Document:

<PAGE>   1
                                                                   Exhibit 10.14

                                                          INDEXING INSTRUCTIONS:

                   Part of the Northeast Quarter, Section 25,

                                                 Township 1 South, Range 6 West,
                                                                             and
                                      Part of the Southeast Quarter, Section 24,
                                                 Township 1 South, Range 6 West,
                                                       DeSoto County Mississippi

                                 LEASE AGREEMENT

                                 BY AND BETWEEN

                         HEWSON/DESOTO PARTNERS, L.L.C.

                                       AND

                      WILLIAMS-SONOMA RETAIL SERVICES, INC.

                         DATED: AS OF NOVEMBER 15, 1999

PREPARED BY:

BAKER, DONELSON, BEARMAN & CALDWELL

<PAGE>   2

2000 FIRST TENNESSEE BUILDING
165 MADISON AVENUE
MEMPHIS, TENNESSEE 38103

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                               TABLE OF CONTENTS

<TABLE>
Section                                                                     Page
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<S>                                                                         <C>
ARTICLE  I
TERM..........................................................................3
  1.1 Initial Term............................................................3
  1.2 Improvements; Occupancy.................................................3
  1.3 Fixtures; Equipment.....................................................6
  1.4 Option Periods..........................................................6

ARTICLE II
RENT..........................................................................8
  2.1 Rent....................................................................8
  2.2 Net-Net-Net Lease......................................................10
  2.3 Proration of Taxes.....................................................14
  2.4 Payment of Taxes; Payment Deferral.....................................15
  2.5 Evidence of Tax Payment................................................16
  2.6 Global Basic Rent Adjustment...........................................16
  2.7 Option Period Rent Rates...............................................17

ARTICLE III
USE, OPERATION, MAINTENANCE AND ALTERATION...................................20
  3.1 Use & Occupancy........................................................20
  3.2 Use of Insurance Proceeds..............................................24
  3.3 Alterations; Improvements..............................................28
  3.4 Signage................................................................31
  3.5 Liens; Encumbrances....................................................31
  3.6 Indemnification........................................................32
  3.7 Inspection of Project..................................................32
  3.8 Landlord's Entry to Project Following Default..........................33

ARTICLE IV
INSURANCE....................................................................33
  4.1 Insurance Requirements.................................................33
  4.2 Form of Policy.........................................................35
  4.3 Notice of Damage or Destruction........................................37
  4.4 Net Proceeds...........................................................37
</TABLE>

                                       i
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<TABLE>
<CAPTION>
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Section                                                                                     ----
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<S>                                                                                         <C>
ARTICLE V
CONDEMNATION................................................................................37
5.1 Notice of Condemnation..................................................................37
5.2 Partial Condemnation....................................................................38
5.3 Substantial Condemnation; Condemnation in Excess of $5,000,000..........................39

ARTICLE VI
SALES, MORTGAGES, ETC. AND GENERAL CONDITIONS...............................................42
6.1 Assignment by Tenant....................................................................42
6.2 Exercise of Rights or Remedies by Landlord..............................................44
6.3 Tenant's Right of First Refusal.........................................................44
6.4 Financial Covenants of Lessee...........................................................44
6.5 Compliance with Bond Documents by Landlord..............................................50
6.6 Financial Statements....................................................................50

ARTICLE VII
DEFAULT.....................................................................................51
7.1 Events of Default.......................................................................51
7.2 Landlord Remedies.......................................................................53
7.3 Re-Entry................................................................................57
7.4 Remedies Cumulative.....................................................................57
7.5 Lessee's Indemnification; Attorney Fees.................................................57
7.6 Mutual Indemnification; Costs...........................................................58
7.7 Right of Offset.........................................................................58
7.8 Certification by Subtenants.............................................................59

ARTICLE VIII
ARBITRATION.................................................................................59
8.1 Submission to Board of Arbitrators......................................................59

ARTICLE IX
COVENANT OF QUIET ENJOYMENT.................................................................61
9.1 Quiet Enjoyment; Non-Disturbance........................................................61
</TABLE>

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<TABLE>
<CAPTION>
Section                                                                                          Page
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<S>         <C>                                                                                  <C>
ARTICLE X
MISCELLANEOUS.....................................................................................61

10.1    Tenancy Beyond Lease Term.................................................................61
10.2    Notices...................................................................................62
10.3    Definition of "Landlord.".................................................................63
10.4    Headings; Table of Contents...............................................................63
10.5    Counterparts..............................................................................64
10.6    Governing Law.............................................................................64
10.7    Cure on Behalf of Landlord................................................................64
10.8    Binding on Successors and Assigns.........................................................64
10.9    Authority of Signatories..................................................................64
10.10   Benefits of the Act.......................................................................65
10.11   [RESERVED.]...............................................................................66
10.12   Waivers...................................................................................66
10.13   Mechanic's Liens..........................................................................66
10.14   Utilities.................................................................................67
10.15   [RESERVED.]...............................................................................67
10.16   Cure on Behalf of Tenant..................................................................67
10.17   Severability..............................................................................67
10.18   Venue.....................................................................................68
10.19   [RESERVED.]...............................................................................68
10.20   Waiver of Jury Trial......................................................................68
10.21   Waiver of Right of Recovery...............................................................69
10.22   Design and Construction Indemnity.........................................................69
10.23   Landlord Waiver of Liens..................................................................70
10.24   Tenant Right to Terminate.................................................................70
10.25   Litigation................................................................................72
10.26   Costs of Action...........................................................................72
10.27   Nondisturbance............................................................................72
10.28   Tenant Subordination of Lease.............................................................73
10.29   Agency....................................................................................73
10.30   Amendment.................................................................................74
</TABLE>

Exhibits:

Exhibit "A"    Real Property Description   A-1
Exhibit "B"    Plans for Building and Improvements and Construction Budget   B-1
Exhibit "C"    Rent Schedule  C-1
Exhibit "D"    Environmental Notices  D-1

                                      iii
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Exhibit "E"    Easements Affecting Real Property   E-1
Exhibit "F"    Existing Indebtedness               F-1

                                       iv
<PAGE>   7

                                 LEASE AGREEMENT

        THIS LEASE, entered into as of the 15th day of November, 1999, by and
between HEWSON/DESOTO PARTNERS, L.L.C., an Arizona limited liability company
(the "Landlord"), and WILLIAMS-SONOMA RETAIL SERVICES, INC., a California
corporation (the "Tenant");

                           W I T N E S S E T H, that:

        This Lease constitutes a financing agreement for the purposes of
Sections 57-10-409 and 27-7-22.3 of the Mississippi Code of 1972, as amended.

        Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
for the term of this Lease, at the rental and subject to the provisions herein
set forth, that entire certain parcel of land (the "Property"), containing sixty
point nine eight three (60.983) acres, more or less, and the easements and
appurtenances thereto, located in the County of DeSoto, State of Mississippi, as
described in Exhibit "A" attached hereto and made a part hereof, together with
the building, and on-site and off-site improvements, all as described in the
Plans (as defined in the Loan Agreement, as hereinafter defined) in Exhibit "B,"
attached hereto (the "Improvements") (the Property and Improvements being herein
sometimes called the "Project"). The Tenant shall, during the course of and upon
completion of the construction of the Improvements, at the Tenant's sole cost
and expense, install in the Improvements certain fixtures ("Fixtures") and
equipment (the "Equipment"). The Project is to be financed through the issuance
of

                                       v
<PAGE>   8

$42,500,000 Taxable Industrial Development Revenue Bonds, Series 1999
(Hewson/DeSoto Partners, L.L.C. Project) (the "Bonds") by the Mississippi
Business Finance Corporation (the "Issuer"), pursuant to a Loan Agreement of
even date herewith between the Issuer and Landlord (the "Loan Agreement"). The
Bonds are issued pursuant to the Trust Indenture ("Indenture") of even date
herewith executed by and between the Issuer and First Tennessee Bank National
Association, as Trustee (the "Trustee"), and are secured by a deed of trust of
even date herewith and executed by Landlord in favor of the Issuer (the "Deed of
Trust"), which has been assigned by the Issuer to the Trustee pursuant to the
Indenture. Interests of various parties in the Project are further subject to a
Tenant Estoppel, Subordination, Non-Disturbance and Attornment Agreement (the
"Non-Disturbance Agreement") of even date herewith by and among the Landlord,
the Tenant, the Issuer and the Trustee.

        Tenant expressly acknowledges that, as security for Landlord's
obligations under the Loan Agreement and as additional security for the Bonds,
the Landlord has assigned its interests hereunder to the Issuer pursuant to an
Assignment of Rents, Leases and Profits of even date herewith (the
"Assignment"), the Issuer's interest in which has been assigned to the Trustee
pursuant to the Indenture. As such, any rights or obligations of Landlord
hereunder, including, but not limited to, approvals, consents and enforcement of
remedies may, but need not be, exercised or performed by the Trustee and/or the
holders of any Bonds (the "Holders" or the "Bondholders") so long as any of the
Bonds remain Outstanding (as defined in the Indenture). So long as the Tenant is
not in default under this Lease, such approvals or consents shall not be
unreasonably withheld unless this Lease or the Loan Agreement otherwise
specifically provides. When no Bonds remain Outstanding and the Loan Agreement
has been terminated and the Indenture released, references to the Trustee herein
shall have no further force or effect.

                                       2
<PAGE>   9

        This Lease is made upon the following terms, provisions, conditions and
limitations, and the parties respectively covenant and agree as follows:

                                    1 ARTICLE

                                      TERM

                                       1

1.1. Initial Term. The initial term of this Lease shall commence on the
Occupancy Commencement Date (as hereinafter defined) and continues until January
1, 2023 (the "Primary Term"). Thereafter, as used herein, unless the context
shall otherwise require, the phrase "term of this Lease" shall mean the Primary
Term plus the option periods exercised pursuant to Section 1.4 hereof.

(a). Improvements; Occupancy. The parties hereto understand and agree that the
Improvements to be erected as part of the Project are anticipated to be complete
and ready for occupancy as evidenced by a Certificate of Occupancy to be issued
by the relevant jurisdiction on or about August 31, 2000 ("Estimated Completion
Date"). Landlord shall exert its best efforts toward the end that the
Improvements be completed on or before August 31, 2000. Landlord agrees to give
Tenant written notice as to whether or not the Improvements will be completed by
the Estimated Completion Date as soon as possible, but in any event not later
than thirty (30) days prior to the Estimated Completion Date.

(b) Tenant's responsibility for payment of amounts set forth in Article II
hereof shall commence on that date (the "Rental Commencement Date") which is the
earliest of (i) ten (10) business days following receipt by the Tenant of a copy
of those items required under

                                       3
<PAGE>   10

Section 4.4 of the Loan Agreement, (ii) that date on which Tenant commences
actual productive use (as distinct from installation of Fixtures and Equipment)
of the Project as a distribution facility, or (iii) January 31, 2001. Tenant's
occupancy of the Project shall commence on that date (the "Occupancy
Commencement Date") which is the earlier of (i) ten (10) business days following
receipt by the Tenant of a copy of those items required under Section 4.4 of the
Loan Agreement or (ii) that date on which Tenant commences actual productive use
(as distinct from installation of Fixtures and Equipment) of the Project as a
distribution facility. Notwithstanding anything to the contrary herein, Tenant
shall have no obligation to pay Company Payments (as hereinafter defined) until
after the Occupancy Commencement Date and until after all amounts (if any) due
to Tenant under the Agreement and Indemnification (as hereinafter defined) have
been paid in full.

(c)

(d) Tenant's obligation to pay those amounts set forth in Article II hereof
(other than Company Payments) shall arise on the Rental Commencement Date
regardless of any disputes which may occur between Landlord and Tenant
concerning construction of the Improvements, subject to the provisions of
paragraph 7.7.

(e)

(f) The Landlord shall construct or cause to be constructed the Improvements
substantially in accordance with the Plans and the Construction Budget attached
hereto as Exhibit "B"; provided, however, that Landlord and Tenant may update
and revise the Plans as they may mutually agree. The Landlord shall obtain all
approvals requisite to the construction of the Project, and shall construct the
Project in material compliance with all federal, State and local laws and
regulations. On or before the Occupancy Commencement Date, the Landlord will
furnish to the Tenant copies of all required permits and authorizations except
those permits and

                                       4
<PAGE>   11

authorizations which Tenant must obtain, authorizing the occupancy and uses of
the Project for the purposes contemplated by the Tenant. The Landlord will take
such action and institute such proceedings as shall be necessary to cause and
require all contractors and material suppliers to complete their contracts,
including the correction of any defective work, and the Landlord agrees that the
Tenant may, from time to time, in its own name, or in the name of the Landlord,
take such action as may be necessary or advisable, as determined by the Tenant,
to assure that the construction of the Improvements will proceed in an efficient
and workmanlike manner. Any amounts recovered as damages, refunds, adjustments
or otherwise in connection with the foregoing (a) shall be paid to the Tenant if
the Tenant has corrected, at its own expense, the matter which gave rise to such
default or breach, or (b) shall be paid to the Landlord if the Landlord has
corrected, at its own expense, the matter which gave rise to such default or
breach, or (c) shall be paid to the Landlord if the matter which gave rise to
such default or breach has not yet been corrected and if such payment is prior
to the Occupancy Commencement Date (in which event Landlord shall thereafter
promptly apply such amount to the correction of such matter, with the balance,
if any, disposed of as set forth in Section 4.5 of the Loan Agreement), or (d)
shall be paid to the Tenant if the matter which gave rise to such default or
breach has not yet been corrected and if such payment is after the Occupancy
Commencement Date (in which event Tenant shall thereafter promptly apply such
amount to the correction of such matter, with the balance, if any, disposed of
as set forth in Section 3.2(b) of this Lease).

1.2. Fixtures; Equipment. The parties hereto understand and agree that the
Landlord has no responsibility whatsoever regarding the delivery and
installation of the Fixtures and Equipment in the Project, and that this Lease
and the Tenant's covenants and agreements contained herein are in no way
conditioned upon such delivery or installation.

1.3

                                       5
<PAGE>   12

(a). Option Periods. In addition to the Primary Term of this Lease and in
partial consideration of Tenant's entering into this Lease, Landlord hereby
grants to Tenant an option to extend the term of this Lease for an additional
period equal to five (5) years plus the number of months (if any), rounded to
the nearest whole month by which the Rental Commencement Date precedes the
Occupancy Commencement Date, commencing at the conclusion of the Primary Term
(hereinafter referred to as the "First Option Period") at the rental to be
determined in accordance with Section 2.7(a) and (b) hereof, but otherwise upon
the same terms and conditions as those set forth in this Lease.

(b)

(c) In addition to the Primary Term of this Lease and in addition to the First
Option Period and in partial consideration of Tenant's entering into this Lease,
Landlord hereby grants to Tenant an additional option to further extend the term
of this Lease for an additional five (5) year period commencing at the
conclusion of the First Option Period (hereinafter referred to as the "Second
Option Period") at the rental to be determined in accordance with Section 2.7(a)
and (c) hereof, but otherwise upon the same terms and conditions as those set
forth in this Lease, together with any additions or amendments made for the
First Option Period.

(d)

(e)     [RESERVED.]

(f)     [RESERVED.]

(g)

        (i) The options under this Section 1.4 may be exercised solely at the
        discretion of Tenant. Tenant may exercise the option for the First
        Option Period by delivering written notice of such exercise to Landlord
        at any time prior to that date which precedes the conclusion of the
        Primary Term of this Lease by one (1) year (the "First Option Exercise
        Date"). If

                                       6
<PAGE>   13

        Tenant has not delivered to Landlord written notice of Tenant's exercise
        of the option for the First Option Period by the First Option Exercise
        Date, the options for the First Option Period and the Second Option
        Period under this Section 1.4 shall lapse and be deemed of no further
        effect.

        (i) Tenant may exercise the option for the Second Option Period by
        delivering written notice of such exercise to Landlord at any time
        during the First Option Period prior to that date which precedes the
        conclusion of the First Option Period by one (1) year (the "Second
        Option Exercise Date"). If Tenant has not delivered to Landlord written
        notice of Tenant's exercise of the option for the Second Option Period
        by the Second Option Exercise Date, the option for the Second Option
        Period under this Section 1.4 shall lapse and be deemed of no further
        effect.

        (i) Neither the option for the First Option Period nor the option for
        the Second Option Period may be exercised at any time during which
        Tenant is in default under any of the terms of this Lease.

(a) As used hereinafter, "Option Period" shall be deemed to mean either the
First Option or the Second Option Period.

                                       7
<PAGE>   14

                                 1 ARTICLE RENT

(a) Rent. From and after the Rental Commencement Date, Tenant shall pay Global
Basic Rent, subject to adjustment as provided in Section 2.6 hereof; "Global
Basic Rent" being defined (i) during the Primary Term as the sum of Basic Rent
(as defined below) and Company Payments (as defined below) (provided, however,
that Tenant shall have no obligation to pay Company Payments until after the
Occupancy Commencement Date and until after all amounts due to Tenant under the
Agreement and Indemnification have been paid in full); and (ii) during the
Option Periods, as set forth in Section 2.7 hereof (provided, however, that
during said Option Periods all Global Basic Rent shall also constitute Company
Payments hereunder).

(a) During the Primary Term, the Global Basic Rent shall be payable in the
amounts set forth in Exhibit "C" attached hereto ("Rent Schedule") and made a
part hereof, subject to adjustment of the Basic Rent as provided in Section 2.6
hereof. Any such Basic Rent adjustment will be documented by an amended Exhibit
"C," agreed to by the parties, at the time of such adjustment. During any Option
Period, the Global Basic Rent shall be determined as set forth in Section 2.7
hereof.

(b)

(c) From and after the Rental Commencement Date and so long as any Bonds remain
Outstanding or the Indenture has not been released during the Primary Term,
Tenant shall timely pay to Trustee in accordance with the terms of the Loan
Agreement at First Tennessee Bank National Association, 4385 Poplar Avenue,
Memphis, Tennessee 38117, Attention: Corporate

                                       8
<PAGE>   15

Trust Department, or such other person or at such other place as Trustee
designates in writing to Tenant, without previous demand therefor and without
deduction or offset, the amount of quarterly payments of interest accruing on
Outstanding Bonds and semi-annual Mandatory Sinking Fund Payments (as defined in
the Indenture) due on the Bonds (the "Basic Rent"). Attached as part of Exhibit
"C" is a schedule of payments of Basic Rent over the term of the Bonds assuming
no prepayments and assuming no change in the rate of interest borne by the Bonds
as described in Section 2.6(b). All payments of Basic Rent by Tenant to Trustee
shall be credited against Tenant's obligation to pay Global Basic Rent. Attached
as part of Exhibit "C" is a schedule of Company Payments for the Primary Term
assuming no prepayment under Section 2.6(a). Provided that all amounts due to
Tenant under the Agreement and Indemnification have been paid in full, from and
after the Occupancy Commencement Date and during the Primary Term, Tenant shall
pay such amounts ("Company Payments") to Landlord, ? Hewson Properties, Inc. at
4636 E. University Drive, Suite 265, Phoenix, Arizona 85034, or to such other
person or place as Landlord designates in writing to Tenant, quarterly (on the
same day as quarterly interest payments are due on the Bonds), without previous
demand therefor, in an amount equal to one-quarter (_) of the difference between
(i) the then applicable Global Basic Rent (as adjusted in Section 2.6 hereof
during the Primary Term) for the applicable lease year and (ii) the Basic Rent
for the applicable lease year ("lease year" being the successive one (1) year
periods). During any Option Period, all Global Basic Rent shall be deemed to be
Company Payments for purposes of this Lease, and shall be paid to Landlord
quarterly as set forth in this Section 2.1(c).

(d)

(e) Notwithstanding any other provision hereof, in the event that the Occupancy
Commencement Date occurs on a date other than a quarterly interest payment date
on the Bonds,

                                       9
<PAGE>   16

the Company Payments due hereunder shall be prorated for such portion of a
quarterly interest period.

(f)

(g) Net-Net-Net Lease. This Lease constitutes what is commonly known as a
"net-net-net lease," it being understood that the Trustee and the Landlord shall
receive the Basic Rent and Company Payments, respectively, free and clear of any
and all impositions, taxes, liens, charges or expenses of any nature whatsoever
in connection with Landlord's ownership and leasing of the Project. In addition
to the Global Basic Rent provided for in Section 2.1 hereof, from and after the
Rental Commencement Date, the Tenant shall pay to Landlord or to third parties
as provided herein (particularly in Sections 2.3 and 2.4) as additional rent
("Additional Rent") all impositions, taxes, payments or fees in lieu of taxes,
insurance premiums, operating charges, costs and expenses which arise or may be
contemplated under any provisions of this Lease during the Primary Term and any
Option Periods. Upon the failure of Tenant to pay any of such costs, charges or
expenses, Landlord shall have the same rights and remedies as otherwise provided
in this Lease for the failure of Tenant to pay Basic Rent. It is the intention
of the parties hereto that Tenant shall in no event be entitled to any abatement
of or reduction in Global Basic Rent payable hereunder except as expressly
provided herein. Any present or future law to the contrary shall not alter this
agreement of the parties.

                                       10
<PAGE>   17

        Amounts payable by Tenant hereunder shall include, but not be limited
        to, the following:

        (i) Insurance premiums required to maintain the insurance policies
        described in Article IV hereof;

        (i) Expenses of occupying, operating, altering, maintaining and
        repairing the Project throughout the term of this Lease; and

        (i) All taxes, assessments, fees in lieu of taxes and other governmental
        charges, as set forth in Section 6.2 of the Loan Agreement, except as
        hereinafter provided in subsection 2.4 and except as prorated pursuant
        to Section 2.3(a) of this Lease, and all other expenses and charges
        (including any asserted by the Issuer or the Trustee, including but not
        limited to Trustee's regular and extraordinary fees, as to all of which
        Landlord shall be entitled to prompt reimbursement by Tenant) which
        during the term of this Lease shall be levied, assessed or imposed by
        any governmental authority upon or with respect to, or incurred in
        connection with the ownership, possession, occupation, operation,
        alteration, maintenance, repair or use of the Project.

        If at any time during the term of this Lease under the laws of the State
of Mississippi or any political subdivision thereof in which the Project is
situated, a tax or excise on rents or other tax, however described, is levied or
assessed by said State or political subdivision against Landlord or the rentals
set forth in Section 2.1 hereof, Tenant covenants to pay and discharge such tax
or excise on rents or other tax, but only to the extent of the amount thereof
which is lawfully assessed or imposed upon Landlord and which was so assessed or
imposed as a direct

                                       11
<PAGE>   18

result of Landlord's interest in the Project, or of this Lease or of the rentals
accruing hereunder, it being the intention of the parties hereto that all sums
payable by Tenant hereunder (including, without limitation, Basic Rent, Company
Payments, Additional Rent and all other sums, all of which are herein sometimes
collectively called "Rent") shall be paid to Landlord absolutely net without
offset of any kind or deduction of any nature whatsoever except as expressly
provided in this Lease with respect to Company Payments. Any payment or
discharge by Tenant of any tax or excise on rents or other tax referred to in
the preceding sentence shall not be deemed to be Additional Rent. Nothing in
this Lease shall be construed to require Tenant to pay any franchise, estate,
inheritance, succession, capital levy or transfer tax of Landlord, or any
income, excess profits or revenue tax or any other tax or impost charged or
levied against Landlord upon the rentals payable by Tenant under this Lease,
except to the extent hereinabove provided. In the case of any assessment for
public improvement wherein the cost of the public improvement is permitted to be
paid in installments, then and in such event only, such installments falling due
during the term of this Lease shall be paid by Tenant, and all such installments
falling due subsequent to the term of this Lease shall be paid by Landlord,
notwithstanding the provisions of Section 2.3 hereof. For the purpose of the
foregoing sentence, an installment is due on the last day prior to the date upon
which such an installment becomes delinquent.

        Upon the occurrence and continuation of an event of default hereunder
(an "Event of Default"), the Landlord may require the Tenant to deposit with the
Trustee (or Landlord if there is no Trustee) in an escrow account bearing
interest for the benefit of Tenant (i) an amount equal to (A) all taxes which
are due and payable which Tenant is obligated to pay under this Section,
including accrued ad valorem taxes, if any, or, in the alternative all amounts
due as payments or fees in lieu of taxes, with respect to the Project plus (B)
any then delinquent insurance premiums

                                       12
<PAGE>   19

with respect to the insurance required under Section 4.1 hereof, and (ii)
thereafter, each month, an amount equal to one-twelfth (1/12th) of the annual
charges for taxes to be paid under this Section 2.2 and insurance premiums.

        Tenant covenants to cooperate fully with Landlord in taking any actions
necessary to apply for and receive ad valorem tax relief for the Property,
including, but not limited to, meeting the requirements of Mississippi Code
Section 27-31-101 and Section 27-31-104. Tenant expressly acknowledges that no
right of offset with respect to payment of Basic Rent to the Trustee or the
payment of other amounts (except Company Payments) hereunder shall arise in the
event of the loss of ad valorem tax relief. Landlord agrees that, so long as
Tenant is not in default hereunder, if any actions on the part of Landlord
result in the occurrence of an event of default under the Loan Agreement or
leads to a foreclosure on the Deed of Trust or any other event the result of
which is the loss of ad valorem tax relief under the Loan Agreement, Landlord
will indemnify Tenant to the extent Tenant is required under this Section 2.2.
to pay ad valorem taxes in excess of the payments in lieu of taxes which
otherwise would have been paid by Tenant hereunder.

(a) Tenant agrees, within six (6) months following the earlier of (i) the
Occupancy Commencement Date or (ii) the date of issuance of the Series 1999
Bonds, the Tenant will certify in writing to the Landlord as to the number of
jobs created or, if prior to the Occupancy Commencement Date, anticipated to be
created, as a result of the Project.

(b)

(c) Tenant will reimburse Landlord with respect to certain environmental
inspection matters as follows:

                                       13
<PAGE>   20

        (i) On an annual basis, Tenant will reimburse Landlord for the costs of
        a "walk-through" inspection of the Project by a qualified environmental
        engineer reasonably acceptable to Tenant.

        (i) If such inspection yields evidence of any potential environmental
        hazards related to Tenant's use and occupancy of the Project, Tenant
        will reimburse Landlord for such additional environmental inspections
        and reports as are deemed reasonably necessary by such engineer.

(a) Proration of Taxes. The taxes, fees in lieu of taxes, and other charges and
expenses described in Section 2.2(a) above shall be prorated when appropriate
between Landlord and Tenant in order that all of such taxes and other charges
and expenses which relate to the period prior to the Occupancy Commencement Date
and the period subsequent to the termination of the term of this Lease shall be
borne by Landlord and in order that all of such taxes and other charges and
expenses which relate to the term of this Lease shall be borne by Tenant. Such
proration shall be computed in accordance with generally accepted accrual
accounting principles and Landlord and Tenant shall each indemnify and hold the
other harmless from any taxes and other charges and expenses relating to their
respective periods of responsibility which may have become a charge upon the
other.

(b)

(c) Tenant shall not enter into any non-terminable contracts or agreements with
respect to the Project extending beyond the term of this Lease without the prior
written consent of Landlord, which consent Landlord may not withhold
unreasonably and arbitrarily.

(d)

                                       14
<PAGE>   21

(e) Payment of Taxes; Payment Deferral. Tenant shall pay each sum payable
pursuant to Section 2.2(a) above prior to the time that such sum becomes
delinquent; provided, however, that if any authority having jurisdiction or
alleging to have jurisdiction assesses real estate taxes or assessments (or fees
in lieu thereof), personal property taxes or assessments (or fees in lieu
thereof), or assesses or levies any other charges against the Project as
contemplated and provided in this Lease, and Tenant deems the same or any of
them excessive, improper or illegal, Tenant may defer payment thereof to the
extent permitted by law so long as the validity or amount thereof is contested
by Tenant in good faith. In such event, if an Event of Default has occurred and
is continuing, Tenant, if requested by Landlord or Trustee so to do, shall
furnish to Landlord and Trustee a corporate surety bond, satisfactory to
Landlord and Trustee as beneficiary, in an amount equal to the aggregate of (a)
the taxes, assessments, or other charges so assessed, plus (b) all penalties and
interest which may reasonably be estimated to be incurred if such contest is
adversely determined thereon at the annual rate provided for by law. In the
event that during the period of such deferred payment, and while such Event of
Default remains unwaived or uncured, such penalties and interest increase to an
amount beyond the amount of such bond, Tenant shall furnish to Landlord and
Trustee such additional corporate surety bond or bonds, satisfactory to Landlord
and Trustee as beneficiary, in such amount as may be necessary to fully cover
such increases in said taxes, assessments, or other charges and penalties and
interest thereon as aforesaid.

(f) With the exception of Global Basic Rent, which shall be due and payable as
set forth in Section 2.1, Tenant shall pay, within twenty (20) days after
receipt of Landlord's written demand and supporting documentation therefor
unless otherwise specified herein, all amounts which Tenant shall otherwise be
obligated to pay to Landlord or otherwise by reason of the provisions

                                       15
<PAGE>   22

of this Lease, provided that Tenant shall not be required to pay any amount
prior to the date such amount is due and payable hereunder.

(g)

1.2 Evidence of Tax Payment. At any time upon request, Tenant shall provide
Landlord with a true copy of a receipted bill, if available, for any tax,
assessment or other governmental charge which has become due and payable by
Tenant under this Lease or any other evidence reasonably satisfactory to
Landlord of the payment thereof.

1.3

(a) Global Basic Rent Adjustment. If upon completion of the Project (in
accordance with Section 4.4 of the Loan Agreement) funds remain in the
Acquisition Fund [resulting in the transfer of such surplus amount from the
Acquisition Fund to the Bond Fund (each as defined in the Loan Agreement) under
Section 5.3(b) of the Indenture, the application of such amount by the Trustee
under Section 5.4(a) of the Indenture to the redemption of Bonds at par pro rata
at the earliest possible date and the corresponding reduction in the amount of
principal and interest payments due on the Bonds], the Basic Rent during the
portion of the Primary Term occurring after the Occupancy Commencement Date
shall be reduced proportionately. Further, to the extent that the Costs of the
Project, as defined in Section 1.1 of the Loan Agreement, necessary to effect
completion of the Project as contemplated by Section 4.4 of the Loan Agreement,
are less than Forty-Two Million Five Hundred Thousand Dollars ($42,500,000.00),
quarterly Company Payments shall be reduced by an amount equal to (x) the
product of 0.5% times the difference between $42,500,000 and such lesser actual
Costs of the Project divided by (y) four (4).

(b)

                                       16
<PAGE>   23

(c) The Bonds are subject to an interest rate increase on January 1, 2011 or if
such day is not a business day, the next succeeding business day (the "Rate
Adjustment Date"), as provided in Section 2.2 of the Indenture, up to a maximum
of thirteen percent (13%) per annum. Landlord and Tenant agree that, upon
receiving notice from the Trustee that such an increase in rate has occurred,
the Basic Rent component of the Global Basic Rent during the remaining portion
of the Primary Term shall be increased accordingly.

(d)

(e) Following the occurrence of any circumstances set forth in Section 6.9 of
the Loan Agreement requiring or permitting the partial prepayment of Bonds, such
amounts will be used to redeem Bonds as provided in Section 3.1 of the
Indenture. If any such redemption occurs during the Primary Term, the Basic Rent
component of the Global Basic Rent during the remaining portion of the Primary
Term shall be reduced proportionately.

(f)

(g) Option Period Rent Rates. The Global Basic Rent for the First Option Period
and for any subsequent Option Period shall be determined as set forth
hereinafter prior to the commencement of each such Option Period by negotiation
between the parties hereto and shall, within the limitations hereinafter set
forth, be based on a negotiated fair market rental rate based upon the
prevailing rental rate for similar industrial space in the vicinity of Olive
Branch, Mississippi including southeast Shelby County, Tennessee, comparably
improved (without reference, however, to Tenant's Fixtures and Equipment), and
of substantially similar age, quality, layout, building size and land size as
that existing in the Project ("Fair Market Rental").

(h)

(i) If the parties hereto fail to reach agreement on the Global Basic Rent for
any Option Period within thirty (30) days prior to the commencement of such
Option Period, the Fair Market

                                       17
<PAGE>   24

Rental determination underlying the relevant amount of Global Basic Rent for
such Option Period shall be determined as follows:

(j)

        (i) Landlord and Tenant shall each appoint a qualified, licensed,
        experienced real estate appraiser, who is a Member of the American
        Institute of Appraisers, and who is familiar with the rentals being
        charged in the vicinity of Olive Branch, Mississippi, including
        southeast Shelby County, Tennessee for industrial space of a similar
        kind and nature, the appointment of each appraiser to be made within
        fifteen (15) days following written notice of either party to the other
        of the necessity of making such appointment.

        (i) The two (2) appraisers, as so selected, shall themselves select a
        third appraiser whose qualifications meet those set forth for the first
        two (2) appraisers, the appointment of the third appraiser to take place
        within fifteen (15) days following the appointment of the first two (2)
        appraisers.

        (i) The three (3) appraisers shall then reach a determination as to
        whether the parties shall employ, as the Fair Market Rental upon which
        the Global Basic Rent for the Option Period in dispute will be based,
        the rentals proposed by the Landlord or the rentals proposed by the
        Tenant.

        (i) The decision of a majority of the three (3) appraisers shall be
        binding.

        (i) Each party shall pay the costs, fees and expenses of its own
        appraiser, and the cost of the third appraiser shall be shared equally
        by the parties. If either party shall fail to

                                       18
<PAGE>   25

        select an appraiser within the time set forth above, the non-defaulting
        party may select such appraiser for the defaulting party. If two (2)
        appraisers, as selected, fail to agree upon an appointed third
        appraiser, both appraisers shall be dismissed and the matter shall be
        submitted to arbitration under the applicable provisions of the American
        Arbitration Association.

(a) During the First Option Period, the Global Basic Rent shall be the Fair
Market Rental of the Project.

(b)

(c) During the Second Option Period, the Global Basic Rent shall be the Fair
Market Rental of the Project.

(d)

(e)     [RESERVED.]

(f)

(g)     [RESERVED.]

(h)

(i) Any rental payment not made when due shall be subject to the Default Rate
(as defined in the Loan Agreement).

                                       19
<PAGE>   26

                                    1 ARTICLE

                   USE, OPERATION, MAINTENANCE AND ALTERATION

                                       1

(a) Use & Occupancy. Tenant agrees to use and occupy the Project as a
distribution facility, for any other lawful uses in connection with its
business, and for other permitted related uses, all of which shall be consistent
with the provisions of Section 57-10-401, et seq. of the Mississippi Code of
1972, as amended, and for no other purpose. Tenant further agrees that in the
use and occupancy of the Project and in the conduct of its business therein,
Tenant will comply with all requirements of all applicable laws, ordinances,
orders and regulations of all governmental authorities having jurisdiction.
Tenant represents that, to its best knowledge, no Hazardous Substances (as
hereinafter defined) have been stored, processed or disposed of on or released
or discharged (including ground water contamination) from the Property which
would materially and adversely affect the value of the Project and no above or
underground storage tanks exist on the Property, and except as set forth on
Exhibit "D" attached hereto, no private or governmental lien or judicial or
administrative notice or action related to Hazardous Substances or other
environmental matters has been filed against the Property or otherwise issued to
or received by Tenant with respect to the Property.

        Tenant will maintain at all times, from and after the Occupancy
Commencement Date, all the Property in material compliance with all
Environmental Laws (as hereinafter defined), will handle any Hazardous
Substances located, stored, used or processed at the Property in material
compliance with all Environmental Laws and will not dispose of, release,
discharge, handle, use, process or store any Hazardous Substances in violation
of any Environmental Laws, and will

                                       20
<PAGE>   27

promptly notify the Landlord and Trustee following receipt of any notice,
action, lien or other similar action alleging either the location of any
Hazardous Substances or the violation of any Environmental Laws with respect to
the Property.

        As used herein, "Environmental Laws" means all local, state or federal
laws, rules or regulations pertaining to environmental regulation, contamination
or cleanup, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1976 or any state lien or superlien
or environmental cleanup statutes.

        Also as used herein, "Hazardous Substances" shall mean and include all
hazardous and toxic substances, wastes or materials, any pollutants or
contaminants (including, without limitation, asbestos and raw materials which
include hazardous constituents), or any other similar substances or materials
which are included under or regulated by any Environmental Laws.

        The Tenant agrees to indemnify and save the Landlord, the Issuer and the
Trustee harmless from any and all claims, damages, demands, expenses,
liabilities and losses of any nature whatsoever (including, without limitation,
all reasonable attorney's fees and expenses) asserted by or on behalf of any
person arising out of, resulting from, or in any way connected with any and all
claims, demands, judgments, damages, actions, causes of action, injuries,
administrative orders, consent agreements and orders, liabilities, penalties,
costs, and expenses of any kind whatsoever including claims arising out of loss
of life, injury to persons, property, or business and/or damages to natural
resources in connection with the activities of Tenant from and after the
Occupancy Commencement Date which (i) arises out of the actual, alleged or
threatened discharge, dispersal, release, storage, treatment, generation,
disposal or escape of

                                       21
<PAGE>   28

pollutants or other toxic or Hazardous Substances, including any solid, liquid,
gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes,
acids, alkalis, chemicals and waste (including materials to be recycled,
reconditioned or reclaimed), or (ii) actually or allegedly arises out of the
use, specification or inclusion of any product, material or process containing
chemicals, the failure to detect the existence or proportion of chemicals in the
soil, air, surface water or groundwater, or the performance or failure to
perform the abatement of any pollution source or the replacement or removal of
any soil, water, surface water or groundwater containing chemicals, in each case
caused by the act or omission of Tenant from and after the Occupancy
Commencement Date.

(a) Subject to Tenant's rights under Sections 3.2 and 5.3 hereof, throughout the
Primary Term of this Lease (and all Option Periods) Tenant will, at its own
expense, keep the Project, including, but not limited to, the HVAC and roof of
the building, in good condition, repair and working order (ordinary wear and
tear excepted) making all repairs and replacements thereto (whether ordinary or
extraordinary, structural or non-structural, foreseen or unforeseen), and
operate the Project in a sound and economic manner (provided, however, that
nothing contained herein shall be construed to impair any rights of Tenant
against third parties). Notwithstanding the foregoing, but subject to the
provisions of Section 10.21, Landlord shall be responsible for all damages (and
repairs necessitated thereby) caused by Landlord, its agents, employees,
invitees and/or contractors. Nothing contained in this Lease shall give Tenant
any right to offset against amounts due as Basic Rent for claims it may have
against Landlord. Subject to Tenant's rights under Sections 3.2 and 5.3 hereof,
at its expense Tenant will maintain the Project in compliance with (i) all laws,
ordinances, orders and regulations of all governmental authorities applicable to
the Project, and (ii) all requirements of those insurance companies with which
Tenant maintains

                                       22
<PAGE>   29

the insurance policies required by Article IV hereof (provided, however, that
nothing contained herein shall be construed to impair any rights of Tenants
against third parties). Tenant also shall comply with and abide by all
covenants, restrictions, conditions and other matters, if any, to which title to
the Project is subject as of the Occupancy Commencement Date, including, without
limitation, those certain easements described on Exhibit "E" hereto, and shall
comply with all such matters becoming effective subsequent to the Occupancy
Commencement Date if such matters were created by the acts of or agreed to by
Tenant. A final unappealable judgment of any court of competent jurisdiction or
the admission by Tenant in any action or proceeding that Tenant has violated any
laws, statutes, ordinances, rules, regulations, requirements or such matters
affecting title in the use of the Project shall conclusively determine that fact
as between the Landlord and the Tenant. In connection with any repairs, renewals
or replacements which are covered by warranties received by Landlord in
connection with the construction or purchase of the Project, Landlord shall
exert its best efforts to cause the issuer of such warranties, if any, to make
such repairs, renewals or replacements.

(b)

(c) In the event that any building, structure or other improvement erected or
made by Tenant, at any time during the term of this Lease, shall encroach upon
any property, street, right-of-way, easement or set-back line or shall violate
the agreements or conditions contained in any restrictive covenant affecting the
Project, then, promptly after written request of the Trustee or of any person
affected by any such encroachment, violation, hindrance, obstruction or
impairment, the Tenant shall, at its expense, either: (i) obtain valid and
effective waivers or settlements of all claims, liabilities and damages
resulting from each such encroachment, violation, hindrance, obstruction or
impairment; or (ii) make such changes in the buildings,

                                       23
<PAGE>   30

structures or other improvements and take such other action as shall be
necessary to remove such encroachments, hindrances or obstructions or to end
such violations or impairments.

(d)

(e) The Tenant anticipates that the Project will result in the creation of one
hundred twenty-five (125) full-time equivalent jobs.

(f)

(g) Use of Insurance Proceeds. In the event of damage or destruction resulting
in an award of Net Proceeds (as defined in Section 4.4 hereof) in excess of
$5,000,000, Tenant shall not be required to repair or restore the Project if,
while any Bonds remain Outstanding, the award is made during the last year of
the term of this Lease, or if no Bonds remain Outstanding, during the last year
of the Primary Term or any Option Period, unless the Tenant has previously
exercised an option to extend for the next ensuing Option Period (if any then
be). If the Tenant has exercised its option to extend for the next ensuing
Option Period, Tenant shall be obligated to repair and restore the portion of
the Project remaining after the event of damage or destruction as provided
above. In the event that Tenant has not exercised its option to extend and is
not, therefore, obligated to repair or restore the Project as provided above,
the Landlord shall be required to promptly repair and restore the Project in
accordance with Section 7.1(a) of the Loan Agreement. If, while the Bonds remain
Outstanding or the Indenture has not been released, such repair or restoration
2accesby Landlord is not commenced and prosecuted promptly, Tenant agrees to
promptly repair and restore the Project [in which event, Landlord will indemnify
Tenant for any and all costs and expenses incurred by Tenant with respect
thereto, Tenant expressly acknowledging that no right of offset with respect to
payment of Basic Rent to Trustee or the payment of other amounts (except Company
Payments) hereunder shall arise in such event]. If the building is structurally
sound and the remaining portions accessible, Tenant shall have the

                                       24
<PAGE>   31

option to remain in the unrestored building on the Property until the end of the
Primary Term of this Lease, or the then current Option Period, as the case may
be, at which time the Tenant's rights of continued occupancy shall cease and
terminate for all purposes.

(h)

(i) If the Project shall be less than totally damaged or destroyed at any time
that any Bonds remain Outstanding, the Loan Agreement has not been terminated or
the Indenture has not been released, if the loss is covered by hazard insurance,
subject to the provisions of Section 3.2(a), Net Proceeds of insurance resulting
from any claim in an amount less than $500,000 shall be paid to Tenant and shall
be used promptly to repair and restore the Project. If such Net Proceeds are in
excess of $500,000, such amounts shall be made payable to and deposited with the
Trustee and disbursed in accordance with the provisions of Section 7.1(a) of the
Loan Agreement. If the partial loss is in excess of $500,000 and is not an
insured loss, or if insurance proceeds required to be deposited with the Trustee
are insufficient to cover costs of repair and reconstruction, subject to Section
3.2(a), Tenant shall deposit sums sufficient to cover repair and reconstruction
costs with the Trustee who shall disburse in accordance with Section 7.1(a) of
the Loan Agreement. If all Bonds have been redeemed, the Loan Agreement
terminated and the Indenture released, all Net Proceeds shall be made payable to
Tenant for use in repair and restoration of the Project. In either a case of an
insured or uninsured loss, subject to the provisions of this Section 3.2(a),
Tenant shall promptly replace, repair, rebuild or restore the Project to
substantially the same condition, value and utility as an operating entity as
existed prior to such damage or destruction, with such changes, alterations and
modifications (including the substitution and addition of other property) as may
be desired by Tenant and submitted to the Trustee for approval, if required in
accordance with Section 3.3 hereof, and as will not impair the overall operating
utility, use, value or service capacity or the character of the Project. Tenant

                                       25
<PAGE>   32

shall pay over to the Landlord any balance of such Net Proceeds of insurance
remaining after payment of all costs of such restoration.

(j)

        (i) If the Project shall be totally destroyed at any time, whether or
        not any Bonds remain Outstanding, or the Loan Agreement terminated or
        the Indenture released, and if there has been no default hereunder,
        Tenant shall have a period of forty-five (45) days from the date of
        destruction to decide whether or not to reconstruct the Project, or to
        terminate this Lease. If, while any Bonds remain Outstanding, Tenant
        elects by written notice to Landlord and Trustee to terminate the Lease,
        Landlord shall direct the Trustee to effect a redemption of the Bonds in
        whole under Section 3.1(a) of the Indenture with the Net Proceeds of
        insurance. If there is any deficiency in Net Proceeds necessary to
        redeem the Bonds, Tenant shall pay such amounts; if there are any excess
        Net Proceeds following redemption, Landlord shall be entitled to such
        amounts. If Tenant elects to repair or reconstruct the Project, Net
        Proceeds of insurance shall be deposited with the Trustee and disbursed
        in accordance with the provisions of Section 7.1(b) of the Loan
        Agreement. If the loss is not an insured loss, or if insurance proceeds
        are insufficient to cover the costs of repair and reconstruction, Tenant
        shall deposit sums sufficient to cover repair and reconstruction costs
        with the Trustee who shall disburse in accordance with Section 7.1(b) of
        the Loan Agreement. Following reconstruction of the Project in
        accordance with Section 7.1(b) of the Loan Agreement, Landlord shall be
        entitled to receive any unexpended Net Proceeds of insurance.

        (i) If at any time following an election by Tenant to repair or
        reconstruct the Project under this Section, an Event of Default shall
        occur hereunder and be continuing, the

                                       26
<PAGE>   33

        Trustee must obtain the written consent of sixty-six and two-thirds
        percent (66?%) of Bondholders for Tenant to obtain funds from the
        insurance loss trust account held by Trustee pursuant to the Indenture,
        which consent shall not be unreasonably withheld or delayed. While
        obtaining such consent, the Trustee may cease to honor requisitions for
        disbursements for repair and reconstruction and may proceed to
        accelerate the Bonds under the Indenture.

        (i) Landlord agrees to join in any direction necessary to effect the
        exercise by Tenant of the options set forth in subsection (i).

        (i) For the purposes of this section (c), "totally destroyed" shall mean
        damage or destruction to the extent of fifty percent (50%) or more of
        the usable floor space in the building on the Project or which has the
        effect of reducing Tenant's distribution capacity in the building on the
        Project to fifty percent (50%) or less of full, pre-casualty capacity.

(a) All such replacements, repairs, rebuilding or restoration made pursuant to
this Section, whether or not requiring the expenditure of the Tenant's own
money, shall automatically become a part of the Project, as if the same were
specifically described herein.

(b)

(c) At all times prior to the termination of this Lease in accordance with
subsection (c) above following total destruction of the Project, Tenant shall
remain liable for Global Basic Rent and all other expenses payable by Tenant in
accordance with this Lease.

                                       27
<PAGE>   34

(a) Alterations; Improvements. The provisions of this Section 3.3 shall be
subject to, and, if in conflict with, superseded by, the provisions of Section
3.2 hereof. Subject to the preceding sentence, and subject to the Loan
Agreement, Tenant may make, from time to time, permanent remodeling,
alterations, improvements or expansions to the Project which the parties hereto
understand and intend to constitute fixtures and permanent accessions to the
Project ("Permanent Improvements"), subject, however, in all cases to the
following conditions, which Tenant shall observe and perform:

(b)

        (i) Prior to making any alterations, improvements or expansions to the
        Project which: (A) do not affect the outside or facade of the building
        or do not involve removal of any part of any floor, load-bearing wall,
        column, girder or other support, or do not affect roof load and (B)
        involve a cost which Tenant reasonably and in good faith estimates to be
        less than Five Hundred Thousand Dollars ($500,000.00), Tenant shall
        furnish to Landlord and Trustee information (including sketches and
        drawings which may be prepared by officers or employees of Tenant) as to
        the proposed changes in walls and partitions or relocations thereof and
        plans and specifications, if available, covering any proposed work, but
        Tenant may proceed forthwith to make such specified alterations or
        improvements. The cost of all such improvements shall be paid by Tenant.

        (i) Prior to making any alterations, improvements or expansions to the
        Project which: (A) affect the outside or facade of the building, or
        involve removal of any part of any floor, load-bearing wall, column,
        girder or other support, or affect roof load, or (B) involve a cost
        which Tenant reasonably and in good faith estimates to be Five Hundred
        Thousand Dollars ($500,000.00) or more, Tenant shall furnish to Landlord
        and

                                       28
<PAGE>   35

        Trustee plans and specifications or other detailed information covering
        the proposed work, and Tenant shall not commence such work unless within
        thirty (30) business days thereafter, Landlord and Trustee shall either
        approve or shall not advise Tenant of Landlord's disapproval of such
        plans and specifications, which approval Landlord and Trustee will not
        unreasonably withhold. Tenant acknowledges that Trustee will submit the
        proposed alteration, improvement or expansion to the Project to the
        Bondholders and Trustee will either approve or disapprove of such
        proposed work based upon the recommendation of Holders of sixty-six and
        two-thirds percent (66?%) of the Bonds then Outstanding with the
        affirmative recommendation of such Holders not to be unreasonably
        withheld or delayed. The cost of all such improvements shall be paid by
        Tenant, and such improvements shall automatically become a part of the
        Project as if the same were specifically described herein.

        Such Permanent Improvements shall become part of the Project and shall
be subject to this Lease. In addition, the parties hereto understand and intend
that such Permanent Improvements shall be subject to the lien of the Deed of
Trust.

(a) The parties hereto intend that any Fixtures and Equipment installed by
Tenant for its use during the term hereof shall be and remain personal property,
shall not constitute fixtures and shall not become part of the Project subject
to this Lease, nor shall the lien of the Deed of Trust attach thereto. Any such
items shall be and remain the property of Tenant and may be removed by Tenant
upon the termination of this Lease. Tenant shall effect such removal solely at
Tenant's expense, subject to the following qualifications:

                                       29
<PAGE>   36

(b)

        (i) Tenant at its own expense shall repair any damage to the Project
        caused by such removal, including, without limitation, damage caused by
        removal of air-conditioning installations, equipment, air ducts and
        vents, conduits of every nature, false floors and floor ramps,
        electrical switches, panels and electrical wiring which were installed
        by the Tenant. Such repairs shall include safe and proper covering of
        any and all exposed wiring occasioned by removal of any electrical
        equipment, including computers. In no event shall Tenant be entitled to
        remove any items not installed and paid for by the Tenant.

        (i) Any alterations or improvements installed in accordance with the
        terms of this Lease on the Project whether before or after the Occupancy
        Commencement Date and not removed by Tenant upon termination of this
        Lease shall forthwith become the property of Landlord. However, should
        Tenant fail to remove any alterations or improvements to the Project
        which Tenant is required to remove, then and in such event, Landlord may
        cause the same to be removed at Tenant's expense, and Tenant shall
        reimburse Landlord for (A) the reasonable cost of the removal; (B) the
        reasonable cost of repairing any damage to the Project caused by such
        removal; (C) rent lost from successor lessees during the period of time
        reasonably required for such removal; and (D) any other damages suffered
        by Landlord as a result thereof.

1.1 Signage. Tenant may install a sign or signs on or in the Project which sign
or signs may be selected by Tenant in its discretion. Tenant shall remove all
such signs at the termination of this Lease and shall promptly repair, to the
reasonable satisfaction of Landlord, any damage to the Project caused by such
removal.

                                       30
<PAGE>   37

1.2

1.3 Liens; Encumbrances. Except as provided in Section 2.4 hereof, Tenant shall
not create or permit to be created or to exist any lien or encumbrance which
might be or become a lien or encumbrance against the Project, except any lien
against Landlord caused by Landlord's actions or inactions and not by Tenant's
actions or inactions. If such lien or encumbrance arises from a matter other
than taxes or assessments by a governmental body, or the payment of amounts in
lieu of taxes to a governmental body, Tenant may defer payment and suffer the
lien to the extent permitted by law so long as the validity or amount thereof is
contested by Tenant in good faith and Tenant has secured a court order from a
court of competent jurisdiction or reasonable assurance from competent legal
counsel that in the interim and during said contest no action can be taken
against the Project by the party holding such lien. If at any time while an
Event of Default has occurred hereunder and is continuing a lien or encumbrance
arises from Tenant's acts or omissions, Tenant, if requested by Landlord or
Trustee so to do, shall furnish to Landlord and Trustee a corporate surety bond
or bonds, satisfactory in form and substance to Landlord and Trustee, in an
amount equal to the amount of the lien, plus all applicable penalties and
interest thereon, which are estimated to accrue during the period of the
contest, such bond to be issued by an insurance company satisfactory to Landlord
and Trustee. In the event that, while an Event of Default has occurred and is
continuing during the period of Tenant's good faith contest, such penalties and
interest increase to an amount beyond the amount of such corporate surety bond,
Tenant shall furnish to Landlord and Trustee such additional bond or bonds,
similarly satisfactory to Landlord and Trustee, in form and substance, in such
amounts as may be necessary to fully cover the lien and all penalties and
interest thereon and likewise issued by an insurance company satisfactory to
Landlord and Trustee.

1.4

                                       31
<PAGE>   38

1.5 Indemnification . Subject to the provisions of Section 10.21, Tenant does
hereby indemnify Landlord against any liability, penalty, expense or damages
which Landlord may incur or to which Landlord may be subjected by reason of
Tenant's possession, occupation, operation, alteration, maintenance, repair or
use of the Project.

1.6

1.7 Inspection of Project. Landlord, Issuer and Trustee shall be entitled to
make reasonable visits to examine and inspect the Project during normal business
hours (but shall be under no obligation to make any such visits or inspections),
all in compliance with Section 12.5 of the Loan Agreement. Such inspections
shall be scheduled at least twenty-four (24) hours in advance so as not to
unduly interfere with Tenant's business activities, except that in case of
emergency, Landlord may enter the Project without prior notice to Tenant.

1.8

1.9 Landlord's Entry to Project Following Default. At any time following the
tenth (10th) day after Tenant shall have received from Landlord any notice of
default hereunder and continuing until Tenant shall have cured such default, and
at any time within twelve (12) months prior to the termination of the term of
this Lease, Tenant shall permit Landlord and any authorized representatives of
Landlord to enter the Project during normal business hours to exhibit the same
for the purpose of future leasing and to display on the Project usual "For
Lease" signs. At any time during the term of this Lease, Landlord and any
authorized representatives of Landlord may enter the Project during normal
business hours to exhibit the Project for the purpose of sale or of mortgage or
other hypothecation. So long as Tenant is not in default hereunder, Landlord
shall give Tenant at least twenty-four (24) hours prior notice of Landlord's
intent to enter to exhibit the Project, and such entry shall be made so as not
unreasonably to interfere with Tenant's use of the Project.

                                       32
<PAGE>   39

                                    1 ARTICLE

                                   INSURANCE

                                       1

1.1 Insurance Requirements. Tenant shall maintain insurance against such risks
and in such amounts as the Landlord and Trustee shall reasonably determine to be
proper for buildings and commercial facilities of like size and type, and shall
pay as the same become due and payable, all premiums with respect thereto,
including, but not necessarily limited to:

        (a) All risk or broad form named perils coverage at all times equal to
        one hundred percent (100%) of the replacement cost of the Improvements
        exclusive of excavations and foundations. Earthquake coverage equal to
        one hundred percent (100%) of the replacement cost of the Improvements
        exclusive of excavations and foundations (so long as commercially
        available);

        (a) comprehensive general liability insurance with $5,000,000.00 minimum
        single limit for injury to persons or property, but in no event less
        than that provided under the Tenant's primary and, if any, excess
        coverage;

        (a) worker's compensation coverage, disability benefits insurance and
        any other type of insurance required by the laws of the State of
        Mississippi;

        (a) Rental value insurance in an amount equal to twelve (12) months of
        all Basic Rent payable hereunder.

                                       33
<PAGE>   40

        Any of the insurance required in paragraphs (a) through (d), inclusive,
may provide an all risk deductible provision in an amount not exceeding $500,000
and an earthquake deductible provision not to exceed fifteen percent (15%) of
the building's replacement cost value. The Tenant shall be a self-insurer to the
extent of the amount of the deductibles obtained.

        Until such time as the construction of the Improvements shall have been
completed, Landlord shall maintain builder's risk insurance to the full
insurable value (with deductible provision not to exceed $500,000) of the
Improvements, and Landlord shall be a self-insurer to the extent of the amount
of the deductible so obtained. During such construction period, Tenant shall
have the responsibility for maintaining any insurance coverage it deems
necessary with respect to the Fixtures and Equipment installed by Tenant at the
Project. Following the Occupancy Commencement Date, Tenant covenants to maintain
insurance coverage in an amount equal to full replacement value with respect to
any of its property located at the Project, with a deductible provision in an
amount not exceeding $500,000.00.

        The insurance required of Tenant by this Section 4.1 shall be maintained
in full force and effect at all times following the Occupancy Commencement Date.

        Each insurance policy provided in accordance with this Section 4.1 shall
include a provision to the effect that any act or omission of Tenant or
Landlord, as the case may be, shall not prejudice Issuer's or Trustee's rights
thereunder. Any insurance provided for in this Article IV may be effected by a
policy or policies of blanket insurance provided that the amount of the total
insurance allocated to the Improvements shall be such as to furnish in
protection the equivalent of separate policies in the amounts herein required.
Subject to Section 3.2 hereof,

                                       34
<PAGE>   41

Tenant shall remain liable and responsible to Landlord for keeping the Project
in good repair and condition whether or not covered by insurance and whether or
not said insurance coverage is adequate to repair and/or replace the
Improvements.

(a) Form of Policy. Each insurance policy required by Section 4.1 hereof (i)
shall be issued by a financially responsible insurer (or insurers) of recognized
standing, legally authorized to write the respective insurance, (ii) shall be in
such form and with such provisions (including, without limitation, the loss
payable clause, the waiver of subrogation clause and the designation of the
named insured parties) as are generally considered standard provisions for the
type of insurance involved, and (iii) shall prohibit cancellation or
modification by the insurer without at least thirty (30) day's prior written
notice to the Landlord and the Trustee. Prior to the expiration of any such
policy, the Tenant shall furnish the Landlord and Trustee satisfactory evidence
that the policy has been renewed or replaced, unless Trustee shall have informed
Tenant in writing that such insurance is no longer required. Without limiting
the generality of the foregoing, all insurance policies maintained pursuant to
Section 4.1(a) hereof shall name the Landlord, Tenant, Issuer and Trustee as the
parties insured thereunder as their respective interests may appear; all
insurance policies maintained pursuant to Section 4.1(b) hereof shall name the
Tenant as the insured and the Landlord and Trustee as additional insureds; and
each such policy shall provide that losses thereunder shall be adjusted with the
insurer by the Tenant or Landlord, on behalf of the insured parties, in the case
of the policy described in Section 4.1(a) hereof, with the approval of the
Trustee as to settlement of any claims in excess of $500,000, but all such
adjustments shall be subject to the provisions hereof. If there is any claim in
excess of $500,000.00 for loss or damage covered under the policy described in
Section 4.1(a) hereof, all

                                       35
<PAGE>   42

proceeds of insurance resulting therefrom shall be paid directly and solely to
the Trustee for application as provided in Section 7.1 of the Loan Agreement.

(b)

(c) Certificates and opinions of the insurers or an agent or agents of the
insurers acceptable to the Trustee, shall be deposited with the Trustee on or
before the Occupancy Commencement Date, upon renewals of policies and at any
other time, at the request of the Trustee.

(d)

1.2 Notice of Damage or Destruction. If the Project shall be damaged or
destroyed (in whole or in part) at any time, Tenant shall promptly give written
notice thereof to the Landlord and the Trustee.

1.3

1.4 Net Proceeds. As used herein, "Net Proceeds," when used with respect to any
insurance or condemnation award, means the gross proceeds from the insurance or
condemnation award with respect to which that term is used remaining after the
payment of all expenses [including reasonable and documented attorney's fees and
any Extraordinary Expense (as defined in the Loan Agreement) of the Trustee]
incurred in the collection thereof.

                                       36
<PAGE>   43

                                    1 ARTICLE

                                  CONDEMNATION

                                       1

1.1 Notice of Condemnation. Forthwith upon receipt by Tenant or Landlord of any
notice of the institution of any proceeding for the taking of the Project or any
part thereof by the exercise of any power of condemnation affecting the Project
or any part thereof, the party receiving such notice shall promptly give written
notice thereof to the other party, and the Trustee. Subject to Section 7.4 of
the Loan Agreement, Tenant, in cooperation with Landlord, shall have the right
to participate in any such proceedings and to be represented by counsel for the
purpose of protecting its interest hereunder. Landlord and Tenant shall each
bear their own expenses incurred in such proceeding. Notwithstanding anything to
the contrary above, as long as the Bonds remain Outstanding and the Indenture
has not been released, any awards in excess of $500,000.00 resulting from the
damages to or taking of the Project, including without limitation any awards for
the fee estate of the Landlord, shall be paid solely and directly to Trustee for
application in accordance with Section 7.2(a) of the Loan Agreement.

(a) Partial Condemnation. If at any time any part of title to, or the partial
use of the Project shall be taken by condemnation or pursuant to the exercise of
the power of eminent domain by any governmental authority ("Condemnation") and
any Bonds are still Outstanding, the Loan Agreement has not been terminated or
the Indenture has not been released and satisfied, Net Proceeds of Condemnation
resulting from any award in an amount less than $500,000 shall be paid to Tenant
and used promptly to replace such condemned portion of the Project. If Net
Proceeds of Condemnation are in excess of $500,000, at any time when Bonds
remain

                                       37
<PAGE>   44

Outstanding, the Loan Agreement has not been terminated and the Indenture has
not been released, such amount shall be paid solely and directly to the Trustee
and disbursed in accordance with Section 7.2(a) of the Loan Agreement; at any
time the Bonds have been redeemed, the Loan Agreement has been terminated and
the Indenture has been released such amounts shall be disbursed in accordance
with Section 5.2(c). In the event such proceeds are insufficient to restore the
Project, subject to Section 5.3, Tenant shall pay the additional amounts
necessary to carry out such restorations, and if Tenant has been obligated by
this Section 5.2 to deposit Net Proceeds of Condemnation with Trustee, Tenant
shall deposit such additional amount with the Trustee. All such amounts
deposited with the Trustee shall be used to promptly restore the Project
(excluding any part thereof not taken by Condemnation) to substantially the same
condition, value and utility as an operating entity as existed prior to such
Condemnation.

(b)

(c) If any Bonds remain Outstanding, or the Indenture has not been released,
then any balance of such proceeds of any Condemnation award remaining after
payment of all costs of such restoration shall be used to redeem Bonds at par
pro rata under Section 3.1(e) of the Indenture. Tenant shall be entitled, under
Section 2.6(c) hereof, to a proportionate reduction in the Basic Rent component
of Global Basic Rent.

(d)

(e) Any balance of such Net Proceeds of Condemnation remaining after payment of
all costs of such restoration and, if any Bonds are then Outstanding, after
redemption of all such Bonds as provided in the preceding subsection (b), shall
be allocated solely to Landlord.

(f)

(g) Substantial Condemnation; Condemnation in Excess of $5,000,000 . In the
event that a taking by eminent domain or condemnation will affect substantially
all [fifty percent (50%) or

                                       38
<PAGE>   45

more] of the usable floor space in the Improvements or will have the effect of
reducing Tenant's distribution capacity in the Improvements to fifty percent
(50%) or less of full, pre-condemnation capacity, Tenant shall have the option,
to be exercised by delivery of a written notice to Landlord and Trustee within
forty-five (45) days after Tenant's receipt of notice from Landlord or the
condemning authority of such taking, to terminate this Lease. While any Bonds
remain Outstanding, upon receipt of such notice, Landlord shall direct the
Trustee to effect a redemption of the Bonds in whole under Section 3.1(a) of the
Indenture with the Net Proceeds of Condemnation. If there is any deficiency in
Net Proceeds necessary to redeem Bonds, Landlord will pay such amounts; any
excess Net Proceeds following redemption shall be allocated solely to Landlord.
If Landlord fails to pay the deficiency, then Tenant shall either: (i) pay such
deficiency required to redeem the Bonds; or (ii) promptly repair or restore the
Project in accordance with Section 7.2 of the Loan Agreement [in which event,
Landlord will indemnify Tenant for any and all costs and expenses incurred by
Tenant with respect thereto, Tenant expressly acknowledging that no right of
offset with respect to payment of Basic Rent to Trustee or the payment of other
amounts (except Company Payments) hereunder shall arise in such event]. Such
termination of this Lease shall only be effective upon the happening of the
earlier of the following events:

(h)

        (i)     The date of delivery of possession to the condemning authority;
                or

        (i)     A date mutually agreed to by Tenant and Landlord which shall not
                be less than one (1) year from the date that Tenant gives notice
                to Landlord of Tenant's intent to terminate.

                                       39
<PAGE>   46

(a) Subject to the provisions of Sections 5.2(a) and 5.3 hereof, in the event
that the taking by eminent domain or condemnation will affect less than fifty
percent (50%) of the usable floor space in the Improvements or will not have the
effect of reducing Tenant's distribution capacity in the Improvements to fifty
percent (50%) or less of full, pre-casualty capacity, or in the event Tenant
elects not to exercise the option to terminate set forth in Section 5.3(a)
above, this Lease shall remain in full force and effect.

(b)

(c) In the event of a taking by eminent domain or Condemnation resulting in an
award of Net Proceeds in excess of $5,000,000, Tenant shall not be required to
repair or restore the Project if, while any Bonds remain Outstanding the taking
is intended to take place during the last year of the Primary Term of this
Lease, or if no Bonds remain Outstanding, during the last year of the Primary
Term or any Option Period, unless the Tenant has previously exercised an option
to extend for the next ensuing Option Period (if any then be). If the Tenant has
exercised its option to extend for the next ensuing Option Period, Tenant shall
be obligated to repair and restore the portion of the Project remaining after
the condemnation as provided above. In the event that Tenant has not exercised
its option to extend and is not, therefore, obligated to repair or restore the
Project as provided above, the Landlord shall be required to promptly repair and
restore the Project in accordance with Section 7.2 of the Loan Agreement. If,
while the Bonds remain Outstanding or the Indenture has not been released, such
repair or restoration by Landlord is not commenced and prosecuted promptly,
Tenant agrees to promptly repair and restore the Project [in which event,
Landlord will indemnify Tenant for any and all costs and expenses incurred by
Tenant with respect thereto, Tenant expressly acknowledging that no right of
offset with respect to payment of Basic Rent to Trustee or the payment of other
amounts (except Company Payments) hereunder shall arise in such event]. If the
building is structurally sound and the

                                       40
<PAGE>   47

remaining portions accessible, Tenant shall have the option to remain in the
unrestored building on the Property until the end of the Primary Term of this
Lease, or the then current Option Period, as the case may be, at which time the
Tenant's rights of continued occupancy shall cease and terminate for all
purposes.

(d)

(e) All such replacements, repairs, rebuilding, or restoration made pursuant to
Sections 5.2 and 5.3 hereof, whether or not requiring the expenditure of the
Tenant's own money, shall automatically become a part of the Project, as if the
same were specifically described herein.

(f)

(g) At all times prior to the termination of this Lease in accordance with
subsection (a) above following total Condemnation of the Project, Tenant shall
remain liable for Global Basic Rent and all other expenses payable by Tenant in
accordance with this Lease (provided, however, that Tenant shall be entitled to
offset against Company Payments any amount due from Landlord to Tenant).

(h)

(i) If at any time following an election by Tenant to replace the Project under
this Section, an Event of Default shall occur hereunder and be continuing, the
Trustee must obtain the written consent of sixty-six and two-thirds percent
(66?%) of Bondholders for Tenant to obtain funds from the condemnation trust
account held by Trustee pursuant to the Indenture, which consent shall not be
unreasonably withheld or delayed. While obtaining such consent, the Trustee may
cease to honor requisitions for disbursements for costs of replacement and may
proceed to accelerate the Bonds under the Indenture.

                                       41
<PAGE>   48

                                    1 ARTICLE

                 SALES, MORTGAGES, ETC. AND GENERAL CONDITIONS

                                       1

(a) Assignment by Tenant. Except as hereinafter provided, and subject to the
Loan Agreement, the Indenture, the Deed of Trust, and the Non-Disturbance
Agreement, Tenant shall not transfer, assign or hypothecate this Lease or its
interest hereunder without the written consent of Landlord and Bondholders,
which consent shall not be unreasonably withheld; provided that no transfer,
assignment or hypothecation shall release Tenant from any obligation or
liability under this Lease, and the person or persons to whom this Lease may be
transferred or assigned shall also assume all the obligations of Tenant under
this Lease. A copy of any such proposed assignment shall be delivered to
Landlord and Trustee in advance of its consenting thereto. No subletting and no
acceptance by Landlord of any rent or other sum of money from a sublessee, and
no recognition by Landlord of any subletting shall release Tenant from any of
its obligations under this Lease.

(a) Notwithstanding the provisions of the foregoing Section 6.1(a), subject to
the covenants set forth in Section 6.4 hereof, Tenant shall have the right to
transfer or assign this Lease or sublet the Project or any portion thereof
without the Landlord's consent or the consent of Bondholders to any corporation
more than fifty percent (50%) of the stock of which is owned by Parent (as
defined in Section 6.4 below), or to any corporation more than fifty percent
(50%) of the stock of which is owned by any corporation owning more than fifty
percent (50%) of Tenant's stock, or to any corporation surviving or resulting
from a merger or consolidation to which Tenant may be a party (providing that
Parent shall own more than 50% of the stock of

                                       42
<PAGE>   49

such surviving corporation), or to any corporation succeeding to all or a
substantial portion of the assets of Tenant (providing that Parent shall own
more than 50% of the stock of such successor corporation); provided, that no
such transfer or assignment shall relieve or release Tenant from any obligation
or liability under this Lease, and the party or parties to whom this Lease may
be transferred or assigned shall assume all the obligations of Tenant hereunder.
The sale of stock by Parent or any shareholder of Parent, or the merger or
consolidation of Parent with or into any other entity, shall not constitute an
assignment of this Lease.

(b)

1.2 Exercise of Rights or Remedies by Landlord. No assignment by Tenant of this
Lease or its interest hereunder and no subletting by Tenant of the Project or
any part thereof, whether with or without the consent of Landlord, shall affect
Landlord's right to exercise any of its rights or remedies hereunder directly
against Tenant.

1.3

1.4 Tenant's Right of First Refusal. Subject to the Loan Agreement, the
Indenture, the Deed of Trust, and the Non-Disturbance Agreement, if Landlord
receives a bona fide offer, from a party not affiliated with Tenant, whether or
not solicited by Landlord, to purchase the Landlord's interest in the Project
and Landlord is willing to accept such offer, Landlord shall give Tenant written
notice of the amount and terms of said offer and the identity of the proposed
purchaser. Tenant shall have the option, exercisable within thirty (30) days
after receipt of such notice, to purchase the Landlord's interest in the Project
on the same terms as those contained in the offer. Landlord may not sell until
after said thirty (30) day period and may then sell only in accordance with the
terms and to the party making the original offer. Any deviation from the
original offer constitutes a new offer and must be submitted to Tenant in
accordance with this

                                       43
<PAGE>   50

Section. There shall occur no merger of the fee and leasehold interests
hereunder as a result of acquisition of both estates by the same party.

1.5

1.6 Financial Covenants of Lessee. For purposes of this Section 6.4, the term
"Group" shall mean each of Williams-Sonoma, Inc., a California corporation and
owner of all issued and outstanding stock of Tenant ("Parent"), Tenant, and all
other wholly-owned subsidiaries of Parent; and "Consolidated Group" shall mean
Parent, Tenant, and all other wholly-owned subsidiaries of Parent on a
consolidated basis. For so long as any Bonds remain Outstanding and the Loan
Agreement has not been terminated or the Indenture released, Tenant agrees that:

1.7

(a) The Group will not incur additional Indebtedness or merge or consolidate
with any other entity if, after giving effect to such Indebtedness, merger or
consolidation on a pro forma basis (including pro forma application of the net
proceeds therefrom), the ratio of (i) the sum of (A) the Consolidated Net Income
plus (B) an amount equal to any net loss realized upon the sale or other
disposition of any business segment or capital asset (to the extent such loss
was deducted in computing such Consolidated Net Income), plus (C) any provision
for taxes utilized in computing net loss under clause (B) hereof, plus (D)
Consolidated Interest Expense plus one-third (?) of operating lease (including
this Lease) base rent (before contingency and pass-through payments), plus (E)
provision for federal and state income taxes (b) to (ii) Consolidated Interest
Expense plus one-third (?) of operating lease (including this Lease) base rent
(before contingency/and pass-through payments) for any six (6) (as determined by
Tenant) of the immediately preceding eight (8) full fiscal quarters immediately
preceding the date of such proposed incurrence of indebtedness, merger or
consolidation, is less than 2.0 to 1.0; provided, however, that the foregoing
restrictions shall not apply to the incurrence by the

                                       44
<PAGE>   51

Consolidated Group of Existing Indebtedness, Permitted Refinancing Indebtedness,
and Indebtedness incurred in connection with Fixtures and Equipment to be
located at the Project; and further provided, however, that accrual of interest
and accretion of accreted value shall not be deemed to be an incurrence of
Indebtedness for purposes of this Section 6.4(a).

(c)

(d) The Group will not permit Consolidated Net Worth (plus deferred catalog
charges not to exceed 10% of Consolidated Net Worth) to be less than
$120,000,000 plus 25% of cumulative Consolidated Net Income (if positive) from
the first day of the first fiscal quarter of Tenant beginning after the date
hereof to the last day of the fiscal quarter of Tenant ending immediately prior
to the date of measurement.

        For purposes of this Section 6.4:

        A. "Consolidated Interest Expense" means the sum of (without
duplication) (i) the cash and non-cash interest expense of the Consolidated
Group, determined in accordance with Generally Accepted Accounting Principles
(including, without limitation, non-cash interest payments, all net payments and
receipts in respect of Interest Rate Agreements, and the interest component of
rental payments under capital leases), (ii) amortization of debt discount in
connection with any Indebtedness of the Consolidated Group, and (iii)
amortization of costs associated with the issuance of any Indebtedness of the
Consolidated Group; provided, however, that one-time fees paid in connection
with the issuance of any Permitted Refinancing Indebtedness incurred by the
Consolidated Group or a member thereof, shall not be included in Consolidated
Interest Expense.

                                       45
<PAGE>   52

        B. "Consolidated Net Income" means, for any period, without duplication,
the aggregate of the Net Income of the Consolidated Group for such period,
determined in accordance with Generally Accepted Accounting Principles;
provided, however, that (i) the Net Income of any entity that is not a member of
the Consolidated Group or is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid to a member of the Consolidated Group; (ii) the Net Income of any entity
that is a subsidiary of Parent [other than a subsidiary of which at least eighty
percent (80%) of the capital stock having ordinary voting power is owned by the
Parent directly or indirectly through one or more subsidiaries] shall be
included only to the extent of the lesser of (a) the amount of dividends or
distributions paid to a member of the Consolidated Group, and (b) the Net Income
of such entity; (iii) the Net Income of any entity acquired by a member of the
Consolidated Group in a pooling of interests transaction for any period prior to
the date of such acquisition, shall be excluded; and (iv) there shall be
excluded from such Net Income, the Net Income (only if positive) of any member
of the Consolidated Group to the extent that the declaration or payment of
dividends or similar distributions by such member of such Net Income is not at
the time permitted by operation of the terms of its charter, or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such member.

        C. "Consolidated Net Worth" means, as of any date, the consolidated
equity of the common and preferred stockholders of the Parent determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles,
less (i) all write-ups (other than write-ups of assets of a going concern
business made within one year after the acquisition of such business) subsequent
to January 31, 2000 in the book value of any asset owned by a

                                       46
<PAGE>   53

member of the Consolidated Group, (ii) all investments in unconsolidated
subsidiaries of Parent and in entities that are not subsidiaries of Parent
(other than cash equivalents, marketable securities and other assets held for
sale outside of the ordinary course of business and long term receivables
resulting from the sale of assets or businesses), and (iii) all unamortized debt
discount and expense, unamortized deferred charges (excluding deferred income
taxes), goodwill, patents, trademarks, service marks, trade names, copyrights,
organization and developmental expenses and other intangible items, all of the
foregoing as determined in accordance with Generally Accepted Accounting
Principles; provided, however, that in determining the consolidated equity of
any entity, the Net Income of such entity shall be calculated in the same manner
as that specified for the determination of Net Income.

        D. "Existing Indebtedness" means the Indebtedness of the Consolidated
Group set forth on Exhibit "F" hereto.

        E. "Indebtedness" means all obligations of the Consolidated Group for
borrowed money which in accordance with Generally Accepted Accounting Principles
should be classified on the balance sheet of the Consolidated Group as
liabilities, and in any event shall include all obligations of the Consolidated
Group for (a) borrowed money; (b) for the deferred portion of the purchase price
of assets (other than trade payables not more than 120 days past due); (c)
secured by any liens upon property or assets owned by the Consolidated Group,
even though the Consolidated Group has not assumed or become liable for the
payment of such obligations; (d) created or accruing under any conditional sale
or other title retention agreement with respect to property acquired by the
Consolidated Group, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to

                                       47
<PAGE>   54

repossession or sale of the property sold; (e) the non-interest portion of
capitalized lease obligations; and (f) guaranties of obligations of others of
the character referred to in this definition.

        F. "Interest Rate Agreement" shall mean any interest rate protection
agreement, interest rate future, interest rate option, interest rate swap,
interest rate cap or other interest rate hedge arrangement, to or under which
any member of the Consolidated Group is or becomes a party or beneficiary.

        G. "Net Income" for any period means, with respect to an entity, the net
income (loss) for such period, determined in accordance with Generally Accepted
Accounting Principles; provided, however, that (i) the net income of any entity
(other than a subsidiary of such entity) in which such entity has a joint
interest with a third party shall be included only to the extent of the amount
of dividends or distributions paid to such entity by such other entity during
such period, (ii) the net income of any entity (other than a subsidiary of such
entity) acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded, (iii) the net income of such
entity shall be reduced by any net after tax gains from any asset sale which
gains were included in net income during such period, (iv) the net income of
such entity, except as already adjusted pursuant to (iii) above, shall not
include, without duplication, any gains which are classified as extraordinary
items in accordance with Generally Accepted Accounting Principles (other than
tax benefits realized in connection with the tax treatment of such entity's net
operating loss carry forwards incurred after the acquisition), and (v) the net
income of such entity shall not include any unrealized gains from investments
other than gains which reverse losses in such period.

                                       48
<PAGE>   55

        H. "Permitted Refinancing Indebtedness" means any Indebtedness of the
Consolidated Group issued in exchange for, or the net proceeds of which are used
to extend, refinance, renew, replace, defease, or refund other Indebtedness of
the Consolidated Group permitted to be incurred under the terms of this Lease,
provided, however, that (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount plus accrued interest (or accreted value, if applicable) and
premium (if any) of the Indebtedness so exchanged, extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable and
documented expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final stated maturity later than the final
maturity of, and has a weighted average life to maturity equal to or greater
than the weighted average life to maturity of, the Indebtedness being exchanged,
extended, refinanced, renewed, replaced, defeased or refunded; and (iii) such
Permitted Refinancing Indebtedness is incurred by the member of the Consolidated
Group which is the obligor on the Indebtedness being exchanged, extended,
refinanced, renewed, replaced, defeased or refunded.

1.1 Compliance with Bond Documents by Landlord . Tenant agrees that no provision
hereof requiring or permitting the action or inaction of the Tenant or the
action or inaction of the Landlord shall be applicable if it should cause
Landlord to fail to comply in any respect with Landlord's obligations under the
Loan Agreement, the Deed of Trust, the Indenture or the Guaranty.

1.2

1.3 Financial Statements . For so long as any Bonds remain Outstanding and the
Loan Agreement has not been terminated or the Indenture has not been released,
Tenant agrees to

                                       49
<PAGE>   56

furnish to the Trustee and each Bondholder, within one hundred twenty (120) days
after the end of each fiscal year of the Parent, audited consolidated financial
statements as of the close of such fiscal year for the Consolidated Group. Such
audited financial statements, which shall include comparative financial
information for the immediately preceding fiscal year, shall be prepared and
certified by Deloitte & Touche or another nationally recognized independent
certified public accounting firm showing the financial condition of the
Consolidated Group at the close of such year and the results of operations of
the Consolidated Group during such year; and within sixty (60) days after the
end of each of the first three (3) quarters of each fiscal year, similar
financial statements (but not including consolidating financial statements) for
the Consolidated Group to those described above, not audited but certified by
the chief financial officer for the Consolidated Group, such balance sheet to be
as of the end of such quarter and such statements of income and surplus to be
for the period from the beginning of such fiscal year to the end of such
quarter, in each case subject only to year-end adjustments. The quarterly
Consolidated Group-prepared financial statements and the annual audited
financial statements shall be accompanied by statements certified by an
authorized Consolidated Group representative to the effect that (i) with respect
to loan agreements (or equivalent documents) unrelated to the Bonds, it has
received no notice of any defaults thereunder, and (ii) is not currently in
default under the Lease or if such a default exists, describing the default.

                                       50
<PAGE>   57

                                    1 ARTICLE

                                    DEFAULT

                                       1

1.1 Events of Default. The following shall constitute Events of Default
hereunder:

1.2

(a) If payment of any Basic Rent or Additional Rent, each as adjusted, is not
made within five (5) days of the date when due or if default shall be made in
the due and punctual payment of any Company Payments, as adjusted, payable under
this Lease or any part thereof when and as the same shall become due and payable
in accordance with the terms of this Lease.

(a) If default shall be made by Tenant in keeping, observing or performing any
of the terms, covenants, agreements, provisions, conditions or limitations
contained in this Lease on Tenant's part to be kept, observed or performed,
other than those referred to in the foregoing subsection (a) of this Section,
and such default shall continue for a period of thirty (30) days after written
notice thereof from Landlord or Trustee to Tenant, or in the case of such a
default or a contingency which cannot with due diligence and in good faith be
cured within said thirty (30) days, the Tenant should fail to proceed promptly
and with due diligence and in good faith to cure the same and thereafter to
prosecute the curing of such default with due diligence and in good faith [it
being intended that in connection with a default not susceptible of being cured
with due diligence and in good faith within thirty (30) days that the time
within which to cure the same shall be extended for such a period as may be
necessary for the curing thereof with due diligence and in good faith]. The
foregoing is subject to the proviso that no grace period shall apply to Tenant's
obligations hereunder to keep the Project insured.

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<PAGE>   58

(b)

(c) An order for relief shall be entered in any federal bankruptcy proceeding in
which the Tenant is the debtor; or bankruptcy, receivership, insolvency,
reorganization, relief, dissolution, liquidation or other similar proceedings
shall be instituted by or against the Tenant or all or any part of the property
of the Tenant under the Federal Bankruptcy Code or any other law of the United
States or any bankruptcy or insolvency law of any state of competent
jurisdiction unless, if such proceedings are instituted against the Tenant, such
proceedings are dismissed or discharged within sixty (60) days after they are
instituted.

(d)

(e) The Tenant shall have become insolvent or unable to pay its debts as they
mature, cease doing business as a going concern, make an assignment for the
benefit of creditors, admit in writing its inability to pay its debts as they
become due, or if a trustee, receiver or liquidator shall be appointed for the
Tenant or for any substantial portion of the assets of the Tenant and such
appointment shall not be vacated within sixty (60) days.

(f)

(g) If Tenant shall abandon the Project; provided that as long as Tenant shall
continue to pay rent and maintain and protect the Project in accordance with the
terms of this Lease, Tenant shall not be deemed to have abandoned the Project.

(h)

(i) Any certification, representation or warranty made by the Tenant herein
shall prove to have been false when made or deemed to have been made.

(j)

(k) Landlord Remedies. If an Event of Default shall occur and shall not have
been remedied within any applicable grace period, and in the manner hereinbefore
provided,

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Landlord, without prejudice to any other right or remedy of Landlord hereunder
or by law, and notwithstanding any waiver of any prior breach of condition or
Event of Default hereunder, may at its option, and without further demand or
notice, the same being expressly waived:

(l)

                (i) Terminate this Lease and retake possession of the Project,
                and thereupon all rights of Tenant hereunder (and of parties
                claiming by, through or under Tenant) shall come to an end, as
                fully as if such were the last day of the whole term
                hereinbefore specified, and Tenant hereby covenants peaceably
                and quietly to yield up and surrender to Landlord the Project
                and all Permanent Improvements thereon, consistent with the
                provisions of this Lease covering such Permanent Improvements;
                and Tenant shall execute and deliver to Landlord such instrument
                or instruments as shall be required by Landlord to properly
                evidence termination of Tenant's rights hereunder and its
                interest herein. In the event of such termination of this Lease,
                Landlord shall have the right to repossess the Project and such
                Permanent Improvements (consistent with the provisions of this
                Lease covering such Permanent Improvements) as well as the right
                to sue for and recover from Tenant:

                (A)     the worth at the time of the award of any unpaid Rent
                        which had been earned at the time of such termination;
                        plus

                (A)     the worth at the time of the award of the amount by
                        which the unpaid Rent which would have been earned after
                        termination until the time of award

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<PAGE>   60

                        exceeds the amount of such rental loss Tenant proves
                        could have been reasonably avoided; plus

                (A)     the worth at the time of the 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 be reasonably avoided; plus

                (A)     any other amount necessary to compensate Landlord for
                        all of the detriment proximately caused by Tenant's
                        failure to perform its obligations under this Lease or
                        which in the ordinary course of events would be likely
                        to result therefrom including, but not limited to,
                        payment of any and all installments for public
                        improvements falling due during the term of this Lease
                        under Section 2.2(a)(iii) hereof; plus

                (A)     such other amounts in addition to or in lieu of the
                        foregoing as may be permitted from time to by time by
                        applicable law.

        As used in paragraphs (A), (B) and (C) of this subsection (a)(i), the
        "worth at the time of award" is computed by allowing interest at the
        prime rate of interest as published from time to time in the "Money
        Rates" section of The Wall Street Journal (the "prime rate") plus 1% or
        by determining present value using a discount rate equal to the prime
        rate plus 1%; or

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        (i)     Landlord may terminate Tenant's right of possession and may
                repossess the Project by forcible entry and detainer suit, by
                taking peaceful possession or otherwise, without terminating
                this Lease, and may sue for and recover all rents and other sums
                including damages at any time and from time to time accruing
                hereunder and exercise all such other rights as may be provided
                by law. Landlord's efforts to relet the Project or any part
                thereof or acts of maintenance or preservation and Landlord's
                appointment of a receiver to protect Landlord's interest under
                this Lease shall not constitute a termination of Tenant's right
                to possession; and no reentry or taking possession of the
                Project by Landlord shall be construed an election to terminate
                this Lease unless a written notice of such intention be given to
                Tenant or unless the termination thereof be decreed by a court
                of competent jurisdiction. Notwithstanding any attempted
                reletting without termination by Landlord because of any default
                by Tenant, Landlord may, at any time after such attempt, elect
                to terminate this Lease for any such default.

        In the event of any default by Tenant, Landlord shall also have the
right, with or without terminating this Lease, to reenter the Project and remove
all persons and property from the Project; such property may be removed and
stored in public warehouse or elsewhere at the cost of and for the account of
Tenant; if Tenant does not remove such property from either the Project or the
storage area selected by Landlord in accordance with the above provision within
thirty (30) days from the effective date of said default, such property shall be
deemed to be abandoned and, at the option of Landlord, shall become the property
of Landlord.

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(a) Mention in this Lease of any particular remedy shall not preclude Landlord
from any other remedy, at law or in equity, including but not limited to the
right of injunction, as if reentry, summary proceedings or other remedies were
not provided for.

(b)

(c) The Tenant shall have an affirmative obligation to notify the Trustee
immediately upon its knowledge of the occurrence of any "Event of Default" as
defined in Section 7.1 hereof.

(d)

1.2 Re-Entry. The terms "enter," "re-enter," "entry" and "re-entry," as used in
this Lease, are not restricted to their technical legal meaning.

1.3

1.4 Remedies Cumulative. Each right or remedy of either party provided for in
this Lease shall be cumulative and shall be in addition to every other right or
remedy provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise, and the exercise or the beginning of the
exercise by a party of any one or more of the rights or remedies provided for in
this Lease or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by that party of
any or all other rights or remedies provided for in this Lease or now or
hereafter existing at law or in equity or by statute or otherwise.

1.5

(a) Lessee's Indemnification; Attorney Fees. Tenant covenants and agrees to
pay, and to indemnify Landlord against the payment of all costs and charges,
including reasonable counsel fees, incurred by Landlord in obtaining possession
of the Project after default by Tenant or upon expiration or earlier termination
of the term of this Lease, provided Landlord prevails in any action or
proceeding (except arbitration) brought to obtain, or to determine the right to,

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<PAGE>   63

possession. This covenant shall include payment of all reasonable and documented
costs and charges of the Issuer and the Trustee, including reasonable counsel
fees of each.

(b)

(c) Tenant further agrees that if Tenant defaults under any of the provisions of
this Lease and the Issuer or the Trustee on behalf of the Bondholders or in its
individual capacity employs attorneys or incurs other expenses in connection
with such default, including but not limited to, seeking legal advice with
regards to enforcement rights and for the collection of Basic Rent and
Additional Rent or the enforcement of performance or of observance of any
obligation or agreement on the part of the Tenant herein contained, or legal
advice with respect thereto, the Tenant agrees that it will on demand therefor
pay to the Issuer or the Trustee the reasonable fees of such attorneys and such
other reasonable and documented expenses as may be incurred by the Issuer and
the Trustee.

(d)

1.6 Mutual Indemnification; Costs. Each party ("indemnitor") covenants and
agrees to pay, and to indemnify the other ("indemnitee") against, all costs and
charges, including reasonable counsel fees, incurred by the indemnitee in
enforcing any agreement or covenant of the indemnitor herein contained, provided
the indemnitee prevails in any action or proceeding (except arbitration) brought
to secure such enforcement.

1.7

1.8 Right of Offset. So long as Tenant has not exercised any right to terminate
this Lease as set forth in Section 10.24(a) hereof, any breach by Landlord of
any term or provisions hereof shall, in addition to those rights set forth in
Section 10.24(a) hereof, give Tenant the right to offset sums due Tenant from
Landlord as a result thereof against sums payable hereunder to Landlord as
Company Payments. In addition, Tenant shall have the right to offset Company

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Payments owed to Landlord hereunder against sums owed Tenant from time to time
pursuant to that certain Agreement and Indemnification of even date herewith
among Tenant, Parent, Landlord, Hewson Properties, Inc. and Gary J. Hewson. So
long as any Bonds remain Outstanding or the Indenture has not been released,
then notwithstanding a breach by Landlord, Tenant shall remain liable for the
payment of all Basic Rent to the Trustee and payment of other amounts (except
Company Payments) hereunder until the termination of this Lease by Tenant as
provided herein.

1.9

1.10 Certification by Subtenants. Upon request by Landlord, Tenant shall
furnish to Landlord (i) written certification from each subtenant of space
within the Project, confirming the amount of rent due under such subtenant's
lease, stating whether any offsets or defenses exist against the sublessor
thereunder, and covering such other matters as Landlord may reasonably require,
and (ii) such other certifications by Tenant as Landlord may reasonably require
with respect to the physical condition of the Project and Tenant's compliance
with the provisions hereof.

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                                    1 ARTICLE

                                  ARBITRATION

                                       1

                                       59
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1.1 Submission to Board of Arbitrators . If at any time, or from time to time
during the term of this Lease, any dispute shall arise between Landlord and
Tenant, and (i) such dispute shall relate to damage, destruction, alterations or
improvements to, or the taking by eminent domain or the condemnation of, the
Project, or (ii) this Lease shall specifically identify such dispute as subject
to arbitration, or (iii) Landlord and Tenant shall have agreed in writing to
resolve such dispute by arbitration; then and only then shall such dispute be
submitted to a board of arbitrators. The board of arbitrators shall be three (3)
in number, one to be named by each of the parties hereto no later than thirty
(30) days after the parties hereto have agreed to submit such dispute to
arbitration or no later than thirty (30) days after the parties hereto shall
agree that such dispute cannot be resolved between themselves, and the third
arbitrator shall be selected by the two arbitrators previously named. The
decision of any two of such arbitrators shall be final and conclusive on the
parties hereto. All arbitrators hereto shall be independent, disinterested
persons with experience in the area of the dispute; any question arising between
the parties hereto related to value of the Project shall be determined by
qualified, licensed appraisers who are members of the American Institute of Real
Estate Appraisers or similarly qualified persons, and all questions concerning
the structure of the building on the Project shall be determined by engineers,
architects or similarly qualified persons. If the two arbitrators designated by
the parties fail to select a third arbitrator within fifteen (15) days after the
appointment by such parties, then the parties may apply to any Chancellor of the
Chancery Court of DeSoto County, Mississippi to designate a third arbitrator. If
either party hereto shall fail to designate an arbitrator within said thirty
(30) days, the other party shall have the right to appoint a second arbitrator.
The parties to the arbitration shall have the right to offer evidence and
testify at the hearings, to be represented by counsel and to cross-examine
witnesses (but the arbitrators may not determine issues and questions not
submitted to arbitration and not framed by the facts and

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data presented by the parties during such hearings). Subject to the foregoing,
the arbitration shall be conducted in accordance with the then applicable rules
of the American Arbitration Association.

                                    1 ARTICLE

                          COVENANT OF QUIET ENJOYMENT

                                       1

1.1 Quiet Enjoyment; Non-Disturbance . Landlord covenants and agrees that
Tenant, upon paying the Rents reserved herein and observing and keeping the
covenants, agreements and stipulations of this Lease on its part to be kept
shall lawfully, peaceably and quietly hold, occupy and enjoy the Project during
the term of this Lease, without hindrance, ejection or molestation by Landlord
or any person or persons claiming under Landlord or claiming by a title superior
to Landlord. Contemporaneously with the execution of this Lease, Landlord and
Tenant have joined in the execution of the Non-Disturbance Agreement.

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                                    1 ARTICLE

                                 MISCELLANEOUS

                                       1

1.1 Tenancy Beyond Lease Term . If Landlord has not leased the Project to others
or does not require the use of the Project for itself and if Tenant holds
possession of the Project after the expiration or termination of the term of
this Lease, Tenant shall become a tenant from month to month upon the terms and
conditions herein contained, so far as applicable, at a monthly rental in an
amount equal to one hundred fifty percent (150%) of the average Global Basic
Rent which was in effect during the Primary Term or Option Term, as applicable,
and which shall be payable in advance, and Tenant shall continue to be such a
month to month tenant until thirty (30) days after Tenant shall have given to
Landlord or Landlord shall have given to Tenant a written notice of intention to
terminate such monthly tenancy.

1.1 Notices . All notices, demands and requests which may or are required to be
given to another party hereunder shall be in writing, and each shall be deemed
to have been properly given (a) on the day given when served personally on an
executive officer or general partner of the party to whom such notice is to be
given, (b) on the following Business Day (as defined in the Loan Agreement) when
sent by reputable overnight courier service, or when sent by telecopy (confirmed
promptly by mail), or (c) on the fifth (5th) Business Day following the Business
Day when sent postage prepaid by first class mail, registered or certified,
return receipt requested, by deposit thereof in a duly constituted United States
Post Office or branch thereof located in one of the states of the United States
of America in a sealed envelope addressed as follows:

1.2

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        (i) To Landlord, ? Hewson Properties, Inc., 4636 E. University Drive,
        Suite 265, Phoenix, Arizona 85034, or such other address as Landlord may
        from time to time designate.

        (i) To Tenant, at 3250 Van Ness, San Francisco, California 94109,
        Attention: President, or such other address as Tenant may from time to
        time designate.

        (i) To Trustee, at First Tennessee Bank National Association, 165
        Madison Avenue, Memphis, Tennessee 38103, Attention: Dennis D.
        Gillespie.

        A duplicate copy of each notice, certificate or other communication
given hereunder to Tenant and/or Landlord shall also be given to Trustee.

1.1 Definition of "Landlord." The term "Landlord" as used in this Lease so far
as covenants and agreements on the part of Landlord are concerned, shall be
limited to mean and include only the owner or owners of the Landlord's interest
in this Lease at the time in question, and in the event of any transfer or
transfers of such interest authorized herein, except a transfer by way of
security, Landlord herein named (and in case of any subsequent transfer, the
then transferor) shall be automatically freed and relieved from and after the
date of such transfer of all personal liability as respects the performance of
any covenants or agreements on the part of Landlord contained in this Lease
thereafter to be performed; provided, that any funds in the hands of Landlord or
the then transferor at the time of such transfer, in which Tenant has an
interest, shall be turned over to the transferee and any amount then due and
payable to Tenant by Landlord or the then transferor under any provision of this
Lease, shall be paid to Tenant;

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provided further that, upon any such transfer, the transferee shall be deemed to
have assumed, subject to the limitations of this Section 10.3, all of the
covenants, agreements and conditions in the Lease contained to be performed on
the part of Landlord; it being intended hereby that the covenants and agreements
contained in this Lease on the part of Landlord shall subject as aforesaid, be
binding on Landlord, its successors and assigns, only during and in respect of
their respective successive periods of ownership.

1.2

1.3 Headings; Table of Contents . The headings of the Articles and the
numberings of the Sections and Subsections in this Lease are inserted as a
matter of convenience to the parties and shall not affect the construction of
this Lease. The wording of this Lease has been agreed upon by both parties
hereto and therefore no party hereto is deemed to be the author thereof.

1.4

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

1.6

1.7 Governing Law . This Lease is to be governed and construed in accordance
with the internal laws of the State of Mississippi, without regard to principles
of conflicts of laws.

1.8

1.9 Cure on Behalf of Landlord . In the event that there shall occur a default
under any mortgage, deed of trust, security agreement, reimbursement agreement,
and/or bond affecting Landlord's interest in the Project, or if any other lien
or encumbrance is created which may be prior to Tenant's interest hereunder and
threatens Tenant's interest hereunder, Tenant may, upon giving Landlord written
notice at least ten (10) days prior to doing so, take such action, including the
payment of money, as may be required to cure such defect, or to discharge such
lien or

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encumbrance, and may deduct such sums and/or its cost and expenses in taking
such action, from the Company Payments due hereunder as they may become due.

1.10

1.11 Binding on Successors and Assigns . Except as otherwise provided herein,
this Lease shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors and assigns.

1.12

(a) Authority of Signatories . Landlord represents and warrants that the person
executing this Lease on behalf of Landlord is a duly authorized member of
Landlord or is its or his duly authorized attorney-in-fact.

(b)

(c) Tenant represents and warrants that all corporate and other proceedings
required to be taken by or on the part of Tenant and its Board of Directors for
the authorization, execution and delivery of this Lease and the performance of
the agreements set forth herein have been duly taken and that the person
executing this Lease on behalf of Tenant has been duly authorized to act for and
in behalf of Tenant.

(d)

1.13 Benefits of the Act. Landlord and Tenant acknowledge that the Bonds are
being issued pursuant to the provisions of Section 57-10-401 et seq. of the
Mississippi Code of 1972, as amended (the "Act"), so that Tenant may obtain
certain benefits provided by the Act as set forth in Section 5.6 of the Loan
Agreement. Tenant hereby acknowledges and accepts the obligations set forth in
Section 5.6 of the Loan Agreement on its behalf, and said Section is hereby
incorporated herein by reference. In order to comply with the requirements of
Section 57-10-409 of the Act, Tenant hereby covenants and agrees as follows:

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1.14

(a) This Lease may be assigned by Tenant (other than to an affiliate thereof)
only upon the prior written consent of the Issuer following the adoption of a
resolution by the Issuer to such effect.

(b)

(c) Upon a default by Tenant in the payment of Basic Rent hereunder, the
Trustee, on behalf of the Issuer, may exercise the rights and remedies available
under the Indenture and the Loan Agreement, including but not limited to
acceleration of the Bonds, foreclosure of the Deed of Trust and termination of
this Lease.

(d)

1.15    [RESERVED.]

1.16

1.17 Waivers . Neither failure by either party to insist upon the strict
performance of any term or condition of this Lease, or to exercise any right or
remedy available on a breach thereof, nor acceptance by Landlord of full or
partial Basic Rent during the continuance of any such breach, shall constitute a
waiver of any such breach or of any such term or condition. No term or condition
of this Lease required to be performed by a party hereto, and no breach thereof,
shall be waived, altered or modified, except by a written instrument executed by
the party making such waiver. No waiver of any breach shall be taken to
constitute a waiver of any other breach, or of a subsequent breach of the same
covenants; and each term or condition shall continue in full force and effect
with respect to any other then existing or subsequent breach thereof.

1.18

1.19 Mechanic's Liens . Under no circumstances shall either party create or
permit the creation of or suffer to exist, any mechanic's lien to be filed
against the Project other than

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Permitted Encumbrances (as defined in the Loan Agreement), by reason of any
work, labor, services or material supplied or claimed to have been supplied to
the Tenant or to the Landlord. Tenant shall promptly take all steps necessary to
discharge and remove any such lien, except Permitted Encumbrances, created by
the action or inaction of Tenant. Nothing in this Lease shall be construed in
any way as constituting the consent or request of either party, expressed or
implied, by inference or otherwise, to any contractor, subcontractor, laborer or
materialman for the performance of any labor or the furnishing of any materials
for any improvement, alteration, or repair of or to the Project that would give
rise to the assertion of any mechanics' or materialmen's lien claim against the
Project, or as giving either party the right, power or authority to contract for
or to permit the rendering of any service or the furnishing of any material that
would give rise to the filing of any mechanic's lien claim against the Project.

1.20

1.21 Utilities . All heat, water, electric current, gas, or other utilities used
in the Project during the Primary Term and the Option Periods shall be paid for
by the Tenant. In addition, should usage of such utilities during the
construction of the Project exceed that occasioned by construction, due to
installation of Equipment and/or Fixtures by Tenant, Tenant agrees to pay such
additional costs.

1.22

1.23    [RESERVED.]

1.24

1.25 Cure on Behalf of Tenant . If the Tenant shall be in default hereunder, and
the Tenant shall not have cured such default within the applicable notice period
set forth herein, the Landlord may, at its option, in addition to any other
rights and remedies, cure such default on behalf of the Tenant, in which event
the Tenant shall reimburse the Landlord for all sums paid to

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<PAGE>   74

effect such cure, together with interest thereon at the Default Rate (as defined
in the Loan Agreement), and together with such reasonable attorney's fees as the
Landlord may have incurred in connection with such matter. Any such sum so paid
by the Landlord, together with any interest and attorney's fees, as above
provided, shall be due on the next rental installment date following the date of
such cure by Landlord.

1.26

1.27 Severability . If any term or provision of this Lease, or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby; and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by applicable law.

1.28

1.29 Venue . As an integral part of the consideration for the Landlord's
willingness to enter into this Lease, it is expressly understood and agreed that
no suit or action shall be commenced by either party, or by any successor,
personal representative, or assignee of either party, with respect to this Lease
or any of the provisions hereof, other than in a state court of competent
jurisdiction in DeSoto County, Mississippi, or in the United States District
Court for the Northern District of Mississippi, Delta Division, and not
elsewhere.

1.30

1.31    [RESERVED.]

1.32

1.33 Waiver of Jury Trial . TO THE FARTHEST EXTENT PERMITTED BY APPLICABLE LAW,
EACH PARTY TO THIS LEASE AGREEMENT HEREBY WAIVES

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ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a)
ARISING UNDER THIS LEASE AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALING OF THE PARTIES HERETO
WITH RESPECT TO THIS LEASE AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS LEASE AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR COPY
OF THIS SECTION WITH ANY COURT AS EVIDENCE OF SUCH AGREEMENT.

1.34

1.35 Waiver of Right of Recovery . Tenant and Landlord hereby waive and release
any and all right of recovery against the other, including employees and agents,
arising during the term of this Lease for any and all loss or damage to any
property located within or constituting a part of the Project which loss or
damage arises from the perils covered by an all risk policy or which right of
recovery arises from loss of earnings or rents resulting from damage caused by
such a peril. This mutual waiver is in addition to any other waiver or release
contained in this Lease. Landlord and Tenant shall each have their insurance
policies issued in such form as to waive any right of subrogation which might
otherwise exist.

1.36

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1.37 Design and Construction Indemnity . With respect to the manner of design
and construction of the Project, Landlord agrees at Tenant's option, to save
Tenant harmless from and indemnify and defend Tenant against any and all injury,
loss, damage, liability (or any claims in respect of the foregoing), costs or
expenses (including, without limitation, attorney's fees, reasonable
investigation and discovery costs), of whatever nature, to any person or
property caused or claimed to be caused by or resulting from any act, omission
or negligence of Landlord or its employees or agents, provided that Tenant, upon
becoming aware of such claim or damage, shall promptly notify Landlord as soon
as reasonably possible. The provisions of this paragraph as to property damage
shall be subject to the provisions of paragraph 10.21 regarding waiver of
subrogation; and the provisions of this paragraph shall further be subject to
the proviso that any obligation of Landlord to Tenant hereunder with respect to
matters covered by insurance required to be maintained by Tenant hereunder shall
be limited so as to assume that the deductible provision in such policy of
insurance does not exceed (A) $50,000 (thereby limiting Landlord's obligation
hereunder to $50,000 per claim) in the case of insurance coverage required to be
maintained by Tenant under Section 4.1(a)-(d) and (B) $500,000 (thereby limiting
Landlord's liability hereunder to $500,000 per claim) in the case of insurance
coverage on Tenant's personal property required to be maintained by Tenant under
Section 4.1.

1.38

1.39 Landlord Waiver of Liens . 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 Property and shall
from time to time execute such documents as Tenant may reasonably request to
acknowledge such waiver.

1.40

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<PAGE>   77

(a) Tenant Right to Terminate . Provided that all Bonds are redeemed, the Loan
Agreement terminated and the Indenture released, if Landlord should be in
default in the performance of any of its obligations under this Lease, which
default continues for a period of more than thirty (30) days after receipt of
written notice from Tenant specifying such default, or if such default is of a
nature to require more than thirty (30) days for remedy and continues beyond the
time reasonably necessary to cure [provided Landlord must have undertaken
procedures to cure the default within such thirty (30) day period and diligently
pursue such efforts to cure to completion], Tenant may, in addition to availing
itself of any other remedies available at law and in equity, at its option, upon
written notice, terminate this Lease, or may incur any reasonable expense
necessary to perform the obligation of Landlord specified in such notice and
deduct such expense from the Company Payments next becoming due.

(b)

(c) So long as the Bonds remain Outstanding, or the Indenture has not been
released, the obligation of the Tenant to pay Basic Rent and Additional Rent as
provided herein and to make all other payments (other than Company Payments),
provided for in this Lease and to maintain the Project in accordance with this
Lease and to perform its other obligations under the Lease shall be absolute and
unconditional, irrespective of any defense or any rights of set-off, recoupment
or counterclaim it might otherwise have against the Landlord. During such
period, the Tenant (i) will not suspend or discontinue any such payment (other
than Company Payments), (ii) will perform all of its other agreements under this
Lease, and (iii) will not terminate this Lease [other than such termination as
is provided for hereunder in subparagraph (a)] for any cause including, without
limitation, any acts or circumstances that may constitute an eviction or
constructive eviction, failure of consideration, failure of title, or commercial
frustration of purpose, or any damage to or destruction of the Project, or the
taking

                                       71
<PAGE>   78

by eminent domain of title to or the rights to temporary use of all or any part
of the Project or any change in the tax or other laws of the United States, the
State or any political subdivision of either thereof, or any failure of the
Issuer to perform and observe any agreement or covenant, whether express or
implied, or any duty, liability or obligation arising out of or connected with
this Lease. Notwithstanding the foregoing, the Tenant may, at its own cost and
expense, in its own name, prosecute or defend any action or proceedings or take
any other action involving third persons which the Tenant deems reasonably
necessary in order to secure or protect its right of possession, use and
occupancy of the Project and other rights hereunder. Nothing contained herein
shall be construed to prevent or restrict the Tenant from asserting any rights
which the Tenant may have against the Landlord under this Lease or under any
provision of law.

(d)

1.41 Litigation . If either party becomes a party to any litigation concerning
this Lease or the Project by reason of any act or omission of the other party or
its authorized representatives, and not by any act or omission of the party that
becomes a party to that litigation or any act or omission of its authorized
representatives, the party that causes the other party to become involved in the
litigation shall be liable to that party for reasonable attorney's fees, court
costs, investigation expenses, discovery costs and costs of appeal incurred by
it in the litigation.

1.42

1.43 Costs of Action . If either party commences an action against the other
party arising out of or in connection with this Lease, the prevailing party
shall be entitled to have and recover from the losing party, reasonable
attorney's fees, costs of suit, investigation costs and discovery costs,
including costs of appeal. When this Lease imposes upon a party an obligation to
indemnify the other, the indemnification obligation shall include the obligation
to pay the

                                       72
<PAGE>   79

indemnitee's reasonable attorney's fees, costs and disbursements, whether the
indemnitee be the plaintiff or defendant.

1.44

1.45 Nondisturbance . Landlord covenants to obtain from any secured party
benefitting from an encumbrance on the Project [and each lessor, if any, whose
interest in the Project is paramount to Landlord's ("Overlessor")] at the time
of the execution hereof, or at any time prior to the recordation of the
Memorandum of Lease, an executed non-disturbance agreement assuring Tenant that
notwithstanding any default by Landlord to the lender or Overlessor, or any
foreclosure or deed in lieu thereof (or Overlessor's termination proceedings),
Tenant's rights under this Lease shall continue in full force and effect and its
possession of the Project shall remain undisturbed except in accordance with the
provisions of this Lease so long as Tenant is not in default hereunder so as to
prevent Lease termination and that the proceeds of any insurance recovery or
condemnation award shall be used for the purposes stated in this Lease.

1.46

1.47 Tenant Subordination of Lease . Tenant shall upon Landlord's request,
subordinate this Lease in the future to any first lien placed by Landlord on the
Project, with an insurance company, bank or any other institutional lender,
provided that such lender executes a non-disturbance agreement providing that if
Tenant is not then in default under this Lease, this Lease shall not terminate
as a result of the foreclosure of such lien, or conveyance in lieu thereof,
Tenant's rights under this Lease shall continue in full force and effect and its
possession be undisturbed except in accordance with the provisions of this
Lease, and that the proceeds of any insurance recovery or condemnation award
shall be used for the purposes stated in this Lease. Tenant will, upon request
of the lienholder, be a party to such an agreement, and will agree that

                                       73
<PAGE>   80

if such lienholder succeeds to the interests of Landlord, Tenant will recognize
said lienholder (or successor in interest of the lienholder) as its Landlord
under the terms of this Lease.

1.48

1.49 Agency . Nothing contained in this Lease shall be deemed or construed by
the parties hereto or by any third person to create the relationship of
principal and agent, or of partnership, or of joint venture, or of any other
association between the parties other than Landlord and Tenant, or to prevent
Landlord or Tenant from entering into ventures in direct competition with the
Project.

1.50

1.51 Amendment . This Lease may be amended only by a written instrument executed
by the Landlord and the Tenant. Additionally, prior to full payment of the Bonds
(or provision for payment thereof having been made in accordance with the
Indenture), except for amendments entered into in connection with a refunding of
the Bonds and except for modifications, amendments and changes relating to
Company Payments, the Landlord and the Tenant shall not alter, modify or amend
in any material respect any of the terms of this Lease without the prior written
approval of the Holders of sixty-six and two-thirds percent (66?%) of the Bonds,
which consent absent the existence and continuance of an Event of Default by
Tenant hereunder, shall not be unreasonably withheld.

1.52

                            [SIGNATURE PAGE FOLLOWS]

                                       74
<PAGE>   81

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

                                        HEWSON/DESOTO PARTNERS, L.L.C., an
                                        Arizona limited liability company

                                        BY: HEWSON PROPERTIES, INC., a
                                            California corporation

                                           By:  /s/ GARY J. HEWSON
                                              ----------------------------------
                                           Title: Chief Executive Officer
                                                 -------------------------------

                                                                        LANDLORD

                                        WILLIAMS-SONOMA RETAIL SERVICES, INC., a
                                        California corporation

                                        By:  JERRY OWENS
                                           -------------------------------------
                                        Title: VP Distribution
                                              ----------------------------------

                                                                          TENANT

<PAGE>   82

STATE OF

COUNTY OF

        Personally appeared before me, ______________________________, the
undersigned authority in and for the said county and state, on this the ____ day
of _______________, 1999, the within-named ______________________________ who
acknowledged that __he is _______________ of WILLIAMS-SONOMA RETAIL SERVICES,
INC. and that for and on behalf of the said corporation, and as its act and
deed, __he executed and delivered the above and foregoing instrument, after
first having been duly authorized by said corporation to do so.

                                        ________________________________________
                                        Notary Public

My Commission Expires:

______________________

STATE OF________________

COUNTY OF_______________

        Personally appeared before me, ______________________________, the
undersigned authority in and for the said county and state, on this the _____
day of _______________, 1999, within my jurisdiction, the within-named
_______________________________, who acknowledged himself to be _______________
of HEWSON PROPERTIES, INC., a California corporation, which corporation is the
manager of HEWSON/DESOTO PARTNERS, L.L.C., an Arizona limited liability company
(the "Maker"), and that for and on behalf of said corporation and as its act and
deed as manager of the Maker and for and on behalf of the Maker and as its act
and deed, he executed and delivered the foregoing instrument after having been
duly authorized so to do.

                                        ________________________________________
                                        Notary Public

My Commission Expires:

______________________

<PAGE>   83

                                   EXHIBIT "A"

                            Real Property Description

TRACT I:

LOCATED IN DESOTO COUNTY, MISSISSIPPI:

BEING A SURVEY OF PART OF THE NORTHEAST QUARTER OF THE NORTHEAST QUARTER, PART
OF THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER, SECTION 25, TOWNSHIP 1 SOUTH,
RANGE 6 WEST, DESOTO COUNTY MISSISSIPPI AND PART OF THE SOUTHWEST QUARTER OF THE
SOUTHEAST QUARTER AND PART OF THE SOUTHEAST QUARTER OF THE SOUTHEAST QUARTER,
SECTION 24, TOWNSHIP 1 SOUTH, RANGE 6 WEST, DESOTO COUNTY MISSISSIPPI AND BEING
MORE PARTICULARLY DESCRIBED AS FOLLOWS:

        COMMENCING AT THE NORTHEAST CORNER OF SAID SECTION 25; THENCE S89
        degrees32'11"W ALONG THE NORTH LINE OF SAID SECTION 25 A DISTANCE OF
        80.00 FEET TO THE POINT OF BEGINNING; THENCE S00 degrees31'04"E ALONG A
        LINE THAT IS 80.00 FEET WEST OF AND PARALLEL TO THE EAST LINE OF SAID
        SECTION 25 A DISTANCE OF 491.49 FEET TO A POINT; THENCE S89
        degrees13'30"W A DISTANCE OF 1964.19 FEET TO A POINT; THENCE N00
        degrees46'30"W A DISTANCE OF 1351.48 FEET TO A POINT; THENCE N89
        degrees13'30"E A DISTANCE OF 1965.03 FEET TO A POINT; THENCE S00E51'56"E
        ALONG A LINE THAT IS 80.00 FEET WEST OF AND PARALLEL TO THE EAST LINE OF
        SAID SECTION 24 A DISTANCE OF 860.00 FEET TO THE POINT OF BEGINNING AND
        CONTAINING 2,656,423 SQUARE FEET OR 60.983 ACRES.

TRACT II:

        The rights benefitting and burdening the foregoing Tract I created by
(a) the Reciprocal Storm Water Detention and Drainage Agreement recorded on
December 11, 1998, at 2:57 p.m. in Book 79, Page 486, of the Chancery Clerk's
Office, DeSoto County, Mississippi, and re-recorded on January 21, 1999, at 4:14
p.m. in Book 80, Page 182 in said Chancery Clerk's Office and (b) the Reciprocal
Connector Easement recorded on December 11, 1998, at 3:00 p.m. in Book 079, Page
511, of the Chancery Clerk's Office, DeSoto County, Mississippi.

<PAGE>   84

                                   EXHIBIT "B"

           Plans for Building and Improvements and Construction Budget

                                  See Attached

                                       1
<PAGE>   85

RETAIL DISTRIBUTION CAMPUS, SECOND BUILDING, WILLIAMS SONOMA, OLIVE BRANCH, MS
PHASE II
Plans by H + M Design Services

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                                                 Final
Sheet #      Prepared by:  Sheet Title                                            Date       Revision Date
----------------------------------------------------------------------------------------------------------
<S>          <C>           <C>                                                    <C>        <C>
CE - 1.1     RSM           Site Plan                                              11/16/99
----------------------------------------------------------------------------------------------------------
CE - 2.1     RSM           Grading & Drainage Plan                                 8/25/99
----------------------------------------------------------------------------------------------------------
CE - 3.1     RSM           Erosion Control Plan                                    8/12/99
----------------------------------------------------------------------------------------------------------
CE - 3.2     RSM           Erosion Control Details                                 9/22/99
----------------------------------------------------------------------------------------------------------
A - 1.1      H-M           Faciltiy Floor Plan                                    11/18/99
----------------------------------------------------------------------------------------------------------
A - 1.2      H-M           Enlarged Office Floor Plan                             11/18/99
----------------------------------------------------------------------------------------------------------
A - 1.3      H-M           DC Section 1/Enlarged Area Floor Plans                 11/18/99
----------------------------------------------------------------------------------------------------------
A - 1.4      H-M           Enlarged Area Floor Plans Shipping/Receiving Offices   11/18/99
----------------------------------------------------------------------------------------------------------
A - 1.5      H-M           Enlarged Tunnel Floor Plan                             11/17/99
----------------------------------------------------------------------------------------------------------
A - 2.1      H-M           Door Schedule                                          11/19/99
----------------------------------------------------------------------------------------------------------
A - 2.2      H-M           Room Finish Schedule Door & Window Details             11/19/99
----------------------------------------------------------------------------------------------------------
A - 3.1      H-M           Building Elevations                                    11/10/99
----------------------------------------------------------------------------------------------------------
A - 3.2      H-M           Enlarged Elevations                                     11/3/99
----------------------------------------------------------------------------------------------------------
A - 3.3      H-M           North Wall Tilt-Up Wall Panel Elevations               11/12/99
----------------------------------------------------------------------------------------------------------
A - 3.4      H-M           North/West Wall Tilt-Up Wall Panel Elevations           11/3/99
----------------------------------------------------------------------------------------------------------
A - 3.5      H-M           West/South Wall Tilt-Up Wall Panel Elevations           11/1/99
----------------------------------------------------------------------------------------------------------
A - 3.6      H-M           South Wall Tilt-Up Wall Panel Elevations               11/10/99
----------------------------------------------------------------------------------------------------------
A - 3.7      H-M           East Wall Tilt-Up Wall Panel Elevations                 11/5/99
----------------------------------------------------------------------------------------------------------
A - 3.8      H-M           Column Line 11 Firewall Tilt-Up Wall Panel Elevations   11/3/99
----------------------------------------------------------------------------------------------------------
A - 3.9      H-M           Column Line 26 Firewall Tilt-Up Wall Panel Elevations   11/8/99
----------------------------------------------------------------------------------------------------------
A - 4.10     H-M           Wall Sections                                          11/19/99
----------------------------------------------------------------------------------------------------------
A - 4.1      H-M           Wall Sections                                          11/16/99
----------------------------------------------------------------------------------------------------------
A - 4.2A     H-M           Wall Sections                                           11/4/99
----------------------------------------------------------------------------------------------------------
A - 4.2      H-M           Wall Sections                                           11/5/99
----------------------------------------------------------------------------------------------------------
A - 4.3      H-M           Wall Sections                                          11/16/99
----------------------------------------------------------------------------------------------------------
A - 4.6      H-M           Wall Sections                                          10/27/99
----------------------------------------------------------------------------------------------------------
A - 4.7      H-M           Wall Sections                                          11/17/99
----------------------------------------------------------------------------------------------------------
A - 4.8      H-M           Wall Sections                                          11/18/99
----------------------------------------------------------------------------------------------------------
A - 4.9      H-M           Wall Sections                                          11/18/99
----------------------------------------------------------------------------------------------------------
A - 6.1      H-M           Glass and Glazing Elevations                           11/19/99
----------------------------------------------------------------------------------------------------------
A - 6.2      H-M           Glass and Glazing Details                              11/19/99
----------------------------------------------------------------------------------------------------------
A - 7.1      H-M           Faciltiy Roof Plans                                    11/16/99
----------------------------------------------------------------------------------------------------------
C - 1.1      H-M           Partial Foundation Plan                                 9/29/99
----------------------------------------------------------------------------------------------------------
C - 1.2      H-M           Partial Foundation Plan                                 9/29/99
----------------------------------------------------------------------------------------------------------
C - 1.3      H-M           Partial Foundation Plan                                 9/29/99
----------------------------------------------------------------------------------------------------------
C - 1.4      H-M           Partial Reinforcing Details                             11/0/99
----------------------------------------------------------------------------------------------------------
C - 1.5      H-M           Partial Reinforcing Details                             11/0/99
----------------------------------------------------------------------------------------------------------
C - 1.6      H-M           Office Foundation Plan                                   6/0/99
----------------------------------------------------------------------------------------------------------
C - 2.1      H-M           Sections and Details                                    9/29/99
----------------------------------------------------------------------------------------------------------
C - 2.2      H-M           Sections and Details                                    9/29/99
----------------------------------------------------------------------------------------------------------
S - 1.1      H-M           Partial Roof Framing Plan                                6/0/99
----------------------------------------------------------------------------------------------------------
S - 1.2      H-M           Partial Roof Framing Plan                                6/0/99
----------------------------------------------------------------------------------------------------------
S - 1.3      H-M           Partial Roof Framing Plan                                6/0/99
----------------------------------------------------------------------------------------------------------
S - 2.1      H-M           Sections and Details                                     6/0/99
----------------------------------------------------------------------------------------------------------
M - 1.1      H-M           Site Utilities Plans                                   10/21/99
----------------------------------------------------------------------------------------------------------
M - 2.1      H-M           Facilty Underground Plumbing Plan                      10/20/99
----------------------------------------------------------------------------------------------------------
M - 2.2      H-M           Enlarged Office Underground Plumbing Plan               11/3/99
----------------------------------------------------------------------------------------------------------
M - 2.3      H-M           Enlarged Areas Underground Plumbing Plan                11/3/99
----------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   86

<TABLE>
----------------------------------------------------------------------------------------------------------
<S>          <C>           <C>                                                    <C>        <C>
M - 2.4      H-M           Enlarged Areas Underground Plumbing Plan               11/27/99
----------------------------------------------------------------------------------------------------------
M - 2.5      H-M           Underground Riser Diagrams                              11/3/99
----------------------------------------------------------------------------------------------------------
M - 3.1      H-M           Faciltiy Overhead Plumbing Plan                        10/28/99
----------------------------------------------------------------------------------------------------------
M - 3.2      H-M           Enlarged Office Underground Plumbing Plan               11/3/99
----------------------------------------------------------------------------------------------------------
M - 3.3      H-M           Enlarged Areas Underground Plumbing Plan                11/3/99
----------------------------------------------------------------------------------------------------------
M - 3.4      H-M           Enlarged Areas Underground Plumbing Plan               10/28/99
----------------------------------------------------------------------------------------------------------
M - 3.5      H-M           Overhead Riser Diagrams                                 11/3/99
----------------------------------------------------------------------------------------------------------
M - 4.1      H-M           Faciltiy HVAC Plan                                     11/11/99
----------------------------------------------------------------------------------------------------------
M - 4.2      H-M           Office HVAC Plan                                       11/19/99
----------------------------------------------------------------------------------------------------------
M - 4.3      H-M           DC Section /Enlarged Area HVAC Plans                   11/17/99
----------------------------------------------------------------------------------------------------------
M - 4.4      H-M           Enlarged Area HVAC Plans Shipping /Receiving Offices   11/17/99
----------------------------------------------------------------------------------------------------------
M - 4.5      H-M           Enlarged Tunnel HVAC Plan                              11/15/99
----------------------------------------------------------------------------------------------------------
M - 4.6      H-M           HVAC Details and Schedules                             11/19/99
----------------------------------------------------------------------------------------------------------
M - 4.7      H-M           HVAC Details and Notes                                 11/19/99
----------------------------------------------------------------------------------------------------------
E - 1.1      H-M           Site Electrical Site Plan                              10/21/99
----------------------------------------------------------------------------------------------------------
E - 1.2      H-M           Facility Grounded Plan                                  11/1/99
----------------------------------------------------------------------------------------------------------
E - 2.1      H-M           Facility Lighting Key Plan                              11/3/99
----------------------------------------------------------------------------------------------------------
E - 2.1A     H-M           Lighting Plan (Section A)                              11/17/99
----------------------------------------------------------------------------------------------------------
E - 2.1BD    H-M           Lighting Location Plan (Section B)                     11/18/99
----------------------------------------------------------------------------------------------------------
E - 2.1CD    H-M           Lighting Location Plan (Section C)                     11/11/99
----------------------------------------------------------------------------------------------------------
E - 2.1CD    H-M           Lighting Plan (Section C)                              11/15/99
----------------------------------------------------------------------------------------------------------
E - 2.1D     H-M           Lighting Location Plan (Section D)                      11/8/99
----------------------------------------------------------------------------------------------------------
E - 2.1E     H-M           Lighting Plan (Section E)                               11/8/99
----------------------------------------------------------------------------------------------------------
E - 2.1FD    H-M           Lighting Location Plan (Section F)                     11/11/99
----------------------------------------------------------------------------------------------------------
E - 2.1F     H-M           Lighting Plan (Section F)                              11/16/99
----------------------------------------------------------------------------------------------------------
E - 2.3      H-M           Office Lighting Plan                                   11/17/99
----------------------------------------------------------------------------------------------------------
E - 2.4      H-M           Enlarged Office Lighting Plan                           11/1/99
----------------------------------------------------------------------------------------------------------
E - 2.5      H-M           Enlarged Office Lighting Plan                           11/1/99
----------------------------------------------------------------------------------------------------------
E - 2.7      H-M           Luminaire Schedule and Details                          11/1/99
----------------------------------------------------------------------------------------------------------
E - 3.1      H-M           Facility Power Key Plan                                 11/9/99
----------------------------------------------------------------------------------------------------------
E - 3.1A     H-M           Power Plan (Section A)                                 11/10/99
----------------------------------------------------------------------------------------------------------
E - 3.1B     H-M           Power Plan (Section B)                                 11/10/99
----------------------------------------------------------------------------------------------------------
E - 3.1C     H-M           Power Plan (Section C)                                 11/10/99
----------------------------------------------------------------------------------------------------------
E - 3.1D     H-M           Power Plan (Section D)                                  11/8/99
----------------------------------------------------------------------------------------------------------
E - 3.1E     H-M           Power Plan (Section E)                                  11/8/99
----------------------------------------------------------------------------------------------------------
E - 3.1F     H-M           Power Plan (Section F)                                  11/8/99
----------------------------------------------------------------------------------------------------------
E - 3.4      H-M           Enlarged Office Power Plan                             11/17/99
----------------------------------------------------------------------------------------------------------
E - 3.5      H-M           Enlarged Office Power Plan                             11/17/99
----------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>   87

                                   EXHIBIT "C"

                                  Rent Schedule

                                  See Attached

                                       1
<PAGE>   88

                                   EXHIBIT "C"

<TABLE>
<CAPTION>
                                                                                                 GLOBAL
    LEASE                                                      BASIC           COMPANY            BASIC           Annual
    QRTS     DATE         INTEREST          SINK FUND          RENT            PAYMENT            RENT             Rent
-----------------------------------------------------------------------------------------------------------------------------
<S>        <C>            <C>               <C>             <C>                <C>              <C>             <C>
       1   09/01/00          $0                    $0               $0         $17,708             $17,708
       2   10/01/00       $318,750                 $0         $318,750         $53,125            $371,875
       3   01/01/01       $956,250                 $0         $956,250         $53,125          $1,009,375      1,398,958.33
       4   04/01/01       $956,250                 $0         $956,250         $53,125          $1,009,375
       5   07/01/01       $956,250           $325,000       $1,281,250         $53,125          $1,334,375
       6   10/01/01       $948,938                 $0         $948,938         $53,125          $1,002,063
       7   01/01/02       $948,938           $335,000       $1,283,938         $53,125          $1,337,063      4,682,875.00
       8   04/01/02       $941,400                 $0         $941,400         $53,125            $994,525
       9   07/01/02       $941,400           $350,000       $1,291,400         $53,125          $1,344,525
      10   10/01/02       $933,525                 $0         $933,525         $53,125            $986,650
      11   01/01/03       $933,525           $370,000       $1,303,525         $53,125          $1,356,650      4,682,350.00
      12   04/01/03       $925,200                 $0         $925,200         $53,125            $978,325
      13   07/01/03       $925,200           $385,000       $1,310,200         $53,125          $1,363,325
      14   10/01/03       $916,538                 $0         $916,538         $53,125            $969,663
      15   01/01/04       $916,538           $400,000       $1,316,538         $53,125          $1,369,663      4,680,975.00
      16   04/01/04       $907,538                 $0         $907,538         $53,125            $960,663
      17   07/01/04       $907,538           $420,000       $1,327,538         $53,125          $1,380,663
      18   10/01/04       $898,088                 $0         $898,088         $53,125            $951,213
      19   01/01/05       $898,088           $440,000       $1,338,088         $53,125          $1,391,213      4,683,750.00
      20   04/01/05       $888,188                 $0         $888,188         $53,125            $941,313
      21   07/01/05       $888,188           $460,000       $1,348,188         $53,125          $1,401,313
      22   10/01/05       $877,838                 $0         $877,838         $53,125            $930,963
      23   01/01/06       $877,838           $480,000       $1,357,838         $53,125          $1,410,963      4,684,550.00
      24   04/01/06       $867,038                 $0         $867,038         $53,125            $920,163
      25   07/01/06       $867,038           $500,000       $1,367,038         $53,125          $1,420,163
      26   10/01/06       $855,788                 $0         $855,788         $53,125            $908,913
      27   01/01/07       $855,788           $525,000       $1,380,788         $53,125          $1,433,913      4,683,150.00
      28   04/01/07       $843,975                 $0         $843,975         $53,125            $897,100
      29   07/01/07       $843,975           $545,000       $1,388,975         $53,125          $1,442,100
      30   10/01/07       $831,713                 $0         $831,713         $53,125            $884,838
      31   01/01/08       $831,713           $570,000       $1,401,713         $53,125          $1,454,838      4,678,875.00
      32   04/01/08       $818,888                 $0         $818,888         $53,125            $872,013
      33   07/01/08       $818,888           $595,000       $1,413,888         $53,125          $1,467,013
      34   10/01/08       $805,500                 $0         $805,500         $53,125            $858,625
      35   01/01/09       $805,500           $625,000       $1,430,500         $53,125          $1,483,625      4,681,275.00
</TABLE>

<PAGE>   89

<TABLE>
<CAPTION>
                                                                                                 GLOBAL
    LEASE                                                      BASIC           COMPANY            BASIC           Annual
    QRTS     DATE         INTEREST          SINK FUND          RENT            PAYMENT            RENT             Rent
-----------------------------------------------------------------------------------------------------------------------------
<S>        <C>            <C>               <C>             <C>                <C>              <C>             <C>
      36   04/01/09       $791,438                 $0         $791,438         $53,125            $844,563
      37   07/01/09       $791,438           $650,000       $1,441,438         $53,125          $1,494,563
      38   10/01/09       $776,813                 $0         $776,813         $53,125            $829,938
      39   01/01/10       $776,813           $680,000       $1,456,813         $53,125          $1,509,938      4,679,000.00
      40   04/01/10       $761,513                 $0         $761,513         $53,125            $814,638
      41   07/01/10       $761,513           $710,000       $1,471,513         $53,125          $1,524,638
      42   10/01/10       $745,538                 $0         $745,538         $53,125            $798,663
      43   01/01/11       $745,538           $745,000       $1,490,538         $53,125          $1,543,663      4,681,600.00
      44   04/01/11       $728,775                 $0         $728,775         $53,125            $781,900
      45   07/01/11       $728,775           $775,000       $1,503,775         $53,125          $1,556,900
      46   10/01/11       $711,338                 $0         $711,338         $53,125            $764,463
      47   01/01/12       $711,338           $810,000       $1,521,338         $53,125          $1,574,463      4,677,725.00
      48   04/01/12       $693,113                 $0         $693,113         $53,125            $746,238
      49   07/01/12       $693,113           $850,000       $1,543,113         $53,125          $1,596,238
      50   10/01/12       $673,988                 $0         $673,988         $53,125            $727,113
      51   01/01/13       $673,988           $885,000       $1,558,988         $53,125          $1,612,113      4,681,700.00
      52   04/01/13       $654,075                 $0         $654,075         $53,125            $707,200
      53   07/01/13       $654,075           $925,000       $1,579,075         $53,125          $1,632,200
      54   10/01/13       $633,263                 $0         $633,263         $53,125            $686,388
      55   01/01/14       $633,263           $970,000       $1,603,263         $53,125          $1,656,388      4,682,175.00
      56   04/01/14       $611,438                 $0         $611,438         $53,125            $664,563
      57   07/01/14       $611,438         $1,010,000       $1,621,438         $53,125          $1,674,563
      58   10/01/14       $588,713                 $0         $588,713         $53,125            $641,838
      59   01/01/15       $588,713         $1,060,000       $1,648,713         $53,125          $1,701,838      4,682,800.00
      60   04/01/15       $564,863                 $0         $564,863         $53,125            $617,988
      61   07/01/15       $564,863         $1,105,000       $1,669,863         $53,125          $1,722,988
      62   10/01/15       $540,000                 $0         $540,000         $53,125            $593,125
      63   01/01/16       $540,000         $1,155,000       $1,695,000         $53,125          $1,748,125      4,682,225.00
      64   04/01/16       $514,013                 $0         $514,013         $53,125            $567,138
      65   07/01/16       $514,013         $1,205,000       $1,719,013         $53,125          $1,772,138
      66   10/01/16       $486,900                 $0         $486,900         $53,125            $540,025
      67   01/01/17       $486,900         $1,260,000       $1,746,900         $53,125          $1,800,025      4,679,325.00
      68   04/01/17       $458,550                 $0         $458,550         $53,125            $511,675
      69   07/01/17       $458,550         $1,320,000       $1,778,550         $53,125          $1,831,675
      70   10/01/17       $428,850                 $0         $428,850         $53,125            $481,975
      71   01/01/18       $428,850         $1,375,000       $1,803,850         $53,125          $1,856,975      4,682,300.00
      72   04/01/18       $397,913                 $0         $397,913         $53,125            $451,038
</TABLE>

<PAGE>   90

<TABLE>
<CAPTION>
                                                                                                 GLOBAL
    LEASE                                                      BASIC           COMPANY            BASIC           Annual
    QRTS     DATE         INTEREST          SINK FUND          RENT            PAYMENT            RENT             Rent
-----------------------------------------------------------------------------------------------------------------------------
<S>        <C>            <C>               <C>             <C>                <C>              <C>             <C>
      73   07/01/18       $397,913         $1,440,000       $1,837,913         $53,125          $1,891,038
      74   10/01/18       $365,513                 $0         $365,513         $53,125            $418,638
      75   01/01/19       $365,513         $1,505,000       $1,870,513         $53,125          $1,923,638      4,684,350.00
      76   04/01/19       $331,650                 $0         $331,650         $53,125            $384,775
      77   07/01/19       $331,650         $1,570,000       $1,901,650         $53,125          $1,954,775
      78   10/01/19       $296,325                 $0         $296,325         $53,125            $349,450
      79   01/01/20       $296,325         $1,640,000       $1,936,325         $53,125          $1,989,450      4,678,450.00
      80   04/01/20       $259,425                 $0         $259,425         $53,125            $312,550
      81   07/01/20       $259,425         $1,715,000       $1,974,425         $53,125          $2,027,550
      82   10/01/20       $220,838                 $0         $220,838         $53,125            $273,963
      83   01/01/21       $220,838         $1,795,000       $2,015,838         $53,125          $2,068,963      4,683,025.00
      84   04/01/21       $180,450                 $0         $180,450         $53,125            $233,575
      85   07/01/21       $180,450         $1,875,000       $2,055,450         $53,125          $2,108,575
      86   10/01/21       $138,263                 $0         $138,263         $53,125            $191,388
      87   01/01/22       $138,263         $1,960,000       $2,098,263         $53,125          $2,151,388      4,684,925.00
      88   04/01/22        $94,163                 $0          $94,163         $53,125            $147,288
      89   07/01/22        $94,163         $2,045,000       $2,139,163         $53,125          $2,192,288
      90   10/01/22        $48,150                 $0          $48,150         $53,125            $101,275
      91   01/01/23        $48,150         $2,140,000       $2,188,150              $0          $2,188,150      4,629,000.00

                       $57,099,525        $42,500,000      $99,599,525      $4,745,833        $104,345,358      $104,345,358
</TABLE>

This rent schedule assumes the building is delivered on schedule on 8/30/00. The
interest payment paid by Williams-Sonoma on 10/1/00 is for the month of
September. The capitalized interest fund will cover the months of July and
August. This schedule assumes no mandatory redemption of bond proceeds and no
interest rate reset.

<PAGE>   91

                                   EXHIBIT "D"

                              Environmental Notices

                                      NONE

<PAGE>   92

                                   EXHIBIT "E"

                        Easements Affecting Real Property

        1. 15' Utility Easement in favor of City of Olive Branch, Mississippi,
running parallel with the west edge of the 80' road right-of-way for Polk Lane,
recorded on August 25, 1998 at 1:04 p.m. in Book 338, Page 562, of the Land Deed
Records, Chancery Clerk's Office, DeSoto County, Mississippi.

        2. 15' Right-of-Way Easement in favor of North Central Mississippi
Electric Power Association, running parallel with the west edge of the 80' road
right-of-way for Polk Lane, recorded on August 25, 1998 at 1:03 p.m. in Book
338, Page 559, of the Land Deed Records, Chancery Clerk's Office, DeSoto County,
Mississippi.

        3. Subdivision Restrictions, Building Lines and Easements of record in
Plat Book 64, Page 34, of the Chancery Court Clerk's Office, DeSoto County,
Mississippi.

        4. Reciprocal Storm Water Detention and Drainage Agreement recorded on
December 11, 1998 at 2:57 p.m. in Book 79, Page 486, of the Chancery Court
Clerk's Office, DeSoto County, Mississippi, and re-recorded on January 21, 1999
at 4:14 p.m. in Book 80, Page 182 in said Chancery Court Clerk's Office.

        5. Reciprocal Connector Easement of record on December 11, 1998 at 3:00
p.m. in Book 079, Page 511, of the Chancery Court Clerk's Office, DeSoto County,
Mississippi.

        6. Parking Easement Agreement recorded on December 11, 1998 at 2:59 p.m.
in Book 079, Page 503, of the Chancery Court Clerk's Office, DeSoto County,
Mississippi.

<PAGE>   93

                                   EXHIBIT "F"

                              Existing Indebtedness

                                        1<PAGE>   1

                                                                  EXHIBIT 10.14A
                                 LEASE GUARANTY

        In order to induce HEWSON /DESOTO PARTNERS, LLC, ("Landlord") to execute
a certain Lease Agreement dated as of November 15, 1999 (the "Lease") between
Landlord and WILLIAMS-SONOMA RETAIL SERVICES, INC., a California corporation
("Tenant"), covering certain premises situated in the City of Olive Branch,
Mississippi described on Exhibit "A" hereto, the undersigned (hereinafter
referred to as "Guarantor") hereby guarantees unto Landlord the payment and
performance of (a) all of the Basic Rent, Additional Rent (as such terms are
defined in the Lease) and other sums or charges which may ever become due and
payable by Tenant under the Lease, including, without limitation, rent that
becomes due and payable by reason of the exercise of any power to accelerate
granted to Landlord under the Lease, (collectively, the "Rents"), and any
damages or other sums that become payable on account of any default by Tenant
under the Lease, and the Company Payments (as defined in the Lease) due Landlord
thereunder, and (b) all of the other obligations, liabilities and duties of
Tenant under the Lease [the Rents, Company Payments and other obligations,
liabilities and duties described in the foregoing clauses (a) and (b) being
hereinafter collectively referred to as the "Obligations"].

        Upon the occurrence of an event of a default by Tenant in the payment or
performance of any of the Obligations, Guarantor shall on demand pay the amount
due to Landlord and perform all of the other Obligations of Tenant with respect
to which Tenant is then in default. For the purposes hereof, the term "Tenant"
shall include any assignee of Tenant and the term "Lease" shall include any
amendment of the Lease effected by Landlord and Tenant. Notwithstanding anything
contained herein to the contrary, Guarantor's obligations shall be limited to
those provided herein.

        Landlord shall not be required, before invoking the benefits of this
guaranty, to institute suit against or exhaust its remedies with respect to
Tenant or any other person liable for the Obligations or to enforce its rights
with respect to any security which shall have ever been given to secure the
payment and performance of the Obligations; and the obligations of Guarantor
hereunder shall not be released or impaired in any way by any action for the
collection or enforcement of the Obligations, or any failure of Landlord to give
Guarantor any notice of any kind under any circumstances whatsoever with respect
to or in connection with the Obligations. Suit may be brought and maintained
against Guarantor without the joinder of Tenant or any other person, and in the
event that there is more than one (1) guarantor of the Obligations, Landlord may
(a) bring suit against all guarantors jointly and severally or against any one
or more of them, (b) compromise or settle with any one or more of such
guarantors for such consideration as Landlord may deem proper, and (c) release
one or more of the guarantors from liability without impairing the liability of
the guarantors not so released; and no action brought by Landlord against any
guarantor of the Obligations shall impair the right of Landlord to bring suit
against any remaining guarantor or guarantors, including Guarantor hereunder.

        The obligations of Guarantor shall be irrevocable and unconditional,
irrespective of the genuineness, validity, regularity or enforceability of the
Lease or any security given for the Obligations or any other circumstances which
might otherwise constitute a legal or equitable discharge of a surety or
guarantor, and Guarantor waives the benefit of all principles or

<PAGE>   2

provisions of law, statutory or otherwise, which are or might be in conflict
with the terms of this guaranty, and agrees that the obligations of Guarantor
shall not be affected by any circumstances, whether or not referred to in this
guaranty, which might otherwise constitute a legal or equitable discharge of a
surety or a guarantor. Specifically, Guarantor waives the benefits of any rights
of sureties and guarantors under the laws of the State of Mississippi. Without
limiting the generality of the foregoing Guarantor agrees that Landlord may, in
its sole and absolute discretion, without notice to or consent by Guarantor, and
without in any way releasing or impairing any liability or obligation of
Guarantor hereunder (a) waive compliance by Tenant with any of its Obligations
or covenants under the Lease or waive any default thereunder, or grant any other
indulgence with respect to the Lease, (b) modify, amend or change any provision
of the Lease, (c) grant extensions or renewals of the Lease or the Obligations,
or effect any release, compromise or settlement in connection therewith,
including any release of the liability of Tenant or any guarantor or other
person liable on the Obligations or any part thereof, (d) transfer its interest
in the premises covered by the Lease or its rights under this guaranty
(including specifically the anticipated assignment of certain of Landlord's
rights under this guaranty and the Lease to the Mississippi Business Finance
Corporation as issuer ("Issuer") of its $42,500,000 Taxable Industrial
Development Revenue Bonds, Series 1999 (Hewson/Desoto Partners, L.L.C. Project)
("Bonds") pursuant to an Assignment of Rents and Leases (the "Assignment"),
which will in turn be assigned by the Issuer to First Tennessee Bank National
Association as trustee ("Trustee") for the holders of the Bonds pursuant to a
Trust Indenture of even date herewith between Issuer and Trustee and the
conveyance and assignment by Landlord to Hewson/Phase II Partners, L.L.C. of the
premises and of its rights under the Lease, (e) consent to the assignment by
Tenant of its rights under the Lease, and (f) deal in all respects with Tenant
and the Obligations as if this guaranty were not in effect. Guarantor further
waives (1) acceptance or notices of acceptance of this guaranty, (2) notices to
Guarantor of any kind in any circumstances whatsoever, including, without
limitation, notice of dishonor and, except as otherwise herein provided, notice
of any default by Tenant under the Lease and all waivers or indulgences granted
by Landlord to Tenant under the Lease, and (3) diligence, presentment and suit
on the part of Landlord in the enforcement of any of the Obligations.

        This guaranty shall be enforceable despite any exculpation from
liability granted to Tenant under the Lease, with the same force and effect as
if no such exculpation from liability had been granted to Tenant.

        Guarantor agrees to pay the reasonable attorneys' fees and all other
costs and expenses incurred by Landlord in order to enforce its rights under
this guaranty.

        In the event any payment by Tenant to Landlord is held to constitute a
preference under the bankruptcy laws, or if for any other reason Landlord is
required to refund such payment or pay the amount thereof to any other party,
such payment by Tenant to Landlord shall not constitute a release of Guarantor
from any liability hereunder, but Guarantor agrees to pay such amount to
Landlord upon demand.

                                       2
<PAGE>   3

        Until the Obligations have been paid in full, Guarantor shall not have
any right of subrogation unless such right is expressly granted in writing by
Landlord.

        Landlord shall apply all payments received by it from Tenant, Guarantor
or any other guarantor under any other instrument, or realized by it from any
security as follows: first, to payment of Basic Rent then due and payable;
second, to payment of Additional Rent then due and payable; third, to payment of
any damages or other sums then payable on account of any default by Tenant;
fourth, to payment of Company Payments then due and payable; and fifth, to
payments of any Obligations then due and payable.

        All the obligations of Guarantor arising hereunder shall be binding on
its successors and assigns. The word "person" as used herein includes natural
persons and entities of all kinds.

        This guaranty shall be construed in accordance with and governed by the
laws of the State of Mississippi.

        EXCEPT TO THE EXTENT PROHIBITED BY LAW, THE GUARANTOR WAIVES TRIAL BY
JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING OF ANY NATURE WHATSOEVER
ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS GUARANTY, WHETHER ARISING UNDER
STATUTE (INCLUDING ANY FEDERAL OR STATE CONSTITUTION) OR UNDER THE LAW OF
CONTRACT, TORT OR OTHERWISE AND INCLUDING, WITHOUT LIMITATION, ANY CHALLENGE TO
THE LEGALITY, VALIDITY, BINDING EFFECT OR ENFORCEABILITY OF THIS PARAGRAPH. THE
GUARANTOR CONSENTS TO THE JURISDICTION OF THE MISSISSIPPI COURTS AND CONSENTS TO
SERVICE OF PROCESS BY REGISTERED OR CERTIFIED MAIL.

                                       3
<PAGE>   4

        This guaranty shall be binding upon Guarantor and its successors and
assigns, and shall inure to the benefit of Landlord and its successors and
assigns. Guarantor acknowledges and agrees that Landlord does not intend to
assign its rights to Company Payments pursuant to the Assignment, and that upon
enforcement of its rights under this guaranty by Trustee, sums due hereunder in
respect of Company Payments shall not be paid to Trustee. Landlord acknowledges
and agrees that notwithstanding anything to the contrary herein contained,
Guarantor may assert any and all defenses of the Tenant arising under the Lease
to the payment of Company Payments, and any and all rights of set-off,
recoupment and counterclaim of the Tenant arising under the Lease with respect
to Company Payments to Guarantor's obligations with respect to Company Payments
hereunder.

        Executed this ____ day of ____________________, 1999.

                                            WILLIAMS-SONOMA, INC.

                                            By:  /s/ Jerry Owens
                                               ---------------------------------

                                            Title: VP Operation
                                                  ------------------------------

                                                                       GUARANTOR

                                       4

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