Document:

<PAGE>   1
                                                                   EXHIBIT 10.11

                                LEASE AMENDMENT

Whereas this is the first amendment to the lease dated November 19, 1994
between Jackson Miles Smith and Susan Lynn Smith, as individuals being the
Landlord and The Miles Smith Family Corp., Inc. dba Cal Fresh Produce being
Tenant.

The subject property is located at 2705 5th Street, Sacramento, CA. The
improvements consist of approximately 34,997 square feet of building area.

The Landlord for the benefit of the Tenant has maintained and improved the
premises since November 19, 1994. Therefore effective July 1, 2000 the
following subparagraph shall be added to "ARTICLE THREE: BASE RENT, Section
3.02(a)."

     Effective July 1, 2000 the minimum effective rent shall be the greater of
the Base Rent with rental adjustment factors or $14,700 per month NNN. Further
upon anniversary dates every sixty (60) months from the effective date of this
notice the minimum stipulated rents shall be the greater of the following:

          July 1, 2005   Base Rent plus rental adjustments or $16,750 per month.
          July 1, 2010   Base Rent plus rental adjustments or $19,275 per month.
          July 1, 2015   Base Rent plus rental adjustments or $22,175 per month.

The Landlord and Tenant by signing below acknowledge acceptance of this change
to the BASE RENT section of the lease agreement and stipulate that all other
terms and conditions of the lease agreement are in full force and effect.

Landlord:

Date: ______        _________________________          ______________________
                    Jackson Miles Smith                Susan Lynn Smith

Tenant:

Date: ______        __________________________________________________
                    The Miles Smith Family Corp., Inc. as Amended DBA
                    Cal Fresh Produce
<PAGE>   2
            [CB COMMERCIAL LETTERHEAD] INDUSTRIAL REAL ESTATE LEASE

ARTICLE ONE: BASIC TERMS

     This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and
are to be read in conjunction with the Basic Terms.

     Section 1.01. DATE OF LEASE:                    February 24, 1997
                                 -----------------------------------------------
     Section 1.02. LANDLORD (INCLUDE LEGAL ENTITY):  JB Company
                                                   -----------------------------

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Address of Landlord:                         2101 Evergreen Street
                    ------------------------------------------------------------
                                             Sacramento, CA 95815 (916) 929-3003
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   Section 1.03. TENANT (INCLUDE LEGAL ENTITY): Miles Smith Family Corporation,
                                              ----------------------------------
                                                a California Corporation
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Address of Tenant:                           2705 - 5th Street
                  --------------------------------------------------------------
                                             Sacramento, CA 95818 (916) 442-1292
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   Section 1.04. PROPERTY: The Property is part of Landlord's multi-tenant real
property development known as
                              --------------------------------------------------
   2703 - 5th Street, #9, Sacramento, CA 95818
--------------------------------------------------------------------------------
and described or depicted in Exhibit "A" (the "Project"). The Project includes
the land, the buildings and all other improvements located on the land, and
the common areas described in Paragraph 4.05(a). The Property is (include
street address, approximate square footage and description) 2703 - 5th
                                                            --------------------
Street, Unit 9, Sacramento, CA 95818, an approximate 10,000 square foot portion
--------------------------------------------------------------------------------
of an approximately 39,688 square foot concrete tilt-up building (SEE EXHIBIT
--------------------------------------------------------------------------------
"A" ATTACHED)
--------------------------------------------------------------------------------

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

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

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   Section 1.05. LEASE TERM: five (5) YEARS zero (0) MONTHS BEGINNING ON
                             --------       --------
April 1, 1997 or such other date as is specified in this Lease, and ending on
-------------
March 31, 2002
--------------------------------------------------------------------------------
   Section 1.06. PERMITTED USES: (See Article Five) General warehousing,
                                                   -----------------------------
storage, bottling, office and related legal uses not injurious to the facility.
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   Section 1.07. TENANT'S GUARANTOR: (If none, so state)   None
                                                        ------------------------
   Section 1.08. BROKERS: (See Article Fourteen) (If none, so state)
Landlord's Broker:                 CB Commercial Real Estate Group, Inc.
                  --------------------------------------------------------------
Tenant's Broker:                   CB Commercial Real Estate Group, Inc.
                ----------------------------------------------------------------
   Section 1.09. COMMISSION PAYABLE TO LANDLORD'S BROKER: (See Article
Fourteen) $   (PER SEPARATE AGREEMENT)
           ---------------------------------------------------------------------
   Section 1.10. INITIAL SECURITY DEPOSIT: (See Section 3.03) $  2,700.00
                                                               -----------------
   Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: (See Section 4.05)
                                                             Unassigned per code
--------------------------------------------------------------------------------
   Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT:

   (a) BASE RENT:        (SEE SECTION 16)                   Dollars ($         )
                 -------------------------------------------          ---------

per month for the first    months, as provided in Section 3.01, and shall be
                        --
increased on the first day of the           month(s) after the Commencement
                                  ---------
Date, either (i) as provided in Section 3.02, or (ii)                        .
                                                      -----------------------
(If (ii) is completed, then (i) as provided and Section 3.02. are inapplicable.)

   Section 1.13. COSTS AND CHARGES PAYABLE BY LANDLORD: (a) Base Real Property
Taxes (See Section 4.02); (b) Base Insurance Premiums (See Section 4.04(c));
(c) Maintenance and Repair (See Article Six).

   Section 1.14. LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE: (See
Section 9.05)   None                    percent (  0  %) of the Profit (the
             ---------------------------         -----
"Landlord's Share").

   Section 1.15. RIDERS: The following Riders are attached to and made a part
of this Lease: (If none, so state)
                                   ---------------------------------------------
   Exhibit "A" - Disclosure and Agreement
--------------------------------------------------------------------------------
   Addendum
--------------------------------------------------------------------------------
   Option to Extend Term Lease Rider
--------------------------------------------------------------------------------

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

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

1988 Southern California Chapter        1
     of the Society of Industrial [LOGO]
     and Office Realtors, Inc.   (Multi-Tenant Gross Form

<PAGE>   3
ARTICLE TWO: LEASE TERM

     Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and shall
begin and end on the dates specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of this
Lease. The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under any
provision of this Lease.

     Section 2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable to
Tenant if Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord's non-delivery of the Property to Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month. If Landlord does not deliver possession of the Property to Tenant within
sixty (60) days after the Commencement Date, Tenant may elect to cancel this
Lease by giving written notice to Landlord within ten (10) days after the sixty
(60) day period ends. If Tenant gives such notice, the Lease shall be cancelled
and neither Landlord nor Tenant shall have any further obligations to the
other. If Tenant does not give such notice, Tenant's right to cancel the Lease
shall expire and the Lease Term shall commence upon the delivery of possession
of the Property to Tenant. If delivery of possession of the Property to Tenant
is delayed, Landlord and Tenant shall, upon such delivery, execute an amendment
to this Lease setting forth the actual Commencement Date and expiration date of
the Lease. Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.

     Section 2.03. EARLY OCCUPANCY. If Tenant occupies the Property prior to
the Commencement Date, Tenant's occupancy of the Property shall be subject to
all of the provisions of this Lease. Early occupancy of the Property shall not
advance the expiration date of this Lease. Tenant shall pay Base Rent and all
other charges specified in this Lease for the early occupancy period.

     Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which Landlord incurs
from Tenant's delay in vacating the Property. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall
be a "month-to-month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy, except that the Base Rent then in
effect shall be increased by twenty-five percent (25%).

ARTICLE THREE: BASE RENT

     Section 3.01. TIME AND MANNER OF PAYMENT. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.

     SECTION 3.03.  SECURITY DEPOSIT; INCREASES.

     (a) Upon the execution of this Lease, Tenant shall deposit with Landlord a
cash Security Deposit in the amount set forth in Section 1.10 above. Landlord
may apply all or part of the Security Deposit to any unpaid rent or other
charges due from Tenant or to cure any other defaults of Tenant. If Landlord
uses any part of the Security Deposit, Tenant shall restore the Security
Deposit to its full amount within ten (10) days after Landlord's written
request. Tenant's failure to do so shall be a material default under this
Lease. No interest shall be paid on the Security Deposit. Landlord shall not be
required to keep the Security Deposit separate from its other accounts and no
trust relationship is created with respect to the Security Deposit.

<PAGE>   4
[MISSING COPY] (Damage or Destruction), Article Eight (???) or any other
termination not resulting ??? Tenant's default, and after Tenant has vacated the
Property in the manner required by this Lease, Landlord shall refund or credit
to Tenant (or Tenant's successor) the unused portion of the Security Deposit,
any advance rent or other advance payments made by Tenant to Landlord, and any
amounts paid for real property taxes and other reserves which apply to any time
periods after termination of the Lease.

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

     Section 4.01. Additional Rent. All charges payable by Tenant other than
Base Rent are called "Additional Rent." Unless this Lease provides otherwise.
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.

     Section 4.02. Property Taxes.

     (a) Real Property Taxes. Landlord shall pay the "Real property Taxes" on
the Property during the Lease Term. Real Property Taxes are real property taxes
applicable to the Property as shown on the tax bill for the most recent tax
fiscal year ending prior to the Commencement Date. However, if the structures on
the Property are not completed by the tax lien date of such tax fiscal year, the
Real Property Taxes are the taxes shown on the first tax bill showing the full
assessed value of the Property after completion of the structures.

     (b) Definition of "Real Property Tax." "Real property tax" means: (i) any
fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority against
the Property; (ii) any tax on the Landlord's right to receive, or the receipt
of, rent or Income from the Property or against Landlord's business of leasing
the Property; (iii) any tax or charge for fire protection, streets, sidewalks,
road maintenance, refuse or other services provided to the Property by any
governmental agency; (iv) any tax imposed upon this transaction or based upon a
re-assessment of the Property due to a change of ownership, as defined by
applicable law, or other transfer of all or part of Landlord's interest in the
Property; and (v) any charge or fee replacing any tax previously included within
the definition of real property tax. "Real property tax" does not, however,
include Landlord's federal or state income, franchise, inheritance or estate
taxes.

     (d) Personal Property Taxes.

          (i)  Tenant shall pay all taxes charged against trade fixtures,
     furnishings, equipment or any other personal property belonging to Tenant.
     Tenant shall try to have personal property taxed separately from the
     Property.

          (ii) If any of Tenant's personal property is taxed with the Property,
     Tenant shall pay Landlord the taxes for the personal property within
     fifteen (15) days after Tenant receives a written statement from Landlord
     for such personal property taxes.

     Section 4.03. Utilities. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement.

     Section 4.04. Insurance Policies.

     (a) Liability Insurance. During the Lease Term, Tenant shall maintain a
policy of commercial general liability insurance (sometimes known as broad form
comprehensive general liability insurance) insuring Tenant against liability for
bodily injury, property damage (including loss of use of property) and personal
injury arising out of the operation, use or occupancy of the Property. Tenant
shall name Landlord as an additional insured under such policy. The initial
amount of such insurance shall be One Million Dollars ($1,000,000) per
occurrence and shall be subject to periodic increase based upon inflation,
increased liability awards, recommendation of Landlord's professional insurance
advisers and other relevant factors. The liability insurance obtained by Tenant
under this Paragraph 4.04(a) shall (i) be primary and non-contributing; (ii)
contain cross-liability endorsements; and (iii) insure Landlord against Tenant's
performance under Section 5.05, if the matters giving rise to the indemnity
under Section 5.05 result from the negligence of Tenant. The amount and coverage
of such insurance shall not limit Tenant's liability nor relieve Tenant of any
other obligation under this Lease. Landlord may also obtain comprehensive public
liability insurance in an amount and with coverage determined by Landlord
insuring Landlord against liability arising out of ownership, operation, use or
occupancy of the Property. The policy obtained by Landlord shall not be
contributory and shall not provide primary insurance.

     (b) Property and Rental Income Insurance. During the Lease Term, Landlord
shall maintain policies of insurance covering loss of or damage to the Property
in the full amount of its replacement value. Such policy shall contain an
inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. Landlord shall have
the right to obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not obtain insurance
for Tenant's fixtures or equipment or building improvements installed by Tenant
on the Property. During the Lease Term, Landlord shall also maintain a rental
income insurance policy, with loss payable to Landlord, in an amount equal to
one year's Base Rent, plus estimated real property taxes and insurance premiums.
Tenant shall be liable for the payment of any deductible amount under Landlord's
or Tenant's insurance policies maintained pursuant to this Section 4.04, in an
amount not to exceed Ten Thousand Dollars ($10,000). Tenant shall not do or
permit anything to be done which invalidates any such insurance policies.

(C)1988 Southern California Chapter       3
of the Society of Industrial    [SIOR LOGO]
and Office Realtors,(R) Inc.      (Multi-Tenant Gross Form)

<PAGE>   5
[MISSING COPY]

          (i) Landlord shall pay the "Premiums" for the insurance policies
     maintained by Landlord under Paragraph 4.04(b). If the Property has been
     previously fully occupied, the "Premiums" are the insurance premiums paid
     during or applicable to the last twelve (12) months of such prior
     occupancy. If the Property has not been previously fully occupied or has
     been occupied for less than twelve (12) months, the Premiums are the lowest
     annual premiums reasonably obtainable for the required insurance for the
     Property as of the Commencement Date.

     (d) General Insurance Provisions.

          (i)   Any insurance which Tenant is required to maintain under this
     Lease shall include a provision which requires the insurance carrier to
     give Landlord not less than thirty (30) days' written notice prior to any
     cancellation or modification of such coverage.

          (ii)  If Tenant fails to deliver any policy, certificate or renewal to
     Landlord required under this Lease within the prescribed time period or if
     any such policy is cancelled or modified during the Lease Term without
     Landlord's consent, Landlord may obtain such insurance, in which case
     Tenant shall reimburse Landlord for the cost of such insurance within
     fifteen (15) days after receipt of a statement that indicates the cost of
     such insurance.

          (iii) Tenant shall maintain all insurance required under this lease
     with companies holding a "General Policy Rating" of A-12 or better, as set
     forth in the most current issue of "Best Key Rating Guide". Landlord and
     Tenant acknowledge the insurance markets are rapidly changing and that
     insurance in the form and amounts described in this Section 4.04 may not be
     available in the future. Tenant acknowledges that the insurance described
     in this Section 4.04 is for the primary benefit of Landlord. If at any time
     during the Lease Term, Tenant is unable to maintain the insurance required
     under the Lease, Tenant shall nevertheless maintain insurance coverage
     which is customary and commercially reasonable in the insurance industry
     for Tenant's type of business, as that coverage may change from time to
     time. Landlord makes no representation as to the adequacy of such insurance
     to protect Landlord's or Tenant's interests. Therefore, Tenant shall obtain
     any such additional property or liability insurance which Tenant deems
     necessary to protect Landlord and Tenant.

          (iv)  Unless prohibited under any applicable insurance policies
     maintained, Landlord and Tenant each hereby waive any and all rights of
     recovery against the other, or against the officers, employees, agents or
     representatives of the other, for loss of or damage to its property or the
     property of others under its control, if such loss or damage is covered by
     any insurance policy in force (whether or not described in this Lease) at
     the time of such loss or damage. Upon obtaining the required policies of
     insurance, Landlord and Tenant shall give notice to the insurance carriers
     of this mutual waiver of subrogation.

     Section 4.05. Common Areas; Use, Maintenance and Costs.

     (a) Common Areas. As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants of
the Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leaseable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or facilities.
Tenant acknowledges that such activities may result in inconvenience to Tenant.
Such activities and changes are permitted if they do not materially affect
Tenant's use of the Property.

     (b) Use of Common Areas. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has granted or may
grant such rights) to use the Common Areas for the purposes intended, subject to
such reasonable rules and regulations as Landlord may establish from time to
time. Tenant shall abide by such rules and regulations and shall use its best
effort to cause others who use the Common Areas with Tenant's express or implied
permission to abide by Landlord's rules and regulations. At any time, Landlord
may close any Common Areas to perform any acts in the Common Areas as, in
Landlord's judgment, are desirable to improve the Project. Tenant shall not
interfere with the rights of Landlord, other tenants or any other person
entitled to use the Common Areas.

     (c) Specific Provision re: Vehicle Parking. Tenant shall be entitled to use
the number of vehicle parking spaces in the Project allocated to Tenant in
Section 1.11 of the Lease without paying any additional rent. Tenant's parking
shall not be reserved and shall be limited to vehicles no larger than standard
size automobiles or pickup utility vehicles. Tenant shall not cause large trucks
or other large vehicles to be parked within the Project or on the adjacent
public streets. Temporary parking of large delivery vehicles in the Project may
be permitted by the rules and regulations established by Landlord. Vehicles
shall be parked only in striped parking spaces and not in driveways, loading
areas or other locations not specifically designated for parking. Handicapped
spaces shall only be used by those legally permitted to use them. If Tenant
parks more vehicles in

(c)1988 Southern California Chapter              4
     of the Society of Industrial [SIOR(TM) LOGO]
     and Office Realtors, Inc.       (Multi-Tenant Gross Form)
<PAGE>   6
the parking area than the number [MISSING COPY] in Section 1.11 of this Lease,
such conduct will be a material breach of this Lease. In addition to Landlord's
other remedies under the Lease, Tenant shall pay a daily charge determined by
Landlord for each such additional vehicle.

     (d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common Areas
in good order, condition and repair and shall operate the Project, in Landlord's
sole discretion, as a first-class industrial/commercial real property
development. Common Area costs include, but are not limited to, costs and
expenses for the following: gardening and landscaping; utilities, water and
sewage charges; maintenance of signs (other than tenants' signs); premiums for
liability, property damage, fire and other types of casualty insurance on the
Common Areas and worker's compensation insurance; all property taxes and
assessments levied on or attributable to the Common Areas and all Common Area
improvements; all personal property taxes levied on or attributable to personal
property used in connection with the Common Areas; straight-line depreciation on
personal property owned by Landlord which is consumed in the operation or
maintenance of the Common Areas; rental or lease payments paid by Landlord for
rented or leased personal property used in the operation or maintenance of the
Common Areas; fees for required licenses and permits; repairing, resurfacing,
repaving, maintaining, painting, lighting, cleaning, refuse removal, security
and similar items; reserves for roof replacement and exterior painting and other
appropriate reserves; and a reasonable allowance to Landlord for Landlord's
supervision of the Common Areas (not to exceed five percent (5%) of the gross
rents of the Project for the calendar year). Landlord may cause any or all of
such services to be provided by third parties and the cost of such services
shall be included in Common Area costs. Common Area costs shall not include
depreciation of real property which forms part of the Common Areas.

     Section 4.06. LATE CHARGES. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if Landlord does not receive any rent
payment within ten (10) days after it becomes due, Tenant shall pay Landlord a
late charge equal to ten percent (10%) of the overdue amount. The parties agree
that such late charge represents as fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment.

     Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant
to Landlord which is not paid when due shall bear interest at the rate of
fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.

ARTICLE FIVE: USE OF PROPERTY

     Section 5.01. PERMITTED USES. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.

     Section 5.02. MANNER OF USE. Tenant shall not cause or permit the Property
to be used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
tenants of the Project, or which constitutes a nuisance or waste. Tenant shall
obtain and pay for all permits, including a Certificate of Occupancy, required
for Tenant's occupancy of the Property and shall promptly take all actions
necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.

     Section 5.03. HAZARDOUS MATERIALS. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state
or local laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia

                                       5
(C)1988 Southern California Chapter
     of the Society of Industrial  [SIOR LOGO]
     and Office Realtors,(R) Inc.
                         (Multi-Tenant Gross Form)
<PAGE>   7
[MISSING COPY]

Compounds and other chemicals, ???, asbestos, PCBs and similar compounds and
including any different products and materials which are subsequently found to
have adverse effects on the environment of the health and safety of persons.
Tenant shall not cause or permit any Hazardous Material to be generated,
produced, brought upon, used, stored, treated or disposed of in or about the
Property by Tenant, its agents, employees, contractors, sublessees or invitees
without the prior written consent of Landlord. Landlord shall be entitled to
take into account such other factors or facts as Landlord may reasonably
determine to be relevant in determining whether to grant or withhold consent to
Tenant's proposed activity with respect to Hazardous Material. In no event,
however, shall Landlord be required to consent to the installation or use of any
storage tanks on the Property.

     Section 5.04.  SIGNS AND AUCTIONS.  Tenant shall not place any signs on the
Property without Landlord's prior written consent. Tenant shall not conduct or
permit any auctions or sheriff's sales at the Property.

     Section 5.05.  INDEMNITY. Tenant shall indemnify Landlord against and hold
Landlord harmless for any and all costs, claims or liability arising from: (a)
Tenant's use of Property; (b) the conduct of Tenant's business or anything else
done or permitted by Tenant to be done in or about the Property, including any
contamination of the Property or any other property resulting from the presence
or use of Hazardous Material caused or permitted by Tenant; (c) any breach or
default in the performance of Tenant's obligations under this Lease; (d) any
misrepresentation or breach of warranty by Tenant under this Lease; or (e) other
acts or omissions of Tenant. Tenant shall defend Landlord against any such cost,
claim or liability at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
legal fees or costs incurred by Landlord in connection with any such claim. As a
material part of the consideration to Landlord, Tenant assumes all risk of
damage to property or injury to persons in or about the Property arising from
any cause and Tenant hereby waives all claims in respect thereof against
Landlord, except for any claim arising out of Landlord's gross negligence or
willful misconduct. As used in this Section, the term "Tenant" shall include
Tenant's employees, agents, contractors and invitees, if applicable.

     Section 5.06.  LANDLORD'S ACCESS.  Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers.
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall give
Tenant prior notice of such entry, except in the case of an emergency. Landlord
may place customary "For Sale" or "For Lease" signs on the Property.

     Section 5.07.  QUIET POSSESSION. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.

ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

     Section 6.01.  EXISTING CONDITIONS.  Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant's intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of the
Property and is not relying on any representations of Landlord or any Broker
with respect thereto. If Landlord or Landlord's Broker has provided a Property
Information Sheet or other Disclosure Statement regarding the Property, a copy
is attached as an exhibit to the Lease.

     Section 6.02.  EXEMPTION OF LANDLORD FROM LIABILITY.  Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures or any other cause; (c) conditions arising in or about the
Property or upon other portions of the Project, or from other sources or places;
or (d) any act or omission of any other tenant of the Project. Landlord shall
not be liable for any such damage or injury even though the cause of or the
means of repairing such damage or injury are not accessible to Tenant. The
provisions of this Section 6.02 shall not, however, exempt Landlord from
liability for Landlord's gross negligence or willful misconduct.

     Section 6.03.  LANDLORD'S OBLIGATIONS. Subject to the provisions of Article
Seven (Damage or Destruction) and Article Eight (Condemnation), and except for
damage caused by any act or omission of Tenant, or Tenant's employees, agents,
contractors or invitees, Landlord shall keep the foundation, roof and structural
portions of exterior walls of the improvements on the Property in good order,
condition and repair. However, Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the surfaces of walls. Landlord shall not
be obligated to make any repairs under this Section 6.03 until a reasonable time
after receipt of a written notice from tenant of the need for such repairs.
Tenant waives the benefit of any present or future law which might give Tenant
the right to repair the Property at Landlord's expense or to terminate the Lease
because of the condition of the Property.

     Section 6.04. TENANT'S OBLIGATIONS.

     (a) Except as provided in Section 6.03, Article Seven (Damage or
Destruction) and Article Eight (Condemnation), Tenant shall keep all portions of
the Property (including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including interior repainting
and refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored. Tenant shall promptly replace such portion of the Property
or system or equipment in the Property, regardless of whether the benefit of
such replacement extends beyond the Lease Term; but if the benefit or useful
life of such replacement extends beyond the Lease Term (as such term may be
extended by exercise of any options), the useful life of such replacement shall
be prorated over the remaining portion of the Lease Term (as extended), and
Tenant shall be liable only for that portion of the cost which is applicable to
the Lease Term (as extended). Tenant shall maintain a preventive maintenance
contract providing for the regular inspection and maintenance of the heating and
air conditioning system by a licensed heating and air conditioning contractor.
Landlord shall have the right, upon written notice to Tenant, to undertake the
responsibility for preventive maintenance of the heating and air conditioning
system at Tenant's expense. In addition, Tenant shall, at Tenant's expense,
repair any damage to the roof, foundation or structural portions of walls caused
by Tenant's acts or omissions. It is the intention of Landlord and Tenant that
at all times during the Lease Term, Tenant shall maintain the Property in an
attractive, first-class and fully operative condition

                                       6

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     of the Society of Industrial   [SIOR(TM) LOGO]
     and Office Realtors Inc.
                           (Multi-Tenant Gross Form)
<PAGE>   8
[MISSING COPY] expense. If tenant fails to maintain, repair or replace the
Property as required by this Section 6.04, Landlord may, upon ten (10) days'
prior notice to Tenant (except that no notice shall be required in the case of
an emergency), enter the Property and perform such maintenance or repair
(including replacement, as needed) on behalf of Tenant. In such case, Tenant
shall reimburse Landlord for all costs incurred in performing such maintenance
or repair immediately upon demand.

     Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.

     (a) Tenant shall not make any alterations, additions, or improvements to
the Property without Landlord's prior written consent, except for non-structural
alterations which do not exceed Ten Thousand Dollars ($10,000) in cost
cumulatively over the Lease Term and which are not visible from the outside of
any building of which the Property is part. Landlord may require Tenant to
provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.

     (b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least twenty (20) days' prior
written notice of the commencement of any work on the Property, regardless of
whether Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.

     Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). In addition, Landlord may
require Tenant to remove any alterations, additions or improvements (whether or
not made with Landlord's consent) prior to the expiration of the Lease and to
restore the Property to its prior condition, all at Tenant's expense. All
alterations, additions and improvements which Landlord has not required Tenant
to remove shall become Landlord's property and shall be surrendered to Landlord
upon the expiration or earlier termination of the Lease, except that Tenant may
remove any of Tenant's machinery or equipment which can be removed without
material damage to the Property. Tenant shall repair, at Tenant's expense, any
damage to the Property caused by the removal of any such machinery or equipment.
In no event, however, shall Tenant remove any of the following materials or
equipment (which shall be deemed Landlord's property) without Landlord's prior
written consent: any power wiring or power panels; lighting or lighting
fixtures; wall coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other heating or air
conditioning equipment; fencing or security gates; or other similar building
operating equipment and decorations.

ARTICLE SEVEN: DAMAGE OR DESTRUCTION

     Section 7.01. PARTIAL DAMAGE TO PROPERTY.

     (a) Tenant shall notify Landlord in writing immediately upon the occurrence
of any damage to the Property. If the Property is only partially damaged (i.e.,
less than fifty percent (50%) of the Property is untenantable as a result of
such damage or less than fifty percent (50%) of Tenant's operations are
materially impaired) and if the proceeds received by Landlord from the insurance
policies described in Paragraph 4.04(b) are sufficient to pay for the necessary
repairs, this Lease shall remain in effect and Landlord shall repair the damage
as soon as reasonably possible. Landlord may elect (but is not required) to
repair any damage to Tenant's fixtures, equipment, or improvements.

     (b) If the insurance proceeds received by Landlord are not sufficient to
pay the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which Landlord maintains under Paragraph 4.04(b),
Landlord may elect either to (i) repair the damage as soon as reasonably
possible, in which case this Lease shall remain in full force and effect, or
(ii) terminate this Lease as of the date the damage occurred. Landlord shall
notify Tenant within thirty (30) days after receipt of notice of the occurrence
of the damage whether Landlord elects to repair the damage or terminate the
Lease. If Landlord elects to repair the damage, Tenant shall pay Landlord the
"deductible amount" (if any) under Landlord's insurance policies and, if the
damage was due to an act or omission of Tenant, or Tenant's employees, agents,
contractors or invitees, the difference between the actual cost of repair and
any insurance proceeds received by Landlord. If Landlord elects to terminate the
Lease, Tenant may elect to continue this Lease in full force and effect, in
which case Tenant shall repair any damage to the Property and any building in
which the Property is located. Tenant shall pay the cost of such repairs, except
that upon satisfactory completion of such repairs, Landlord shall deliver to
Tenant any insurance proceeds received by Landlord for the damage repaired by
Tenant. Tenant shall give Landlord written notice of such election within ten
(10) days after receiving Landlord's termination notice.

     (c) If the damage to the Property occurs during the last six (6) months of
the Lease Term and such damage will require more than thirty (30) days to
repair, either Landlord or Tenant may elect to terminate this Lease as of the
date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.

     Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease shall
terminate as of the date the destruction occurred. Notwithstanding the preceding
sentence, if the Property can be rebuilt within six (6) months after the date of
destruction, Landlord may elect to rebuild the Property at Landlord's own
expense, in which case this Lease shall remain in full force and effect.
Landlord shall notify Tenant of such election within thirty (30) days after
Tenant's notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.

(c) 1988 Southern California Chapter    7
of the Society of Industrial      [SIOR(TM) LOGO]
and Office Realtors, Inc.         (Multi-Tenant Gross Form)

<PAGE>   9
     [MISSING COPY] and Landlord or Tenant repairs or restores the Property
pursuant to the provisions of this Article Seven, any rent payable during the
period of such damage, repair and/or restoration shall be reduced according to
the degree, if any, to which Tenant's use of the Property is impaired. However,
the reduction shall not exceed the sum of one year's payment of Base Rent,
insurance premiums and real property taxes. Except for such possible reduction
in Base Rent, insurance premiums and real property taxes. Tenant shall not be
entitled to any compensation, reduction, or reimbursement from Landlord as a
result of any damage, destruction, repair, or restoration of or to the Property.

     Section 7.04. Waiver. Tenant waives the protection of any statute, code or
judicial decision which grants a tenant the right to terminate a lease in the
event of the substantial or total destruction of the leased property. Tenant
agrees that the provisions of Section 7.02 above shall govern the rights and
obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.

ARTICLE EIGHT: CONDEMNATION

     If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs first.
If more than twenty percent (20%) of the floor area of the building in which the
Property is located, or which is located on the Property, is taken, either
Landlord or Tenant may terminate this Lease as of the date the condemning
authority takes title or possession, by delivering written notice to the other
within ten (10) days after receipt of written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
takes title or possession). If neither Landlord nor Tenant terminates this
Lease, this Lease shall remain in effect as to the portion of the Property not
taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord's expense.

ARTICLE NINE: ASSIGNMENT AND SUBLETTING

     Section 9.01. Landlord's Consent Required. No portion of the Property or of
Tenant's interest in this Lease may be acquired by any other person or entity,
whether by sale, assignment, mortgage, sublease, transfer, operation of law, or
act of Tenant, without Landlord's prior written consent, except as provided in
Section 9.02 below. Landlord has the right to grant or withhold its consent as
provided in Section 9.05 below. Any attempted transfer without consent shall be
void and shall constitute a non-curable breach of this Lease. If Tenant is a
partnership, any cumulative transfer of more than twenty percent (20%) of the
partnership interests shall require Landlord's consent. If Tenant is a
corporation, any change in the ownership of a controlling interest of the voting
stock of the corporation shall require Landlord's consent.

     Section 9.02. Tenant Affiliate. Tenant may assign this Lease or sublease
the Property, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all
of Tenant's obligations under this Lease.

     Section 9.03. No Release of Tenant. No transfer permitted by this Article
Nine, whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the rent and to perform all other obligations
of Tenant under this Lease. Landlord's acceptance of rent from any other person
is not a waiver of any provision of this Article Nine. Consent to one transfer
is not a consent to any subsequent transfer. If Tenant's transferee defaults
under this Lease, Landlord may proceed directly against Tenant without pursuing
remedies against the transferee. Landlord may consent to subsequent assignments
or modifications of this Lease by Tenant's transferee, without notifying Tenant
or obtaining its consent. Such action shall not relieve Tenant's liability under
this Lease.

     Section 9.04. Offer to Terminate. If Tenant desires to assign the Lease or
sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice of
the offer, the Lease shall terminate as of the date specified and all the terms
and provisions of the Lease governing termination shall apply. If Landlord does
not so elect, the Lease shall continue in effect until otherwise terminated and
the provisions of Section 9.05 with respect to any proposed transfer shall
continue to apply.

     Section 9.05. Landlord's Consent.

     (a) Tenant's request for consent to any transfer described in Section 9.01
shall set forth in writing the details of the proposed transfer, including the
name, business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and any other
information Landlord deems relevant. Landlord shall have the right to withhold
consent, if reasonable, or to grant consent, based on the following factors: (i)
the business of the proposed assignee or subtenant and the proposed use of the
Property; (ii) the net worth and financial reputation of the proposed assignee
or subtenant; (iii) Tenant's compliance with all of its obligations under the
Lease; and (iv) such other factors as Landlord may reasonably deem relevant. If
Landlord objects to a proposed assignment solely because of the net worth and/or
financial reputation of the proposed assignee, Tenant may nonetheless sublease
(but not assign), all or a portion of the Property to the proposed transferee,
but only on the other terms of the proposed transfer.

     (b) If Tenant assigns or subleases, the following shall apply:

          (i) Tenant shall pay to Landlord as Additional Rent under the Lease
     the Landlord's Share (stated in Section 1.14) of the Profit (defined below)
     on such transaction as and when received by Tenant, unless Landlord gives
     written notice to Tenant and the assignee or subtenant that Landlord's
     Share shall be paid by the assignee or subtenant to Landlord directly

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         of the Society of Industrial    [SIOR (TM) LOGO]
         and Office Realtors,(R) Inc.      (Multi-Tenant Gross Form)

<PAGE>   10

     The "Profit" means (A) all amount [MISSING COPY] to Tenant for such
     assignment or [MISSING COPY] including "key money, monthly rent in excess
     of the monthly rent payable under the Lease, and all fees and other
     consideration paid for the assignment or sublease, including fees under any
     collateral agreements, less (B) costs and expenses directly incurred by
     Tenant in connection with the execution and performance of such assignment
     or sublease for real estate broker's commissions and costs of renovation or
     construction of tenant improvements required under such assignment or
     sublease. Tenant is entitled to recover such costs and expenses before
     Tenant is obligated to pay the Landlord's Share to Landlord. The Profit in
     the case of a sublease of less than all the Property is the rent allocable
     to the subleased space as a percentage on a square footage basis.

         (ii) Tenant shall provide Landlord a written statement certifying all
     amounts to be paid from any assignment or sublease of the Property within
     thirty (30) days after the transaction documentation is signed, and
     Landlord may inspect Tenant's books and records to verify the accuracy of
     such statement. On written request, Tenant shall promptly furnish to
     Landlord copies of all the transaction documentation, all of which shall be
     certified by Tenant to be complete, true and correct. Landlord's receipt of
     Landlord's Share shall not be a consent to any further assignment or
     subletting. The breach of Tenant's obligation under this Paragraph 9.05(b)
     shall be a material default of the Lease.

     Section 9.06. No Merger. No merger shall result from Tenant's sublease of
the Property under this Article Nine, Tenant's surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.

ARTICLE TEN: DEFAULTS; REMEDIES

     Section 10.01. Covenants and Conditions. Tenant's performance of each of
Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants and
conditions.

     Section 10.02. Defaults. Tenant shall be in material default under this
Lease:

     (a) If Tenant abandons the Property or if Tenant's vacation of the
Property results in the cancellation of any insurance described in Section 4.04;

     (b) If Tenant fails to pay rent or any other charge when due;

     (c) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30) day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of this Lease.
The notice required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.

     (d)(i) If Tenant makes a general assignment or general arrangement for the
benefit of creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets
located at the Property or of Tenant's interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days. If a court of competent jurisdiction determines that any of
the acts described in this subparagraph (d) is not a default under this Lease,
and a trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the
rent (or any other consideration) paid in connection with such assignment or
sublease over the rent payable by Tenant under this Lease.

     (e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any portion
of Tenant's obligations under the Lease. Unless otherwise expressly provided,
no guaranty of the Lease is revocable.

     Section 10.03. Remedies. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:

     (a) Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason
of Tenant's default, including (i) the worth at the time of the award of the
unpaid Base Rent, Additional Rent and other charges which Landlord had earned
at the time of the termination; (ii) the worth at the time of the award of the
amount by which the unpaid Base Rent, Additional Rent and other charges which
Landlord would have earned after termination until the time of the award
exceeds the amount of such rental loss that Tenant proves Landlord could have
reasonably avoided; (iii) the worth at the time of the award of the amount by
which the unpaid Base Rent, Additional Rent and other charges which Tenant
would have paid for the balance of the Lease Term after the time of award
exceeds the amount of such rental loss that Tenant proves Landlord could have
reasonably avoided; and (iv) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under the Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, any costs or
expenses Landlord incurs in maintaining or preserving the Property after such
default, the cost of recovering possession of the Property, expenses of
reletting, including necessary renovation or alteration of the Property,
Landlord's reasonable attorneys' fees incurred in connection therewith, and
any real estate commission paid or payable. As used in subparts (i) and (ii)
above, the "worth at the time of the award" is computed by allowing interest
on unpaid amounts at the rate of fifteen percent (15%) per annum, or such
lesser amount as may then be the maximum lawful rate. As used in subpart (iii)
above, the "worth at the time of the award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of the award, plus one percent (1%). If Tenant has abandoned the Property,
Landlord shall have the option of (i) retaking possession of the Property and
recovering from Tenant the amount specified in this Paragraph 10.03(a), or (ii)
proceeding under Paragraph 10.03(b);

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(c)1988 Southern California Chapter        [SIOR(TM) LOGO]
        of the Society of Industrial
        and Office Realtors,(R) Inc.   (Multi-Tenant Gross Form)
<PAGE>   11
[MISSING COPY]

abandoned the Property. In such event, Landlord shall be entitled to enforce all
of Landlord's rights and remedies under this Lease, including the right to
recover the rent as it becomes due;

  (c) Pursue any other remedy now or hereafter available to Landlord under the
laws or judicial decisions of the state in which the Property is located.

     Section 10.04. REPAYMENT OF "FREE" RENT. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated
Rent". Tenant shall be credited with having paid all of the Abated Rent on the
expiration of the Lease Term only if Tenant has fully, faithfully, and
punctually performed all of Tenant's obligations hereunder, including the
payment of all rent (other than the Abated Rent) and all other monetary
obligations and the surrender of the Property in the physical condition
required by this Lease. Tenant acknowledges that its right to receive credit
for the Abated Rent is absolutely conditioned upon Tenant's full, faithful and
punctual performance of its obligations under this Lease. If Tenant defaults
and does not cure within any applicable grace period, the Abated Rent shall
immediately become due and payable in full and this Lease shall be enforced as
if there were no such rent abatement or other rent concession. In such case
Abated Rent shall be calculated based on the full initial rent payable under
this Lease.

     Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence
of any act which affirms the Landlord's intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Landlord's damages for default
shall include all costs and fees, including reasonable attorneys' fees that
Landlord incurs in connection with the filing, commencement, pursuing and/or
defending of any action in any bankruptcy court or other court with respect to
the Lease; the obtaining of relief from any stay in bankruptcy restraining any
action to evict Tenant; or the pursuing of any action with respect to
Landlord's right to possession of the Property. All such damages suffered
(apart from Base Rent and other rent payable hereunder) shall constitute
pecuniary damages which must be reimbursed to Landlord prior to assumption of
the Lease by Tenant or any successor to Tenant in any bankruptcy or other
proceeding.

     Section 10.06. CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.

ARTICLE ELEVEN: PROTECTION OF LENDERS

     Section 11.01. SUBORDINATION. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever
made or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall
execute such further documents and assurances as such lender may require,
provided that Tenant's obligations under this Lease shall not be increased in
any material way (the performance of ministerial acts shall not be deemed
material), and Tenant shall not be deprived of its rights under this Lease.
Tenant's right to quiet possession of the Property during the Lease Term shall
not be disturbed if Tenant pays the rent and performs all of Tenant's
obligations under this Lease and is not otherwise in default. If any ground
lessor, beneficiary or mortgagee elects to have this Lease prior to the lien of
its ground lease, deed of trust or mortgage and gives written notice thereof to
Tenant, this Lease shall be deemed prior to such ground lease, deed of trust or
mortgage whether this Lease is dated prior or subsequent to the date of said
ground lease, deed of trust or mortgage or the date of recording thereof.

     Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.

     Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such
attornment or subordination or agreement to do so. If Tenant fails to do so
within ten (10) days after written request, Tenant hereby makes, constitutes
and irrevocably appoints Landlord, or any transferee or successor of Landlord,
the attorney-in-fact of Tenant to execute and deliver any such instrument or
document.

     Section 11.04. ESTOPPEL CERTIFICATES.

     (a) Upon Landlord's written request, Tenant shall execute, acknowledge and
deliver to Landlord a written statement certifying: (i) that non of the terms
or provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has not been
cancelled or terminated; (iii) the last date of payment of the Base Rent and
other charges and the time period covered by such payment; (iv) that Landlord
is not in default under this Lease (or, if Landlord is claimed to be in
default, stating why); and (v) such other representations or information with
respect to Tenant or the Lease as Landlord may reasonably request or which any
prospective purchaser or encumbrancer of the Property may require. Tenant shall
deliver such statement to Landlord within ten (10) days after Landlord's
request. Landlord may give any such statement by Tenant to any prospective
purchaser or encumbrancer of the Property. Such purchaser or encumbrancer may
rely conclusively upon such statement as true and correct.

     (b) if Tenant does not deliver such statement to Landlord within such ten
(10)-day period, Landlord, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been cancelled or terminated except as
otherwise represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease. In such event, Tenant shall be estopped from denying
the truth of such facts.

     Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial

(C) 1988 Southern California Chapter        10
          of the Society of Industrial  [SIOR(TM) LOGO]
          and Office Realtors, Inc.
                           (Multi-Tenant Gross Form)

<PAGE>   12
statements required by such [MISSING COPY] facilitate the financing or
refinancing of [MISSING COPY]. Tenant represents and warrants to Landlord that
each such financial statement is a true and accurate statement as of the date
of such statement. All financial statements shall be confidential and shall be
used only for the purposes set forth in this Lease.

ARTICLE TWELVE: LEGAL COSTS

     Section 12.01. LEGAL PROCEEDINGS. If Tenant or Landlord shall be in breach
or default under this Lease, such party (the "Defaulting Party") shall
reimburse the other party (the "Nondefaulting Party") upon demand for any costs
or expenses that the Nondefaulting Party incurs in connection with any breach
or default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgment entered. Such costs shall include legal fees and costs
incurred for the negotiation of a settlement, enforcement of rights or
otherwise. Furthermore, if any action for breach of or to enforce the
provisions of this Lease is commenced, the court in such action shall award to
the party in whose favor a judgment is entered, a reasonable sum as attorneys'
fees and costs. The losing party in such action shall pay such attorneys' fees
and costs. Tenant shall also indemnify Landlord against and hold Landlord
harmless from all costs, expenses, demands and liability Landlord may incur if
Landlord becomes or is made a party to any claim or action (a) instituted by
Tenant against any third party, or by any third party against Tenant, or by or
against any person holding any interest under or using the Property by license
of or agreement with Tenant; (b) for foreclosure of any lien for labor or
material furnished to or for Tenant or such other person; (c) otherwise arising
out of or resulting from any act or transaction of Tenant or such other person;
or (d) necessary to protect Landlord's interest under this Lease in a
bankruptcy proceeding, or other proceeding under Title 11 of the United States
Code, as amended. Tenant shall defend Landlord against any such claim or action
at Tenant's expense with counsel reasonably acceptable to Landlord or, at
Landlord's election, Tenant shall reimburse Landlord for any legal fees or
costs Landlord incurs in any such claim or action.

     Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Tenant's request for Landlord's
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord's consent.

ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS

     Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.

     Section 13.02. LANDLORD'S LIABILITY; CERTAIN DUTIES.

     (a) As used in this Lease, the term "Landlord" means only the current
owner or owners of the fee title to the Property or Project or the leasehold
estate under a ground lease of the Property or Project at the time in question.
Each Landlord is obligated to perform the obligations of Landlord under this
Lease only during the time such Landlord owns such interest or title. Any
Landlord who transfers its title or interest is relieved of all liability with
respect to the obligations of Landlord under this Lease to be performed on or
after the date of transfer. However, each landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not yet
been applied under the terms of this Lease.

     (b) Tenant shall give written notice of any failure by Landlord to perform
any of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord shall not
be in default under this Lease unless Landlord (or such ground lessor,
mortgagee or beneficiary) fails to cure such non-performance within thirty (30)
days after receipt of Tenant's notice. However, if such non-performance
reasonably requires more than thirty (30) days to cure, Landlord shall not be
in default if such cure is commenced within such thirty (30) day period and
thereafter diligently pursued to completion.

     (c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.

     Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.

     Section 13.04. INTERPRETATION. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part
of the terms or provisions of this Lease. Whenever required by the context of
this Lease, the singular shall include the plural and the plural shall include
the singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with Tenant's expressed or
implied permission.

     Section 13.05. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This
Lease is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.

     Section 13.06. NOTICES. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified
mail, return receipt requested, postage prepaid. Notices to Tenant shall be
delivered to the address specified in Section 1.03 above, except that upon
Tenant's taking possession of the Property, the Property shall be Tenant's
address for notice purposes. Notices to Landlord shall be delivered to the
address specified in Section 1.02 above. All notices shall be effective upon
delivery. Either party may change its notice address upon written notice to the
other party.

     Section 13.07. WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.

     Section 13.08. NO RECORDATION. Tenant shall not record this Lease without
prior written consent from Landlord. However, either Landlord or Tenant may
require that a "Short Form" memorandum of this Lease executed by both parties
be recorded. The party requiring such recording shall pay all transfer taxes
and recording fees.

                                       11
(c)1988 Southern California Chapter
        of the Society of Industrial [SIOR(TM) LOGO]
        and Office Realtors, Inc
                           (Multi-Tenant Gross Form)

<PAGE>   13
[MISSING COPY]

any part, legally acquires any rights or interest in this Lease from Landlord
or Tenant. However, Landlord shall have no obligation to Tenant's successor
unless the rights or interests of Tenant's successor are acquired in accordance
with the terms of this Lease. The laws of the state in which the Property is
located shall govern this Lease.

     SECTION 13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general partner of the partnership, that he or it has full authority
to sign for the partnership and that this Lease binds the partnership and all
general partners of the partnership. Tenant shall give written notice to
Landlord of any general partner's withdrawal or addition. Within thirty (30)
days after this Lease is signed, Tenant shall deliver to Landlord a copy of
Tenant's recorded statement of partnership or certificate of limited
partnership.

     SECTION 13.11 JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.

     SECTION 13.12. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation
or restriction and weather conditions.

     SECTION 13.13. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.

     SECTION 13.14. SURVIVAL. All representations and warranties of Landlord
and Tenant shall survive the termination of this Lease.

ARTICLE FOURTEEN: BROKERS

     SECTION 14.01. BROKER'S FEE. When this Lease is signed by and delivered to
both Landlord and Tenant, Landlord shall pay a real estate commission to
Landlord's Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord's Broker, or the sum stated in
Section 1.09 above for services rendered to Landlord by Landlord's Broker in
this transaction. Landlord shall pay Landlord's Broker a commission if Tenant
exercises any option to extend the Lease Term or to buy the Property, or any
similar option or right which Landlord may grant to Tenant, or if Landlord's
Broker is the procuring cause of any other lease or sale entered into between
Landlord and Tenant covering the Property. Such commission shall be the amount
set forth in Landlord's Broker's commission schedule in effect as of the
execution of this Lease. If a Tenant's Broker is named in Section 1.08 above,
Landlord's Broker shall pay an appropriate portion of its commission to
Tenant's Broker if so provided in any agreement between Landlord's Broker and
Tenant's Broker. Nothing contained in this Lease shall impose any obligation on
Landlord to pay a commission or fee to any party other than Landlord's Broker.

     SECTION 14.02. PROTECTION OF BROKERS. If Landlord sells the Property, or
assigns Landlord's interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such attorneys'
fees shall be fixed by the court in such action. This Paragraph is included in
this Lease for the benefit of Landlord's Broker.

     SECTION 14.03. AGENCY DISCLOSURE; NO OTHER BROKERS. Landlord and Tenant
each warrant that they have dealt with no other real estate broker(s) in
connection with this transaction except: CB Commercial Real Estate Group, Inc.,
who represents

                   Tenant
______________________________________________________________________________
_____________________________________________________________________________,
and                CB Commercial Real Estate Group, Inc.
   ______________________________________________________________________, who

represents         Landlord
          ____________________________________________________________________
_____________________________________________________________________________ .

     In the event that CB Commercial represents both Landlord and Tenant,
Landlord and Tenant hereby confirm that they were timely advised of the dual
representation and that they consent to the same, and that they do not expect
said broker to disclose to either of them the confidential information of the
other party.

ARTICLE FIFTEEN: COMPLIANCE

     The parties hereto agree to comply with all applicable federal, state and
local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties, property or the subject matter of this Agreement,
including, but not limited to, the 1964 Civil Rights Act and all amendments
thereto, the Foreign Investment in Real Property Tax Act, the Comprehensive
Environmental Response Commission and Liability Act, and The Americans With
Disabilities Act.

     ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED
HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED,
PLEASE DRAW A LINE THROUGH THE SPACE BELOW.

                                       12

(c)1988 Southern California Chapter [SIOR(TM) LOGO]
        of the Society of Industrial
        and Office Realtors,(R) Inc. (Multi-Tenant Gross Form)

<PAGE>   14
[MISSING COPY]

     Landlord and tenant may sign the Lease at the place and on the dates
supplied adjacent to their signatures below and have initialled all Riders which
are attached to or incorporated by reference in the Lease.

                                                       "LANDLORD"

Signed on __________________, 19__                 JP Company

at________________________________.        _________________________________

                                           By:______________________________

                                                   Jim Gately
                                           Its:_____________________________

                                           By:______________________________

                                           Its:_____________________________

                                                         "TENANT"

Signed on___________________, 19__        Miles Smith Family Corporation,a
                                          California Corporation

at________________________________.       By: ______________________________

                                          Its:______________________________

                                          By:_______________________________

                                          Its:______________________________

     IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH A
PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.

     THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION
OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS(R) INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN
CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS, INC.,(C)
ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL TO
ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL
COUNSEL.

                                       13

1998 Southern California Chapter  [SIOR(TM) LOGO]
     of the Society of Industrial
     and Office Realtors Inc.  (Multi- Tenant Gross Form)

<PAGE>   15
                  ADDENDUM TO INDUSTRIAL REAL ESTATE LEASE
                           (MULTI-TENANT FACILITY)
                    CB COMMERCIAL REAL ESTATE GROUP, INC.
                             BROKERAGE MANAGEMENT
                         LICENSED REAL ESTATE BROKER

This is an Addendum to Industrial Real Estate dated February 24, 1997, by and
between JB Company, as "Landlord", Miles Smith Family Corporation, a California
Corporation, as "Tenant".

In the event of a discrepancy between the terms and conditions set forth in
this Addendum and the original Lease, this Addendum shall prevail.

16.  RENT SCHEDULE:
<TABLE>
<CAPTION>
<S>                          <C>
     Months 00 - 12           $2,700.00
     Months 13 - 24           $2,800.00
     Months 25 - 36           $2,900.00
     Months 37 - 48           $3,000.00
     Months 49 - 60           $3,100.00
</TABLE>

17.  TENANT IMPROVEMENTS:

     Landlord, at Landlord's sole cost and expense, shall complete the
following tenant improvements:

     a)  Warehouse and
         Office Area:         Approximately 10,000 square feet separated from
                              the remainder of the building by a full height
                              separation wall to include the following:

                              1.  Clean and sweep throughout warehouse, office
                                  and restroom area.

                              2.  Repair existing roll doors and add electrical
                                  door opener from existing facility at 2705 -
                                  5th Street.

                              3.  Make sure all services to the facility are in
                                  good working order and repair, including, but
                                  not limited to, roll-doors, electrical lights,
                                  plumbing, HVAC, fixtures, roof, hardware and
                                  mechanical, etc.

                              4.  Construct two (2) offices.

                              5.  Re-carpet all office areas, new and existing.
                                  Carpet to Tenant's specifications, within
                                  reason.

                              6.  Construct one (1) additional reception area by
                                  removing existing wall and one (1) break area
                                  approximately 12' x 14' with sink, counter and
                                  cabinets and install Tenant's dishwasher.

                              7.  Remove sixty percent (60%) of warehouse lights
                                  and attach remaining lights to ceiling deck.

                              8.  Remove three (3) gas heaters in warehouse and
                                  leave one (1) unit functional.

18.  PRIOR ENTRY:

     Landlord consents to the entry of Tenant into and upon the premises prior
to the commencement date of this Lease for the purpose of cleaning, repairing,
furnishing and decorating. Prior to the commencement date of this Lease and
during the period Landlord has consented to Tenant's entry into and upon the
premises, Tenant shall indemnify and hold harmless Landlord from and against any
and all claims arising from Tenant's use of the premises, or from the conduct of
Tenant's business or from any activity, work or things done, permitted or
suffered by Tenant in or about the premises or elsewhere and shall further
indemnify and hold harmless Landlord from and against any and all claims arising
from any negligence of the Tenant, or any of Tenant's

<PAGE>   16
     agents, contractors, employees, and from and against all cost, attorney's
     fees, expenses and liabilities incurred in the defense of any such claim or
     action or proceeding brought thereon; and in case any action or proceeding
     be brought against Landlord by reason of any such claim, Tenant upon notice
     from Landlord shall defend the same at Tenant's expense by counsel
     satisfactory to Landlord. Tenant, as a material part of the consideration
     to Landlord, hereby assumes all risk of damage to property or injury to
     persons, in or upon, or against the premises arising from any cause and
     Tenant hereby waives all claims in respect thereof against Landlord.

19.  OVERHEAD DOORS:

     Tenant hereby agrees to maintain in proper working order during the term of
     the lease, the overhead doors and the associated hardware ("and
     mechanisms") associated with the operation. Landlord shall have no
     responsibility to repair, replace or maintain the overhead doors except the
     initial occupancy of Tenant.

20.  CONTACTS:

     Miles Smith
     2705 - 5th Street
     Sacramento, CA 95677
     (916) 442-1292

     Jim Gately
     JB Company
     2101 Evergreen Street
     Sacramento, CA 95815
     (916) 929-3003

21.  LANDLORD'S INDEMNITY:

     Landlord shall indemnify Tenant against and hold Tenant harmless from any
     and all costs, claims or liabilities arising from any contamination of the
     Property or any other property resulting from the presence of use of
     Hazardous Materials in, on or about the Property or any adjacent properties
     existing as of the commencement of the lease term. Landlord shall defend
     Tenant against any such cost, claim or liability at Landlord's expense with
     counsel reasonably acceptable to Tenant. This provision shall not apply to
     contamination caused directly by Tenant.

CONSULT YOUR ADVISORS -  This document (including its exhibits and addendums,
if any) has been prepared by Broker for approval by the undersigned respective
parties' legal counsel. Broker makes no representation or recommendation as to
the legal sufficiency or tax consequences of this document or the transaction to
which it relates. These are questions for an attorney or accountant.

AGREED AND ACCEPTED:

"LANDLORD"                              "TENANT"

JB COMPANY                               MILES SMITH FAMILY CORPORATION,
                                         A CALIFORNIA CORPORATION

By:________________________              By:____________________________

Date:______________________              Date:__________________________

<PAGE>   17

                                                                     EXHIBIT "A"

                                   [SITE MAP]
<PAGE>   18
                       OPTION TO EXTEND TERM LEASE RIDER
                           [CB COMMERCIAL LETTERHEAD]

     This Rider is attached to and made part of that certain Lease (the "Lease")
dated February 24, 1997 between JB Company, as Landlord, and Miles Smith Family
Corporation, a California Corporation, as Tenant, covering the Property commonly
known as 2803 - 5th Street, Sacramento, CA 95818 (the "Property"). The terms
used herein shall have the same definitions as set forth in the Lease. The
provisions of this Rider shall supersede any inconsistent or conflicting
provisions of the Lease.

A. Option(s) to Extend Term.

     1. Grant of Option.

     Landlord hereby grants to Tenant one (1) option(s)(the "Option(s)") to
extend the Lease Term for additional term(s) of five (5) years each (the
"Extension(s)"), on the same terms and conditions as set forth in the Lease,
but at an increased rent as set forth below. Each Option shall be exercised
only by written notice delivered to Landlord at least one hundred twenty (120)
days before the expiration of the Lease Term or the preceding Extension of the
Lease Term, respectively. If Tenant fails to deliver Landlord written notice of
exercise of an Option within the prescribed time period, such Option and any
succeeding Options shall lapse, and there shall be no further right to extend
the Lease Term. Each Option shall be exercisable by Tenant on the express
conditions that (a) at the time of the exercise, and at all times prior to the
commencement of such Extension, Tenant shall not be in default under any of the
provisions of the Lease and (b) Tenant has not been ten (10) or more days late
in the payment of rent more than a total of three (3) times during the Lease
Term and all preceding Extensions.

     2. Personal Options.

B.   Calculation of Rent.

     The Base Rent during the Extension(s) shall be determined by one or a
combination of the following methods (INDICATE METHOD UPON EXECUTION OF THE
LEASE):

     [ ] 1. Cost of Living Adjustment (Section B.1, below)
            Rental Adjustment Date(s): The first day of the ___________ month(s)
            of the ___________________________ Extension(s) of the Lease Term.

     [X] 2. Fair Rental Value Adjustment (Section B.2, below) as determined by
            appraiser [X] or broker [X].
            Rental Adjustment Date(s): The first day of the ___________ month(s)
            of the ___________________________ Extension(s) of the Lease Term.

     [ ] 3. Fixed Adjustment
            The Base Rent shall be increased to the following amounts (the
            "Adjusted Base Rent(s)") on the dates (the "Rental Adjustment
            Date(s)") set forth below:

               Rental Adjustment Date(s)               Adjusted Base Rent(s)

            _________________________________        $__________________________

            _________________________________        $__________________________

            _________________________________        $__________________________

            _________________________________        $__________________________

     1. Cost of Living Adjustment.

     The Base Rent shall be increased on the dates specified in Section B.1,
above (the "Rental Adjustment Date(s)") by reference to the Index defined in
Section 3.02 of the Lease or the substitute index described in Paragraph
3.02(b) of the Lease, as follows: The Base Rent in effect immediately prior to
the applicable Rental Adjustment Date (the "Comparison Base Rent") shall be
increased by the percentage that the index has increased from the month in
which the payment of the Comparison Base Rent commenced through the month in
which the applicable Rental Adjustment Date occurs. In no event shall the Base
Rent be reduced by reason of such computation.

(c) 1988 Southern California Chapter
         of the Society of Industrial  [SIOR(TM) LOGO]
         and Office Realtors,(R) Inc.
<PAGE>   19
[MISSING COPY]

     The Base Rent shall be increased on the date(s) specified in Section B.2,
above (the "Rental Adjustment Date(s)") to the "fair rental value" of the
Property, determined in the following manner:

     (a) Not later than one hundred (100) days prior to any applicable Rental
Adjustment Date, Landlord and Tenant shall meet in an effort to negotiate, in
good faith, the fair rental value of the Property as of such Rental Adjustment
Date. If Landlord and Tenant have not agreed upon the fair rental value of the
Property at least ninety (90) days prior to the applicable Rental Adjustment
Date, the fair rental value shall be determined by appraisal, by one or more
appraisers or brokers (herein called "Appraiser(s)"), as provided in Section
B.2(b), below. If appraiser(s) are used, such appraiser(s) shall have at least
five (5) years' experience in the appraisal of commercial/industrial real
property in the area in which the Property is located and shall be members of
professional organizations such as MAI or equivalent. If broker(s) are used,
such broker(s) shall have at least five (5) years' experience in the sales and
leasing of commercial/industrial real property in the area in which the
Property is located and shall be members of professional organizations such as
the Society of Industrial and Office Realtors or equivalent.

     (b) If Landlord and Tenant are not able to agree upon the fair rental value
of the Property within the prescribed time period, then Landlord and Tenant
shall attempt to agree in good faith upon a single Appraiser not later than
seventy-five (75) days prior to the applicable Rental Adjustment Date. If
Landlord and Tenant are unable to agree upon a single Appraiser within such time
period, then Landlord and Tenant shall each appoint one Appraiser not later than
sixty-five (65) days prior to the applicable Rental Adjustment Date. Within ten
(10) days thereafter, the two (2) appointed Appraisers shall appoint a third
(3rd) Appraiser. If either Landlord or Tenant fails to appoint its Appraiser
within the prescribed time period, the single Appraiser appointed shall
determine the fair rental value of the Property. If both parties fail to appoint
Appraisers within the prescribed time periods, then the first Appraiser
thereafter selected by a party shall determine the fair rental value of the
Property. Each party shall bear the cost of its own Appraiser and the parties
shall share equally the cost of the single or third Appraiser, if applicable.

     (c) For the purposes of such appraisal, the term "fair market value" shall
mean the price that a ready and willing tenant would pay, as of the applicable
Rental Adjustment Date, as monthly rent to a ready and willing landlord of
property comparable to the Property if such property were exposed for lease on
the open market for a reasonable period of time and taking into account all of
the purposes for which such property may be used. If a single Appraiser is
chosen, then such Appraiser shall determine the fair rental value of the
Property. Otherwise, the fair rental value of the Property shall be the
arithmetic average of the two (2) of the three (3) appraisals which are
closest in amount, and the third appraisal shall be disregarded. In no event,
however, shall the Base Rent be reduced by reason of such computation. Landlord
and Tenant shall instruct the Appraiser(s) to complete the determination of the
fair rental value not later than thirty (30) days prior to the applicable
Rental Adjustment Date. If the fair rental value is not determined prior to the
applicable Rental Adjustment Date, then Tenant shall continue to pay to
Landlord the Base Rent applicable to the Property immediately prior to such
Extension, until the fair rental value is determined. When the fair rental
value of the Property is determined, Landlord shall deliver notice thereof to
Tenant, and Tenant shall pay to Landlord, within ten (10) days after receipt of
such notice, the difference between the Base Rent actually paid by Tenant to
Landlord and the new Base Rent determined hereunder.

                                       2

(c)1988 Southern California Chapter
        of the Society of Industrial [SIOR(TM) LOGO]
        and Office Realtors, Inc

<PAGE>   20
                           [CB COMMERCIAL LETTERHEAD]

                                                     Date: February 24, 1997
                                                           ---------------------
Landlord/Seller     JB Company
                    ------------------------------------------------------------

Tenant/Purchaser    Miles Smith Family Corporation, a California Corporation
                    ------------------------------------------------------------

Property            2703 - 5th Street Sacramento, CA
                    ------------------------------------------------------------
                                      Street Address, City, State

Also known as:
              ------------------------------------------------------------------

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

Brokers:         CB Commercial Real Estate Group, Inc. representing    Landlord
                                                                      ----------
                 CB Commercial Real Estate Group, Inc. representing    Tenant
                                                                      ----------

BROKER REPRESENTATION (check if applicable)

   X      Seller/Landlord and Purchaser/Tenant hereby acknowledge that Broker
--------  represents both parties hereto; and both parties thereto.

NOTIFICATION RE: NATIONAL FLOOD INSURANCE PROGRAM

This property __X__ is/ _____ is not located in a Special Flood Hazard Area on
United States Department of Housing and Urban Development (HUD) "Special Flood
Zone Area Maps." Federal law requires that as a condition of obtaining federally
related financing on most properties located "flood zones," banks, savings and
loan associations, and some insurance lenders require flood insurance to be
carried where the property, real or personal, is security for a loan. This
requirement is mandated by the National Flood Insurance Act of 1968 and the
Flood Disaster Protection Act of 1973. The purpose of the program is to provide
flood insurance to property owners at a reasonable cost. Cities or counties
participating in a National Flood Insurance Program may have adopted building or
zoning restrictions, or other measures, as part of their participation in the
program. You should contact the city or county in which the property is located
to determine any such restrictions. The extent of coverage available in your
area and the cost of this coverage may vary, and for further information, you
should consult your lender or insurance carrier.

Flood Zone Designation: Zone   X    Source FEMA Map Panel Sacramento County 0210
                             -----        --------------------------------------

HAZARDOUS WASTES OR SUBSTANCES AND UNDERGROUND STORAGE TANKS

Comprehensive federal and state laws and regulations have been enacted in the
past several years in an effort to control the use, storage, handling, clean-up,
removal and disposal of hazardous wastes or substances. Some of these laws and
regulations (such as, for example, the Comprehensive Environmental Response
Compensation and Liability Act [CERCLA]) provide for broad liability on the part
of owners, tenants, or other users of property for clean-up costs and damages,
regardless of fault. Other laws and regulations set standards for the handling
of asbestos, and establish requirements for the use, modification,
abandonment, and closure of underground storage tanks.

?? not practical or possible to list all such laws and regulations in this
Notice. Therefore, Sellers/Landlords and Purchasers/Tenants are urged to consult
legal counsel to determine their respective rights and liabilities with respect
to the issues described in this Notice, as well as all other aspects ?? the
proposed transaction. If hazardous wastes or substances have been, or are going
to be used, stored, handled or disposed on the Property if the Property has been
or may have underground storage tanks, it is essential that legal and technical
advice be obtained to determine, among other things, the nature of permits and
approvals which have been obtained or may be required; the estimated costs and
expenses associated with ?? use, storage, handling, clean-up, disposal or
removal of hazardous wastes or substances; and the nature and extent of
contractual provisions necessary or desirable in this transaction. Broker
recommends expert assistance and site investigation to determine past uses of
the property, which may provide valuable information as to the likelihood of
hazardous wastes or substances, or underground storage tanks, being on the
Property.

Seller/Landlord agrees to disclose to Broker and to Purchaser/Tenant any and
all information which he/she/it has regarding present and future zoning and
environmental matters affecting the Property and regarding the condition of the
Property, including, but not limited to structural, mechanical and ??s
conditions, the presence and location of asbestos, PCB transformers, other
toxic, hazardous or contaminated substances, and underground storage tanks, in,
on, or about the Property.

Broker has conducted no investigation regarding the subject matter hereof,
except as may be contained in a separate written document signed by Broker.
Broker makes no representations concerning the existence or nonexistence of
hazardous wastes or substances, or underground storage tanks, in, on, or about
the Property. Purchaser/Tenant should contact a professional, such as a civil
engineer, industrial hygienist or other persons ?? experience in these matters,
to advise on these matters.

The term "hazardous wastes or substances" is used herein in its very broadest
sense and includes, but is not limited to, petroleum based products, paints and
solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonium
compounds, asbestos, PCBs and other chemical products. Hazardous wastes or
substances and underground storage tanks may be present on all types of real
property. This Notice is intended to apply to any transaction involving any type
of real property, whether improved or unimproved.

BROKER DISCLOSURE

The parties hereby expressly acknowledge that Broker has made no independent
determination or investigation regarding the following: present ?? future use or
zoning of the property; environmental matters affecting the Property; the
condition of the Property, including, but not limited to ??ctural, mechanical
and soils conditions, as well as issues surrounding hazardous wastes or
substances as set out above; violations of the Occupational Safety and Health
Act or any other federal, state, county or municipal laws, ordinances, or
statutes; measurements of land and/or ??dings. Purchaser/Tenant agrees to make
its own investigation and determination regarding such items. REAL ESTATE
BROKER IS QUALIFIED TO ADVISE ON REAL ESTATE. IF YOU DESIRE LEGAL ADVICE,
CONSULT YOUR ATTORNEY.

AMERICANS WITH DISABILITIES ACT (ADA)

??ers or tenants of real property may be subject to the Americans with
Disabilities Act (ADA), a federal law codified at 42 USC Section 12101 et??.
Among other requirements of the ADA that could apply to your property, Title III
of the Act requires owners and tenants of "public Accommodations" to remove
barriers to access by disabled persons and provide auxiliary aids and services
for hearing, vision or speech impaired persons. The regulations under Title III
of the ADA are codified at 28 CFR Part 36.

??er recommends that you     and your attorney review the ADA and the
regulations, and, if appropriate, your proposed lease or purchase and sale
??ement, to determine if this law would apply to you and the nature of the
requirements. These are legal issues. You are responsible for conducting your
own independent investigation of these issues.

??CE TO PURCHASERS AND SELLERS REGARDING THE FOREIGN INVESTMENT IN REAL
PROPERTY TAX ACT (FIRPTA)

??ss an exemption applies, FIRPTA required that every buyer of real estate in
the United States deduct and withhold from the Seller's proceeds amount equal
to ten percent (10%) of the gross sales price. The primary exemptions are:

     The Seller furnishes to the Purchaser a certificate executed by the Seller
     stating under penalty of perjury the Seller's United States taxpayer
     identification number and that the Seller is not a foreign person. (A
     foreign person is any foreign citizen or entity other than a United States
     resident alien).

     The property is acquired by the Purchaser for use as his or her residence
     and the amount paid for the property is $300,000 or less.

                                      -1-

November 15, 1995
<PAGE>   21
[missing copy]
???ability, the Purchaser will be liable for the ??? amount unless the Purchaser
and Seller obtain a qualifying statement from the I.R.S. before transfer of
title.

??? Even though the Seller provides the Purchaser with a non-foreign person
certificate, the Purchaser must still withhold the tax if the Purchaser ??? ???
knowledge that the certificate is false or if the Purchaser receives notice
from the Purchaser's agent or Seller's agent that the certificate ???.

??? seller who is a foreign person should consult with an attorney or
accountant familiar with FIRPTA before entering into any negotiations or
contrac??? ???or the sale of property. If the Seller acts promptly, depending
on the particular circumstances, it may be possible to have the I.R.S. (1)
determine ??? Seller's maximum tax liability, (2) reduce the amount which the
Purchaser must withhold, (3) issue a qualifying statement, or (4) make an ???
???refund of excess withholding.
_______________________________________________________________________________

                              SELLER'S CERTIFICATE
     (To be executed only if the Seller is not a foreign person or entity)

The undersigned hereby certifies:
     1.   The names, addresses and United States taxpayer identification
numbers of all of the owners of the above property are as follows (attach
addendum if more space is needed):

     SELLER'S NAME       U.S. TAX I.D. NUMBER          ADDRESS
                         (Or, Social Security Number)  (If the Seller is an
                                                        individual, the
                                                        individual's home
                                                        address must be used)

________________________________________________________________________________
________________________________________________________________________________

There is no other person or entity who has an ownership interest in the
property.
     2.   None of the owners of the Property are nonresident aliens for
purposes of U.S. income taxation or, if Seller is an entity, it is not a
foreign corporation, foreign partnership, foreign trust, or foreign estate, as
such terms are defined in the Internal Revenue Code and regulations thereto.
     3.   I (we) understand that the Purchaser of the Property intends to rely
on the foregoing representations in connection with the Foreign Investment in
Real Property Tax Act and that this certification may be disclosed to the
Internal Revenue Service.

     The undersigned hereby declare under penalty of perjury that the foregoing
is true and correct.

Date:    _____________________________    Date:    ____________________________

Seller:  _____________________________    Seller:  ____________________________

By:      _____________________________    By:      ____________________________

Title:   _____________________________    Title:   ____________________________

(The original of this certificate is to be delivered to the Purchaser, or the
closing agent, if any, on or before the closing.)
_______________________________________________________________________________

COMPLIANCE WITH LAWS
??? parties hereto agree to comply with all applicable federal, state and local
laws, regulations, codes, ordinances and administrative orders having
???isdiction over the parties, property or the subject matter of this
Agreement, including, but not limited to, the 1964 Civil Rights Act and ???
amendments thereto, the Foreign Investment in Real Property Tax Act, the
Comprehensive Environments Response Compensation and Liability ???, and The
Americans With Disabilities Act.

EARTHQUAKE SAFETY (CALIFORNIA ONLY)
??? or their agents who are involved in the transfer of a precast concrete or
reinforced or unreinforced masonry building with wood frame floors ??? which
was built before January 1, 1975 must deliver to the transferee a copy of a
state publication entitled "The Commercial Property Owner's Guide to Earthquake
Safety" published by the California Seismic Safety Commission. The undersigned
Purchaser/Tenant of the real property herein ???cribed acknowledges that CB
COMMERCIAL REAL ESTATE GROUP, INC. has delivered to the undersigned a copy
thereof in accordance with California Government Code Section 8875.6 and
Sections 8893 et seq.  Year Building Constructed (Sales Only):_________________

???QUIST-PRIOLO NOTIFICATION; ALQUIST-PRIOLO SPECIAL EARTHQUAKE STUDIES ZONE
ACT (CALIFORNIA ONLY)                    X
??? Property described above _____ /s/ ______ is not situated in a Special
Studies Zone as designated under the Alquist-Priolo Special Studies Zone Act,
Sections 2621-2630, inclusive, of the California Public Resources Code; and, as
such, the construction or development on the property of any structure for
human occupancy may be subject to the findings of a geologic report prepared by
a geologist registered in the State ??? California, unless such report is
waived by the city or county under the terms of that Act. No representations on
the subject are made by ???er/Landlord or by CP COMMERCIAL REAL ESTATE GROUP,
INC. or its agents or employees, and the Purchaser/Tenant should make
his/her/its ???n inquiry or investigation.

SPECIAL EARTHQUAKE STUDIES ZONE DESIGNATION SOURCE: FAULT-RUPTURE HAZARD ZONES
IN CALIFORNIA SPECIAL PUBLICATION 42.

??? further information you may wish to contact appropriate city or county
agencies:______________________________________________________________________
_______________________________________________________________________________

???TER HEATER BRACING AND DISCLOSURE AND CERTIFICATION (CALIFORNIA ONLY)
??? Seller/Landlord hereby certifies that all water heaters in or on the
Property are braced, anchored or strapped to resist falling or horizontal ???
placement due to earthquake motions as required by state and applicable local
codes.

CONSULT YOUR ADVISORS No representation or recommendation is made by CB
Commercial Real Estate Group, Inc. or its agents or employees to the legal
effect, interpretation, or economic consequences of this agreement, the
transaction contemplated hereunder, the national flood ???rance program and
related legislation, nor of other legislation referred to herein. These are
questions that you should address with your consul??? ??? and advisors.

     RECEIPT OF A COPY OF THIS NOTICE AND AGREEMENT IS HEREBY ACKNOWLEDGED.

          SELLER/LANDLORD                       PURCHASER/TENANT

JB Company                               Miles Smith Family Corporation,
                                             a California Corporation

???  ____________________________    By:    __________________________________

???  ____________________________    Its:   __________________________________

???: ______________________, 1996    Dated: ____________________________, 1996

November 15, 1995                     -2-
<PAGE>   22
[CB COMMERCIAL LETTERHEAD]

1. PARTIES.

   This Sublease, dated March 5, 1997, is made between Miles Smith Family
   Corporation, a California Corporation ("Sublessor") and Dan Good Distributing
   Company, Inc., a California Corporation ("Sublessee")

2. MASTER LEASE.

   Sublessor is the lessee under a written lease dated February 24, 1997 wherein
   JB Company ("Lessor") leased to Sublessor the real property located in the
   City of Sacramento County of Sacramento, State of California described as
   2703 - 5th Street, Unit #9, Sacramento, CA 95818, an approximate 10,000
   square foot portion of an approximately 39,688 square foot concrete tilt-up
   building ("Master Premises"). Said lease has been amended by the following
   amendments the Addendum and Disclosure and Agreement of Master Lease said
   lease and amendments are herein collectively referred to as the "Master
   Lease" and are attached hereto as Exhibit "A".

3. PREMISES.

   Sublessor hereby subleases to Sublessee on the terms and conditions set
   forth in this Sublease the following portion of the Master Premises
   ("Premises"): all of master premises

4. WARRANTY BY SUBLESSOR.

   Sublessor warrants and represents to Sublessee that the Master Lease has not
   been amended or modified except as expressly set forth herein, that
   Sublessor is not now, and as of the commencement of the Term hereof will not
   be, in default or breach of any of the provisions of the Master Lease, and
   that Sublessor has no knowledge of any claim by Lessor that Sublessor is in
   default or breach of any of the provisions of the Master Lease.

5. TERM.

   The Term of this Sublease shall commence on April 1, 1997 ("Commencement
   Date"), or when Lessor consents to this Sublease (if such consent is required
   under the Master Lease), whichever shall last occur, and end on March 31,
   2002, 19___ ("Termination Date"), unless otherwise sooner terminated in
   accordance with the provisions of this Sublease. In the event the Term
   commences on a date other than the Commencement Date, Sublessor and Sublessee
   shall execute a memorandum setting forth the actual date of commencement of
   the Term. Possession of the Premises ("Possession") shall be delivered to
   Sublessee on the commencement of the Term. If for any reason Sublessor does
   not deliver Possession to Sublessee on the commencement of the Term,
   Sublessor shall not be subject to any liability for such failure, the
   Termination Date shall not be extended by the delay, and the validity of this
   Sublease shall not be impaired, but rent shall abate until delivery of
   Possession. Notwithstanding the foregoing, if Sublessor has not delivered
   Possession to Sublessee within thirty (30) days after the Commencement Date,
   then at any time thereafter and before delivery of Possession, Sublessee may
   give written notice to Sublessor of Sublessor of Sublessee's intention to
   cancel this Sublease. Said notice shall set forth an effective date for such
   cancellation which shall be at least ten (10) days after delivery of said
   notice to Sublessor. If Sublessor delivers Possession to Sublessee on or
   before such effective date, this Sublease shall remain in full force and
   effect. If Sublessor fails to deliver Possession to Sublessee on or before
   such effective date, this Sublease shall be cancelled, in which case all
   consideration previously paid by Sublessee to Sublessor on account of this
   Sublease shall be returned to Sublessee, this Sublease shall thereafter be of
   no further force or effect, and Sublessor shall have no further liability to
   Sublessee on account of such delay or cancellation. If Sublessor permits
   Sublessee to take Possession prior to the commencement of the Term, such
   early Possession shall not advance the Termination Date and shall be subject
   to the provisions of this Sublease, including without limitation the payment
   of rent.

6. RENT.

   6.1 Minimum Rent. Sublessee shall pay to Sublessor as minimum rent, without
       deduction, setoff, notice, or demand, at 2705 - 5th Street, Sacramento,
       CA 95818 or at such other place as Sublessor shall designate from time to
       time by notice to Sublessee, the sum of Three Thousand and no/100 Dollars
       ($3,000.00) per month, in advance on the first day of each month of
       the Term. Sublessee shall pay to Sublessor upon execution of this
       Sublease the sum of Five Thousand Seven Hundred and no/100 Dollars
       ($5,700.00) as rent for the first month and a ($2,700.00) security
       deposit. If the Term begins or ends on a day other than the first or last
       day of a month, the rent for the partial months shall be prorated on a
       per diem basis. Additional provisions:

       Monthly rent shall increase One Hundred and no/100 Dollars ($100.00) each
       anniversary as follows: months 13-24 ($3,100.00); months 25-36
       ($3,200.00); months 37-48 ($3,300; months 49-60 ($3,400.00).

   6.2 Operating Costs. If the Master Lease requires Sublessor to pay to Lessor
       all or a portion of the expenses of operating the building and/or project
       of which the Premises are a part ("Operating Costs"), including but not
       limited to taxes, utilities, or insurance, then Sublessee shall pay to
       Sublessor as additional rent one hundred percent (100%) of the amounts
       payable by Sublessor for Operating Costs incurred during the Term. Such

                                       1

<PAGE>   23
        [MISSING COPY] of Operating Costs on the basis [MISSING COPY] estimate
        thereof, then as and when adjustments between estimated and actual
        Operating Costs are made under the Master Lease, the obligations of
        Sublessor and Sublessee hereunder shall be adjusted in a like manner;
        and if any such adjustment shall occur after the expiration or earlier
        termination of the Term, then the obligations of Sublessor and Sublessee
        under this Subsection 6.2 shall survive such expiration or termination.
        Sublessor shall, upon request by Sublessee, furnish Sublessee with
        copies of all statements submitted by Lessor of actual or estimated
        Operating Costs during the Term.

7.   SECURITY DEPOSIT.

     Sublessee shall deposit with Sublessor upon execution of this Sublease the
     sum of Two Thousand Seven Hundred and no/100           Dollars ($2,700.00)
     as security for Sublessee's faithful performance of Sublessee's obligations
     hereunder ("Security Deposit"). If Sublessee fails to pay rent or other
     charges when due under this Sublease, or fails to perform any of its other
     obligations hereunder, Sublessor may use or apply all or any portion of the
     Security Deposit for the payment of any rent or other amount then due
     hereunder and unpaid, for the payment of any other sum for which Sublessor
     may become obligated by reason of Sublessee's default or breach, or for any
     loss or damage sustained by Sublessor as a result of Sublessee's default or
     breach. If Sublessor so uses any portion of the Security Deposit, Sublessee
     shall, within ten (10) days after written demand by Sublessor, restore the
     Security Deposit to the full amount originally deposited, and Sublessee's
     failure to do so shall constitute a default under this Sublease. Sublessor
     shall not be required to keep the Security Deposit separate from its
     general accounts, and shall have no obligation or liability for payment of
     interest on the Security Deposit. In the event Sublessor assigns its
     interest in this Sublease, Sublessor shall deliver to its assignee so much
     of the Security Deposit as is then held by Sublessor. Within ten (10) days
     after the Term has expired, or Sublessee has vacated the Premises, or any
     final adjustment pursuant to Subsection 6.2 hereof has been made, whichever
     shall last occur, and provided Sublessee is not then in default of any of
     its obligations hereunder, the Security Deposit, or so much thereof as had
     not theretofore been applied by Sublessor, shall be returned to Sublessee
     or to the last assignee, if any, of Sublessee's interest hereunder.

8.   USE OF PREMISES.

     The Premises shall be used and occupied only for general warehousing,
     bottling, storage, office and related legal uses not injurious to the
     facility, and for no other use or purpose.

9.   ASSIGNMENT AND SUBLETTING.

     Sublessee shall not assign this Sublease or further sublet all or any part
     of the Premises without the prior written consent of Sublessor (and the
     consent of Lessor, if such is required under the terms of the Master
     Lease).

10.  OTHER PROVISIONS OF SUBLEASE.

     All applicable terms and conditions of the Master Lease are incorporated
     into and made a part of this Sublease as if Sublessor were the lessor
     thereunder, Sublessee the lessee thereunder, and the Premises the Master
     Premises, except for the following:

     none

     Sublessee assumes and agrees to perform the lessee's obligations under the
     Master Lease during the Term to the extent that such obligations are
     applicable to the Premises, except that the obligation to pay rent to
     Lessor under the Master Lease shall be considered performed by Sublessee to
     the extent and in the amount rent is paid to Sublessor in accordance with
     Section 6 of this Sublease. Sublessee shall not commit or suffer any act or
     omission that will violate any of the provisions of the Master Lease.
     Sublessee shall exercise due diligence in attempting to cause Lessor to
     perform its obligations under the Master Lease for the benefit of
     Sublessee. If the Master Lease terminates, this Sublease shall terminate
     and the parties shall be relieved of any further liability or obligation
     under this Sublease, provided however, that if the Master Lease terminates
     as a result of a default or breach by Sublessor or Sublessee under this
     Sublease and/or the Master Lease, then the defaulting party shall be liable
     to the nondefaulting party for the damage suffered as a result of such
     termination. Notwithstanding the foregoing, if the Master Lease gives
     Sublessor any right to terminate the Master Lease in the event of the
     partial or total damage, destruction, or condemnation of the Master
     Premises or the building or project of which the Master Premises are a
     part, the exercise of such right by Sublessor shall not constitute a
     default or breach hereunder.

11.  ATTORNEYS' FEES.

     If Sublessor, Sublessee, or Broker shall commence an action against the
     other arising out of or in connection with this Sublease, the prevailing
     party shall be entitled to recover its costs of suit and reasonable
     attorney's fees.

12.  AGENCY DISCLOSURE:

     Sublessor and Sublessee each warrant that they have dealt with no other
     real estate broker in connection with this transaction except: CB
     COMMERCIAL REAL ESTATE GROUP, INC., who represents Sublessee and Sublessor,
     and
         ------------------------------------------------------------------, who
     represents
               -----------------------------------------------------------------

     ------------------------------------------------------------------------- .
     In the event that CB COMMERCIAL REAL ESTATE GROUP, INC. represents both
     Sublessor and Sublessee, Sublessor and Sublessee hereby confirm that they
     were timely advised of the dual representation and that they consent to the
     same, and that they do not expect said broker to disclose to either of them
     the confidential information of the other party.

14.  NOTICES.

     All notices and demands which may or are to be required or permitted to be
     given by either party on the other hereunder shall be in writing. All
     notices and demands by the Sublessor to Sublessee shall be sent by United
     States Mail, postage prepaid, addressed to the Sublessee at the Premises,
     and to the address hereinbelow, or to such other place as Sublessee may
     from

                                       2
<PAGE>   24
[MISSING COPY]

To Sublessor:   2705 - 5th Street, #1, Sacramento, CA 95818
             -------------------------------------------------------------------
To Sublessee:   2703 - 5th Street, #9, Sacramento, CA 95818
             -------------------------------------------------------------------

15. CONSENT BY LESSOR.
    THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT UNLESS CONSENTED TO BY LESSOR
    WITHIN 10 DAYS AFTER EXECUTION HEREOF, IF SUCH CONSENT IS REQUIRED UNDER THE
    TERMS OF THE MASTER LEASE.

16. COMPLIANCE.
    The parties hereto agree to comply with all applicable federal, state and
    local laws, regulations, codes, ordinances and administrative orders having
    jurisdiction over the parties, property or the subject matter of this
    Agreement, including, but not limited to, the 1964 Civil Rights Act and all
    amendments thereto, the Foreign Investment in Real Property Tax Act, the
    Comprehensive Environmental Response Compensation and Liability Act, and The
    Americans With Disabilities Act.

                Miles Smith Family Corporation,
Sublessor:      a California Corporation
          --------------------------------------

By:  /s/ Jackson Miles Smith
   ---------------------------------------------
         Jackson Miles Smith

Title:   President
      ------------------------------------------

By: /s/ Susan Lynn Smith
   ---------------------------------------------

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

Date:
     -------------------------------------------

                Dan Good Distributing Company, Inc.
Sublessee:      a California Corporation
          --------------------------------------

By:  /s/ Gordon Langstarr
   ---------------------------------------------
         Gordon Langstarr

Title:   President
      ------------------------------------------

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

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

Date:    3/7/97
     -------------------------------------------

                          LESSOR'S CONSENT TO SUBLEASE

The undersigned ("Lessor"), lessor under the Master Lease, hereby consents to
the foregoing Sublease without waiver of any restriction in the Master Lease
concerning further assignment or subletting. Lessor certifies that, as of the
date of Lessor's execution hereof, Sublessor is not in default or breach of any
of the provisions of the Master Lease, and that the Master Lease has not been
amended or modified except as expressly set forth in the foregoing Sublease.

Lessor:   JB Company
          --------------------------------------

By:      /s/ Jim Gately
   ---------------------------------------------
             Jim Gately

Title:       Vice President
      ------------------------------------------

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

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

Date:
     -------------------------------------------

--------------------------------------------------------------------------------
  CONSULT YOUR ADVISORS - This document has been prepared for approval by your
  attorney. No representation or recommendation is made by Broker as to the
  legal sufficiency of tax consequences of this document or the transaction to
  which it relates. These are questions for your attorney.

  In any real estate transaction, it is recommended that your consult with a
  professional, such as a civil engineer, industrial hygienist or other person,
  with experience in evaluating the condition of the property, including the
  possible presence of asbestos, hazardous materials and underground storage
  tanks.
--------------------------------------------------------------------------------<PAGE>   1
                                                                   Exhibit 10.12

                                      LEASE

THIS AGREEMENT made this 30th day of September, 1999, between A & A Investment
Company, a Colorado General Partnership (consisting of Esther Appleman Trust B
and Steven Appleman), c/o A & A Investment Company, 153 Denargo Market, Denver,
Colorado 80216 (herein called the "Landlord") and Rocky Mountain Fresh and
Natural Inc. (herein called the "Tenant").

                                   WITNESSETH:

         That Landlord for and in consideration of the mutual covenants herein
contained and upon the terms and conditions herein set forth does by these
presents, let, lease and demise unto Tenant, and said Tenant, in consideration
thereof, does hereby lease, hire and take from Landlord the following described
premises, situated in the City of Denver, County of Denver, State of Colorado,
to wit:

         Premises at 110 Denargo Market, outlined in red on the plan attached
hereto and incorporated herein by this reference, together with all
appurtenances and the building and improvements therein, for a term of two (2)
years, beginning on November 1, 1999, and ending on October 31, 2001. The rental
for the term shall be in the sum of Fifty Seven Thousand Six Hundred Dollars
payable at Two Thousand Four Hundred Dollars per month, payable in advance on
the first day of each and every month during the term of this agreement.

         It is hereby mutually covenanted and agreed this lease is made upon the
foregoing and upon the following agreements, conditions, covenants and terms, to
wit:

         1. Landlord represents and warrants that it is the owner of the demised
premises in fee simple and that it has lawful title and right to make this lease
for the term aforesaid and that Tenant on paying the rent and performing the
covenants aforesaid, shall and may peaceably and quietly have, hold and enjoy
the said demised premises for the term aforesaid.

         2. Tenant shall, during the term hereby granted, pay to Landlord the
rent herein reserved at the time and in the manner provided. Said rental shall
be paid to Landlord at A & A Investment Company, 153 Denargo Market, Denver,
Colorado 80216 unless Landlord shall designate, in writing, a different address
at which said rental shall be
<PAGE>   2
payable.

         3. Tenant at its own expense may from time to time install partitions,
machinery, tools, equipment and other trade fixtures of any kind whatsoever and
shall have the right to during or at the termination of this lease or of any
renewal thereof to remove any and all of the same which may have been placed
within or attached and affixed to said building and premises by Tenant, and any
such trade fixtures shall not be considered as belonging to Landlord by reason
of affixing or attaching the same to said building or premises or any part
thereof. Tenant agrees, however, to repair immediately all damage to said
premises caused by the existence of, the attachment to or removal of same from
said premises.

         4. Tenant, at its own expense, may from time to time during the term of
this lease make alterations, additions and improvements on and to the demised
premises, provided, however, that Tenant shall not make structural changes
without the written consent of Landlord. At the termination of this lease or any
option period, Tenant may, at Landlord's sole option, be required to remove or
pay for the removal of any such alterations, additions or improvements with 30
days' notice to Tenant prior to termination of Lease.

         5. Tenant shall pay, in addition to the rent, for all utilities,
including gas, water, fuel, electricity, used upon or furnished to the demised
premises.

         6. Landlord will make, at its own expense, all structural and exterior
walls repairs and all repairs to the roof, and any and all work required by any
public authority, law ordinance or regulation. Landlord will maintain parking
and loading areas and foundations. February 6, 2001.

         Tenant will make, at its own expense, during the term of this lease,
such repairs to the interior of the premises as may be necessary to maintain the
interior thereof in as good condition as at the beginning of the term of this
lease, reasonable wear and tear and damage by fire or other casualty and the
elements excepted.

         7. Tenant shall have the right, subject to Landlord's prior written
approval, to sublet or assign this lease to any person, firm or corporation for
any lawful use or purposes, provided, however, that no sublease or assignment
shall, in any manner, operate to release Tenant from the full performance of all
the terms and conditions on its part to be performed and Tenant shall continue
fully liable for the performance thereof.
<PAGE>   3
         8. If the demised premises are totally destroyed (or so substantially
damaged as to the untenable by Tenant in Tenant's sole and absolute discretion),
by fire, explosion, storm, or other casualty, this lease shall be apportioned as
of that date, and there shall be no further liability between the parties
hereto. If the demised premises are damaged but not rendered wholly untenable by
any such casualty, the rent shall abate in proportion as the premises has been
damaged and the Tenant's use thereof has been impaired, the Landlord shall
restore the premises as speedily as practicable, whereupon full rent shall
recommence, and if the premises are not fully restored within one hundred eight
(180) days this lease may thereupon, at the option of the Tenant, be terminated
upon (10) days' written notice to the Landlord, and the rent shall be
apportioned as of the date of such termination, and there shall be no further
liability between the parties hereto.

         9. In the event there be any tax assessment or unsatisfied mechanics'
liens or other liens affecting the premises, which liens have been created by
acts of Tenant, Landlord shall have the right to satisfy such liens and Landlord
shall have the right of reimbursement against Tenant therefor, with interest at
nine percent (9%) from the date that Landlord may make payments to satisfy such
liens. It is understood, however, the Landlord may not make payments to satisfy
such liens without giving notice to Tenant and allowing Tenant ten (10) days
after the giving of such notice within which to satisfy the lien.

         10. Tenant may, at Tenant's own risk, lawfully erect or cause to be
erected or permit the erection of such signs as it may see fit, on the exterior
walls and roof of premises, provided that such signs shall be permitted by
governmental authorities, and Tenant agrees to maintain said signs in a good
state of repair and to remove the same at the end of the term of this lease or
any renewal thereof, repairing any damage caused by such removal.

         11. It is understood and agreed that wherever the consent or approval
of Landlord is required hereunder, Landlord shall not unreasonably withhold such
consent or approval.

         12. In the event Tenant shall default in the payment of such rent and
such default continues for thirty (30) days after notice of default is given
Tenant, or in the event Tenant defaults in the performance of any other of the
terms of this lease on its part to be performed and fails to make prompt steps
to rectify the default within ten (10) days after
<PAGE>   4
written notice of such default is given to it, then Landlord, may at its option,
terminate this lease by serving upon Tenant written notice thereof by registered
or certified mail and after receipt of such notice Tenant shall become a tenant
at will and Landlord shall have the right to enter upon and repossess itself of
the premises; provided, however, that if default by Tenant (except payment of
rent) cannot reasonably be remedied within ten (10) days after notice of
default, then Tenant shall have the additional time reasonably necessary to
remedy the same before the lease can be terminated or other remedy enforced by
Landlord.

         13. Landlord covenants, agrees and warrants that applicable zoning and
similar laws and regulations permit the use of the demised premises for the
storage, sale and distribution of food products and other items of merchandise
generally sold in conjunction with such business, and that there are no deeds or
other restrictions prohibiting or limiting such use.

         14. All notices given or required to be given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail to the
Landlord at the address stated in Article 2 above, or to Tenant at the demised
premises, as the case may be, unless and until such party shall designate, in
writing a further or different address to which subsequent notices shall be
sent. The time of giving such notice shall be deemed to be when such notice is
mailed, excepting notices of default shall not be deemed to be given until
received.

         15. Landlord shall pay all real property taxes on the premises, however
denominated.

         16. Tenant shall at Tenant's sole cost and expense, carry public
liability and property damage insurance in minimum amounts of not less than
Three Hundred Thousand ($300,000.00) Dollars per person, Six Hundred Thousand
($600,000.00) Dollars per occurrence public liability, and Seventy-Five Thousand
($75,000.00) Dollars per occurrence property damage; said insurance shall name
Landlord as coinsured and a certificate of such insurance, bearing the following
endorsements, shall be deposited with Landlord:

         (A)      "Before changing or canceling this policy, the insurance
                  company agrees to give (5) days prior written notice to A & A
                  Investment Co."
<PAGE>   5
         (B)      "Notice is received and accepted that insured has waived right
                  of recovery from A & A Investment Co."

         Notwithstanding anything herein to the contrary, it is specifically
understood and agreed that Tenant shall indemnify and hold harmless Landlord
from any and all losses or claims of any kind or nature whatsoever arising
during the course of the tenancy of the demised premises.

         17. If more than fifty percent (50%) of the Premises are taken for any
public or quasi-public use under governmental law, ordinance or regulation, or
by right of eminent domain, or by private purchase in lieu thereof and the
taking prevents or materially interferes with the use of the Premises for the
purpose for which they were leased to Tenant, this Lease shall terminate and the
rent shall be abated during the unexpired portion of this Lease, effective on
the date of such taking. If less than fifty percent (50%) of the Premises are
taken from any public or quasi-public use under any governmental law, ordinance
or regulation, or by right of eminent domain, or by private purchase in lieu
thereof, this Lease shall not terminate, but the rent payable hereunder during
the unexpired portion of this Lease shall be reduced to such extent as may be
fair and reasonable under all the circumstances. All compensation awarded in
connection with or as a result of any of the foregoing proceedings shall be
property of the Landlord, and Tenant hereby assigns any interest in any such
award to Landlord; provided, however, Landlord shall have no interest in any
award made to Tenant for loss of business or goodwill or for the taking of
Tenant's fixtures and improvements, if a separate award for such items is made
to Tenant.

         18. The terms and conditions of this lease shall be binding upon and
inure to the benefit of the legal representatives, successors and assigns of the
parties hereto.

         19. Tenant will provide normal routine maintenance for compressors and
other refrigeration equipment for the full term of this lease.

         IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed by their duly authorized officers, and their corporate seals to be
hereunto affixed, the day and year first above written.

ATTEST:                            A & A INVESTMENT COMPANY
<PAGE>   6
                                        /s/
-------------------------               ------------------------------------
                                            STEVEN APPLEMAN, General Partner

ATTEST:                            ROCKY MOUNTAIN FRESH AND
                                   NATURAL, INC.

                                        /s/
-------------------------               ------------------------------------
                                            BARRY STOLBOF, President

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