIATES, LTD., a California limited partnership ("Lessor"),
and SWEET FACTORY, INC., a Delaware corporation ("Lessee"), is effective
June 1, 1997, and is to that certain Lease by and between Lessor and Lessee
dated February 1, 1995, for premises known as Units 1 through 6, inclusive 11,
12, E, F and D-9, 10343 Roselle Street, San Diego, California 92121.

     IT IS AGREED AS FOLLOWS:

     1.   The Lease is amended as follows:

          1.1  PARAGRAPH 1.2(a) entitled "Premises," is amended to add to the
Premises; Suite 7 and 8, 10343 Roselle Street, San Diego, California 92101,
and to amend the square footage of the Premises to be 28,784 square feet.

          1.2  PARAGRAPH 1.2(b) entitled "Parking," is amended to read as
follows: "58 unreserved vehicle parking spaces. See Paragraph 2.6."

          1.3  PARAGRAPH 1.3 entitled "Term," is amended to read: "The term
shall be for four (4) years seven (7) months commencing on June 1, 1997, and to
terminate December 31, 2001.

          1.4  PARAGRAPH 1.5 entitled "Base Rent," and paragraph 49 entitled
"RENT SCHEDULE," are amended to read as follows:

     Base Rent per month ("Base Rent") shall be payable on the first day of
month commencing June 1, 1997, as follows:

<TABLE>
<CAPTION>
                                       (Per Sq. Ft
                    Term                per month)              Base Rent
                    ----               -----------              ---------
<S>               <C>                   <C>                 <C>
6/1/97 - 1/31/98  Months 1-8            ($.64438)           $18,547.75 gross
----------------
2/1/98 - 1/31/99  Months 9-20             ($.67)            $19,289.10 gross
----------------
2/1/99 - 1/31/00  Months 21-32           ($.697)            $20,061.19 gross
----------------
2/1/00 - 1/31/01  Months 33-44          ($.72485)           $20,864.50 gross
----------------
                  Months 45-55           ($.7538)           $21,697.88 gross
----------------
</TABLE>

          1.5  PARAGRAPH 7.3(b) entitled "CONSENT," is amended to delete the
last sentence.

          1.7  PARAGRAPH 56 entitled "OPTION TO RENEW," is amended to read as
follows: "Lessee shall have one option to renew the term of the Lease for an
additional five (5) year period. The rental rate for said option period shall
be at the then prevailing market rate for similar space. If the parties are
unable to agree as to the then prevailing market rate, the rental rate shall be
established by binding arbitration using the services of JAMS/ENDISPUTE at San
Diego, California.

          1.8  PARAGRAPH 58 is added to read:
                                                           --  FULLY EXECUTED --
<PAGE>   21
               58.  LESSOR'S CONTRIBUTION TO TENANT IMPROVEMENTS.  Lessor shall
          provide Lessee with One Dollar and Fifty Cents ($1.50) per square
          foot allowance as Lessor's contribution to Lessee's Tenant
          Improvements ("Allowance"), which sum is calculated as follows: $1.50
          times 23,784 square feet equals $43,176. Lessor shall, within ten
          (10) days after receipt from Lessee of invoices for Lessee's Tenant
          improvements, verify Lessee's cost and completion of the work, and
          shall remit to Lessee Forty-Three Thousand One Hundred Seventy-Six
          Dollars ($43,176.00). In the event Lessor shall not make payment to
          Lessee within thirty (30) days after presentation of Lessee's
          invoices, notwithstanding any other provision of this Lease to the
          contrary, Lessee may deduct from rent as it thereafter falls due
          monthly sufficient sums until the Allowance has been paid Lessee in
          full.

     2.   BROKERAGE COMMISSION.  Lessee is not bound by this provision. Lessor
shall pay a commission which is to be split on a 50%-50% basis with Business
Real Estate and John Burnham & Company and shall be based upon Business Real
Estate's standard schedule which is 6%, 6%, 5%, 4%, 4% of the total
consideration for years one through five respectively. Excluded from the
commission will be the unamortized commission from the remaining term of the
existing lease.

     3.   OTHER TERMS AND CONDITIONS.  Except as otherwise provided in this
Amendment to Lease, the Lease is ratified, confirmed and approved.


                                   LESSOR

                                   TORREY SORRENTO ASSOCIATES, LTD.,
                                   a California limited partnership


                                   By: /s/  [Signature Illegible]
                                       -----------------------------------


                                   LESSEE:

                                   SWEET FACTORY, INC.,
                                   a Delaware corporation


                                   By: /s/  T. ROBERT BELL
                                       -----------------------------------
                                            T. Robert Bell, President and
                                            Chief Executive Officer


                                   By: /s/  JERRY B. SILVERMAN
                                       -----------------------------------
                                            Jerry B. Silverman,
                                            Vice President - Real Estate