<PAGE>
                                                                   EXHIBIT 10.41

                                     LEASE


                                    between

                  NORTH SAN FERNANDO VALLEY PROPERTIES, INC.,

                           a California corporation

                                  as Landlord

                                      and

                              SPORT CHALET, INC.,

                            a Delaware corporation,

                                   as Tenant

                            Los Angeles, California
<PAGE>

<TABLE>
<CAPTION>

                               TABLE OF CONTENTS
                               -----------------

                                                                            Page
                                                                            ----
<S>   <C>                                                                   <C>
1.    Premises................................................................1
      --------

2.    Improvements............................................................2
      ------------

3.    Term of this Lease......................................................4
      ------------------

4.    Uses....................................................................5
      ----

5.    Rent....................................................................6
      ----

6.    Taxes and Assessments...................................................7
      ---------------------

7.    Utilities...............................................................8
      ---------

8.    Tenant's Alterations, Additions or Improvements.........................8
      -----------------------------------------------

9.    Common Areas............................................................9
      ------------

10.   Common Area Expenses....................................................10
      --------------------

11.   Maintenance.............................................................11
      -----------

12.   Insurance...............................................................13
      ---------

13.   Indemnity...............................................................14
      ---------

14.   Damage and Destruction..................................................15
      ----------------------

15.   Condemnation............................................................16
      ------------

16.   Assignment and Subletting...............................................16
      -------------------------

17.   Subordination and Attornment............................................17
      ----------------------------

18.   Tenant Defaults.........................................................17
      ---------------

19.   Landlord Defaults.......................................................19
      -----------------

20.   Tenant's Property; Surrender; Holding Over..............................19
      ------------------------------------------

21.   Limitation of Liability.................................................20
      -----------------------

22.   Quiet Enjoyment.........................................................20
      ---------------

23.   Estoppel Statements.....................................................20
      -------------------

24.   Force Majeure...........................................................20
      -------------

25.   Signs...................................................................20
      -----

26.   Real Estate Brokers.....................................................20
      -------------------

27.   Memorandum of Lease.....................................................20
      -------------------

28.   Notices.................................................................21
      -------

29.   Attorneys' Fees.........................................................21
      ---------------

30.   Waiver..................................................................21
      ------

31.   Lease Binding Upon Successors...........................................21
      -----------------------------

32.   Topical Headings........................................................21
      ----------------

33.   Language................................................................21
      --------

34.   Invalidity..............................................................21
      ----------

35.   Time of the Essence.....................................................21
      -------------------

36.   Governing Law...........................................................21
      -------------
</TABLE>

                                      -i-
<PAGE>

<TABLE>


<S>   <C>                                                                  <C>
37.   Approvals...............................................................21
      ---------

38.   Counterparts............................................................21
      ------------

39.   Reference...............................................................21
      ---------

40.   Entire Agreement........................................................22
      ----------------
</TABLE>

Exhibit A - Site Plan
Exhibit B - Memorandum of Lease
Exhibit C - Construction of Premises

                                     -ii-
<PAGE>

                                     LEASE

     THIS LEASE (this "Lease") dated as of May 7, 1999, is entered into by and
                       -----
between NORTH SAN FERNANDO VALLEY PROPERTIES, INC., a California corporation
("Landlord") and SPORT CHALET, INC., a Delaware corporation ("Tenant").
----------                                                    ------

                            BASIC LEASE PROVISIONS

Shopping Center:       Porter Ranch Town Center, Los Angeles, California

Lease Term:            An initial term of Fifteen (15) Lease Years (the "Initial
                                                                         -------
                       Term"), plus five (5) separate "Option Terms") (as
                       ----                            ------------
                       hereinafter defined) of five (5) Lease Years each.

Minimum Rent:          Initial Term                 $50,166.67 per month
                       First Option Term            $55,183.33 per month
                       Second Option Term           $60,701.67 per month
                       Third Option Term            $66,771.83 per month
                       Second Option Term           $73,449.01 per month
                       Third Option Term            $80,793.92 per month
                       Fourth Option Term           $88,873.31 per month
                       Fifth Option Term            $97,760.64 per month
Percentage
Rental Rate:           Four percent (4%)

Initial Uses:          Display and retail sale and lease of sporting equipment
                       and apparel as are from time to time sold and leased in
                       similar sized retail stores operated by Tenant in
                       Southern California under the trade name "Sport Chalet".

Approximate Floor
Area of the Premises:  43,000 square feet

Address of Landlord:   North San Fernando Valley Properties, Inc.
                       920 Foothill Boulevard
                       La Canada Flintridge, CA 91011
                       Attn:  Mr. Norbert Olberz

Address of Tenant:     Sport Chalet, Inc.
                       920 Foothill Blvd.
                       La Canada Flintridge, CA 91011

Tenant's Trade Name:   Sport Chalet

Exhibits:

A    Site Plan
B    Memorandum of Lease
C    Construction of the Premises

     This summary of Basic Lease Provisions is intended to supplement and/or
summarize the provisions set forth in the balance of this Lease.  If there is
any conflict between any provisions contained in this summary of Basic Lease
Provisions and the balance of this Lease, the balance of this Lease shall
control.

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

          (a) Landlord leases to Tenant and Tenant leases from Landlord certain
premises (the "Premises") being a building (the "Building") to be constructed by
               --------                          --------
Landlord approximately within that certain area shown as cross-hatched on
Exhibit A attached hereto and incorporated herein by this reference, which
---------
Building shall contain approximately forty-three thousand (43,000) square feet
of "Floor Area" (as hereinafter defined), together with certain improvements
    ----------
(the "Improvements") to be constructed therein by Landlord, for the "Term" (as
      ------------                                                   ----
hereinafter defined), at the rental, and upon the terms, conditions and
provisions set forth in this Agreement.  The Premises shall be a part of a
larger "Shopping Center" located in the City of Los Angeles, County of Los
        ---------------
Angeles, State of California, the current plan for construction of which is
approximately as shown on the Exhibit A attached hereto and incorporated herein
                              ---------
by this reference, provided that the parties hereby acknowledge that Landlord
owns only the parcel of the Shopping Center

                                       1
<PAGE>

upon which the Premises is located (the "Landlord's Parcel") and the remainder
                                         -----------------
of the Shopping Center is owned by third parties, and, accordingly, the future
development and/or operation of the Shopping Center is not within the control of
Landlord, except for such matters as may require the consent or approval of
Landlord as owner of the Landlord's Parcel under that certain Declaration of
Covenants, Conditions and Restrictions and Reservation of Easements encumbering
the Shopping Center, recorded on July 1, 1998 as Instrument No. 98-1119300 in
the Official Records of Los Angeles County, California (the "CC&R's"). Landlord
                                                             ------
agrees not to consent to or approve of any matter requiring the consent or
approval of Landlord as owner of the Landlord's Parcel under the CC&R's which
would materially and adversely affect the operation of Tenant's business from
the Premises or the Shopping Center without the prior written consent or
approval of Tenant. The parties hereby agree and acknowledge that as of the date
of this Lease, Landlord does not yet own Landlord's Parcel but has entered into
an agreement for the purchase of Landlord's Parcel; provided that it shall be a
condition to the occurrence of the Commencement Date that Landlord shall have
acquired title to the Landlord's Parcel. Landlord shall deliver notice to Tenant
promptly following the closing of Landlord's acquisition of title to Landlord's
Parcel. As used herein, the term "Floor Area" shall mean all areas available, or
                                  ----------
held for the exclusive use and occupancy of occupants or future occupants of the
Landlord's Parcel (including, without limitation, mezzanines used for the sale
of goods and services, provided that mezzanines used for storage or general
offices shall not be included in Floor Area), measured from the interior surface
of exterior walls (and from extensions thereof in the case of openings) and from
the center of interior demising partitions.

          (b) The Floor Area of the Premises shall be the estimated Floor Area
stated in Section 1(a) above, unless and until adjusted pursuant hereto.  If
          ------------
either party determines that the actual Floor Area of the Premises varies from
that set forth in Section 1(a), such party (the "Recalculating Party") shall
                  ------------                   -------------------
give notice to the other party of the Recalculating Party's determination of the
actual Floor Area of the Premises, together with reasonably detailed supporting
documentation for the making of such determination.  In the event the party
receiving such determination of actual Floor Area in the Premises shall in good
faith dispute such determination, such party shall have the right, within thirty
(30) days of receipt of such determination, to deliver written notice (the
"Floor Area Dispute Notice") to the Recalculating Party, stating in reasonable
--------------------------
detail the nature of such dispute, and in the event of such dispute, Landlord
and Tenant shall meet within fifteen (15) days following the receipt by the
Recalculating Party of the Floor Area Dispute Notice to in good faith endeavor
to reach agreement upon the amount of the actual Floor Area of the Premises.  In
the event Landlord and Tenant are unable, despite the exercise of reasonable
good faith efforts, to so reach agreement upon the actual amount of Floor Area
within the Premises within thirty (30) days following the receipt by the
Recalculating Party of the Floor Area Dispute Notice, either party shall have
the right to institute a reference proceeding pursuant to Section 39 below, to
                                                          ----------
resolve such dispute.  In the event the actual amount of Floor Area within the
Premises is agreed upon by the parties to be other than the amount set forth in
Section 1(a) above, by mutual agreement of the parties, a failure of the non-
------------
Recalculating Party to dispute a determination of Floor Area in accordance
herewith by delivery of the Floor Area Dispute Notice within the thirty (30) day
period provided above, or by determination pursuant to reference proceeding,
then such agreed upon amount of Floor Area shall be the Floor Area of the
Premises for all purposes of this Lease Minimum Rent under this Lease, shall be
appropriately retroactively and prospectively adjusted, and any appropriate
adjustment payment from one party to the other based upon such Floor Area
(together with interest on the amount of such payment, at the "Interest Rate"
                                                               -------------
(as hereinafter defined), from the time such payment would have been due until
the time such payment is made) shall be made within thirty (30) days of such
agreement upon such Floor Area.  As used herein, the term "Interest Rate" means
                                                           -------------
a per annum rate of interest equal to the lesser of (1) two percent (2%) over
the then "prime rate" most recently published in the Wall Street Journal (or in
                                                     -------------------
the event the Wall Street Journal ceases to publish a "prime rate", the "prime
              -------------------
rate" of a comparable source reasonably agreed upon by the parties), or (2) the
maximum rate permitted by applicable law.

2.  Improvements.
    ------------

          (a) Landlord shall, at Landlord's sole cost and expense, perform
certain work in connection with the construction of the Premises in accordance
with Exhibit C attached hereto and incorporated herein by this reference
     ---------
("Landlord's Work").  Tenant shall, at Tenant's sole cost and expense, install
-----------------
all improvements, furniture, trade fixtures, equipment,

                                       2
<PAGE>

personal property and inventory in the Premises, except to the extent included
in Landlord's Work (collectively, "Tenant's Work") in accordance with Exhibit C
                                   -------------                      ---------
attached hereto.

          (b) Landlord hereby represents and warrants, to Landlord's actual
knowledge, that as of the "Substantial Completion Date" (as defined in Exhibit
                           ---------------------------                 -------
C), neither the Premises nor any other part of the Landlord's Parcel shall
contain any "Hazardous Substances" (as hereinafter defined) in such quantity as
             --------------------
would constitute a violation of applicable federal, state or local governmental
laws, statutes, rules, regulations, ordinances, codes, orders or other
requirements (collectively, any "Laws") or would adversely affect Tenant's use
                                 ----
or occupancy of, or operation of business from, the Premises.  Landlord agrees
and represents and warrants that it shall not incorporate or permit or suffer to
be incorporated, knowingly or unknowingly, any material containing any Hazardous
Substances into the Premises.  Landlord shall prevent any action by any Person
other than Tenant and/or any of Tenant's employees, agents and/or invitees that
will cause the Premises to be in violation of, or will subject the Premises to,
any remedial obligations under federal, state or local Laws relating to
Hazardous Substances.  In the event Hazardous Substances are, or become, located
in, upon, under or about the Premises and/or any other portion of the Landlord's
Parcel in such quantity as would constitute a violation of applicable Laws or
would adversely affect Tenant's use or occupancy of, or operation of business
from, the Premises, other than as a result of the acts or omissions of Tenant
and/or any of Tenant's employees and/or agents, Landlord shall promptly
remediate such contamination, at no cost to Tenant (and without inclusion
thereof as a "Common Area Expense" (as hereinafter defined)), upon discovery of
              -------------------
such contamination.  Landlord agrees to immediately notify Tenant in reasonable
detail of any existing, pending or threatened regulatory action, third party
claims, and/or contamination of the Landlord's Parcel, relating to the presence
of Hazardous Substances within the Landlord's Parcel resulting from other than
the acts or omissions of Tenant and/or any of Tenant's employees and/or agents.
Landlord shall indemnify, defend and hold harmless Tenant from and against any
and all damages, claims, expenses, costs and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) arising out of or in
connection with the presence of Hazardous Substances in, upon, under or about
the Premises and/or any other portion of the Landlord's Parcel at any time
during the Term of this Lease, other than as a result of the acts or omissions
of Tenant and/or any of Tenant's employees and/or agents.  As used in this
Lease, the term "Hazardous Substance" means any asbestos, petroleum product or
                 -------------------
by-product or hazardous or toxic substance, material or waste which is or
becomes regulated by any local government authority, the State of California or
the United States.

          (c) Tenant agrees and represents and warrants that it shall not
incorporate or permit or suffer to be incorporated, knowingly or unknowingly,
any material containing any Hazardous Substances into the Premises provided that
nothing contained herein shall be deemed to prohibit Tenant's use within the
Premises of items customarily used in the operation of a store for the permitted
use under this Lease but constituting Hazardous Substances as defined herein
(including, by way of example and without limitation, customary cleaning fluids
and/or lead diving weights).  Tenant shall prevent any action by Tenant and/or
any of Tenant's employees and/or agents that will cause the Premises to be in
violation of, or will subject the Premises to, any remedial obligations under
federal, state or local Laws relating to Hazardous Substances.  In the event
Hazardous Substances are, or become, located in, upon, under or about the
Premises and/or any other portion of the Landlord's Parcel in such quantity as
would constitute a violation of applicable Laws or would adversely affect the
use or occupancy of, or operation of business from, the Landlord's Parcel
Center, as a result of the acts or omissions of Tenant and/or any of Tenant's
employees and/or agents, Tenant shall promptly remediate such contamination, at
no cost to Landlord, upon discovery of such contamination.  Tenant agrees to
immediately notify Landlord in reasonable detail of any existing, pending or
threatened regulatory action, third party claims, and/or contamination of the
Landlord's Parcel, relating to the presence of Hazardous Substances within the
Landlord's Parcel resulting from the acts or omissions of Tenant and/or any of
Tenant's employees and/or agents.  Tenant shall indemnify, defend and hold
harmless Landlord from and against any and all damages, claims, expenses, costs
and liabilities (including, without limitation, reasonable attorneys' fees and
expenses) arising out of or in connection with the presence of Hazardous
Substances in, upon, under or about the Premises and/or any other portion of the
Landlord's Parcel at any time during the Term of this Lease, as a result of the
acts or omissions of Tenant and/or any of Tenant's employees and/or agents.

                                       3
<PAGE>

          (d) During the pendency of any work of construction which may result
in the imposition of a mechanic's or materialman's lien upon the Premises,
Landlord may post in the Premises in a reasonable manner, file and/or record
notices of non-responsibility in accordance with applicable Laws.  The
provisions of this Section 2(d) shall apply to work in the Premises by or on
                   ------------
behalf of Tenant during the Term including Tenant's Work.

          (e) Neither Tenant nor Landlord shall permit any mechanic's,
materialman's or other lien against the Premises or the Landlord's Parcel in
connection with any labor, materials or services furnished or claimed to have
been furnished by or on behalf of such party.  If any such lien shall be filed
against the Premises or the Landlord's Parcel, the party charged with causing
the lien shall cause the same to be discharged, provided, however, that either
party may contest any such lien, so long as the enforcement thereof is stayed.
Each party shall indemnify, defend and hold harmless the other from and against
any and all costs, losses, liabilities, claims, demands and expenses (including,
without limitation, reasonable attorneys' fees and expenses) arising as a result
of any mechanic's, materialman's or other lien filed against the Premises or the
Landlord's Parcel in connection with any labor, materials or services furnished
or claimed to have been furnished on behalf of the indemnifying party.

3.  Term of this Lease.
    ------------------

          (a) The "Term" of this Lease shall be the period commencing upon the
                   ----
"Commencement Date" (as hereinafter defined) and, unless sooner terminated or
------------------
extended as herein provided, expiring on the January 31 first following the
expiration of fifteen (15) Full Lease Years following the Commencement Date.
"Full Lease Year" means each successive twelve (12) month period occurring
----------------
during the Term commencing with the first day of the month in which the
Commencement Date occurs, or, if the Commencement Date is not the first day of a
month, commencing with the first day of the month following the month during
which the Commencement Date occurs.  "Partial Lease Year" means (a) the period
                                      ------------------
between the Commencement Date, if that date is not the first day of a month, and
the day before the beginning of the first Full Lease Year, and (b) if the Term
ends on other than the last day of a Full Lease Year, the period beginning on
the first day following the end of the final Full Lease Year of the Term and
ending on the last day of the Term.  "Lease Year" means either a Full Lease Year
                                      ----------
or Partial Lease Year, as the case may be.  As used herein, the term
"Commencement Date" shall mean the date of the earlier to occur of (i) the date
------------------
Tenant opens to the public for business from the Premises, or (ii) sixty (60)
days after the Substantial Completion Date.  If the Commencement Date does not
occur within three (3) years after the date hereof, this Lease shall
automatically terminate and be of no further force or effect, unless otherwise
approved by both parties, in the event of which termination neither party shall
have any further liability or obligation hereunder.

          (b) Tenant and its authorized agents, contractors, subcontractors and
employees shall have the right, without an obligation to pay rent, additional
rent or other charge, to enter the Premises for the purpose of performance of
Tenant's Work prior to the Commencement Date and no such entry by Tenant shall
be deemed an acceptance of the Premises; provided, however, that any such early
entry shall not unreasonably interfere with Landlord's performance of its
construction obligations with respect to the Premises pursuant to this Lease.
Tenant may use such utilities as are available during the course of such entry
for fixturization purposes prior to the Commencement Date.  During the course of
any entry by Tenant for fixturization purposes prior to the Commencement Date,
all terms and conditions of this Lease (but not Tenant's obligation to make
payments in respect of rent or additional rent) shall apply, with specific
reference to indemnity and insurance.

          (c) Landlord hereby grants Tenant five (5) separate options (the
"Options") to extend the Term of this Lease for five (5) separate consecutive
--------
terms (the "Option Terms") of five (5) years each, following expiration of the
            ------------
then existing Term, upon all the terms and conditions contained in this Lease,
except for the payment of Minimum Rent which shall be in accordance with the
provisions of Section 5(a) below.  Tenant shall give written notice of the
              ------------
exercise of each Option to Landlord at least six (6) months prior to the
expiration of the then applicable Term.  Should Tenant neglect to exercise any
Option by the dates specified above, Tenant's right to exercise shall not expire
until thirty (30) days after notice from Landlord of Tenant's failure to
exercise such Option.  References in this Lease to the "Term" shall mean the
                                                        ----
initial Term of this Lease, as the same

                                       4
<PAGE>

may be extended by any Option Terms, as applicable. Tenant shall have no other
right to extend the Term beyond the expiration of the fifth (5th) Option Term.

4.  Uses.
    ----

          (a) Tenant shall open for business from the Premises for one (1) day
for the Initial Uses set forth in the Basic Lease Provisions under the trade
name of "Sport Chalet".  Landlord hereby represents and warrants to Tenant that,
as of the Substantial Completion Date, the operation for business from the
Premises for the retail sale and/or lease of sporting equipment (including,
without limitation, ski equipment), sporting goods, sports apparel and active
wear (including, without limitation, ski apparel), athletic footwear and
provision of incidental services will not violate any agreements respecting
exclusive use rights or restrictions on use within the Landlord's Parcel or any
portion thereof, and Landlord shall indemnify, defend and hold harmless Tenant
from and against any and all costs, losses, demands, claims, liabilities and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) arising as a result of any breach of such representation and warranty.

          (b) Following such initial opening for business from the Premises,
Tenant shall have the right to change the trade name under which it operates
from the Premises and the use of the Premises to an alternate lawful retail use,
subject to applicable restrictions of record (including, without limitation, the
CC&R's).

          (c) Following such initial opening, Tenant will be open for business
from the Premises during such days and hours as it deems reasonable and
practicable in its sole business judgment for the operation of its business.  In
entering into this Lease, Landlord is not relying upon Tenant's operation of its
business from the Premises after Tenant's initial opening for business.  Nothing
in this Lease shall be construed to require a business to be continuously
operated in the Premises or to require the Premises to be continuously occupied
following Tenant's initial opening for business.  In the event that the Premises
shall, at any time after Tenant's initial opening for business, be closed for
business for a period of ninety (90) consecutive days or more, other than as a
result of a remodeling, casualty, condemnation or other Force Majeure Event, or
due to Tenant's impending subletting of the Premises or assignment of its
interest in this Lease, as permitted under this Lease, then at any time
thereafter so long as the Premises shall be closed for business, Landlord may,
at its election, terminate this Lease by giving Tenant written notice thereof,
whereupon this Lease shall terminate on the sixtieth (60th) day after Tenant's
receipt of such notice in the same manner as if such date were the date
originally set forth herein for the expiration of this Lease; except, however,
that if Tenant shall reopen the Premises for business on or before the sixtieth
(60th) day after Tenant's receipt of such termination notice from Landlord, then
Landlord's election to terminate shall be null and void and this Lease shall
continue in full force and effect.

          (d)  Intentionally omitted.

          (e) Provided Tenant obtains Landlord's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed, Tenant shall
have the exclusive right to use the roof of the Premises, such use being for
Tenant's separate HVAC rooftop system, if any, any antennae or other
communications equipment or other roof-top mounted equipment as Tenant may deem
desirable for the operation of its business; provided, however, that no roof
penetrations shall be made without obtaining Landlord's consent, which consent
shall not be unreasonably withheld, conditioned or delayed, and Tenant shall, at
its own expense, promptly repair any damage or wear to the roof resulting from
such use or caused by penetrations made during installation of Tenant's
equipment or by vibration of such equipment.

          (f) Tenant shall not keep anything within the Premises for any purpose
which invalidates any insurance policy carried on the Premises or on any other
improvements located on adjacent properties.  All property kept, stored or
maintained within the Premises by Tenant shall be at Tenant's sole risk.  Tenant
shall procure at its sole expense any permits and licenses required for the
transaction of its business in the Premises and otherwise comply with all
applicable Laws.

          (g) Subject in all events to compliance with applicable Laws and
matters of record (including, without limitation, the CC&R's), which approval
shall not be unreasonably withheld, conditioned or delayed, Tenant

                                       5
<PAGE>

may use the sidewalk immediately adjacent to Tenant's storefront (the "Outdoor
                                                                       -------
Sales Area"), to display merchandise being sold from the Premises ("Tenant's
----------                                                          --------
Outdoor Sales"), subject to the following limitations: (i) all structures
-------------
erected in connection with Tenant Outdoor Sales on the Outdoor Sales Area shall
be first-class, professionally prepared and promptly removed upon completion;
(ii) no Tenant's Outdoor Sales shall materially adversely affect pedestrian and
vehicular traffic within or ingress and egress to and from the Shopping Center;
(iii) Tenant's liability policy carried pursuant to Section 12(b) shall provide
                                                    ------------
primary coverage for occurrences within the Outdoor Sales Area during any
Tenant's Outdoor Sales; and (iv) Tenant shall maintain the Outdoor Sales Area
during any Tenant's Outdoor Sales in first-class, neat, clean, and otherwise in
an attractive condition, free of litter and debris resulting from the Tenant's
Outdoor Sales.

5.  Rent.
    ----

          (a) Tenant shall pay Landlord "Minimum Rent" during the Term in the
                                         ------------
monthly amounts specified in the Basic Lease Provisions.  Minimum Rent for any
partial month occurring during the Term shall be prorated based upon the number
of days within such month occurring during the Term.  Minimum Rent shall be paid
in monthly installments, in advance, on the first day of each calendar month,
without demand, offset or abatement, except as specifically otherwise provided
in this Lease.

          (b)  (i)   Tenant shall pay as "Percentage Rent" for each fiscal year
                                          ---------------
of Tenant during the Term (which fiscal year is presently April 1 to March 31,
and is herein referred to as the "Fiscal Year"), (1) four percent (4%) of "Gross
                                  -----------                              -----
Sales" (as hereinafter defined) made from the Premises during such Fiscal Year
-----
less (2) Minimum Rent for such Fiscal Year.

               (ii)  As used herein, "Gross Sales" means the total gross
                                      -----------
receipts of all merchandise sold or leased including the charges for all
services performed by Tenant or by any subtenant, licensee or concessionaire,
wholesale or retail, cash, credit, or otherwise, including, without limitation,
the value of all consideration other than money received therefor (except for
trade-ins which are intended for resale by Tenant from the Premises): (1) where
the orders originate, in, at, from or arising out of the use of the Premises,
whether delivery or performance is made from the Premises or from some other
place and regardless of the place of bookkeeping for, payment of, or collection
of any account; (2) made by means of mechanical or other vending devices; and
(3) which Tenant, or any subtenant, licensee or concessionaire, in the customary
course of its business, would attribute to its operations at the Premises.
Excluded from Gross Sales are: (I) any exchange or transfer of merchandise
between stores or warehouses of Tenant made solely for the convenient operation
of Tenant's or any subtenant's, licensee's or concessionaire's business and not
to consummate a sale made in or from the Premises; (II) returns to shippers or
manufacturers; (III) cash or credit refunds to customers on transactions
otherwise included in Gross Sales; (IV) sales of fixtures and equipment, which
are not stock for sale or trade; (V) sales, luxury or excise taxes, gross
receipt taxes, and other taxes now or hereafter imposed upon the sale or value
of merchandise or services, whether added separately to the selling price of the
merchandise or services and collected from customers or included in the retail
selling price; (VI) the sums and credits received in settlement of claims for
loss or damage to merchandise; (VII) receipts from public telephones, vending
machines, ticket sales (including, without limitation, tickets to sporting or
other entertainment events and/or ski lift and/or travel package tickets), and
fees for fishing, hunting or other sporting licenses; (VIII) interest, carrying
charges, or other finance charges in respect of sales made on credit; (IX) sales
to employees at a discount, not exceeding three percent (3%) of total Gross
Sales in any Fiscal Year; (X) accounts receivable, not to exceed three percent
(3%) of Gross Sales in any Fiscal Year, which have been determined to be
uncollectible for federal income tax purposes during such Fiscal Year, provided,
however, that if any such amounts are actually collected in a later Fiscal Year,
such amount so collected shall be included in the Gross Sales for such later
Fiscal Year; (XI) sublease rents or other consideration received in connection
with an assignment, sublease, license, concession or other grant of a right of
occupancy with respect to any portion of the Premises; (XII) sales of
merchandise ordered by catalogue regardless of place of order or delivery; and
(XIII) charges paid to all credit card companies.

               (iii) Tenant shall furnish Landlord within sixty (60) days after
the end of each Fiscal Year during the Term, a statement, certified by Tenant,
setting forth the Gross Sales made during such Fiscal Year including

                                       6
<PAGE>

a calculation of any Percentage Rent owing for such Fiscal Year together with a
payment of the amount of any Percentage Rent owing for such Fiscal Year.

          (iv) Tenant and any subtenant, licensee or concessionaire upon the
Premises shall use such devices for controlling sales as are reasonably
necessary to accurately record all sales.  During the Term, Tenant shall keep at
the Premises or at its home or regional office, complete, accurate books of
account and records with respect to the business conducted in or from the
Premises, including the recording of Gross Sales and the receipt and delivery of
all merchandise in and from the Premises during the Term, and shall retain such
books and records and reasonable supporting documentation for at least two (2)
years from the end of the period to which they are applicable.  Landlord's
acceptance of Percentage Rent shall be without prejudice to Landlord's
examination and audit rights.  Landlord may at any reasonable time during normal
business hours, upon ten (10) days' prior notice to Tenant, cause a complete
audit to be made of such books, records and other materials which Tenant is
required to retain (including, without limitation, the books and records of any
subtenant, licensee or concessionaire) for all or any part of the two (2) years
immediately preceding the giving of such notice.  Landlord may require Tenant to
produce such information about such books and records as is necessary for a
proper examination and audit thereof and to make such books and records
available to Landlord for examination and audit; provided, however, that nothing
contained in this Lease shall be deemed to provide Landlord with the right to
review any of Tenant's records with respect to any other store locations other
than as may be necessary for determination of Gross Sales from the Premises.
Any such audit shall be conducted in a manner so as to minimize interference
with Tenant's business operations.  If such audit discloses any underpayment by
Tenant of Percentage Rent, Tenant shall pay to Landlord the amount of such
underpayment within fifteen (15) days following Tenant's receipt of such audit.
If such audit discloses that Tenant's annual statement of Gross Sales
understates Gross Sales made during the applicable Fiscal Year by three percent
(3%) or more, Tenant shall pay Landlord as Additional Rent within fifteen (15)
days after demand, Landlord's reasonable cost in conducting such audit (as
evidenced by invoices or other reasonable supporting documents delivered to
Tenant).  Landlord shall not conduct such an audit of Tenant's records more than
once in any given Fiscal Year (unless necessitated as a result of any dispute
respecting the accuracy of the initial audit with respect to such Fiscal Year).
Failure of Landlord to conduct such an audit within two (2) years following
provision to Landlord of the applicable annual Gross Sales statement shall
constitute waiver by Landlord of any right to audit Gross Sales specified within
such annual Gross Sales statement.  Any information obtained by Landlord as a
result of any such audit shall be held in strict confidence by Landlord, except
that such information may be disclosed by Landlord to a proposed lender or
purchaser with respect to a prospective sale or financing of the Shopping Center
or when Landlord is required to comply with lawful orders of a court or
governmental agency.

          (c) All monetary obligations of Tenant to Landlord under this Lease
other than Minimum Rent and Percentage Rent are collectively referred to herein
as "Additional Rent".  References in this Lease to "Rent" shall mean,
    ---------------                                 ----
collectively, Minimum Rent, Percentage Rent and Additional Rent.

6.  Taxes and Assessments.
    ---------------------

          (a) Landlord shall pay, on or before the due date, all taxes and
assessments levied against the Landlord's Parcel (including, without limitation,
the land underlying the Landlord's Parcel) during the Term.

          (b) Tenant shall pay to Landlord "Tenant's Share" (as hereinafter
                                            --------------
defined) of the real estate taxes and general assessments (collectively,
"Taxes") levied upon and assessed against the Landlord's Parcel, for each tax
 -----
year of the Term.  Such taxes shall be payable by the later to occur of (i)
thirty (30) days following Tenant's receipt from Landlord of the applicable Tax
bill together with a calculation of the amount of such Tax owing by Tenant in
accordance with this Section 6, and (ii) fourteen (14) days prior to
                     ---------
delinquency.  Tenant's schedule of payments (annual or semi-annual) shall be
concurrent with and proportionate to Landlord's schedule of payments to the
taxing authority.  Landlord shall furnish Tenant with proof of payment of Taxes
within thirty (30) days after the delinquency date thereof.  In the event of
assessments which may be paid in installments by reason of bonding or otherwise,
Landlord may elect to make payment under the installment plan.  In any event,
Tenant's payment obligations under this Section shall be as if Landlord made
payment over the longest period of time permitted by the assessment and Tenant
shall bear no

                                       7
<PAGE>

liability as to installments due following the expiration of the Term or earlier
termination of this Lease.

          (c) For purposes of this Section 6, "Tenant's Share" is defined as one
                                   ---------   --------------
hundred percent (100%).

          (d) Should the first or final tax year occurring during the Term
include a period of time prior to or following the Term, as applicable, Tenant
shall be responsible to Landlord for a pro rata portion of its tax obligation as
described herein, based on the portion of such tax year included in the Term of
this Lease.  This Section includes Tenant's total responsibility for taxes for
the Shopping Center, including, without limitation, the Common Areas thereof.

          (e) There shall be excluded from the tax bill to which Tenant
contributes for the purposes of computing Tenant's Share (i) income, excess
profits, estate, single business, inheritance, succession, transfer, franchise,
capital, rental, gross receipts or any other taxes or assessments upon Landlord
or the Rents or other sums payable under thus Lease; (ii) taxes and assessments,
general (other than ad valorem taxes) or special, which finance the initial
construction or acquisition of the Shopping Center or off-site improvements
(including, without limitation, sewer and/or street improvements) or any one or
more subsequent renovations, improvements and/or alterations thereof; and (iii)
any charge, such as a water meter charge and the sewer rent based thereon, which
is measured by the consumption of the actual user of the item or service on
which such charge is made.

          (f) Any rebates, refunds, or abatements of Taxes received by Landlord
subsequent to payment of the applicable Taxes by Tenant shall be refunded to
Tenant on a pro rata basis within ten (10) days of receipt thereof by Landlord.
Any such rebate, refund or abatement realized by Landlord prior to payment by
Tenant shall result in an immediate reduction in the Taxes upon which Tenant's
Share is calculated.

          (g) Tenant shall have such rights to contest the validity or amount of
Taxes as are permitted by law, either in its own name or in the name of
Landlord, in either case with Landlord's full cooperation.  Any resultant
refund, rebate or reduction shall be used first to repay the expenses of
obtaining such relief.  Landlord shall provide Tenant with government notices of
assessment (or reassessment) in time sufficient to reasonably permit Tenant, at
Tenant's election, to make contest; and if Landlord fails to do so, then there
shall be excluded from the Tax bill to which Tenant contributes, any increased
Taxes resulting from such assessment (or reassessment).  The term "contest" as
                                                                   -------
used in this Section 6(g) means contest, appeal, abatement or other proceeding,
             ------------
prescribed by applicable law to obtain tax reduction or tax refund, howsoever
denominated.

          (h) Tenant shall pay prior to delinquency all taxes, assessments, fees
and charges imposed on its furniture, trade fixtures, equipment, inventory and
other personal property (collectively, "Tenant's Personal Property") in the
                                        --------------------------
Premises.  If any such Tenant's Personal Property is assessed jointly with the
property of Landlord, such assessment shall be equitably allocated between
Landlord and Tenant.

7.  Utilities.
    ---------

        Landlord shall provide to the Premises at all times necessary utilities
services including electric, water, gas, telephone and other necessary utility
lines, as well as Common Area refuse collection service and sewerage lines
capable of adequately providing for Tenant's needs, but in no event of less
capacity than as specified in Exhibit C attached hereto.  Landlord shall cause
                              ---------
all such utilities separately serving the Premises to be separately metered for
the Premises.  Tenant shall pay applicable use charges for all such utilities
serving the Premises during the Term directly to the applicable utility
provider.

8.  Tenant's Alterations, Additions or Improvements.
    -----------------------------------------------

        Tenant may make non-structural alterations and improvements to the
interior of the Premises without the prior approval of Landlord.  Tenant shall
not make any alterations to any structural or exterior portions of the Premises
without first obtaining the prior written approval of Landlord, which approval
shall not be unreasonably withheld, conditioned or delayed, and shall be deemed
granted if Tenant is not notified in writing of a reasonable basis for
Landlord's withholding of such approval within fifteen (15) days of Tenant's
request therefor.  Upon the expiration of the Term or sooner termination of this
Lease, Tenant may, provided no structural damage to the Premises will be caused
thereby, remove its furniture, fixtures and equipment.  Tenant's

                                       8
<PAGE>

alterations and improvements to the Premises (except Tenant's trade fixtures,
equipment and personal property), shall become Landlord's property upon
expiration of the Term or earlier termination of this Lease, and Landlord will
accept the Premises as altered without any obligation upon Tenant to restore the
Premises to its former condition. Tenant shall be responsible for all damage
resulting from any construction, alterations or additions in or to the Premises
during the Term made by Tenant (collectively, any "Tenant Construction Work"),
                                   ------------------------
whether or not Landlord's consent therefor is necessary or was obtained. All
Tenant Construction Work shall be performed in accordance with all necessary
governmental approvals and permits, which Tenant shall obtain at its sole
expense and all applicable Laws. All Tenant Construction Work shall be performed
in a good and workmanlike manner and diligently prosecuted to completion so the
Premises shall always be a complete unit except during performance of such
Construction Work. Tenant shall perform all Tenant Construction Work so as not
to obstruct access to the Common Areas or the premises of any other occupant of
the Shopping Center.

9.  Common Areas.
    ------------

          (a) As used in this Lease, the term "Common Areas" shall mean those
                                               ------------
portions of, and facilities within, the Shopping Center which are defined as
"Common Areas" under the CC&R's.  Tenant acknowledges that prior to the
Commencement Date, Landlord shall enter into that certain Development Agreement
(the "Development Agreement") with Porter Ranch Development Co. ("Developer"), a
      ---------------------                                       ---------
memorandum of which shall be recorded in the Official Records of Los Angeles
County, California, as an encumbrance against the Shopping Center (the
"Memorandum of Development Agreement").  The form of the Development Agreement
------------------------------------
and Memorandum of Development Agreement shall be subject to Tenant's approval,
which approval shall not be unreasonably withheld, conditioned or delayed.
Prior to the Commencement Date, Landlord shall enforce its rights under the
Development Agreement so as to cause Developer to construct the Common Areas of
the Shopping Center substantially as shown on Exhibit A attached hereto, subject
                                              ---------
to such modifications as are permitted under the Development Agreement and/or
CC&R's, as applicable, provided that to the extent that Landlord has any right
of approval or consent thereunder with respect to such modifications, Landlord
shall obtain Tenant's prior written approval or consent thereto, which approval
shall not be unreasonably withheld, conditioned or delayed.

          (b) Tenant, as well as its agents, employees and customers
(collectively, "Customers"), shall have and are granted such nonexclusive rights
                ---------
to use of the Common Areas as are provided under the CC&R's.  Landlord and
Tenant each hereby agree and acknowledge that this Lease is subject and
subordinate to all matters of now of record or which are hereafter recorded as
an encumbrance against the Landlord's Parcel (subject to Section 17 below),
                                                         ----------
including, without limitation, the CC&R's, the Development Agreement, the
Memorandum of Development Agreement, and that certain Separate Agreement (the
"Separate Agreement") to be entered into by and between Landlord and Developer
-------------------
prior to the Commencement Date, a memorandum of which shall be recorded in the
Official Records of Los Angeles County, California, as an encumbrance against
the Shopping Center (the "Memorandum of Separate Agreement"); provided that
                          --------------------------------
Tenant's prior approval shall be obtained as to any such future encumbrance
which materially increases Tenant's rights under this Lease or materially
increases Tenant's obligations or liabilities under this Lease).  The form of
the Separate Agreement and Memorandum of Separate Agreement shall be subject to
Tenant's approval, which approval shall not be unreasonably withheld,
conditioned or delayed.  Each party shall in all respects comply with the
CC&R's, Development Agreement, Separate Agreement, and other matters of record
in performance of their respective obligations under this Lease.  Landlord shall
use commercially reasonable efforts to enforce the CC&R's, Development
Agreement, Separate Agreement and other matters of record (including, without
limitation, the rights of Landlord under the CC&R's, Development Agreement,
Separate Agreement and other matters of record and the obligations of the other
parties bound by the CC&R's, Development Agreement, Separate Agreement and other
matters of record).  Without limiting the generality of the foregoing, if Tenant
in good faith determines that the CC&R's, Development Agreement, Separate
Agreement and/or any other matters of record are not being complied with,
Landlord shall use commercially reasonable efforts to enforce compliance with
the same by the non-complying party.  Landlord agrees not to consent to or
approve of any matter requiring the consent or approval of Landlord as owner of
the Landlord's Parcel under the CC&R's, Development Agreement, Separate
Agreement or other matters of record which would materially and adversely affect
the operation of Tenant's business from the Premises or the Shopping Center
without the prior written consent or approval of Tenant.

                                       9
<PAGE>

          (c) If permitted under the CC&R's, subject to the provisions of this
Section 9(c), Landlord may from time to time consent to or approve of the
------------
addition of land to or elimination of land from the Shopping Center, or the
elimination or addition of any improvements, or changes to or in the shape,
size, location, number, height or extent of the improvements to any portion of
the Shopping Center; provided, however, that if Landlord has the right under the
CC&R's to consent to or approve of the same, Tenant's prior written approval,
which approval shall not be unreasonably withheld, conditioned or delayed, shall
be required for any such change which would have an adverse affect upon Tenant's
use or occupancy of or operation from the Premises, parking areas serving the
Premises, the visibility of the Premises and/or Tenant's exterior signage from
the Common Areas exterior to the Premises and/or public rights-of-way adjacent
thereto, or pedestrian or vehicular access to the Premises from the Common Areas
and/or public rights-of-way adjacent thereto.  Landlord shall not change the
dimensions or location of the Premises.  In no event shall any kiosks be located
within the Common Areas on Landlord's Parcel.

10.  Common Area Expenses.
     --------------------

          (a) As used in this Lease, the term "Common Area Expenses" shall mean
                                               --------------------
all costs incurred by Landlord for the operation, maintenance and repair of the
Common Areas, including, without limitation, (i) maintenance, repair and
resurfacing of the parking areas and maintenance, repair and replacement of
Common Area lighting standards (except that if the cost of such resurfacing or
replacement is not fully chargeable to current account in the year incurred in
accordance with generally accepted accounting principles, such cost shall be
amortized over its useful life and only the yearly amortization included in
Common Area Expenses); cleaning, sweeping, repainting and restriping the parking
areas; maintenance of refuse receptacles, landscaping, common utility lines
serving all tenants of the Shopping Center, directional signs and other markers;
Common Area utility costs; provided, however, that the parties hereby agree that
Common Area Expenses under this clause (i) may include, without limitation, all
amounts paid by Landlord as "Common Area Maintenance Expenses" under the CC&R's
as modified by the Separate Agreement, and (ii) if not maintained by the
"Operator" under the CC&R's as a part of "Common Area Maintenance Expenses"
under the CC&R's, costs of Landlord's policy of commercial general liability
insurance for the Common Areas and, if maintained by Landlord, an All Risk
Policy for Common Area improvements on Landlord's Parcel in an amount equal to
the full replacement value thereof (subject only to reasonable deductible
amounts).  Except to the extent specifically otherwise provided in this Lease,
unless included within amounts payable by Landlord as "Common Area Maintenance
Expenses" under the CC&R's as modified by the Separate Agreement, in no event
shall "Common Area Expenses" include any expenditures which, in accordance with
       --------------------
generally accepted accounting principles, are not fully chargeable to current
account in the year the expenditure is incurred.

          (b) Subject to the provisions of Section 9 above, Tenant shall pay
                                           ---------
"Tenant's Share" (as hereinafter defined) of the Common Area Expenses.  As used
---------------
herein, "Tenant's Share" of Common Area Expenses is defined as one hundred
         --------------
percent (100%).  Tenant's payment under the provisions of this Section 10(b)
                                                               -------------
shall be due and payable not sooner than thirty (30) days following receipt by
Tenant of an itemized billing from Landlord, which billing shall be no more
frequently than monthly, nor less frequently than annually during the Term;
provided, however, that Landlord shall have the right to estimate Common Area
Expenses and Tenant's Share thereof, based on the previous year's actual
expenditures and reasonably anticipated increases and so inform Tenant in
writing along with an itemized breakdown of the actual expenditures for such
previous year.  Beginning with the first full calendar month following thirty
(30) days after Tenant's receipt of Landlord's written estimate, Tenant shall
include one-twelfth (1/12th) of its annual obligation for Tenant's Share of
Common Area Expenses based upon such estimate with each payment of Minimum Rent
thereafter until actual expenditures are thereafter computed by Landlord.  As
soon as reasonably practicable following the end of each calendar year (but not
later than within one hundred eighty (180) days thereafter), Landlord shall
calculate actual expenditures for Common Area Expenses for such calendar year
and Tenant's Share thereof and provide such accounting to Tenant (the "Annual
                                                                       ------
Statement").  If the Annual Statement shows that Tenant's payments of estimated
---------
Tenant's Share of Common Area Expenses exceeds actual Tenant's Share of Common
Area Expenses for such calendar year, Landlord shall accompany said Annual
Statement with a payment to Tenant of the amount of such excess.  If the Annual
Statement shows that Tenant's payments of estimated Tenant's Share of Common
Area Expenses were less than actual Tenant's Share of Common Area Expenses for
such calendar year, Tenant shall

                                       10
<PAGE>

pay said difference to Landlord within thirty (30) days of Tenant's receipt of
the Annual Statement.

          (c) Landlord shall keep at the Shopping Center or at another location
in Southern California, complete, accurate books of account and records with
respect to the Common Area Expenses, and shall retain such books and records and
reasonable supporting documentation for at least two (2) years from the end of
the period to which they are applicable.  Tenant's payment of Tenant's Share of
Common Area Expenses shall be without prejudice to Tenant's examination and
audit rights.  Tenant may at any reasonable time during normal business hours,
upon ten (10) days' prior notice to Landlord, cause a complete audit to be made
of such books, records and other materials which Landlord is required to retain
for all or any part of the two (2) years immediately preceding the giving of
such notice.  Tenant may require Landlord to produce such information about such
books and records as is necessary for a proper examination and audit thereof and
to make such books and records available to Tenant for examination and audit.
Any such audit shall be conducted in a manner so as to minimize interference
with Landlord's business operations.  If such audit discloses any overpayment by
Tenant of Tenant's Share of Common Area Expenses, Landlord shall refund to
Tenant the amount of such overpayment within fifteen (15) days following
Landlord's receipt of such audit.  If such audit discloses an overpayment by
Tenant of Tenant's Share of Common Area Expenses by three percent (3%) or more,
Landlord shall pay to Tenant within fifteen (15) days after demand, Tenant's
reasonable cost in conducting such audit (as evidenced by invoices or other
reasonable supporting documents delivered to Landlord).  Tenant shall not
conduct such an audit of Landlord's records more than once in any given calendar
year (unless necessitated as a result of any dispute respecting the accuracy of
the initial audit with respect to such calendar year).  Failure of Tenant to
conduct such an audit within two (2) years following provision to Tenant of the
applicable Annual Statement shall constitute waiver by Tenant of any right to
audit Common Area Expenses set forth in such Annual Statement.

11.  Maintenance.
     -----------

          (a) Tenant will at its expense maintain the interior portions of the
Premises (which Landlord is not obligated to repair in accordance with Section
                                                                       -------
11(b) below) in good and tenantable condition and make all needed repairs
-----
thereto, including, without limitation, exposed interior utility lines, meters,
pipes, conduits, fixtures and other equipment and systems serving exclusively
the Premises and equipment and personal property of Tenant within the Premises.
Tenant shall permit no waste, damage or injury to the Premises and Tenant shall
carry out a program of regular maintenance and repair of the Premises.  Tenant
shall perform all necessary repairs, alterations and improvements to cause the
Premises to comply with all applicable Laws to the extent that such compliance
is required as a result of Tenant's particular use of, or alterations or
improvements to, the Premises.  Tenant will not overload the electrical wiring
serving the Premises, and will install at its expense, but only after obtaining
Landlord's written approval any additional electrical wiring which is required
in connection the operation of Tenant's business, in excess of such electrical
wiring and capacity as is provided pursuant to Exhibit C.
                                               ---------

          (b) Landlord will, at its sole cost and expense, keep, maintain,
repair and replace in first-class and professional manner and repair consistent
with the standards of first-class shopping centers comparable to the Shopping
Center located in the vicinity of the Shopping Center, and (subject to Tenant's
obligation to perform necessary repairs, alterations or improvements to the
Premises to comply with applicable Laws where such compliance is required as a
result of Tenant's particular use of the Premises) perform any repairs,
improvements or alterations required by applicable Laws to, the foundation,
footings, roof, roof membrane, exterior walls and structural portions of, the
Premises (excluding front doors, windows, and plate glass), utility lines,
meters, pipes, conduits, fixtures and other equipment and systems (except if
exposed within the Premises and serving exclusively the Premises), and sprinkler
systems and gutters.  In addition, Landlord shall use commercially reasonable
efforts to enforce the CC&R's so as to cause the Common Areas to be maintained,
repaired, replaced and operated in accordance with the CC&R's.  Tenant may give
Landlord notice of such repairs as may be required under the terms of this
Section, and Landlord shall proceed forthwith to effect the same with reasonable
diligence, but in no event later than thirty (30) days after having received
notice (or such greater period of time as is reasonably necessary to complete
such repairs in the event such repairs are not susceptible of completion within
thirty (30) days, provided Landlord shall, following receipt of such notice from
Tenant, promptly commence such repairs and diligently prosecute

                                       11
<PAGE>

the same to completion). In event of an emergency, Tenant shall have the right,
but not the obligation, to undertake immediate repairs of such nature as would
normally be Landlord's responsibility, and notify Landlord promptly after such
repairs have been undertaken (including, without limitation, notice by
telephone, to the extent reasonably practicable). If Landlord fails to repair
any portion of the Premises which is Landlord's responsibility, within the
thirty (30) day period set forth above (or such greater period of time as is
reasonably necessary to complete such repairs in the event such repairs are not
susceptible of completion within thirty (30) days, provided that following
receipt of such notice from Tenant, Landlord promptly commences such repairs and
diligently prosecutes the same to completion), or in the case of any emergency
as above stated, Tenant may perform the repairs or maintenance and Landlord
shall reimburse Tenant for the reasonable cost of such repairs within thirty
(30) days following Landlord's receipt from Tenant of invoices or other
reasonable evidence of the amount of such costs; provided, however, that in the
event Landlord in good faith disputes whether Tenant properly performed an
obligation of Landlord hereunder, Landlord shall have the right to dispute the
same by institution of a reference proceeding in accordance with the provisions
of Section 39 below. If it is determined pursuant to such proceeding that Tenant
   ----------
did not properly perform an obligation of Landlord in accordance herewith, then
Tenant shall not have any right to reimbursement for the cost of performance as
herein provided.  If it is determined pursuant to such proceeding that Tenant
properly performed an obligation of Landlord hereunder, then Landlord shall
within ten (10) days following such determination, reimburse Tenant for the
reasonable cost of such performance as determined pursuant to such action, plus
interest thereon at the Interest Rate from the date of Tenant's expenditure
until Landlord's reimbursement.  Should Landlord fail to pay such amount as is
owing in accordance herewith (i) within thirty (30) days of receipt of invoice
(if Landlord does not institute an action within such thirty (30) day period to
in good faith dispute as herein provided), or (ii) within ten (10) days after
such determination by such action, as applicable, Tenant may deduct and offset
such amount (including interest at the Interest Rate from the time such
expenditure was made by Tenant until paid by Landlord) from Rent and other
monetary obligations of Tenant owing to Landlord hereunder.

          (c) Landlord and its authorized representatives may enter the Premises
during usual business hours, upon not less than twenty-four (24) hours' prior
written notice to Tenant to (i) inspect the same; and (ii) show the same to
prospective mortgagees, buyers and, in the final six (6) months of the Term,
tenants.  Landlord may, upon reasonable prior notice to Tenant, enter the
Premises to make additions, alterations or repairs to the Premises as Landlord
is required to make in accordance with this Lease or in order to comply with
applicable Laws, provided, however, that all such additions, alterations and/or
repairs shall be performed in a manner so as to minimize interference with the
operation of Tenant's business from the Premises.  In addition, in event of an
emergency, Landlord shall have the right, but not the obligation, to undertake
immediate repairs of such nature as would normally be Tenant's responsibility,
and notify Tenant promptly after such repairs have been undertaken (including,
without limitation, notice by telephone, to the extent reasonably practicable).
If Tenant fails to repair any portion of the Premises which is Tenant's
responsibility, within thirty (30) days after notice from Landlord of the
necessity for such repair (or such greater period of time as is reasonably
necessary to complete such repairs in the event such repairs are not susceptible
of completion within thirty (30) days, provided that following receipt of such
notice from Landlord, Tenant promptly commences such repairs and diligently
prosecutes the same to completion), or in the case of any emergency as above
stated, Landlord may perform the repairs or maintenance and Tenant shall
reimburse Landlord for the reasonable cost of such repairs within thirty (30)
days following Tenant's receipt from Landlord of invoices or other reasonable
evidence of the amount of such costs; provided, however, that in the event
Tenant in good faith disputes whether Landlord properly performed an obligation
of Tenant hereunder, Tenant shall have the right to dispute the same by
institution of a reference proceeding in accordance with the provisions of
Section 39 below.  If it is determined pursuant to such proceeding that Landlord
----------
did not properly perform an obligation of Tenant in accordance herewith, then
Landlord shall not have any right to reimbursement for the cost of performance
as herein provided.  If it is determined pursuant to such proceeding that
Landlord properly performed an obligation of Tenant hereunder, then Tenant shall
within ten (10) days following such determination, reimburse Landlord for the
reasonable cost of such performance as determined pursuant to such action, plus
interest thereon at the Interest Rate from the date of Landlord's expenditure
until Tenant's reimbursement.

                                       12
<PAGE>

12.  Insurance.
     ---------

          (a)  (i)  Landlord shall maintain at all times during the Term an "All
                                                                             ---
Risk Policy" (as hereinafter defined) insuring against damage to any portion of
-----------
the Premises, and appurtenances thereto.  Such insurance shall be in the full
amount of replacement value (subject only to reasonable deductible amounts),
without deduction for physical depreciation and shall provide that the proceeds
of any loss shall be payable in the manner provided for in this Lease.  Such
policy shall be obtained from an insurer licensed to do business within the
State of California having a policy holder's rating of at least A- and a
financial rating of not less than VIII in the most recently published Best's
Insurance Reports.  Landlord shall, at least ten (10) days prior to the
Commencement Date, and thereafter annually provide Tenant with a certification
of such insurance coverage, which certificate shall indicate, among other
things, that Tenant is a named insured along with Landlord and that the Premises
and all the improvements and Landlord's fixtures appurtenant thereto, have been
insured to their full replacement value, without deduction for physical
depreciation.  As used herein, the term "All Risk Policy" shall mean a policy of
                                         ---------------
fire and other property insurance in the form commonly referred to in the
industry as "all risk" with extended endorsement (false arrest, libel, slander,
assault, battery, invasion of privacy, theft, vandalism and malicious mischief
coverage) and including broad form water damage, or if such policy is no longer
issued, such other policy as would cover the same risks and perils; provided
that although Landlord may elect to obtain coverage for flood and earthquake in
addition to such policy, Tenant shall not be required to pay any part of the
premium allocable to such coverages.

               (ii) Tenant shall reimburse Landlord for "Tenant's Share" (as
                                                         --------------
hereinafter defined) of the premium costs of the insurance described in Section
                                                                        -------
12(a)(i) above.  Tenant's schedule of payments for reimbursement shall be
--------
established in the same manner as described in Section 6 above, for Tenant's
                                               ---------
Share of Taxes.  "Tenant's Share" for purposes of this Section 12(a)(ii) shall
                  --------------                       -----------------
be one hundred percent (100%).

               (iii)  In lieu of Landlord assuming the obligation specified in
Section 12(a)(i) above, subject to Tenant's reimbursement as described in
----------------
Section 12(a)(ii) above, Tenant may, at its option, elect to carry such
-----------------
insurance on the Premises including such other endorsements as the Tenant in its
judgment deems prudent under the circumstances, all at Tenant's sole cost and
expense, in which event Tenant shall not be responsible for reimbursement under
Section 12(a)(ii) and Tenant's Share of insurance costs pursuant to this Section
-----------------                                                        -------
12(a) for purposes of this Lease shall equal the amount of Tenant's cost for
-----
such insurance.

               (iv) As used herein, the term "Lender" means the holder of
                                              ------
indebtedness secured by a first lien upon the real property including the
Premises, whether the interest creating such lien is denominated as a mortgage,
deed of trust or other security instrument, but only if Lender (1) is a
financial institution, such as a bank, savings and loan, insurance company, or
other entity regularly engaged in making loans secured by real property, and (2)
has Fifty Million Dollars ($50,000,000.00) of such loans outstanding.  Insurance
proceeds for damage or destruction to the Premises ("Proceeds"), if under One
                                                     --------
Dollar ($1.00) per square foot of Floor Area in the Premises shall be paid
directly to Landlord.  If in excess of such amount, upon Tenant's request, the
Proceeds shall be deposited with Lender provided Lender agrees to apply the
Proceeds in the manner described herein.  If Lender does not so agree, or there
is no Lender, then, upon Tenant's request, the Proceeds shall be deposited with
a bank, trust company, or title insurance company (collectively, with Lender,
referred to herein as "Stakeholder") designated by Tenant and reasonably
                       -----------
approved by Landlord, for use as provided in Section 14 below.  The Stakeholder
                                             ----------
shall disburse the Proceeds to the party performing restoration upon
certification by the architect in charge of restoration that the amounts
requested shall be paid in accordance with standard construction disbursement
procedures in connection with such restoration to the contractor,
subcontractors, materialmen, architects or other persons who have rendered
services or have furnished materials for such restoration, and upon the
completion of such restoration the remaining balance of any of such Proceeds
shall be paid to Landlord upon demand.

          (b)  (i)  From the date of delivery of the Premises to Tenant, Tenant
will carry at its sole cost commercial general liability insurance covering the
Premises and Tenant's use thereof against claims from personal injury, bodily
injury, death and property damage occurring in or about the

                                       13
<PAGE>

Premises and Outdoor Sales Area, such insurance in each case to afford
protection to a combined single limit of at least Three Million Dollars
($3,000,000.00) (such insurance extending to any liability of Tenant arising out
of the indemnities provided for in Section 13 below), and naming Landlord as an
                                   ----------
additional insured thereunder.

               (ii) From the date of delivery of the Premises to Tenant,
Landlord will carry, as a Common Area Expense, commercial general liability
insurance covering the Common Areas on Landlord's Parcel against claims from
personal injury, bodily injury, death and property damage occurring in or about
the Premises, such insurance in each case to afford protection to a combined
single limit of at least Three Million Dollars ($3,000,000.00) (such insurance
extending to any liability of Landlord arising out of the indemnities provided
for in Section 13 below), and naming Tenant as an additional insured thereunder;
       ----------
provided, however, that for so long as the "Operator" under the CC&R's maintains
liability insurance with respect to the Common Areas as provided under Section
9.4 of the CC&R's, Landlord shall not be required to maintain liability
insurance pursuant to this Section 12(b)(ii).
                           -----------------

               (iii)  The policies maintained by Landlord and Tenant pursuant to
this Section 12(b) shall each (1) include a cross-liability endorsement
     -------------
providing that Landlord and Tenant, although insureds, may recover on account of
the negligence of the other, (2) be obtained from an insurer with a policy
holder's rating of at least A- and a financial rating of not less than VIII in
the most recently published Best's Insurance Reports, (3) shall provide that
such insurance is not contributory with the coverage which the other party may
carry and is primary insurance coverage and not excess insurance coverage or
overage insurance coverage, and (4) shall provide that the insurance provider
will give at least thirty (30) days' written notice of any cancellation,
reduction in coverage, lapse or failure to renew, to the party designated on the
insurance certificate as the holder thereof.

               (iv) Landlord and Tenant agree to deliver to the other
certificates of insurance evidencing the existence in force of the policies of
insurance described in this Section 12(b). Each of such certificates shall
                            -------------
provide that such insurance shall not be canceled, reduced in coverage, lapse or
materially amended unless thirty (30) days' prior written notice of such
cancellation, reduction in coverage, lapse or amendment is given to the party
designated on such certificate as the holder thereof.

               (v) Any insurance required by this Section 12(b) may be by
                                                  -------------
satisfied by blanket insurance, covering additional items or locations or
insureds, so long as the coverage afforded (including, without limitation,
coverage as to additional insureds) will not be reduced or diminished by reason
of the use of such blanket policy of insurance.

          (c) Landlord and Tenant waive any rights each may have against the
other on account of any loss or damage caused to Landlord or Tenant, as the case
may be, their respective property, the Premises or its contents or to the other
portions of the Landlord's Parcel, arising from any risk generally covered by
all-risk insurance if such waiver does not invalidate such policies or prohibit
recovery thereunder.  The parties each, for their respective insurance, waive
any right of subrogation that any insurer may have against Landlord or Tenant.
Landlord and Tenant shall use their respective reasonable good faith efforts to
obtain such waiver.

13.  Indemnity.
     ---------

      Tenant shall indemnify, hold harmless and defend Landlord from and against
any and all claims, actions, demands, expenses and liability whatsoever,
including reasonable attorneys' fees, on account of any such real or claimed
damage or liability and from all liens, claims, demands, expenses and liability
whatsoever arising out of the negligence or wilful misconduct of Tenant and/or
any of Tenant's employees, agents, representatives and/or contractors, to the
extent the same is not covered by the insurance required to be maintained by
Landlord pursuant to this Lease.  Landlord shall indemnify, hold harmless and
defend Tenant from and against any and all claims, actions, demands, expenses
and liability whatsoever, including reasonable attorneys' fees, on account of
any such real or claimed damage or liability and from all liens, claims,
demands, expenses and liability whatsoever arising out of the negligence or
wilful misconduct of any of Landlord and/or any of Landlord's employees, agents,
representatives and/or contractors, to the extent the same is not covered by the
insurance required to be maintained by Tenant pursuant to this Lease.

                                       14
<PAGE>

14.  Damage and Destruction.
     ----------------------

          (a) If the Premises and/or any portion of the Common Areas which if
not available for use would have an adverse affect upon the operation of
Tenant's business from the Premises is damaged or destroyed by any risk covered
by an All Risk Policy, Landlord shall (subject to being able to obtain all
necessary permits and approvals) promptly, but not later than one (100) days
after such damage or destruction (unless either party terminates this Lease
pursuant to Section 14(b)), commence and thereafter diligently prosecute to
            -------------
completion, the repair and/or reconstruction of (i) the Premises to
substantially the same condition as when the Premises were originally delivered
to Tenant pursuant to Landlord's obligations under Exhibit C (the parties hereby
                                                   ---------
agreeing that Landlord shall not be obligated for the repair and/or restoration
of any items of Tenant's Work or alterations and improvements made by Tenant not
covered by the insurance maintained by Landlord pursuant to this Lease) and (ii)
such of the Common Areas on Landlord's Parcel to the condition existing prior to
such damage or destruction, and use reasonable efforts to enforce the provisions
of the CC&R's to cause the Common Areas outside of the Landlord's Parcel to be
repaired and/or reconstructed to the condition required by the CC&R's.  Landlord
shall prosecute all such work by Landlord diligently to completion in a good and
workmanlike manner.

          (b) Landlord may terminate this Lease by notice to Tenant within sixty
(60) days after the occurrence of damage to or destruction of the Premises if
the Premises is damaged or destroyed as a result of any risk not covered by an
All Risk Policy and the cost of such repair and/or restoration exceeds ten
percent (10%) of the replacement value of the Premises; provided that Tenant may
nullify such an election by Landlord to terminate by agreeing by written notice
to Landlord within ten (10) days following receipt of Landlord's termination
notice to agree to be solely responsible for the cost of repair not covered by
an All Risk Policy and which is actually not covered by the insurance maintained
by Landlord, to the extent in excess of ten percent (10%) of the replacement
value of the Premises.  In addition, following any casualty to the Premises
and/or the Common Areas which materially and adversely affects the operation of
Tenant's business from the Premises, the parties shall meet and reasonably agree
upon an estimate of the time necessary to complete the repair and/or restoration
necessitated by such casualty, and in the event it is so determined that such
repair shall not be completed within one hundred eighty (180) days following the
occurrence of such casualty and/or in the event such repair in fact is not
completed within such one hundred eighty (180) day period (or such longer period
as Tenant may approve in writing prior to the commencement of the repair and/or
restoration), Tenant shall have the right to terminate this Lease by written
notice to Landlord delivered within thirty (30) days following the making of
such determination and/or the expiration of such one hundred eighty (180) day
(or longer, as applicable) period, as the case may be.  In addition to the
foregoing, in the event of any casualty to the Premises or a material portion of
the Common Areas occurring during the final two (2) Lease Years of the Term,
requiring in excess of ninety (90) days to repair, either party may terminate
this Lease by written notice to the other within sixty (60) days of the
occurrence of the casualty unless Tenant exercises or has exercised its next
available Option, if any, to extend the Term within such thirty (30) day period,
and in the event of the exercise of such Option to extend the Term, such
casualty shall be treated in the manner of casualties occurring other than
during the final two (2) Lease Years of the Term.  Unless this Lease is so
terminated in accordance with this Section 14(b), this Lease shall continue in
                                   -------------
full force, and Landlord shall perform its repair obligation under Section
                                                                   -------
14(a).  Upon any termination of this Lease under this Section 14(b), the Rent
                                                      -------------
shall be adjusted as of the date of such termination and the parties shall be
released without further obligation to the other coincident with the surrender
of possession of the Premises to Landlord, except for items which have accrued
and are unpaid.

          (c) If neither party terminates this Lease pursuant to Section 14(b)
                                                                 -------------
above, and if the operation of Tenant's business from the Premises is materially
interfered with as a result of such damage or destruction, Tenant's obligation
for the payment of Rent pursuant to this Lease during the period the Premises
are so rendered unfit shall be equitably abated based upon the extent of the
interference with Tenant's business resulting from such casualty.

          (d) The parties waive such rights of Lease termination as are granted
to them under the laws of the state of California, it being their agreement that
the rights of termination in the event of casualty, as set forth herein, shall
be exclusive.

                                       15
<PAGE>

15.  Condemnation.
     ------------

          (a) If during the Term, all or any portion of the Premises is taken by
right of eminent domain or condemnation by a competent governmental authority or
by conveyance in lieu thereof (collectively, any "Taking") other than in a
                                                  ------
"Temporary Taking" (as hereinafter defined), or if such a portion of the Common
-----------------
Areas is so Taken (other than in a Temporary Taking) as Tenant reasonably
determines shall have an adverse affect upon the operation of Tenant's business
from the Premises, within thirty (30) days following the date of such Taking,
Tenant may terminate this Lease upon written notice to the Landlord.  In the
event Tenant does not so terminate this Lease, Landlord shall promptly and
diligently restore the Premises and Common Areas on Landlord's Parcel, and use
reasonable efforts to enforce provisions of the CC&R's so as to cause other
portions of the Common Areas as are so Taken to be restored, to as near their
condition as existed prior to such Taking as is reasonably possible.  In the
event of a Taking which does not result in the termination of this Lease,
Tenant's obligations for Rent under this Lease shall be equitably abated
following such Taking based upon the extent of the interference with the
operation of Tenant's business from the Premises.  In the event of a "Temporary
                                                                      ---------
Taking" (which for purposes hereof shall mean a Taking not extended beyond the
------
Term) which adversely affects Tenant's operation from its Premises, Tenant shall
have the right to elect either to terminate this Lease in accordance herewith or
to not terminate this Lease and receive all compensation awarded by the
condemning authority with respect to such temporary Taking of the Premises
(provided that if such Temporary Taking shall adversely affect Tenant's
operation from its Premises for a period of less than six (6) months, Tenant
shall not have any such right to terminate this Lease as a result thereof, but
Tenant shall be entitled to receive all compensation awarded by the condemning
authority with respect to such temporary Taking).

          (b) Landlord shall be entitled to that portion of the award payable in
connection with any such Taking attributable to the diminution in value of
Landlord's reversionary interest in the Premises and fee interest in other
portions of the Landlord's Parcel, and Tenant shall be entitled to that portion
of the award payable in connection with such Taking attributable to diminution
in value of Tenant's leasehold, damage to Tenant's business and loss of goodwill
and Tenant's relocation costs.

          (c) The parties waive such rights of Lease termination as may be
granted them in the event of condemnation by the laws of the State of
California, it being their agreement that the rights of termination set forth in
this Lease shall be exclusive.

16.  Assignment and Subletting.
     -------------------------

          (a) Except as otherwise specifically provided herein, Tenant shall not
assign Tenant's interest in this Lease or sublet any portion of the Premises
(collectively, "Transfer") without obtaining in each instance the prior consent
                --------
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed.  No acceptance of Rent by Landlord from any Person shall be deemed
Landlord's consent to any Transfer.  Landlord's consent to any Transfer shall
not constitute a waiver of the necessity for such consent to any subsequent
Transfer.  Notwithstanding a permitted Transfer, Tenant shall remain fully
liable for the full performance of every obligation under this Lease to be
performed by Tenant.  Any permitted assignee or subtenant pursuant to this
Section 16 may change the trade name under which the business operating from the
----------
Premises is operated and/or the use of the Premises in accordance with the
provisions of Section 4(b) above.
              ------------

          (b) Notwithstanding anything to the contrary contained in Section
                                                                    -------
16(a) above, Tenant may, without Landlord's consent, (but upon reasonable prior
-----
notice to Landlord) at any time (i) assign this Lease or sublease the whole or
any part of the Premises to any entity controlled by, controlling or under
common control with Tenant or to any entity resulting from the consolidation or
merger of Tenant into or with such other entity or the acquisition of all or
substantially all of the assets of Tenant by such entity, or (ii) license, grant
a concession of or otherwise permit the use of one or more portions of the
Premises which are not separately demised to licensees, concessionaires or users
consistent with Tenant's permitted use of the Premises (including, without
limitation, any licensee selling golf equipment, ski and/or other sports-
oriented vacation tours or packages).

          (c) If Tenant is a corporation, unincorporated association or
partnership, Tenant shall not transfer, assign or hypothecate (or permit the

                                       16
<PAGE>

transfer, assignment or hypothecation) of all or substantially all of the assets
of such corporation, association or partnership, or all or substantially all of
any stock or interest in such corporation, association or partnership so as to
result in a change in the control thereof by the Person(s) owning a majority
interest therein on the date of this Lease.  This Section 16(c) shall not apply
                                                  -------------
to Tenant if such transaction involves an assignment or subletting permitted
under Section 16(b), nor shall this Section 16(c) or any other provision of this
      -------------                 -------------
Lease prohibit or require Landlord's consent for the transfer of stock
(including, without limitation, a majority interest in such stock) in a
corporation whose voting stock is listed on a national securities exchange.

17.  Subordination and Attornment.
     ----------------------------

          (a) Upon notice by Landlord, Tenant shall subordinate its rights under
this Lease to any lease(s) wherein Landlord is the lessee and to the lien of any
mortgage(s) or deed(s) of trust (collectively, "Instrument"), regardless of
                                                ----------
whether such Instrument now exists or is hereafter created, to all advances
thereunder, to any interest thereon, and to all modifications, consolidations,
renewals, replacements and extensions thereof, provided the lessors, mortgagees
or trustees agree to provide Tenant with an agreement of non-disturbance in a
form reasonably acceptable to Tenant, agreeing to recognize this Lease and
Tenant's rights hereunder in the event of termination or foreclosure under the
Instrument.  Tenant agrees to execute any agreement evidencing such
subordination and non-disturbance in a form reasonably acceptable to Tenant, at
Landlord's request.  Any such lessor, mortgagee or trustee may elect to have
this Lease prior to its instrument, and in the event of such election and upon
notification by such lease, mortgagee or trustee to Tenant, this Lease shall be
deemed prior to said Instrument, whether this Lease is dated prior or subsequent
to said Instrument.  Notwithstanding anything to the contrary contained in this
Lease, it shall be a condition precedent to the performance of each of Tenant's
obligations under this Lease (including, without limitation, Tenant's obligation
for the payment of Rent), that Tenant obtain from each lessor, mortgagee or
trustee under an Instrument presently encumbering the Premises, an agreement of
non-disturbance in a form reasonably acceptable to Tenant.

          (b) If Landlord's interest in the Premises is transferred (except in a
sale-leaseback financing transaction), or if any proceedings are brought for the
foreclosure of, or in the event of the exercise of the power of sale under, any
Instrument, or if any lease in a sale-leaseback transaction wherein Landlord is
the lessee is terminated, Tenant shall attorn to and recognize such purchaser,
assignee, mortgagee or trustee as Landlord under this Lease, provided such
purchaser, assignee, mortgagee or trustee has executed or agrees to execute an
agreement of non-disturbance in a form reasonably acceptable to Tenant,
recognizing this Lease and Tenant's rights hereunder.

18.  Tenant Defaults.
     ---------------

          (a) The occurrence of either of the following shall constitute a
default by Tenant pursuant to this Lease:  (i) Tenant's failure to pay Rent when
due under this Lease, where such failure continues for ten (10) days after
notice that such payment is due (which notice shall be lieu of and not in
addition to any notice required under applicable law); and (ii) Tenant's failure
to observe or perform any covenant, term or condition of this Lease (other than
the payment of Rent) where such failure continues for thirty (30) days after
notice thereof from Landlord to Tenant (which notice shall be lieu of and not in
addition to any notice required under applicable law); provided that if such
failure cannot reasonably be cured within such thirty (30) day period, Tenant
shall not be in default hereunder so long as Tenant commences such cure within
such thirty (30) day period and thereafter diligently prosecutes such cure to
completion.

          (b) In the event of any default by Tenant pursuant to Section 18(a)
                                                                -------------
above, in addition to any other remedies available to Landlord at law or in
equity, Landlord shall have the immediate option to terminate this Lease and all
rights of Tenant hereunder by giving written notice of such intention to
terminate.  In the event that Landlord shall elect so to terminate this Lease,
then Landlord may recover from Tenant:

               (i)    The worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus

                                       17
<PAGE>

               (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 Tenant proves could have been
reasonably avoided; plus

               (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 Tenant proves could have been reasonably
avoided; plus

               (iv)   Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom.

     The term "rent" as used herein shall be deemed to mean Minimum Rent and
               ----
Additional Rent but not Percentage Rent.  As used in Sections 18(b)(i) and (ii)
                                                     -----------------     ----
above, the "worth at the time of award" is computed by allowing interest at the
Interest Rate.  As used in Section 18(b)(iii) above, the "worth at the time of
                           ------------------
award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).

          (c) In the event of any default by Tenant pursuant to Section 18(a)
                                                                -------------
above and Tenant's abandonment of the Premises, Landlord shall also have the
right to reenter the Premises and remove all persons and property therefrom by
summary proceedings or otherwise; such property may be removed and stored in a
public warehouse or elsewhere at the cost of and for the account of Tenant or
disposed of in a reasonable manner by Landlord.

          (d) In the event Landlord shall elect to reenter as provided in
Section 18(c) above, or shall take possession of the Premises pursuant to legal
-------------
proceedings or pursuant to any notice provided by law, and if Landlord does not
elect to terminate this Lease, then Landlord may from time to time, without
terminating this Lease, either recover all rental as it becomes due or relet the
Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its reasonable
discretion may deem advisable, with the right to make alterations and repairs to
the Premises.  In the event that Landlord shall elect to relet, then rentals
received by Landlord from such reletting shall be applied first, to the payment
of any indebtedness, other than Minimum Rent due hereunder, owed by Tenant to
Landlord; second, to the payment of any reasonable cost actually incurred in
such reletting; third, to the payment of the reasonable cost actually incurred
in making any alterations and repairs to the Premises; fourth, to the payment of
Minimum Rent due and unpaid hereunder; and the residue, if any, shall be held by
Landlord and applied in payment of future rent as the same may become due and
payable hereunder.  Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of rent hereunder,
be less than the rent payable during that month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord.  Such deficiency shall be calculated and
paid monthly.  Tenant shall also pay to Landlord, as soon as ascertained, any
costs and expenses reasonably incurred by Landlord in such reletting, including
but not limited to brokerage commissions, or in making alterations and repairs
not covered by the rentals received from such reletting.  No reentry or taking
possession of the Premises by Landlord pursuant to this Section 18, shall be
                                                        ----------
construed as an election to terminate this Lease unless a written notice of such
intention be given by Landlord to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction.  Landlord may at any time after
such reletting elect to terminate this Lease for any such default by Tenant.

          (e) All rights, options and remedies of Landlord contained in this
Lease shall be construed and held to be cumulative, and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by law,
whether or not stated in this Lease.

          (f) Landlord waives such liens, if any, to which it may have a right
with respect to the merchandise, furniture, trade fixtures and other personal
property of Tenant located on or about the Premises and shall from time to time
execute such documents as Tenant may reasonably request to acknowledge such
waiver.

                                       18
<PAGE>

19.  Landlord Defaults.   Except as otherwise provided in this Lease, Landlord
     -----------------
shall be in default under this Lease if Landlord fails to perform any of its
obligations hereunder and said failure continues for a period of thirty (30)
days after Tenant gives Landlord notice thereof (unless such failure cannot
reasonably be cured within thirty (30) days) and Landlord shall have commenced
to cure within said thirty (30) days and continues diligently to pursue the
curing of the same). Tenant agrees to give to any holder of indebtedness secured
by a first and/or second lien upon the Premises whose address has previously
been provided to Tenant, a copy of any notice of default served upon the
Landlord. Tenant further agrees that any such holder of indebtedness shall have
the right to cure any Landlord default within the time period provided for such
cure by Landlord pursuant to this Lease. If such default is not cured within the
specified time period, Tenant may exercise any right or remedy available to it
at law or in equity or under this Lease. Tenant shall have the right to cure any
such default and Landlord shall reimburse Tenant for the reasonable cost thereof
within thirty (30) days following receipt from Tenant of invoices or other
reasonable evidence of the amount of such costs; provided, however, in the event
Landlord in good faith disputes whether Tenant properly performed an obligation
of Landlord, Landlord may dispute the same by institution of a reference
proceeding pursuant to Section 39 below within thirty (30) days following
                       ----------
Tenant's request for reimbursement. If it is determined pursuant to such
proceeding that Tenant's cure was proper, Landlord shall, within ten (10) days
following such determination, reimburse Tenant for the cost of such cure (plus
interest at the Interest Rate from the date of Tenant's expenditure until
reimbursement). Should Landlord fail to pay Tenant any amount due Tenant (a)
within thirty (30) days following receipt of Tenant's invoices or other evidence
(if Landlord does not institute a reference proceeding disputing such cure), or
(b) within ten (10) days after determination by reference, Tenant may,
notwithstanding anything to the contrary contained in this Lease, deduct and
offset such amount (including, without limitation, interest at the Interest Rate
from the time of Tenant's expenditure until repaid) from any monetary obligation
of Tenant owing Landlord hereunder. Notwithstanding anything to the contrary
contained in this Lease, Tenant shall have the right to offset any unpaid
reference or court award from any monetary obligation due under this Lease. Any
amount due from Landlord to Tenant shall bear interest at the Interest Rate from
the date due until paid. All rights, options and remedies of Tenant contained in
this Lease shall be construed and held to be cumulative, and no one of them
shall be exclusive of the other, and Tenant shall have the right to pursue any
one or all of such remedies or any other remedy or relief which may be provided
by law, whether or not stated in this Lease. Tenant's failure to insist upon
strict performance of any term, covenant or condition of this Lease or to
exercise any right or remedy it has shall not be deemed a waiver or
relinquishment for the future of such performance, right or remedy unless in
writing signed by Tenant. No waiver by Tenant shall constitute a waiver of any
subsequent breach.

20.  Tenant's Property; Surrender; Holding Over.
     ------------------------------------------

          (a) Any furniture, trade fixtures and other equipment and personal
property of Tenant not permanently affixed to the Premises shall be Tenant's
property.  Tenant may remove its personal property which it has stored or placed
in the Premises.  Tenant, at its sole expense, shall immediately repair any
damage to the Premises caused by installation or removal of any personal
property unless such damage is caused by the negligence or wilful misconduct of
Landlord and/or any of Landlord's employees, agents, representatives and/or
contractors.  Any personal property of Tenant not removed from the Premises
before the expiration of the Term or within thirty (30) days following any
earlier termination of this Lease in accordance with the terms of this Lease
shall become Landlord's property, except to the extent Landlord elects to
require its removal, in which case Tenant shall promptly cause the removal of
the same at Tenant's expense.

          (b) Tenant shall surrender possession of the Premises upon the
expiration of the Term or earlier termination of this Lease, broom clean, free
of debris, in good order and state of repair (excepting Landlord's obligations
under this Lease and ordinary wear and tear), and deliver the keys as Landlord
designates.  In the event Tenant holds over in the Premises following the
expiration of the Term or earlier termination of this Lease, and Tenant's
occupancy shall be considered a tenancy from month to month (terminable upon
thirty (30) days' notice by either party) on all terms and conditions of this
Lease, except that Tenant's obligation for monthly Minimum Rent during such
holdover shall equal one hundred ten percent (110%) of the monthly Minimum Rent
in effect immediately preceding the expiration of the Term or earlier
termination of the Lease.

                                       19
<PAGE>

21.  Limitation of Liability.   In consideration of the benefits accruing under
     -----------------------
the Lease, and notwithstanding anything contained in this Lease to the contrary,
Tenant and all successors and assigns covenant and agree that, in the event of
any actual or alleged failure, breach or default under the Lease by Landlord,
their sole and exclusive remedy shall be against Landlord's interest in the
Landlord's Parcel. Tenant and all such successors and assigns agree that the
obligations of Landlord under the Lease do not constitute personal obligations
of the individual partners, whether general or limited, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse against the
individual partners, directors, officers or shareholders of Landlord or any of
their personal assets for satisfaction of any liability with respect to the
Lease.

22.  Quiet Enjoyment.   Upon payment by Tenant of the rent and the observance
     ---------------
and performance of all of the agreements, covenants, terms and conditions on
Tenant's part to be observed and performed, Tenant shall quietly enjoy the
Premises for the Term without hindrance or interruption by Landlord or any other
person or persons lawfully or equitably claiming by, through or under Landlord,
subject to the terms of this Lease, the CC&R's, the Development Agreement, the
Separate Agreement and applicable matters of record.

23.  Estoppel Statements.   Within twenty (20) days after each written request
     -------------------
from either party in connection with a sale, financing or other transfer of such
party's interest in this Lease, the non-requesting party shall execute and
deliver to the requesting party or its designee (and the requesting party and
each designee may rely thereon) an estoppel certificate in form reasonably
satisfactory to the requesting party certifying as to such matters as may be
reasonably requested by the requesting party.

24.  Force Majeure.   If either party is delayed or hindered in or prevented
     -------------
from the performance of any act required hereunder because of strikes, lockouts,
inability to procure labor or materials, failure of power, restrictive Laws,
riots, insurrection, war, fire or other casualty or other reason of a similar or
dissimilar nature beyond the reasonable control of the party delayed (any "Force
                                                                           -----
Majeure Event"), performance of such act shall be excused for the period of the
-------------
Force Majeure Event, and the period for the performance of such act shall be
extended for an equivalent period.  Delays or failures to perform resulting from
lack of funds shall not be Force Majeure Events.

25.  Signs.   Tenant shall be entitled to the maximum lawful building signage,
     -----
provided that such signage shall be subject to compliance with applicable Laws,
the CC&R's, Development Agreement, Separate Agreement and other matters of
record.  In addition, subject to compliance with applicable Laws, Tenant shall
be entitled to all pylon and/or monument signage rights to which Landlord may be
entitled for Landlord's Parcel under the CC&R's, Development Agreement and/or
Separate Agreement (including, without limitation, under Section 3.3 of the
Separate Agreement), provided that Tenant shall be responsible for all costs of
fabrication of its identification panels upon such signage and any costs for
such pylon and/or monument signage which Landlord is required to pay under the
CC&R's, Development Agreement and/or Separate Agreement.

26.  Real Estate Brokers.   Tenant warrants that it has not dealt with a broker
     -------------------
regarding this Lease, and shall indemnify, defend and hold harmless Landlord
from and against any and all claims, actions, damages, expenses and liability
whatsoever, including reasonable attorneys' fees, arising from any claim for
commission or finder's fee regarding this Lease by reason of dealings with
Tenant. Landlord warrants that it has not dealt with a broker regarding this
Lease, and shall indemnify, defend and hold harmless Tenant from and against any
and all claims, actions, damages, expenses and liability whatsoever, including
reasonable attorneys' fees, arising from any claim for commission or finder's
fee regarding this Lease by reason of dealings with Landlord.

27.  Memorandum of Lease.   This Lease shall not be recorded. However, a
     -------------------
Memorandum hereof in the form attached hereto as Exhibit B shall be executed, in
                                                 ---------
recordable form, by both parties concurrently herewith and recorded by Landlord,
at Landlord's expense, with the official charged with recordation duties for the
county in which the Shopping Center is located, with directions that it be
returned to Tenant. Upon the expiration of the Term or earlier termination of
this Lease, Tenant shall cooperate with Landlord in executing a memorandum, in
recordable form, acknowledging Tenant's release of its leasehold interest in the
Premises.

                                       20
<PAGE>

28.  Notices.   Any notice, demand, request, approval, consent or other
     -------
instrument which is, or is required to be, given under this Lease shall be in
writing and shall be deemed to have been given two (2) days after when mailed by
United States registered or certified mail return receipt requested, postage
prepaid, or when received, if sent by overnight courier or delivery service,
addressed to Landlord or Tenant at the respective addresses set forth in the
Basic Lease Provisions or such other address or addresses as either party may
designate by notice to the other in accordance with this Section 28.
                                                         ----------

29.  Attorneys' Fees.   In the event either party shall institute any action or
     ----------------
proceeding against the other party relating to this Lease, the unsuccessful
party in such action or proceeding shall reimburse the successful party for its
disbursements incurred in connection therewith and for its reasonable attorneys'
fees as fixed by the court. In addition to the foregoing award of attorneys'
fees to the successful party, the successful party in any lawsuit on this Lease
shall be entitled to its attorneys' fees incurred in any post-judgment
proceedings to collect or enforce the judgment. This provision is separate and
several and shall survive the merger of this Lease into any judgment on this
Lease.

30.  Waiver.   No waiver of any breach of any of the terms, covenants,
     ------
agreements, restrictions or conditions of this Lease shall be construed as a
waiver of any succeeding breach of any of the same or other covenants,
agreements, restrictions, or conditions hereof.

31.  Lease Binding Upon Successors.   Subject to the provisions of Section 16
     -----------------------------                                 ----------
above, each of the terms, covenants and conditions of this Lease shall extend to
and be binding upon and shall inure to the benefit of not only Landlord and
Tenant, but each of their respective heirs, administrators, legal
representatives, successors and assigns. Whenever in this Lease reference is
made to either Landlord or Tenant, the reference shall be deemed to include,
wherever applicable, the heirs, legal representatives and administrators,
successors and assigns, the same as if such parties were named in every case.

32.  Topical Headings.   Captions of the sections or parts of this Lease are for
     ----------------
convenience only and shall not be considered or referred to in resolving
questions of interpretation or construction.

33.  Language.   The words "Landlord" and "Tenant" when used herein shall be
     --------               --------       ------
applicable to one or more persons as the case may be, and the singular shall
include the plural, and the neuter shall include the masculine and feminine, and
if there be more than one, the obligations hereof shall be joint and several.
The word "persons" wherever used shall include individuals, firms, associations
          -------
and corporations. The language in all parts of this Lease shall in all cases be
construed as a whole and in accordance with its fair meaning and shall not be
construed strictly for or against Landlord or Tenant.

34.  Invalidity.   If any provision of this Lease shall prove to be invalid,
     ----------
void or illegal, it shall in no way affect, impair or invalidate any other
provision hereof.

35.  Time of the Essence.   Time is expressly declared to be "of the essence" in
     -------------------
this Lease and in each and every provision hereof wherein time for performance
is a factor.

36.  Governing Law.   This Lease shall be governed by, and construed in
     -------------
accordance with, the laws of the State of California.

37.  Approvals.   Except to the extent specifically otherwise provided in this
     ---------
Lease, whenever the approval or consent of either of the parties hereto is
required under this Lease, such approval or consent shall not be unreasonably
withheld, conditioned or delayed.

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

39.  Reference.   At the election of either Landlord or Tenant, any dispute with
     ---------
respect to the subject matter of this Lease (except an unlawful detainer action
by Landlord) shall be resolved by reference pursuant to the provisions of
California Code of Civil Procedure Section 638 et seq., for a determination to
                                               -- ---
be made which shall be binding upon the parties as if tried before a court or
jury.  The parties agree specifically as to the following:

                                       21
<PAGE>

          (a) Within five (5) business days after service of a demand by a party
hereto, the parties shall agree upon a single referee who shall then try all
issues, whether of fact or law, and then report a finding or judgment thereon.
If the parties are unable to agree upon a referee either party may seek to have
one appointed, pursuant to California Code of Civil Procedure Section 640, by
the presiding judge of the Los Angeles County Superior Court.

          (b) The compensation of the referee shall be such charge as is
customarily charged by the referee for like services.  The cost of such
proceedings shall initially be borne equally by the parties.  However, the
prevailing party in such proceedings shall be entitled, in addition to all other
costs, to recover its contribution for the cost of the reference as an item of
damages and/or recoverable costs.

          (c) If a reporter is requested by either party, then a reporter shall
be present at all proceedings, and the fees of such reporter shall be borne by
the party requesting such reporter.  Such fees shall be an item of recoverable
costs.  Only a party shall be authorized to request a reporter.

          (d) The referee shall apply all California Rules of Procedure and
Evidence and shall apply the substantive law of California in deciding the
issues to be heard.  Notice of any motions before the referee shall be given,
and all matters shall be set at the convenience of the referee.

          (e) The referee's decision under California Code of Civil Procedure
Section 644, shall stand as the judgment of the court, subject to appellate
review as provided by the laws of the State of California.

          (f) The parties agree that they shall in good faith endeavor to cause
any such dispute to be decided within four (4) months.  The date of hearing for
any proceeding shall be determined by agreement of the parties and the referee,
or if the parties cannot agree, then by the referee.

          (g) The referee shall have the power to award damages and all other
relief.

40.  Entire Agreement.   This Lease contains the entire agreement of the parties
     ----------------
hereto with respect to the matters covered thereby, and no other agreement,
statement or promise made by any party hereto, or to any employee, officer or
agent of any party hereto, which is not contained herein, shall be binding or
valid. All prior or contemporaneous agreements or writings between or among the
parties are specifically merged into this Lease. This Lease may not be amended,
modified or supplemented except by written instrument executed by Landlord and
Tenant.

     IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year written next to their respective signatures.

LANDLORD:                               TENANT:

NORTH SAN FERNANDO VALLEY PROPERTIES,   SPORT CHALET, INC.,
INC., a California corporation          a Delaware corporation

By:  /S/ Norbert Olberz                 By: /S/ Dennis Trausch
   -------------------------               ---------------------------

Print Name: Norbert Olberz              Print Name:  Dennis Trausch
           -----------------                       -------------------

Its:  President                         Its: Executive Vice President
    ------------------------                 -------------------------

                                       22
<PAGE>

                                   EXHIBIT A
                                   ---------

                                   SITE PLAN


                              Exhibit A - Page 1
<PAGE>

                                   EXHIBIT B
                                   ---------



RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

Sport Chalet, Inc.
920 Foothill Boulevard
La Canada, California 91011
Attn:  Mr. Dennis Trausch

--------------------------------------------------------------------------------
                                   Space above this line for Recorder's use only

                              MEMORANDUM OF LEASE
                              -------------------

     This Memorandum of Lease (this "Memorandum") is dated as of May 7, 1999, by
                                     ----------
and between NORTH SAN FERNANDO VALLEY PROPERTIES, INC., a California corporation
("Landlord"), and SPORT CHALET, INC., a Delaware corporation ("Tenant"), with
  --------                                                     ------
reference to the following facts:

     Concurrently herewith, Landlord and Tenant have entered into that certain
Lease (the "Lease") for that certain premises (the "Premises") consisting of a
            -----                                   --------
building to be constructed by Landlord within the area shown as cross-hatched on
the site plan attached hereto as Schedule 1 and incorporated herein by this
                                 ----------
reference, which building shall contain approximately forty-three thousand
(43,000) square feet of "Floor Area" (as defined in the Lease).  The Premises is
                         ----------
located upon a parcel of real property ("Landlord's Parcel") in the City of Los
                                         -----------------
Angeles, County of Los Angeles, and State of California as legally described on
Schedule 2 attached hereto and made a part hereof.  The Landlord's Parcel is a
----------
portion of a larger commercial project commonly known as "Porter Ranch Town
Center" (the "Shopping Center").
              ---------------

     NOW, THEREFORE, for and in consideration of the foregoing, Landlord and
Tenant hereby agree as follows:

     1.  Agreement to Lease.  Landlord hereby leases to Tenant, and Tenant
         ------------------
hereby leases from Landlord, the Premises together with the right to the use of
the "Common Areas" (as defined in the Lease) pursuant to the Lease, at the
     ------------
rental and upon all of the terms and conditions set forth in the Lease, which
Lease is incorporated herein by this reference.  In the event of any
inconsistency between the terms and conditions of this Memorandum and the terms
and conditions of the Lease, the terms and conditions of the Lease shall govern
and control.

     2.  Term.  Subject to the terms and conditions contained in the Lease, the
         ----
Premises is leased for an initial term which is to expire on the January 31 next
following the expiration of 15 "Full Lease Years" (as defined in the Lease)
                                ----------------
following the "Commencement Date" (as defined in the Lease), together with
               -----------------
options to extend the term of the Lease for five (5) consecutive five (5) year
periods.

     3.  Covenants Running with the Land.  The covenants of Landlord set forth
         -------------------------------
in the Lease shall run with the land of Landlord's Parcel in accordance with the
provisions of applicable law, including, without limitation, Sections 1469 and
1470 of the California Code of Civil Procedure.

     IN WITNESS WHEREOF, each of the parties hereto has executed this instrument
as of the date first above written.

LANDLORD:                               TENANT:

NORTH SAN FERNANDO VALLEY PROPERTIES,   SPORT CHALET, INC.,
INC., a California corporation          a Delaware corporation

By:________________________             By:_________________________

Print Name:________________             Print Name:_________________

Its:_______________________             Its:________________________

                              Exhibit B - Page 1
<PAGE>

STATE OF CALIFORNIA     )
                        ) ss.
COUNTY OF __________)

     On ________________, 199__, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared ___________________________,

 personally known to me;

 proved to me on the basis of satisfactory evidence,

to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the within instrument.

     WITNESS my hand and official seal.



     _________________________________
     Notary Public

STATE OF CALIFORNIA     )
                        ) ss.
COUNTY OF __________)

     On ________________, 199__, before me, the undersigned, a Notary Public in
and for said County and State, personally appeared ___________________________,

 personally known to me;

 proved to me on the basis of satisfactory evidence,

to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the within instrument.

     WITNESS my hand and official seal.



     _________________________________
     Notary Public
<PAGE>

                       SCHEDULE 1 TO MEMORANDUM OF LEASE
                       ---------------------------------

                      DEPICTION OF PREMISES ON SITE PLAN
<PAGE>

                       SCHEDULE 2 TO MEMORANDUM OF LEASE
                       ---------------------------------

                               LEGAL DESCRIPTION
<PAGE>

                                   EXHIBIT C
                                   ---------

                           CONSTRUCTION OF PREMISES

1.   Landlord's Work.
     ---------------

     (a) Landlord shall cause the Premises to be improved upon the Substantial
Completion Date in accordance with certain specifications therefor which, if not
approved by the parties prior to the execution of this Lease, shall be mutually,
reasonably approved by Landlord and Tenant promptly following the execution of
this Lease (collectively, "Landlord's Work").
                           ---------------

     (b) Landlord's Work shall be performed in accordance with detailed plans
and specifications therefor, prepared by a qualified and experienced design
professional reasonably approved by Tenant, at Landlord's sole cost and expense,
which shall have been previously approved in writing by Tenant in accordance
with the following.  If the "Final Working Drawings" (as hereinafter defined)
                             ----------------------
have not been approved prior to the execution of this Lease, then the following
provisions regarding preparation and approval of Preliminary Drawings and Final
Working Drawings shall apply:  Promptly following the execution of this Lease,
Landlord shall submit to Tenant for Tenant's approval, three (3) complete sets
of the "Preliminary Drawings" showing the schematic design of Landlord's Work.
        --------------------
Tenant shall return to Landlord the Preliminary Drawings, marked "approved" or
"disapproved", within fifteen (15) days of receipt.  If no response from Tenant
is received within such fifteen (15) day period, such Preliminary Drawings shall
be deemed disapproved.  If such Preliminary Drawings are so disapproved or
deemed disapproved, the parties shall promptly meet to resolve any objections of
Tenant and Landlord shall thereafter promptly submit revised Preliminary
Drawings to Tenant for reevaluation in accordance herewith.  Upon return by
Tenant of approved Preliminary Drawings, Landlord shall prepare for submittal to
Tenant for Tenant's approval three (3) complete sets of the Final Working
Drawings (the "Final Working Drawings") which shall include architectural,
               ----------------------
structural, mechanical, electrical, and plumbing drawings for Landlord's Work.
The Final Working Drawings shall be prepared strictly in accordance with the
Preliminary Drawings approved by Tenant.  Tenant will return to Landlord the
Final Working Drawings, marked either "approved" or "disapproved", within
fifteen (15) days of receipt.  If no response from Tenant is received within
such fifteen (15) day period, such Final Working Drawings shall be deemed
disapproved.  If such Final Working Drawings are so disapproved or deemed
disapproved, the parties shall promptly meet to resolve any objections of Tenant
and Landlord shall thereafter promptly submit revised Final Working Drawings to
Tenant for reevaluation in accordance herewith.  Tenant shall have the right to
reasonably approve the general contractor and the subcontractors for performance
of all major trades for the performance of Landlord's Work.  All contractors and
subcontractors for the performance of Landlord's Work shall be duly qualified,
licensed and experienced in the construction of comparable improvements.

     (c) For all purposes of this Exhibit C and the Lease of which this Exhibit
                                  ---------                             -------
C is a part, the "Substantial Completion Date" shall be deemed to occur upon the
-                 ---------------------------
latest to occur of (i) receipt by Tenant of factually correct certification from
Landlord's architect for the performance of Landlord's Work of the completion of
all of Landlord's Work in accordance with the provisions of this Exhibit C,
                                                                 ---------
other than such customary "punch-list" items which do not adversely affect
Tenant's performance of Tenant's Work or Tenant's use or occupancy of, or
operation of business from, the Premises and/or such items, if any, as cannot be
completed prior to the completion of Tenant's Work, (ii) the completion of such
portions of the Common Areas and off-site improvements benefitting the Project
as are necessary for Tenant's unimpaired use and operation of business from the
Premises, and (iii) the receipt by Tenant of all "Tenant's Permits" (as
                                                  ----------------
hereinafter defined).  As used herein, "Tenant's Permits" shall mean (1) all
                                        ----------------
zoning approvals and other governmental permits and approvals, if any, required
as a condition to Tenant's operation of its business from the Premises (except
for such permits or approvals which require the completion of Tenant's Work
prior to issuance) (collectively, "Tenant's Use Permits"), and (2) building
                                   --------------------
permits for the performance of Tenant's Work ("Tenant's Building Permits").
                                               -------------------------
Tenant shall use commercially reasonable efforts to obtain Tenant's Use Permits
as soon as reasonably possible following the execution of this Lease subject to
the provisions of this Exhibit C.  Landlord shall deliver to Tenant not less
                       ---------
than sixty (60) days' prior written notice of Landlord's good faith estimate of
the occurrence of the Substantial Completion Date and thereafter provide Tenant
with progress reports and other information reasonably necessary to inform
Tenant of the Substantial Completion Date.  All such "punch-list"

                              Exhibit C - Page 1
<PAGE>

items and such other unperformed items of Landlord's Work not completed upon the
Substantial Completion Date shall be completed by Landlord as soon as possible
following such Substantial Completion Date but in no event later than thirty
(30) days thereafter. In addition, at any time following the Substantial
Completion Date, Tenant shall have the right to notify Landlord of incomplete or
defective items of Landlord's Work and Landlord shall promptly complete or
repair, as the case may be, such items of work.

2.   Tenant's Work.  Tenant shall, at Tenant's sole cost and expense, perform
     -------------
all work in the Premises (other than Landlord's Work) and install such
furniture, trade fixtures and equipment as Tenant deems necessary for the
operation of Tenant's business from the Premises (collectively, "Tenant's
                                                                 --------
Work"). To the extent Tenant's Work constitutes alterations which would require
----
the consent of Landlord pursuant to the Lease, such Tenant's Work shall be
performed in accordance with plans and specifications therefor which shall be
subject to Landlord's prior written approval (which approval shall not be
unreasonably withheld or delayed). All Tenant's Work shall be performed in a
good and workmanlike manner and in accordance with all applicable Laws. Tenant
shall use commercially reasonable efforts to obtain Tenant's Building Permits
for the performance of Tenant's Work to the extent required for such work as
soon as possible following approval of the plans and specifications therefor,
and, following receipt thereof, shall deliver copies of such permits to Landlord
upon request. Tenant shall commence the performance of Tenant's Work promptly
following the Substantial Completion Date, and thereafter diligently prosecute
the same to completion.

                              Exhibit C - Page 1