Document:

<PAGE>

                                                                   Exhibit 10.18

                     Extension and Modification Agreement
                     ------------------------------------
                                    Of Lease
                                    --------

THIS AGREEMENT, dated March 19, 2001, made between Harry L. Hussmann Jr., Inc.,
                                                   ---------------------------
a Texas Corporation hereby referred to as "Landlord" and Dal-Tile Corporation, a
                                                         --------------------
Pennsylvania Corporation, formerly a Delaware Corporation, hereby referred to as
"Tenant" will modify the "original lease", dated for reference purposes only,
August 24, 1993 and expires on March 31, 2001. This agreement will in effect be
a new lease that will apply all provisions from the original lease with the
exception of paragraphs 1.5 and 1.10 and as hereafter set forth.

1. Premises:     A 13,500 square foot building on approximately 45,000 square
   ---------
             foot lot most commonly known as 11185 Pellicano, El Paso, Texas.

2. Term:         The term of the Lease is hereby set for a period of five (5)
   -----
             years from and after April 1, 2001, so that the term shall extend
             to and include March 31, 2006.

3. Rent:         The monthly Base Rent during this term shall remain at
   -----
             Four-thousand-six-hundred ($4,600.00) dollars per month.

4. Repairs and Improvements:
   -------------------------

             a.  Landlord will bear the cost to install new dock bumpers.

             b.  Landlord will bear the cost to install a fire alarm system in
                 warehouse to permit storage above 12 feet in compliance with
                 city codes.
                 After the initial installation it becomes the Tenant's
                 responsibility and expense to maintain the system and schedule
                 and pay for required inspections.

             c.  Landlord will make necessary repairs to warehouse doors where
                 able. If repairs cannot be made and replacement becomes
                 necessary Landlord and Tenant will share the cost on a 50/50
                 basis.

             d.  Landlord will immediately begin soliciting proposals and bids
                 to install heat exhaust fans in the warehouse area. Landlord
                 will make every effort to have fans installed before May 31,
                 2001.

                                       1

<PAGE>

5. Renewal Option: Tenant shall have the option to extend this lease for one (1)
   --------------
              additional five (5) year term at the same rental rate.

6. Effectiveness of Lease: The parties confirm the Lease is valid and in full
   ----------------------
              force and effect, and except as set forth in this agreement, all
              the provisions of the original lease shall remain in full force
              and effect and unchanged.

IN WITNESS WHEROF, The parties hereto have executed this agreement.

                                        Harry L. Hussmann Jr., Inc.

Dated: 2/23/2001                        /s/ William R. Peterson
      --------------                    -------------------------------
                                        William R. Peterson, President

                                        DAL-TILE CORPORATION

Dated: 3/19/01                          /s/ [ILLEGIBLE]
      --------------                    -------------------------------
                                        VICE PRESIDENT

                                       2

<PAGE>

               [LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

             STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE--NET
                (Do not use this form for Multi-Tenant Property)

1.  Basic Provisions ("Basic Provisions")

    1.1   Parties: This Lease ("Lease"), dated for reference purposes only,
August 24, 1993, is made by and between Harry L. Hussmann Jr., Inc., a Texas
Corporation ("Lessor") and Dal-Tile Corporation, a Delaware Corporation
("Lessee"), (collectively the "Parties", or individually a "Party").

    1.2   Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known by the street address of north side of 11000 block of Pellicano, El Paso
located in the County of El Paso, State of Texas, and generally described as
(describe briefly the nature of the property) 13,500 square foot building to be
built in accordance with mutually acceptable plans and specifications on an
approximately 45,500 square foot lot ("Premises"). (See Paragraph 2 for further
provisions.)

    1.3   Term: Seven (7) years and -0- months ("Original Term") commencing
April 1, 1994 ("Commencement Date") and ending March 31, 2001 ("Expiration
Date"). (See Paragraph 3 for further provisions.)

    1.4   Early Possession: Substantial completion of Lessor's improvements
("Early Possession Date"). (See Paragraphs 3.2 and 3.3 for further provisions.)

    1.5   Base Rent: $3,750.00 per month ("Base Rent"), payable on the first day
of each month commencing April 1, 1994 through March 31, 1996; $4,250.00 April
1, 1996 through March 31, 1999; $4,600.00 April 1, 1999 through March 31, 2001.
(See Paragraph 4 for further provisions.)

[_] If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted.

    1.6   Base Rent Paid Upon Execution: $ None as Base Rent for the period.

    1.7   Security Deposit: $ None ("Security Deposit"). (See Paragraph 5 for
further provisions.)

    1.8   Permitted Use: Sale and distribution of ceramic tile and related
products (See Paragraph 6 for further provisions.)

    1.9   Insuring Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See Paragraph 8 for further provisions.)

    1.10  Real Estate Brokers: The following real estate brokers (collectively,
the "Brokers") and brokerage relationships exist in this transaction and are
consented to by the Parties (check applicable boxes):

          Wolfe Real Estate, Inc. (Mark Peyton) represents
[X] Lessor exclusively "Lessor's Broker"); [_] both Lessor and Lessee, and

          ____________________________________________________________represents
[_] Lessee exclusively ("Lessee's Broker"); [_] both Lessee and Lessor.  (See
Paragraph 15 for further provisions.)

    1.11  Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by None ("Guarantor"). (See Paragraph 37 for further provisions.)

    1.12  Addenda. Attached hereto is an Addendum or Addenda consisting of
Paragraphs 49 through 52 and Exhibits Plans and Specifications to be added all
of which constitute a part of this Lease.

2.  Premises.

    2.1  Letting.  Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease.  Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental, is an approximation which Lessor
and Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.

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

    2.3  Compliance with Covenants, Restrictions and Building Code.  Lessor
warrants to Lessee that the improvements on the Premises comply with all
applicable covenants or restrictions of record and applicable building codes,
regulations and ordinances in effect on the Commencement Date.  Said warranty
does not apply to the use to which Lessee will put the Premises or to any
Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made or to
be made by Lessee.  If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense.

    2.4  Acceptance of Premises.  Lessee hereby acknowledges: (a) that it has
been advised by the Brokers to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law, as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has
made any oral or written representations or warranties with respect to the said
matters other than as set forth in this Lease.

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

3.  Term.

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

    3.2  Early Possession.  If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession.  All other terms of this Lease,
however, (including but not limited to the obligations to pay Real Property
Taxes and insurance premiums and to maintain the Premises) shall be in effect
during such period.  Any such early possession shall not affect nor advance the
Expiration Date of the Original Term.

                                                                 Initials   W/C
                                                                          ------
                                                                          ______

(C) 1990--American Industrial Real Estate Association             FORM 204N-3/90

NET

                                     PAGE 1

<PAGE>

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

4. Rent

     4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which it is due under the terms of this Lease. Base Rent and all
other rent and charges for any period during the term hereof which is for less
than one (1) full calendar month shall be prorated based upon the actual number
of days of the calendar month involved. Payment of Base Rent and other charges
shall be made to Lessor at its address stated herein or to such other persons or
at such other addresses as Lessor may from time to time designate in writing to
Lessee.

6. Use.

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

     6.2 Hazardous Substances.

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

        (b)  Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance or a condition involving or resulting from
same, has come to be located in, on, under or about the Premises, other than
as previously consented to by Lessor, Lessee shall immediately give written
notice of such fact to Lessor, Lessee shall also immediately give Lessor a copy
of any statement, report, notice, registration, application, permit, business
plan, license, claim, action or proceeding given to, or received from, any
governmental authority or private party, or persons entering or occupying
the premises, concerning the presence, spill, release, discharge of, or exposure
to, any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.

        (c)  Indemnification. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all loss of rents and/or damages,
liabilities, judgements, costs, claims, liens, expenses, penalties, permits and
attorney's and consultant's fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Lessee or under
Lessee's control. Lessee's obligations under this Paragraph 6 shall include,
but not be limited to, the effects of any contamination or injury to person,
property or the environment created or suffered by Lessee, and the cost of
investigation (including consultant's and attorney's fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination
therein involved, and shall survive the expiration or earlier termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release from its obligations under this Lease with
respect to Hazardous Substances or storage tanks, unless specifically so agreed
by Lessor in writing at the time of such agreement.

    6.3 Lessee's Compliance with Law. Except as otherwise provided in this
Lease, Lessee, shall, at Lessee's sole cost and expense, fully, diligently and
in a timely manner comply with all "Applicable Law" which term is used in this
Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registration, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law.

    6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to
employ experts and/or consultants in connection therewith and/or to advise
Lessor with respect to Lessee's activities, including but not limited to the
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In any such case, Lessee shall upon request reimburse Lessor
or Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.

7. Maintenance; Repairs; Utility Installation; Trade Fixtures and Alterations.

   7.1  Lessee's Obligations.

        (a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as to
condition), 2.3 (Lessor's warranty as to compliance with covenants, etc), 7.2
(Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all times
keep the Premises and every part thereof in good order, condition and repair,
(whether or not such portion of the Premises requiring repair, or the means of
repairing the same, are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs except for repair and maintenance of the
roof, foundation, structural walls, and utility lines outside the perimeter of
the building, for which the Lessor, at Lessor's expense, shall be the
responsible.

                                     PAGE 2

<PAGE>

as a result of Lessee's use, any prior use, the elements or the age of such
portion of the Premises), including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises such as plumbing,
heating, air conditioning, ventilating, electrical, lighting facilities,
boilers, fire or unfired pressure vessels, fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing system, including fire alarm and/or
smoke detection systems and equipment, fire hydrants, fixtures, walls (interior
and exterior), foundations, ceilings, roofs, floors, windows, doors, plate
glass, skylights, landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, about, or adjacent to the Premises
Lessee  shall not cause or permit  any  Hazardous  Substance  to be  spilled  or
released in, on, under or about the Premises  (including through the plumbing or
sanitary  sewer  system)  and shall  promptly,  at  Lessee's  expense,  take all
investigatory  and/or remedial  action  reasonably  recommended,  whether or not
formally ordered or required,  for the cleanup of any  contamination of, and for
the  maintenance,  security  and/or  monitoring  of, the Premises,  the elements
surrounding  same,  or  neighboring  properties,  that was caused or  materially
contributed to by Lessee, or pertaining to or involving any Hazardous  Substance
and/or  storage  tank  brought  onto the  Premises by or for Lessee or under its
control  Lessee,  in keeping the  Premises in good order,  condition  and repair
shall exercise and perform good maintenance practices Lessee's obligations shall
include  restorations,  replacements  or  renewals  when  necessary  to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair if Lessee occupies the Premises for seven (7) years or more,
Lessor may  require  Lessee to repaint  the  exterior  of the  buildings  on the
Premises as reasonably  required,  but not more frequently than once every seven
(7) years.

          (b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain contracts, with copies to Lessor, in customary form and substance for,
and with contractors specializing and experienced in, the inspection,
maintenance and service of the following equipment and improvements, if any,
located on the Premises: (i) heating, air conditioning and ventilation
equipment, (ii) boiler, fired or unfired pressure vessels, (iii) fire sprinkler
and/or standpipe and hose or other automatic fire extinguishing systems,
including fire alarm and/or smoke detection, (iv) landscaping and irrigation
systems, (iv) roof covering and drain maintenance and (vi) asphalt and parking
lot maintenance.

     7.2  Lessor's Obligations. Except for the warranties and agreements of
Lessor contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, with the exception of
the Lessor's responsibilities described in Paragraph 7.1a, all of which
obligations are intended to be that of the Lessee under Paragraph 7.1 hereof. It
is the intention of the Parties that the terms of this Lease govern the
respective obligations of the Parties as to maintenance and repair of the
Premises. Lessee and Lessor expressly waive the benefit of any statute now or
hereafter in effect to the extent it is inconsistent with the terms of this
Lease with respect to, or which affords Lessee the right to make repairs at the
expense of Lessor or to terminate this Lease by reason of any needed repairs.

     7.3  Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions; Consent Required. The term "Utility Installations" is
used in this Lease to refer to all carpeting, window coverings, air lines, power
panels, electrical distribution, security, fire protection systems,
communication systems, lighting fixtures, heating, ventilating, and air
conditioning equipment, plumbing, and fencing in, on or about the Premises. The
term "Trade Fixtures" shall mean Lessee's machinery and equipment that can be
removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements on the Premises from that which
are provided by Lessor under the terms of this Lease other than Utility
Installations or Trade Fixtures, whether by addition or deletion "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor as defined
in Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's prior
written consent. Lessee may, however, make non-structural Utility Installations
to the interior of the Premises (excluding the roof), as long as they are not
visible from the outside, do not involve puncturing, relocating or removing the
roof or any existing walls, and the cumulative cost thereof during the term of
this Lease as extended does not exceed $25,000.

          (b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consents of the Lessor shall be
presented to Lessor in written form with proposed detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific
consent, shall be deemed conditioned upon: (i) Lessee's acquiring all applicable
permits required by governmental authorities, (ii) the furnishing of copies of
such permits together with a copy of the plans and specifications for the
Alteration or Utility Installation to Lessor prior to commencement of the work
thereon, and (iii) the compliance by Lessee with all conditions of said permits
in a prompt and expeditious manner. Any Alterations or Utility Installations by
Lessee during the term of this Lease shall be done in a good and workmanlike
manner, with good and sufficient materials, and in compliance with all
Applicable Law Lessee shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefor Lessor may (but without
obligation to do so) condition its consent to any requested Alteration or
Utility Installation that costs $10,000 or more upon Lessee's providing Lessor
with a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor under Paragraph 36 hereof.

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

     7.4  Ownership; Removal; Surrender; and Restoration.

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

          (b) Removal. Unless otherwise agreed in writing, Lessor may require
that any or all Lessee Owned Alterations or Utility Installations be removed by
the expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.

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

8.   Insurance; Indemnity.

     8.1  Payment For Insurance. Regardless of whether the Lessor or Lessee is
the Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor in excess of $1,000,000 per occurrence. Premiums
for policy periods commencing prior to or extending beyond the Lease term shall
be prorated to correspond to the Lease term. Payment shall be made by Lessee to
Lessor within thirty (30) days following receipt of an invoice for any amount
due.

     8.2  Liability Insurance.

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

          (b) Carried By Lessor. In the event Lessor is the Insuring Party,
Lessor shall also maintain liability insurance described in Paragraph 8.2(a),
above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.

     8.3  Property Insurance--Building, Improvements and Rental Value.

          (a) Building and Improvements. The Insuring Party shall obtain and
keep in force  during the term of this Lease a policy or policies in the name of
Lessor,  with loss payable to Lessor and to the holders of any mortgages,  deeds
of trust or ground leases on the Premises ("Lender(s)"), insuring loss

                                                               Initials  W/C
                                                                        -----
                                                                        -----
                                     PAGE 3

<PAGE>

or damage to the Premises. The amount of such insurance shall be equal to the
full replacement cost of the Premises, as the same shall exist from time to
time, or the amount required by Lenders, but in no event more than the
commercially reasonable and available insurable value thereof if by reason of
the unique nature or age of the improvements involved, such latter amount is
less than full replacement cost. If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installation shall be insured by Lessee
under Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
enforcement of any ordinance or law regulating the reconstruction or replace of
any undamaged sections of the PRemises required to be demolished or removed by
reason of the enforcement of any building zoning safety or land use laws as the
result of a covered cause of loss. Said policy or policies shall also contain an
agreed valuation provision in lieu of any coinsurance clause, waiver of
subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price4 Index for all Urban Consumers for the
city nearest to where the Premises are located. If such Insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence
and Lessee shall be liable for such deductible amount in the event of an insured
Loss, as defined in Paragraph 9.1(c)

           (b) Rental Value. The Insuring Party shall in addition obtain and
keep in force during the term of this LEase a policy or policies in the name of
Lessor, with loss payable to Lessor and Lender(s), insuring the loss of the full
rental and other charges payable by Lessee to Lessor under this Lease for one
(1) year (including all real estate taxes, insurance costs, and any scheduled
rental increases). Said insurance shall provide (that in the event the Lease is
terminated by reason of an insured loss, the period of indemnity for such
coverage shall be extended beyond the date of the completion of repairs or
replacements of the Premises, to provide for one full year's loss of rental
revenues form the date of any such loss. Said insurance shall contain an agreed
valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Lessee, for the next twelve (12) month period Lessor shall be liable
for any deductible amount in the event of such loss.

           (c) Adjacent Premises. If the Premises are part of a larger building,
or if the Premises are part of a group of building owned by Lessor which are
adjacent to the PRemises, the Lessee shall pay for any increase in the premiums
for the property insurance of such building or buildings if said increase is
caused by Lessee's act, omission, use or occupancy of the Premises.

           (d) Tenant's Improvement. If the Lessor is the Insuring Party, the
Lessor shall not be required to insure Lessee Owned Alteration and Utility
Installation unless the item in question has become the property of Lessor under
the terms of this LEase4. If Lessee is the Insuring Party, the policy carried
by Lessee under this Paragraph 8.3 shall insure LEssee Owned Alterations and
Utility Installations.

     8.4   Lessee's Property Insurance. Subject to the requirements of Paragraph
8.5, Lessee at its cost shall either by separate policy or at Lessor's option by
endorsement to a policy already carried, maintained insurance coverage on all of
Lessee's personal property, Lessee Owned Alterations and Utility Installations
in, on, or about the PRemises similar in coverage to that carried by the
Insuring Party under Paragraph 8.3. Such insurance shall be used by Lessee for
the replacement of personal property or the restoration of Lessee Owned
Alterations and Utility Installation. Lessee shall be the Insuring Party with
respect to the insurance required by this Paragraph 8.4 and shall provide Lessor
with written evidence that such insurance is in force.

     8.5   Insurance Policies. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least B+,V or such other rating as may be required by a Lender having a
lien on the Premises, as set forth in the most current issue of "Best's
Insurance Guide." Lessee shall not do or permit to be done, anything which shall
invalidate the insurance policies referred to this Paragraph 8. If Lessee is the
Insuring Party, Lessee shall cause to be delivered to Lesser certified copies of
policies of such insurance or certificates evidencing the existence and amounts
of such insurance with the insureds and loss payable clauses as required by this
Lease. No such policy shall be cancellable or subject to modification except
after thirty (30) days prior written notice to Lessor. Lessee shall at least
thirty (30) days prior to the expiration of such policies, furnish Lessor with
evidence of renewals or "insurance binders" evidencing renewal thereof, or
Lessor may order such insurance and charge the cost thereof to Lessee, which
amount shall be payable by Lessee to Lessor upon demand if the Insuring Party
shall fail to procure and maintain the insurance required to be carried by the
Insuring party under this Paragraph 8 the other Party may but shall not be
required to procure and maintain the same, but at Lessee's expense.

     8.6   Waiver of Subrogation. Without affecting any other rights or
remedies, Lessee and Lessor ("Waiving Party") each hereby release and relieve
the other and waive their entire right to recover damages (whether in contact or
in Tort) against the other, for loss of or damage to the Waiving Party's
property arising out of our incident to the perils required to be insured
against under Paragraph 8. The effect of such releases and waivers of the right
to recover damages shall not be limited by the amount of insurance carried or
required, or by any deductibles applicable thereto.

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

     8.8   Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said injury or damage results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part or from other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant or Lessor. Notwithstanding Lessor's negligence or breach of
this Lease. Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.

9.   Damage or Destruction.

     9.1   Definitions

           (a) "Premises Partial Damage" shall mean damage or destruction to the
               improvements on the Premises, other than Lessee Owned Alterations
               and Utility installations, the repair cost of which damage or
               destruction is less then 50% of the then Replacement Cost of
               the Premises immediately prior to such damage or destruction
               excluding from such calculation the value of the land and Lessee
               Owned Alterations and Utility Installations

           (b) "Premises Total Destruction" shall mean damage or destruction to
               the Premises, other than Lessee Owned Alterations and Utility
               Installations the repair cost of which damage or destruction is
               50% or more of the then Replacement Cost of the Premises
               immediately prior to such damage or destruction, excluding from
               such calculation the value of the land and Lessee Owned
               Alterations and Utility Installations.

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

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

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

     9.2   Partial Damage-Insured Loss.  If a Premises Partial Damage that is an
           Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
           such damage (but not Lessee's Trade Fixtures or Lessee Owned
           Alterations and Utility Installations) as soon as reasonably possible
           and this Lease shall continue in full force and effect; provided,
           however, that Lessee shall, at Lessor's election, make the repair of
           any damage or destruction the total cost to repair of which is
           $10,000 or less, and, in such event, Lessor shall make the insurance
           proceeds available to Lessee on a reasonable basis for that purpose
           Notwithstanding the foregoing, if the required insurance was not in
           force or the insurance proceeds are not sufficient to effect such
           repair, the Insuring Party shall promptly contribute the shortage in
           proceeds (except as to the deductible which is Lessee's
           responsibility) as and when required to complete said repairs. In the
           event, however, the shortage in proceeds was due to the fact that, by
           reason of the unique nature of the improvements, full replacement
           cost insurance coverage was not commercially reasonable and
           available, Lessor shall have no obligation to pay for the shortage in
           insurance proceeds or to fully restore the unique aspects of the
           Premises unless Lessee provides Lessor with the funds to cover same,
           or adequate assurance thereof, within ten (10) days following receipt
           of written notice of such shortage and request therefor. If Lessor
           receives said funds or adequate assurance thereof within said ten
           (10) day period, the party responsible for making the repairs shall
           complete them as soon as reasonably possible and this Lease shall
           remain in full force and effect if Lessor does not receive such funds
           or assurance within said period, Lessor may nevertheless elect by
           written notice to Lessee within ten (10) days thereafter to make such
           restoration and repair as is commercially reasonable with Lessor
           paying any shortage in proceeds, in which case this Lease shall
           remain in full force and effect. If in such case Lessor does not so
           elect, then this Lease shall terminate sixty (60) days following the
           occurrence of the damage or destruction. Unless otherwise agreed,
           Lessee shall in no event have any right to reimbursement from Lessor
           for any funds contributed by Lessee to repair any such damage or
           destruction. Premises Partial Damage due to flood or earthquake shall
           be subject to Paragraph 9.3 rather than Paragraph 9.2.
           notwithstanding that there may be some insurance coverage, but the
           net proceeds of any such insurance shall be made available for the
           repairs if made by either Party.

                                                                 Initial WJC
                                                                         ---

                                                                   [ILLEGIBLE]
                                                                   -------------

NET                                  PAGE 4

<PAGE>

     9.3  Partial Damage--Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense and
this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13). Lessor may at Lessor's option, either: (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) give written notice
to Lessee within thirty (30) days after receipt by Lessor of knowledge of the
occurrence of such damage of Lessor's desire to terminate this Lease as of the
date sixty (60) days following the giving of such notice. In the event Lessor
elects to give such notice of Lessor's intention to terminate this Lease. Lessee
shall have the right within ten (10) days after the receipt of such notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage totally at Lessee's expense and without reimbursement from Lessor.
Lessee shall provide Lessor with the required funds or satisfactory assurance
thereof within thirty (30) days following Lessee's said commitment. In such
event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible and the required
funds are available. If Lessee does not give such notice and provide the funds
or assurance thereof within the times specified above, this Lease shall
terminate as of the date specified in Lessor's notice of termination.

     9.4  Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee. In the event, however, that the damage or destruction was caused by
Lessee. Lessor shall have the right to recover Lessor's damages from Lessee
except as released and waived in Paragraph 8.6.

     9.5  Damage Near End of Term. If at any time during the last six (6) months
of the term of this Lease there is damage for which the cost to repair exceeds
one (1) month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise,
whichever is earlier ("Exercise Period"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds. Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.

     9.6  Abatement of Rent: Lessee's Remedies.

          (a) In the event of damage described in Paragraph 9.2 (Partial
Damage--Insured), whether or not Lessor or Lessee repairs or restores the
Premises, the Base Rent, Real Property Taxes, insurance premiums, and other
charges, if any, payable by Lessee hereunder for the period during which such
damage, its repair or the restoration continues (not to exceed the period for
which rental value insurance is required under Paragraph 8.3(b)), shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired. Except for abatement of Base Rent, Real Property Taxes, insurance
premiums, and other charges, if any, as aforesaid all other obligations of
Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim
against Lessor for any damage suffered by reason of any such repair or
restoration.

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

     9.7  Hazardous Substance Conditions. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable Law
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 13). Lessor may at Lessor's option either (i) investigate
and remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to investigate
and remediate such condition exceeds twelve (12) times the then monthly Base
Rent or $100,000, whichever is greater, give written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
Hazardous Substance Condition of Lessor's desire to terminate this Lease as of
the date 20 days following the giving of such notice in the event Lessor elects
to give such notice of Lessor's intention to terminate this Lease, Lessee shall
have the right within ten (10) days after the receipt of such notice to give
written notice to Lessor of Lessee's commitment to pay for the investigation and
remediation of such Hazardous Substance Condition totally at Lessee's expense
and without reimbursement from Lessor except to the extent of an amount equal to
twelve (12) times the then monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with the funds required of Lessee or satisfactory
assurance thereof within thirty (30) days following Lessee's said commitment in
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such investigation and remediation as soon as reasonably
possible and the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the times
specified above, this Lease shall terminate as of the date specified in Lessor's
notice of termination. If a Hazardous Substance Condition occurs for which
Lessee is not legally responsible, there shall be abatement of Lessee's
obligations under this Lease to the same extent as provided in Paragraph 9.6(a)
for a period of not to exceed twelve months.

     9.8  Termination--Advance Payments. Upon termination of this Lease
pursuant to this Paragraph 9, an equitable adjustment shall be made concerning
advance Base Rent and any other advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit
as has not been, or is not then required to be, used by Lessor under the terms
of this Lease.

     9.9  Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

     10.1 (a) Payment of Taxes. Lessor shall pay and Lessee shall reimburse
Lessor within thirty (30) days of receipt of written documentation, the Real
Property Taxes, as defined in Paragraph 10.2, applicable to the Premises during
the term of this Lease. Subject to Paragraph 10.1(b), all such payments shall be
made at least ten (10) days prior to the delinquency date of the applicable
installment Lessee shall promptly furnish Lessor with satisfactory evidence
that such taxes have been paid. If any such taxes to be paid by Lessee shall
cover any period of time prior to or after the expiration or earlier termination
of the term hereof, Lessee's share of such taxes shall be equitably prorated to
cover only the period of time within the tax fiscal year this Lease is in
effect, and Lessor shall reimburse Lessee for any overpayment after such
proration. If Lessee shall fail to pay any Real Property Taxes required by this
Lease to be paid by Lessee, Lessor shall have the right to pay the same, and
Lessee shall reimburse Lessor therefor upon demand.

          (b) Advance Payment. In order to insure payment when due and before
delinquency of any or all Real Property Taxes, Lessor reserves the right, at
Lessor's option, to estimate the current Real Property Taxes applicable to the
Premises, and to require such current year's Real Property Taxes to be paid in
advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the
installment due, at least twenty (20) days prior to the applicable delinquency
date, or (ii) monthly in advance with the payment of the Base Rent. If Lessor
elects to require payment monthly in advance, the monthly payment shall be that
equal monthly amount which, over the number of months remaining before the month
in which the applicable tax installment would become delinquent (and without
interest thereon), would provide a fund large enough to fully discharge before
delinquency the estimated installment of taxes to be paid. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payment shall be adjusted as required to provide the fund needed to pay
the applicable taxes before delinquency. If the amounts paid to Lessor by Lessee
under the provisions of this Paragraph are insufficient to discharge the
obligations of Lessee to pay such Real Property Taxes as the same become due,
Lessee shall pay to Lessor, upon Lessor's demand, such additional sums as are
necessary to pay such obligations. All moneys paid to Lessor under this
Paragraph may be intermingled with other moneys of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, subject to proration as provided in
Paragraph 10.1(a), at the option of Lessor, be treated as an additional Security
Deposit under Paragraph 5.

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

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

NET                                                             Initials    WJC
                                                                           -----
                                                                           -----

                                     Page 5

<PAGE>

     10.4 Personal Property Taxes. Lease shall prior to delinquency all taxes
assessed against and levied upon Lessee Owned Alterations. Utility
installations. Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere When possible, Lessee shall
cause its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor if any of
Lessee's said personal property shall be assessed with Lessor's real property.
Lessee shall pay Lessor the taxes attributable to Lessee within ten (10) days
after the receipt of a written statement setting forth the taxes applicable to
Lessee's property or at Lessor's option, as provided in Paragraph 10.1 (b)

11.  Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon if any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion to be
determined by Lessor of all charges jointly metered with other premises.

12.  Assignment and Subletting

     12.1 Lessor's Consent Required.

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

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

          (d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall at Lessor's option, be a
Default curable after notice per Paragraph 13 1 (c), or a noncurable Breach
without the necessity of any notice and grace period if Lessor elects to treat
such unconsented to assignment or subletting as a noncurable Breach. Lessor
shall have the right to either (i) terminate this Lease, or (ii) upon thirty
(30) days written notice ("Lessor's Notice"), increase the monthly Base Rent to
fair market rental value or one hundred ten percent (110%) of the Base Rent then
in effect, whichever is greater Pending determination of the new fair market
rental value, if disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice with any overpayment credited against the next installment(s) of
Base Rent coming due and any underpayment for the period retroactively to the
effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to the then fair market value
without the Lease being considered an encumbrance or any deduction for
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in effect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment and (iii) any fixed rental adjustments scheduled during
the remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior in the market
value adjustment

     12.2 Term and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor's consent any assignment or subletting shall
not (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease (ii) release Lessee of
any obligations hereunder, or (iii) after the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease

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

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

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

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

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

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

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

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

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

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

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

13.  Default: Breach: Remedies.

     13.1 Default: Breach. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said Default. A "Default" is defined as a
failure by the Lessee to observe, comply with or perform any of the terms,
covenants, conditions or rules applicable to Lessee under this Lease. A "Breach"
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure by
Lessee to cure such Default prior to the expiration of the applicable grace
period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs
13.2 and/or 13.3:

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

                                                                  Initials  W/C
                                                                           -----
                                                                           -----

                                     PAGE 6

<PAGE>

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

          (c) Except as expressly otherwise provided in this Lease, the failure
by Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with applicable law per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1 (b), (iii) the recission of an unauthorized assignment or
subletting per Paragraph 12 1(b), (iv) a Tenancy Statement per Paragraphs 16 or
37, (v) the subordination or non-subordination of this Lease per Paragraph 30,
(vi) the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1 11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of ten (10) days
following written notice by or on behalf of Lessor to Lessee.

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

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

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

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

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

          (a) Terminate lessee's right to possession of the Pemises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees and that
portion of the leasing commission paid by Lessor applicable to the unexpired
term of this Lease. The worth at the time of award of the amount referred to in
provision (iii) of the prior sentence shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one percent. Efforts by Lessor to mitigate damages caused by
Lessee's Default or Breach of this Lease shall not waive Lessor's right to
recover damages under this Paragraph. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding the unpaid rent and damages as are recoverable
therein, or Lessor may reserve therein the right to recover all or any part
thereof in a separate suit for such rent and/or damages if a notice and grace
period required under subparagraphs 13.1(b), (c) or (d) was not previously
given, a notice in pay rent or quit, or to perform or quit, as the case may be
given to Lessee under any statute authorizing the forfeiture of leases for
unlawful detainer shall also constitute the applicable notice for grace period
purposes required by subparagraphs 13.1(b), (c) or (d). In such case, the
applicable grace period under subparagraphs 13.1(b), (c) or (d) and under the
unlawful detainer statute shall run concurrently after the one such statutory
notice, and the failure of Lessee to cure the Default within the greater of the
two such grace periods shall constitute both an unlawful detainer and a Breach
of this Lease entitling Lessor to the remedies provided for in this Lease and/or
by said statute.

          (b) Continue the Lease and Lessee's right to possession in effect in
California under California Civil Code Section 1951.41 after Lessee's Breach
and abandonment and recover the rent as it becomes due, provide Lessee has the
right to sublet or assign, subject only to reasonable limitations. See Paragraph
12 and 36 for the limitations on assignment and subletting which limitations
Lessee and Lessor agree and reasonable. Acts of maintenance or preservation,
efforts to relet the Premises or the appointment of a receiver to protect the
Lessor's interest under the Lease, shall not constitute a termination of the
Lessee's right to possession.

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

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

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

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
to Lessor of rent and other sums due hereunder will cause Lessor to incur costs
not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such cost include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
term of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within 15 days after such amount
shall be due, then, without any requirement for notice to Lessee. Lessee shall
pay to Lessor a late charge equal to six percent (6%) of such overdue amount.
The parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Lessor will incur by reason of late payment by Lessee.
Acceptance of such late charge by Lessor shall in no event constitute a waiver
of Lessee's Default or Breach with respect to such overdue amount, nor prevent
Lessor from exercising any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding
Paragraph 4.1 or any other provision of this Lease to the contrary. Base Rent
shall, at Lessor's option, become due and payable quarterly in advance.

     13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease
unless Lessor fails within a reasonable time to perform an obligation required
to be performed by Lessor. For purposes of this Paragraph 13.5. a reasonable
time shall generally not be less than thirty (30) days after receipt by Lessor,
and by the holders of any ground lease, mortgage or deed of trust covering the
Premises whose name and address shall have been furnished by Lessor, and by the
holders of any ground lease, mortgage or deed of trust covering the Premises
whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not
been performed; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days after such notice are reasonably required
for its performance, then Lessor shall not be in breach of this Lease if
performance is commenced within a reasonable time and thereafter diligently
pursued to completion.

     14. Condemnation. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercise of said
power fail of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority take
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises, or more than twenty-five percent (25%) of the
land area not occupied by any building, is taken by condemnation, or if such
condemnation materially hampers Lessee's operations, Lessee may, at Lessee's
option, to be exercised in writing within thirty (30) days after Lessor shall
have given Lessee written notice of such taking (or in the absence of such
notice, within thirty (30) days after the condemning authority shall

                                                            Initials     WJC
                                                                     -----------
                                                                     [ILLEGIBLE]
                                                                     -----------

                                     PAGE 7

<PAGE>

have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the building located on the Premises.
No reduction of Base Rent shall occur if the only portion of the Premises taken
is land on which there is no building. Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold or for the taking of the fee, or as severance damages, provided,
however, that Lessee shall be entitled to any compensation, separately awarded
to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade
Fixtures. In the event that this Lease is not terminated by reason of such
condemnation, Lessor shall to the extent of its net severance damages received,
over and above the legal and other expenses incurred by Lessor in the
condemnation matter, repair any damage to the Premises caused by such
condemnation, except to the extent that Lessee has been reimbursed therefor by
the condemning authority, Lessee shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such repair.

15. Broker's Fee.

        15.1  The Brokers named in Paragraph 1.10 are the procuring causes of
this Lease.

        15.2  Upon execution of this Lease by both Parties, Lessor shall pay to
said Brokers jointly, or in such separate shares as they may mutually designate
in writing, a fee as set forth in a separate written agreement between Lessor
and said Brokers for in the event there is no separate written agreement between
Lessor and said Brokers, the sum of $______________________) for brokerage
services rendered by said Brokers to Lessor in this transaction

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

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

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

        15.6  Lessor and Lessee hereby consent to and approve all agency
relationships, including any dual agencies, indicated in Paragraph 1.10.

16. Tenancy Statement.

        16.1  Each Party (as "Responding Party") shall within ten (10) days
after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Tenancy Statement" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises, or, if this is
a sublease of the lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.

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

19.  Interest on Past-Due Obligations.  Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within thirty (30)
days following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.

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

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

22.  No Prior or Other Agreements; Broker Disclaimer.  This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises.  Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.

23.  Notices.

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

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

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

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

26.  No Right To Holdover.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.

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

                                                         Initials      WJC
                                                                  --------------
                                                                  ______________

NET

                                     PAGE 8

<PAGE>

28.  Covenants and Conditions.  All provisions on this Lease to be observed or
performed by Lessee are both covenants and conditions.

29.  Binding Effect:Choice of Law.  This Lease shall be binding upon the
parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located.  Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.  Subordination:Attornment:Non-Disturbance.

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

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

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

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

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

32.  Lessor's Access:Showing Premises; Repairs.  Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which
they are a part, as Lessor may reasonably deem necessary.  Lessor may at any
time place on or about the Premises or building any ordinary "For Sale" signs
and Lessor may at any time during the last one hundred  twenty (120) days of the
term hereof place on or about the Premises any ordinary "For Lease" signs.  All
such activities of Lessor shall be without abatement of rent or liability to
Lessee.

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

34.  Signs. Lessee shall not place any sign upon the Premises, except that
Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations).  Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues from the installation of such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business.

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

36.  Consents.

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

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

37.  Guarantor.

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

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

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

39.  Options.

     39.1  Definition.  As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.

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

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

                                                   Initials        WJC
                                                            --------------------

NET                                  PAGE 9

<PAGE>

    39.4 Effect of Default on Options.

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

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

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

40. Multiple Buildings. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.

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

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

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

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

45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or hand-written provisions shall be controlled by the typewritten
or handwritten provisions.

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

47. Amendments. This Lease may be modified only in writing, signed by parties in
interest at the time of the modification. The parties shall amend this Lease
from time to time to reflect any adjustments that are made to the Base Rent or
other rent payable under this Lease.

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

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

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

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

<TABLE>
<S>                                                   <C>
Executed at  El Paso, Texas                           Executed at  Dallas Texas
           ------------------------------------                  ------------------------------------
on   SEPTEMBER 17, 1993                               on_____________________________________________
  ---------------------------------------------
by LESSOR:                                            by LESSEE:

        Harry L Hussman Jr., Inc.                             Dal-Tile Corporation
-----------------------------------------------       -----------------------------------------------
        2159 Mills Avenue El Paso, Tx                         7834 CF Hawn Frwy  PO Box 17130
-----------------------------------------------       -----------------------------------------------
                                79901                         Dallas Texas 75217

By /s/ Harry L Hussman III                            By_____________________________________________
  ---------------------------------------------
Name Printed: Harry L Hussman III                     Name Printed: William J Coppola
             ----------------------------------                    ----------------------------------
Title:        President                               Title:        Executive Vice President
      -----------------------------------------            ------------------------------------------

By_____________________________________________       By_____________________________________________
Name Printed:__________________________________       Name Printed:__________________________________
Title:_________________________________________       Title:_________________________________________
Address:_______________________________________       Address:_______________________________________
_______________________________________________       _______________________________________________
Tel. No. (___)__________ Fax No.(___)__________       Tel. No. (___)__________ Fax No.(___)__________
</TABLE>

NET

NOTICE: These forms are often modified to meet changing requirements of law and
        industry needs. Always write or call to make sure you are utilizing the
        most current form: American Industrial Real Estate Association, 345
        South Figueroa Street, Suite M-1, Los Angeles, CA 90071, (213)687-6777.
        Fax No. (213)687-8616.

        c Copyright 1990-By American Industrial Real Estate Association.
                              All rights reserved.
   No part of these works may be reproduced in any form without permission in
                                    writing.

                                    PAGE 10

<PAGE>

                                   ADDENDUM A

                    to lease dated August 24, 1993, between
                 Harry L. Hussman III and Dal-Tile Corporation

49.  TENANT IMPROVEMENTS

Lessor, at lessor's sole cost, shall furnish and install the following:

A.   Building.  Approximately  13,500 square feet (100' x 135') of substantially
     the same construction and design of the "Hardtke building" to include:

     Tilt wall concrete construction
     Pre-engineered metal building roof structure
     Clear span
     20 foot minimum eave height
     6 inch concrete slab
     Paving and/or blacktop on remainder of the lot
     Parking to equal or exceed city specifications
     Landscaping (not to exceed $500)
     Electric service - 200 amps, 120/208 volt service
     Alarm system (not to exceed $2,000)

B.   Warehouse Area. Approximately 12,000 square feet of warehouse to include:

     20 skylights
     Fluorescent lighting (not to obstruct 20' clear height)
     Two dock high and one grade level roll up loading doors
     Personnel door

C.   Office/Showroom area. Approximately 1,500 square feet, layout per Lessee,
     to include:

     Three (3) individual offices
     Dropped T-bar ceiling with recessed fluorescent lighting
     Glass store front with glass door
     Taped and textured sheetrock walls ready for wallpaper and/or paint
     Stained doors
     Electrical and phone jack distribution
     Roughed-in plumbing
     Hot and cold water
     Slab to be clean and ready to receive tile

50.  PLANS AND SPECIFICATIONS.  Lessor shall, within five (5) days after the
execution of this Lease, at Lessor's expense, engage a mutually acceptable
licensed architect having offices in El Paso, Texas to prepare plans and
specifications for the building described in Paragraph 49 above, consistent with
the building description set forth therein, and the said plans and

<PAGE>

specifications shall be prepared by the said architect and submitted to both
parties within the next 25 days. Either party may, within 10 days after receipt
of the said plans and specifications, submit to the other party any reasonable
changes in the said plans and specifications that are, in the opinion of the
architect, consistent with the said building description and that will not
increase the estimated cost of the building by more than 1-1/2%. If neither
party desires any such changes to be made, Lessor shall proceed as soon as is
reasonably feasible with the construction of the building in accordance with
said original plans and specifications, or if all such desired changes in the
plans and specifications, or if all such desired changes in the plans and
specifications are mutually acceptable to the parties, Lessor shall so proceed
with the construction of the building. However, if any such desired changes in
the plans and specifications should not be mutually acceptable to the parties,
                                    ---
then either party may give notice in writing to the other party to that effect,
and the Lease shall thereupon be immediately and automatically cancelled, and
neither party shall be further liable to the other under the Lease, except that
each party shall bear 1/2 of all of the costs incurred for the preparation of
the said plans and specifications.

51.  EARLY ACCESS.  Lessor grants Lessee, his agents or contractors the right to
enter upon the premises for the purposes of performing the finish work on the
office/showroom portion of the building and for setting up and operation of
storage and distribution business. This work is to be done during Lessor's
construction of Tenant's improvements provided, however, that Lessee cooperates
in full with Lessor's contractors and/or agents and in no way inhibits Lessor's
ability to perform the tenant improvements in a timely and unimpeded fashion.

52.  TENANT FINISH ALLOWANCE. Upon Lessee's request within thirty (30) days of
completion of Lessee's finish out, Lessor shall reimburse Lessee for Lessee's
documented signage and finish out expenses not to exceed $20,000.00. Lessee
shall reimburse Lessor for expense in sixty (60) equal payments in the amount of
$445.00 commencing April 1, 1994. If Lessor's expense pursuant to this paragraph
is less than $20,000.00, then the monthly payment amount shall be the product of
the actual Lessor's expense multiplied by the fraction .02225. Such
reimbursement payments shall be considered additional rent per paragraph 21.

LESSOR:                                        LESSEE:

Harry L. Hussmann Jr., Inc.                    Dal-Title Corporation

by: /s/ Harry L Hussmann III                   by: /s/ William J Coppola
   ---------------------------------              ----------------------------
   Harry L Hussmann III, Pres.                    William J Coppola, Exec. VP

Date: Sept 17, 1993                            Date:  9/8/93
     --------------                                 -------------

<PAGE>

                                   ADDENDUM B
                                   ----------

     This is an addendum to that certain Lease dated August 24, 1993 between
HARRY L. HUSSMANN, JR., INC., as Lessor, and DAL-TILE CORPORATION, as Lessee.

     Lessor and Lessee hereby agree that the Plans and Specifications for the
building decribed in Paragraph 49 of the said Lease, as prepared by Ron Brown
Architects, and dated November 4, 1993, have been submitted to and reviewed and
accepted by both parties pursuant to Paragraph 50 of Addendum A to the said
Lease, and that Lessor shall proceed to have said building constructed by BALBOA
ENTERPRISES, INC., or other contractor selected by Lessor, in accordance with
the said Plans and Specifications, as soon as is reasonably feasible.

     EXECUTED this ____ day of December, 1993.

                                   HARRY L. HUSSMANN, JR., INC.,
                                   Lessor

                                   By: /s/ Harry L. Hussmann, III
                                       ----------------------------------------
                                       Harry L. Hussmann, III, President

                                   DAL-TILE CORPORATION,
                                   Lessee

                                   By: /s/ William Floppole
                                       ----------------------------------------<PAGE>

                                                                   Exhibit 10.19

                           NOTICE OF LEASE TERM DATES

To:    Steve Diffenderfer                Date: February 2, 2001
       Dal Tile Corporation

Re: Lease dated September 30, 1996, by and between Ontario Industrial Partners,
a Delaware Corporation, Landlord, and Dal Tile Corporation, Tenant, concerning
the Premises located at 3625 E. Jurupa Street, Ontario, CA.

In accordance with the subject Lease, we wish to advise and/or confirm as
follows:

    1.  That the Premises under the Lease was accepted on January 20, 1997
        herewith by the Tenant as being substantially completed in accordance
        with the Lease Agreement.

    2.  The Landlord and Tenant mutually agree that early possession of the
        subject Premises took place on December 22, 1996 which was thirty-eight
        (38) days after November 15, 1996 (the original target date for
        completion). That Landlord and Tenant acknowledges that under the
        provisions of the subject Lease Agreement, the lease term of the subject
        Premises shall commence as of December 22, 1996 for a term of 123
        months, ending on March 31, 2007.

    3.  That in accordance with the subject Lease, Base Rent and Operating
        Expense Reimbursement (CAM) shall commence to accrue on December 22,
        1996.

    4.  If the Commencement date of the subject Lease is other than the first
        day of the month, the first billing will contain a pro-rata adjustment.
        Each billing thereafter shall be for the full amount of the monthly
        installment as provided for in said Lease.

    5.  Rent is due and payable in advance on the first day of each and every
        month during the term of said Lease. Rent checks should be made payable
        to Ontario Industrial Partners. Inc. c/o Sares-Regis Group.

    6.  Tenant's obligation to pay monthly installments of Annual Basic Rent
        will be waived for a period of six (6) months beginning on December 22,
        1996 and ending on June 21, 1997 in accordance with the Basic Lease
        Information of subject Lease Agreement. This Base Rent waiver shall not
        include Operating Expense Reimbursement (CAM) payments.

    7.  The number of Rentable Square Feet contained within the Premises for all
        purposes of this Lease is 410,515 square feet.

    8.  Tenant's Percentage, based upon the number of Rentable Square Feet
        contained withing the Premises and the Building is 100%.

AGREED AND ACCEPTED

        LANDLORD:

        Ontario Industrial Partners, Inc., A Delaware Corporation

        By: /s/ [ILLEGIBLE]
           ----------------------------------------------------

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

        TENANT:

        Dal Tile Corporation, a Pennsylvania Corporation

        By: /s/ Steve Diffenderfer
           ----------------------------------------------------
                Steve Diffenderfer

        Its: Manager of Real Estate

<PAGE>

                            ONTARIO INDUSTRIAL LEASE

                                       Net

                             Basic Lease Information

Lease Date:            September 30, 1996

Lessor:                ONTARIO INDUSTRIAL PARTNERS,INC., a Delaware corporation

Lessor's Address:      c/o SARES REGIS GROUP
                       18802 Bardeen Avenue
                       Irvine, California 92612-1521

Lessee:                DAL TILE CORPORATION, a Pennsylvania corporation

Lessee's Address:      7834 C.F. Hawn Freeway
                       Dallas, Texas 75217

Premises:              Approximately 410,515 square feet as shown on Exhibit "A"
                                                                     -----------

Premises Address:      3625 E. Jurupa Street
                       Ontario, California

Lot:                   The legal lot on which the Premises is situated

Park:                  Ontario Industrial Park

Term:                  123 Months

Base Rent:             Months During Term           Monthly Base Rent
                       ------------------           -----------------
                              1-6                   Free

                              7-60                  $110,839.00 ($.27 pst)

                              61-123                $129,312.00 ($.315 pst)

Security Deposit:      $129,312.00

Permitted Use:         Warehouse and distribution and general offices in
                       connection therewith, but only to the extent permitted
                       by the City of Ontario and by any and all entities
                       having jurisdiction.

Insurance Amount:      Single combined liability limit of $l million, and
                       property damage limits of not less than $1 million.

Parking Spaces:        400

<PAGE>

Exhibits:              Exhibit A -- Premises
                       Exhibit B -- Tenant Improvements
                       Exhibit C -- Environmental Questionnaire
                       Exhibit D -- Rules & Regulations

Addenda:               Addendum I: Option to Extend Lease

                                       2

<PAGE>

                                LEASE AGREEMENT

DATE:      This Lease is made and entered into as of the Lease Date defined on
           Page 1. The Basic Lease Information set forth on Page 1, the
           Exhibits and Addendum or Addenda described in the Basic Lease
           Information and this Lease are and shall be construed as a single
           Instrument and are referred to herein as the Lease.

1.     Premises: Lessor hereby leases to Lessee upon the terms and conditions
       --------
       contained herein the Premises.

2.     Commencement Date:  The "Commencement Date" of the term of this Lease
       -----------------
       shall be the earlier of (i) the date the "Primary Tenant Improvements"
       (as defined in Exhibit "B" attached to this; Lease) have been
                      -----------
       substantially completed in accordance with the plans and specifications
       therefor (except for minor punch-list items) and signed off by the City
       of Ontario, or (ii) the date Lessee commences occupancy of the Premises
       (other than for Lessee's installation of utilities furniture and
       fixtures, or to complete the Primary Tenant Improvements as provided
       below). The date of substantial completion of the Primary Tenant
       Improvements is currently anticipated to occur on approximately November
       1, 1996. If Lessor cannot deliver possession of the Premises to Lessee on
       the Commencement Date, Lessor shall not be subject to any liability nor
       shall the validity of the Lease be affected; provided the Lease term and
       the obligation to pay Rent shall commence on the date possession is
       tendered and the termination date shall be extended by a period of time
       equal to the period computed from the Commencement Date to the date
       possession is tendered; provided however that if Lessor fails to
                               -------- -------
       substantially complete the Primary Tenant Improvements by December 1,
       1996 plus periods attributable to Lessee delays or change orders to the
       Primary Tenant improvements or due to force majeure, then Lessee shall
                                             -------------
       thereafter have the right, upon written notice to Lessor, to assume the
       obligations of Lessor to complete the Primary Tenant Improvements, in
       which event the reasonable amounts of actual costs incurred by Lessee
       (proof of which reasonably satisfactory to Lessor shall be provided by
       Lessee together with lien release waivers and other evidence reasonably
       satisfactory to Lessor that all such work has been fully paid for by
       Lessee) shall he reimbursed by Lessor to Lessee upon demand. In the event
       that Lessor permits Lessee to occupy the Premises prior to the
       Commencement Date, such occupancy shall be subject to all the provisions
       of this Lease.

3.     Rent: Lessee agrees to pay Lessor, without prior notice or demand, the
       ----
       Base Rent described on Page 1, payable in advance at Lessor's address
       shown on Page 1 on the first day of each month throughout the term of
       the Lease. In addition to the Base Rent set forth on Page 1. Rent also
       includes Lessee's share of Operating Expenses, Tax Expenses. Additional
       Expenses and Utilities as specified in Paragraphs 6.A., 6.B., 6.C., and 7
       of this Lease, and the term "Rent" whenever used herein refers to all
       these amounts. Lessee's payment of Base Rent for the first full month
       that Base Rent is due (i.e., for month 7 of the term) shall he
                              ----
       delivered to Lessor concurrently with Lessee's execution of this Lease.

4.     Security Deposit: Upon execution of this Lease, Lessee shall deposit
       ----------------
       with Lessor as a Security Deposit for the full and faithful performance
       by Lessee of its obligations under this Lease the amount described on
       Page 1. If Lessee is in default with respect to any covenant or condition

                                     3

<PAGE>

      of this Lease, Lessor may use the Security Deposit, or any portion
      thereof, to cure the default or to compensate Lessor for all damage
      sustained by Lessor resulting from Lessee's default. Lessee shall
      immediately on demand pay to Lessor a sum equal to the portion of the
      Security Deposit so applied so as to maintain the Security Deposit in the
      sum initially deposited with Lessor. If Lessee shall have fully complied
      with all of the covenants and conditions of this Lease, but not otherwise,
      Lessor shall return the Security Deposit to Lessee, less such amounts as
      are reasonably necessary to remedy Lessee's defaults within thirty (30)
      days after the expiration or the sooner termination of this Lease. Lessor
      shall not be required to keep the Security Deposit separate from other
      funds, but Lessor shall (i) credit to Lessee on the Security Deposit
      unapplied and outstanding from time to time simple interest at the rate
      being obtained by Lessor on its investment thereof, and (ii) provided and
      so long as the net worth of Lessee is not less than the net worth of
      Lessee as of the Lease Date, Lessee is not in default pursuant to
      Paragraph 20 below, and Lessee has not been late in the payment of Rent
      more than five (5) times during the term, then commencing with the 61st
      month of the term and continuing every 12th month thereafter through the
      121st month or the term, Lessor shall return to Lessee from the Security
      Deposit the amount of Twenty Thousand Dollars ($20,000.00) per year, and
      the Security Deposit shall he reduced by the amounts so returned.

5.    Tenant Improvements: Lessor shall install the improvements ("Tenant
      -------------------
      Improvements") on the Premises as described and in accordance with the
      criteria set forth in Exhibit "B", attached and incorporated herein by
                            -----------
      this reference.

6.    Expenses:
      --------

          A.  Operating Expenses: In addition to the Rent set forth in Paragraph
      3, Lessee shall pay all "Operating Expenses". "Operating Expenses" are
      defined as the total amounts paid or payable by the Lessor in connection
      with the ownership, maintenance, repair and operation of the Premises and
      the Lot, or where applicable, Lessee's pro rata share of the Park. These
      Operating Expenses may include, but are not limited to:

              (a)  Lessor's cost of non-structural repairs to and maintenance of
          the roof and exterior walls of the Premises; roof structure
          replacement shall not be considered an Operating Expense; any
          nonstructural Capital Improvement will be amortized over the life of
          the improvement; Lessee shall have the benefit of, on a non-exclusive
          basis with Lessor, and without warranty of any kind from Lessor or
          recourse against Lessor, all guaranties, warranties and agreements
          from suppliers, contractors, and subcontractors regarding their
          performance, quality of workmanship and quality of materials supplied
          in connection with the Premises and all equipment and fixtures
          installed therein;

              (b)  Lessor's cost of maintaining the outside paved area,
          landscaping and other common areas for the Park to the extent such
          areas have been developed and leased; and

              (c)  Lessor's annual cost of Lessor's general liability insurance
          relating to this Lease, all risk (excluding earthquake) insurance for
          the Premises and the Lot, and rental loss insurance.

                                       4

<PAGE>

Operating Expenses expressly shall not include any expenses incurred by Lessor
in the development or leasing of the Park.

     B. Tax Expenses: In addition to the Rent set forth in Paragraph 3. Lessee
shall pay all real property taxes applicable to the land and improvements
included within the Lot ("Tax Expense"). The term "Tax Expense" includes any
form of tax and assessment (general, special, ordinary or extraordinary),
commercial rental tax, payments under any improvement bond or bonds, license,
rental tax, transaction tax, levy, or penalty (if incurred as a result of
Lessee's delinquency) imposed by authority having the direct or indirect power
of tax (including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement district thereof) as
against any legal or equitable interest of Lessor in the Premises, Lot or Park,
as against Lessor's right to rent or other income therefrom, or as against
Lessor's business of leasing the Premises or the occupancy of Lessee or any
other tax, fee, or excise, however described (other than inheritance or estate
taxes), including any value added tax, or any tax imposed in substitution,
partially or totally, of any tax previously included within the definition of
real property taxes, or any additional tax the nature of which was previously
included within the definition of real property tax.

C.   Additional Expenses: In addition to the Rent set forth in Paragraph 3.
Lessee shall pay all of the following expenses ("Additional Expenses"):

          (a) Lessor's cost of modification to the Park occasioned by any rules,
        laws or regulation effective subsequent to the commencement of the Lease
        and arising from Lessee's use:

          (b) Lessor's cost of modifications to the Premises occasioned by any
        rules, laws or regulations arising from Lessee's use of the Premises
        regardless of when such rules, laws or regulations became effective: and
        Lessor's cost of modifications to the Lot occasioned by any rules, law
        or regulations arising from Lessee's use of the Premises regardless of
        when such rules, laws or regulations become effective. Lessee shall not
        be required to pay Lessor's costs of modifications to the Park that are
        not caused by Lessee's use of Premises; and

          (c) As compensation to Lessor for accounting and management services
        rendered, an additional amount equal to ten percent (10%) of the sum of
        the total cost and expenses described in Paragraphs 6.A. and 6.C. above.

D.   Payment of Operating Expenses. Tax Expense and Additional Expenses: Lessor
shall estimate the Operating Expense, Tax Expense and Additional Expenses for
the calendar year in which the Lease commences. Commencing on the Commencement
Date, one-twelfth (1/12th) of this estimate shall be paid by Lessee to Lessor on
the first day of each month of the remaining months of the calendar year.
Thereafter, Lessor may estimate such expenses as of the beginning of each
calendar year and require Lessee to pay one-twelfth (1/12th) of such estimated
amount as additional Rent hereunder on the first day of each month. Not later
than March 31 of the following calendar year, or as soon thereafter as
reasonably possible, including the year following the year in which this Lease
terminates, Lessor shall endeavor to furnish Lessee with a true and correct
accounting of actual Operating Expenses, Tax Expenses and Additional Expenses
and

                                       5

<PAGE>

     within thirty (30) days of Lessor's delivery of such accounting, Lessee
     shall pay to Lessor the amount of any underpayment. Notwithstanding the
     foregoing, failure by Lessor to give such accounting by such date shall not
     constitute a waiver of Lessor of its right to collect Lessee's share of any
     underpayment. Lessor shall credit the amount of any overpayment by Lessee
     toward the next estimate monthly installment(s) falling due, or where the
     term of the Lease has expired, refund the amount of overpayment to Lessee.
     Lessor shall, upon request by Lessee, provide additional documentation to
     substantiate Operating Expenses and reasonable verification that Operating
     Expenses have been competitively bid.

7.   Utilities: Lessee shall pay the cost of all water, sewer, gas, heat,
     ---------
electricity, telephone and other utilities billed or metered separately to
Lessee. For utility fees or use charges that are not billed separately to
Lessee, Lessee shall pay the amount which is attributable to Lessee's use of the
Premises. In addition, Lessee shall within thirty (30) days after receiving a
bill from Lessor pay Lessor an common area utility costs.

8.   Late Charges: Lessee acknowledges that late payment by Lessee to Lessor of
     ------------
Base Rent, Tax Expenses, Additional Expenses, utility costs or other sums due
hereunder, will cause Lessor to incur costs not contemplated by this Lease and
the exact amount of such costs are extremely difficult and impracticable to fix.
Such costs, include, without limitation, processing and accounting charges, and
late charges that may be imposed on Lessor by the terms of any note secured by
any encumbrance against the Premises. Therefore, if any installment of Rent or
other sums due from Lessee is not received by Lessor within ten (10) days when
due, Lessee shall pay to Lessor a sum equal to five percent (5%) of such overdue
amount plus attorney's fees and costs incurred by Lessor by reason of Lessee's
failure to pay Base Rent and other charges when due hereunder as a late charge.
The parties agree that this late charge represents a fair and reasonable
estimate of the costs that Lessor will incur by reason of late payment by
Lessee. Acceptance of any late charge without full payment of the amount overdue
shall not constitute a waiver of Lessee's default with respect to the overdue
amount, nor prevent Lessor from exercising any of the other rights and remedies
available to Lessor.

9.   Use of Premises: The Premises are to be used for the uses stated on Page 1
     ---------------
and for no other purposes.

     Lessee shall not do or permit anything to be done in or about the Premises
nor, without Lessor's prior written consent (which shall not be unreasonably
withheld), keep or bring anything therein which will in any way increase the
existing rate or affect any policy of fire or other insurance upon the Premises
or any of its contents (other than customary periodic increases in insurance
premiums not arising out of a change in use), or cause a cancellation of any
insurance policy. Lessee shall not do or permit anything to be done in or about
the Premises which will in any way obstruct or interfere with the rights of
other tenants or occupants of the Premises or other buildings in the Park or
injure or annoy other tenants or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Lessee cause,
maintain or permit any nuisance in, on or about the Premises. Lessee shall not
damage or deface or otherwise commit or suffer to be committed any waste in or
upon the Premises. Lessee shall honor the terms of all recorded covenants,
conditions and restrictions relating to the Lot, copies of which existing as of
the Lease Date have been delivered to Lessee. Lessee shal1 honor reasonable
rules and regulations of the Lessor related to parking and the operation of the
Park. Lessee at its sole cost and expense shall comply with all laws relating to
its use or occupancy of the Premises.

                                       6

<PAGE>

10. Alterations and Additions: Lessee shall not install any signs, fixtures or
    -------------------------
improvements to the Premises without the prior written consent of Lessor. Lessee
shall keep the Premises and the Lot free from any liens arising out of any work
performed, materials furnished or obligations incurred by or on behalf of Lessee
(excluding the Tenant Improvements). As a condition to Lessor's consent to the
installation of any fixtures or improvements, Lessor may require Lessee to post
a completion bond for up to 150% of the cost of the work. Upon termination of
this Lease, Lessee shall remove all signs, fixtures, furniture, furnishings and
if requested by Lessor, remove any improvements made by Lessee and repair any
damage caused by the installation or renewal of such signs, fixtures, furniture,
furnishings and improvements and leave Premises in as good condition as they
were in at the time of the Commencement Date, excepting for reasonable wear and
tear.

11. Repairs and Maintenance: Lessee shall, at Lessee's sole cost and expense,
    -----------------------
maintain the Premises and adjacent areas including, without limitation, interior
of windows, skylights, doors and storefronts and the interior of the Premises in
good, clean and safe condition and repair to the reasonable satisfaction of the
Lessor any damage caused by Lessee or its employees, agents, invitees, licensees
or contractors. Without limiting the generality of the foregoing, Lessee shall
be solely responsible for maintaining and repairing all utilities, fixtures,
plumbing and mechanical equipment, heating, ventilating and air conditioning
systems ("HVAC"), fire protection systems, and furnish all expendables (e.g.
light bulbs, paper goods, soap, etc.) used in the Premises. All repairs shall he
made by a licensed and bonded contractor reasonably approved by Lessor. In
addition, Lessee shall procure a preventive maintenance and inspection contract
for the HVAC and fire protection systems reasonably acceptable to Lessor.

    Except for repairs rendered necessary by the negligence or willful
misconduct of Lessee, its agents, customers, employees and invitees, Lessor
shall, at Lessor's sole cost and expense, cause to be maintained, repaired or
replaced (collectively "repairs") as necessary in Lessor's reasonable discretion
the structural portions of the roof, foundations and exterior walls of the
Premises (exclusive of glass and exterior doors), and underground utility and
sewer pipes outside the exterior walls of the building on the Premises. In
addition, subject to being reimbursed by Lessee as an Operating Expense
hereunder, Lessor shall except for repairs rendered necessary by the negligence
or willful misconduct of Lessee, its agents, customers, employees and invitees,
repair the nonstructural portions of the roof and exterior walls of the
Premises, outside paved areas and landscaping. Lessee shall not make repairs to
the Premises at the cost of Lessor whether by reduction of Base Rent or
otherwise; provided however, that if Lessor fails to commence any repairs
           ----------------
required to be made by Lessor hereunder within a reasonable period of time
(determined based on the particular circumstances involved) after receipt of
reasonable notice under the circumstances by Lessor of the need for such repair,
and the failure to make such repair will result in an imminent threat of injury
to persons or damage to personal property within the Premises or the inability
of Lessee to occupy the Premises, then provided no default by Lessee as
described in Paragraph 20 hereof has occurred and is continuing, Lessee may
elect to make such repair strictly in accordance with the following: (i) before
making any such repair, Lessee shall deliver to Lessor a second notice of the
need for such repair, which notice shall specifically advise Lessor that Lessee
intends to exercise its self-help right hereunder ("Self-Help Notice"), (ii)
should Lessor further fail, within a reasonable period of time under the
particular circumstances involved, to commence the necessary repair, or to make
other arrangements reasonable under the circumstances, then Lessee shall have
the right to make only such repairs as are necessary to secure the Premises from
the imminent threat of injury to persons or damage to personal property, or to
permit Lessee to occupy the Premises, (iii) any such repairs undertaken by
Lessee shall be performed and completed in accordance with Lessee's obligations
for its own repairs and alterations under Paragraph 10 above and this Paragraph
11, (iv) Lessee shall be responsible for obtaining

                                       7

<PAGE>

any necessary governmental permits before commencing the repair work, and Lessee
shall assume the risk of any damage, loss or injury resulting from such work,
and (v) Lessee shall be entitled to reimbursement from Lessor for the reasonable
amounts of actual costs incurred by Lessee (proof of which reasonably
satisfactory to Lessor shall be provided by Lessee together with lien release
waivers and other evidence reasonably satisfactory to Lessor that all such work
has been fully paid for by Lessee) upon demand, but Lessee shall have no right
to obtain such reimbursement by reduction of Rent or otherwise.

     Except for normal maintenance and repair of the items outlined above,
Lessee shall have no right of access to or install any device on the roof of the
Premises nor make any penetrations of the roof of the Premises without the
express prior written consent of Lessor.

12.  Insurance: Lessee shall at all times during the term of this Lease, and at
     ---------
its sole cost and expense, maintain workers compensation insurance and
comprehensive general liability insurance again liability for bodily injury and
property damage with liability limits as set forth on Page 1 with such insurance
naming Lessor and its managing agent as additional insureds and including such
coverages and endorsements as may be required by Lessor. In no event shall the
limits of said policy or policies be considered as limiting the liability of
Lessee under this Lease.

     All insurance shall be with companies licensed to do business with the
Insurance Commissioner of the State of California having a rating of not less
than "B+", X as set forth in the most current issue of Best's Insurance Guide. A
certificate of all such insurance shall be delivered to the Lessor prior to the
Commencement Date of this Lease, and annually thereafter over the term of the
Lease, which shall certify that the policy names Lessor and its managing agent
as additional insureds and that the policy shall not be cancelled or altered
without thirty (30) days prior written notice to Lessor.

13.  Limitation of Liability and Indemnity: Except for damage resulting from the
     -------------------------------------
sole active negligence or willful misconduct of Lessor or its agents or
employees, Lessee agrees to save and hold lessor harmless and indemnify Lessor
from and against all liabilities, charges and expenses (including reasonable
attorneys' fees, costs of court and expenses necessary in the prosecution or
defense of any litigation) by reason of injury to person or property, from
whatever cause, while in or on the Premises, in any way connected with the
Premises or with the improvements or personal property therein, including any
liability for injury to person or property of Lessee, his agents or employees or
third party persons.

     Except for damage resulting from sole active negligence or willful
misconduct of Lessor or it agents or employees, Lessor shall not be liable to
Lessee for any damage to Lessee or Lessee's property, for any injury to or loss
of Lessee's business or for any damage or injury to any person from any cause.

14.  Assignment and Subleasing: Lessee shall not assign or transfer this Lease
     -------------------------
nor sublet all or any portion of the Premises without the written consent of
Lessor, which shall not be unreasonably withheld. Notwithstanding the foregoing,
Lessee shall have the right, upon notice to Lessor but without the need for
Lessor's consent, to sublease all or any portion of the Premises or assign this
Lease to any subsidiary, affiliate or parent of Lessee so long as the general
purpose and use of the Premises (including without limitation the volume of
business therein) involves the ceramic tile business as conducted by Lessee as
of the Commencement Date. Lessor shall be deemed reasonable in withholding its
consent to any assignment or sublease hereunder if Lessor determines in its
reasonable discretion that the intended use of the Premises will constitute a
violation of this Lease or any law, rule, ordinance, regulation, covenant,

                                        8

<PAGE>

condition or restriction governing or encumbering the Premises or would involve
the storage, use or keeping of Hazardous Materials (as defined in Paragraph 29
below) in, on or about the Premises other than those being utilized by Lessee
for the ceramic tile business as of the Commencement Date, or if the proposed
assignee or sublessee has had a history of past violations of law with respect
to its handling of Hazardous Materials. If Lessee seeks to sublet or assign all
or any portion of the Premises, a copy of the proposed sublease or assignment
agreement and all agreements collateral thereto, shall be delivered to Lessor at
least thirty (30) days prior to the commencement of the sublease or assignment
(the "Proposed Effective Date"). In the event the sublease is for a term which
by itself or taken together with prior or other subleases is for the remaining
term of this Lease as of the time of the Proposed Effective Date, then Lessor
shall have the right, to be exercised by giving written notice to Lessee, to
recapture the space described in the sublease. If such recapture notice is
given, it shall serve to terminate this Lease with respect to the proposed
sublease space, or, if the proposed sublease space covers all the Premises, it
shall serve to terminate the entire term of this Lease, in either case as of the
Proposed Effective Date. However, no termination of this Lease with respect to
part or all of the Premises shall become effective without the prior written
consent, where necessary, or the holder of each deed of trust encumbering the
Premises or any part thereof. If this Lease is terminated pursuant to the
foregoing with respect to less than the entire Premises, the Rent shall be
adjusted on the basis of the proportion of square feet retained by Lessee to the
square feet originally demised and this Lease as so amended shall continue
thereafter in full force and effect. Each permitted assignee or sublessee shall
assume and be deemed to assume this Lease and shall be and remain liable jointly
and severally with Lessee for payment of rent and for the due performance, of
and compliance with all the terms, covenants, conditions and agreements herein
contained on Lessee's part to be performed or complied with, for the term of
this Lease.

15.   Subrogation: Lessor and Lessee hereby mutually waive their respective
      -----------
rights of recovery against each other from any loss required to be insured by
any property insurance under this Lease, except that nothing contained herein
shall waive Lessor's rights to any deductibles, liability insurance coverage or
indemnity claims permitted against Lessee elsewhere in this Lease. Each party
shall obtain any special endorsements, if required by their insurer, to evidence
compliance with the aforementioned waiver.

16.   Ad Valorem Taxes: Lessee shall pay before delinquent all taxes assessed
      ----------------
against the personal property of the Lessee and all taxes attributable to any
leasehold improvements made by Lessee.

17.   Subordination: Lessee shall, upon request of the Lessor, execute any
      -------------
instrument necessary or desirable to subordinate this Lease and all its rights
contained hereunder to any and all encumbrances now or hereafter a force against
the Lot and the Premises, provided such instrument includes the nondisturbance
protections contained in the last sentence of this Paragraph 17.

      In the event any proceedings are brought for foreclosure or in the event
of the exercise of the power of sale or a deed under any deed of trust made by
Lessor covering the Premises or a deed in lieu of foreclosure thereunder, Lessee
shall attorn to the purchaser upon any such foreclosure or sale and recognize
such purchaser as the Lessor under this Lease any such purchaser or such
transferee who acquires the Premises by deed in lieu of foreclosure.
Notwithstanding such subordination, Lessee's possession of the Premises shall
not be disturbed as long as Lessee is not in default and as long as Lessee
timely pays the Rent and observes and performs all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms.

                                       9

<PAGE>

18.   Right of Entry: Lessee grants Lessor or its agent the right to enter the
      --------------
Premises with 24-hour notice and during business hours for purposes of
inspection, exhibition, repair or alteration. Lessor shall at all times have and
retain a key with which to unlock all the doors in, upon and about the Premises,
excluding Lessee's vaults and safes, and Lessor shall have the right to use any
and all means Lessor deems necessary to enter the Premises in an emergency.
Lessor shall also have the right, during the final 90 days of the Lease term to
place "for rent" and/or "for sale" signs on the outside of the Premises. Lessee
hereby waives any claim from damages or for any injury or inconvenience to or
interference with Lessee's business, or any other loss occasioned thereby except
for any claim for any of the foregoing arising out of the negligent acts or
omissions of Lessor or its authorized representatives.

19.   Estoppel Certificate: Lessee shall execute and deliver to Lessor, upon not
      --------------------
less than ten (10) days prior written notice, a statement in writing certifying
that this Lease is unmodified and in full force and effect (or, if modified,
stating the nature of such modification) and the date to which the Rent and
other charges are paid in advance, if any, and acknowledging that there are not,
to Lessee's knowledge, any uncured defaults on the part of Lessor hereunder or
specifying such defaults as are claimed. Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Premises.
Lessee's failure to deliver such statement within such time shall be conclusive
upon the Lessee that (1) this Lease is in full force and effect, without
modification except as may be represented by or; (2) there are no uncured
defaults in the Lessor's performance; and (3) not more than one month's rent has
been paid in advance.

20.   Lessee's Default: The occurrence of any one or more of the following
      ----------------
events shall constitute a default and breach of this Lease by Lessee:

          (a)  The vacation or abandonment of the Premises by the Lessee,
     without intent to reoccupy or sublease.

          (b)  The failure by Lessee to make payment of Rent or any other
     payment required hereunder within five (5) days after delivery of written
     notice that said payment was not received when due.

          (c)  The failure of Lessee to observe, perform or comply with any of
     the conditions or provisions of this Lease for a period, unless otherwise
     noted herein, of thirty (30) days after written notice, provided however,
     that if the nature of such failure is such that the same cannot reasonably
     be cured within such thirty (30) day period, then Lessee shall not be in
     default hereunder if Lessee shall, within such thirty (30) day period,
     commence such cure and thereafter diligently prosecute such cure to
     completion.

          (d)  The Lessee becoming the subject of any bankruptcy (including
     reorganization or arrangement proceedings pursuant to any bankruptcy act)
     or insolvency proceeding whether voluntary or involuntary.

          (e)  The Lessee using or storing Hazardous Materials on the Premises
     other than as permitted by the provisions of Paragraph 29 below.

     Any written notice delivered under this Paragraph 20 shall be in lieu of
     (and not in addition to) any notice required under California CCP (S)1161
     et seq. or any similar or successor statute.
     -- ---

                                       10

<PAGE>

21.  Remedies for Lessee's Default: In the event of Lessee's default or breach
     -----------------------------
of the Lease, Lessor may terminate Lessee's right to possession of the Premises
by any lawful means in which case this Lease shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In addition, the
Lessor shall have the immediate right of re-entry, and if this right of re-entry
is exercised following abandonment of the Premises by Lessee. Lessor may
consider any personal property belonging to Lessee and left on the Premises to
also have been abandoned.

     If Lessee breaches this Lease and abandons the property before the end of
the term, or if Lessee's right to possession is terminated by Lessor because of
a breach of the Lease, then in either such case, Lessor may hereunder,
including, but not restricted to, the worth at the time of the award (computed
in accordance with paragraph (3) of the Subdivision (a) of Section 1951.2 of the
California Civil Code) of the amount by which the Rent then unpaid hereunder for
the balance of the Lease term exceeds the amount of such loss of Rent for the
same period which the Lessee proves could be reasonably avoided by Lessor and in
such case, Lessor prior to the award, may relet the Premises for the purpose of
mitigating damages suffered by Lessor because of Lessee's failure to perform its
obligations hereunder; provided, however, that even though Lessee has abandoned
the Premises following such breach, this Lease shall nevertheless continue in
full force and effect for as long as the Lessor does not terminate Lessee's
right of possession, and until such termination, Lessor may enforce all its
rights and remedies under this Lease, including the right to recover the Rent
from Lessee as it becomes due hereunder. The "worth at the time of the award"
within the meaning of Subparagraphs (a)(l) and (a)(2) of Section 1951.2 of the
California Civil Code shall be computed by allowing interest at the rate of ten
percent (10%) per annum.

     The foregoing remedies are not exclusive; they are cumulative in addition
to any remedies now or later allowed by law or to any equitable remedies Lessor
may have, and to any remedies Lessor may have under bankruptcy laws or laws
affecting creditor's right generally.

     The waiver by Lessor of any breach of any term of this Lease shall not be
deemed a waiver of such term or of any subsequent breach thereof.

22.  Holding Over: If Lessee holds possession of the Premises after the term of
     ------------
this Lease with Lessor's consent, Lessee shall become a tenant from month to
month upon the terms specified at a monthly Rent of 125% for the first three (3)
months, and 150% thereafter of the Rent due on the last month of the Lease term,
payable in advance on or before the first day of each month. All options, if
any, granted under the terms of this Lease shall be deemed terminated and be of
no effect during said month to month tenancy. Lessee shall continue in
possession until such tenancy shall be terminated by either Lessor or Lessee
giving written notice of termination to the other party at least thirty (30)
days prior to the effective date of termination.

23.  Lessor's Default: Lessees agrees to give any holder of a deed of trust
     ----------------
encumbering the Premises ("Trust Deed Holders"), by certified mail, a copy of
any notice of default served upon the Lessor by Lessee, provided that prior to
such notice Lessee has been notified in writing (by way of Notice of Assignment
of Rents and Leases, or otherwise) of the address of such Trust Deed Holder.
Lessee further agrees that if Lessor shall have failed to cure such default
within the time, if any, provided for in this Lease, then the Trust Deed Holders
shall have an additional thirty (30) days within which to cure such default or
if such default cannot be cured within that time, then such additional time as
may be necessary, if within such thirty (30) days, the Trust Deed Holders has
commenced and is diligently pursuing the

                                       11

<PAGE>

remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.

24.  Parking: Lessee shall have the use of the number of undesignated parking
     -------
spaces set forth on Page 1. Lessor shall exercise its best efforts to insure
that such spaces are available to Lessee for its use, but Lessor shall not be
required to enforce Lessees right to use the same.

25.  Sale of Premises: In the event of any sale of the Premises by Lessor,
     ----------------
Lessor shall be and is hereby released from its obligations which accrue
subsequent to the date of the sale under this Lease; and the purchaser, at such
sale or any subsequent sale of the Premises shall be deemed, without any further
agreement between the parties or their successors in interest or between the
parties and any such purchaser, to have assumed and agreed to carry out any and
all of the covenants and obligations of the Lessor under this Lease.

26.  Waiver: No delay or omission in the exercise of any right or remedy of
     ------
Lesser on any default by Lessee shall impair such a right of remedy or be
construed as a waiver.

     The subsequent acceptance of Rent by Lessor after breach by Lessee of any
other covenant or term of this Lease shall not be deemed a waiver of such other
breach, other than a waiver of timely payment for the particular Rent payment
involved, and shall not prevent Lessor from maintaining an unlawful detainer or
other action based on such other breach.

     No payment by Lessee or receipt by Lessor of a lesser amount than the
monthly Rent and other sums due hereunder shall be deemed to be other than on
account of the earliest Rent or other sums due, nor shall any endorsement or
statement on any check or accompanying any check or payment be deemed an accord
and satisfaction; and Lessor may accept such check or payment without prejudice
to Lessor's right to recover the balance of such Rent or other sums or pursue
any other remedy provided in this Lease.

27.  Casualty Damage: If the Premises or any part thereof shall be damaged by
     ---------------
fire or other casualty, Lessee shall give prompt written notice thereof to
Lessor. In case the building shall be so damaged by fire or other casualty that
substantial alteration or reconstruction of the building shall, in Lessor's
reasonable opinion, be required (whether or not the Premises shall have been
damaged by such fire or other casualty), Lessor may, at its option, terminate
this Lease by notifying Lessee in writing of such termination within thirty (30)
days after the date of such damage, in which event the Rent shall be abated as
of the date of such damage. If Lessor does not elect to terminate this Lease,
Lessor shall within sixty (60) days after the date of such damage commence to
repair and restore the Premises and shall proceed with best efforts (but without
incurring increased cost to Lessor) to restore the Premises as soon as
reasonably possible (except that Lessor shall not be responsible for delays
outside its control) to substantially the same condition in which it was
immediately prior to the happening of the casualty, except that Lessor shall not
be required to rebuild, repair, or replace any part of Lessee's furniture,
furnishings or fixtures and equipment removable by Lessee or any improvements
installed by Lessee under the provisions of this Lease. If Lessor reasonably
estimates prior to commencing such repairs that the building cannot be
reasonably restored within 180 days, Lessee shall have the right, within fifteen
(15) days after its receipt of such estimate, to terminate this Lease by written
notice to Lessor delivered during such 15-day period; but if Lessee fails to so
notify Lessor in writing within such 15-day period,

                                       12

<PAGE>

then Lessee's termination right hereunder shall expire and be of no further
force or effect. Lessor shall not in any event be required to spend for such
work an amount in excess of insurance proceeds actually received by Lessor as a
result of the fire or other casualty. Lessor shall not be liable for any
inconvenience or annoyance to Lessee, injury to the business of Lessee, loss of
use of any part of the Premises by the Lessee or loss of Lessee's personal
property resulting in any way from such damage or the repair thereof, except
that, subject to the provisions of the next sentence, Lessor shall allow Lessee
a fair diminution of Rent during the term and to the extent the Premises are
unfit for occupancy. If the Premises or any other portion of the Park shall be
damaged by fire or other casualty resulting from the fault or negligence of
Lessee of any of Lessee's agents, employees, or invitees, the Rent shall not be
diminished during the repair of such damage and Lessee shall be liable to Lessor
for the cost and expense for the repair and restoration caused thereby to the
extent such cost and expense is not covered by insurance proceeds.

     Except as otherwise provided in this Paragraph 27, Lessee hereby waives the
provisions of Sections 1932(2.), 1933(4.), 1941 and 1942 of the California Civil
Code.

28.  Condemnation: If twenty-five percent (25%) or more of the building portion
     ------------
of the Premises is taken for any public or quasi-public purpose of any lawful
governmental power or authority or sold to a governmental entity to prevent such
taking, the Lessee or the Lessor may at its sole option terminate this Lease as
of the date when physical possession of the Premises is taken by the taking
authority. Lessee shall not because of such taking assert any claim against the
Lessor for any compensation because of such taking, and Lessor shall be entitled
to receive the entire amount of any award without deduction for any estate of
interest of Lessee. If a substantial portion of the Park or the Lot is so taken,
Lessor at its option may terminate this Lease. If Lessor does not elect to
terminate this Lease, Lessor shall, if necessary, promptly proceed to restore
the Premises or the Premises to substantially its same condition prior to such
partial taking, allowing for the reasonable effects of such taking, and a
proportionate allowance shall be made to Lessee for the Rent corresponding to
the time during which, and to the part of the Premises of which, Lessee is
deprived on account of such taking and restoration. Lessor shall not be required
to spend funds for restoration in excess of the amount received by Lessor as
compensation awarded.

29.  Environmental Covenants:
     -----------------------

          (a)  As used herein, the term "Hazardous Material" shall mean any
     substance or material which has been determined by any state, federal or
     local governmental authority to be capable of posing a risk or injury to
     health, safety or property, including all of those materials and substances
     designated as hazardous or toxic by the city in which the Premises are
     located, the U.S. Environmental Protection Agency, the Consumer Product
     Safety Commission, the Food and drug Administration, the California Water
     Resources Control Board, the Regional Water Quality Control Board, San
     Bernardino County Region, the California Air Resources Board CAL/OSHA
     Standards Board, Division of Occupational Safety and Health, the California
     Department of Food and Agriculture, the California Department of Health
     Services, or any federal agencies that have overlapping jurisdiction with
     such California agencies, or any other governmental agency now or hereafter
     authorized to regulate materials and substances in the environment. Without
     limiting the generality of the foregoing, the term "Hazardous Materials"
     shall include all of those materials and substances defined as "hazardous
     materials" or "hazardous waste" in Section 66680 through 66685 of Title 22
     of the California Administrative Code,

                                       13

<PAGE>

     Division 4, Chapter 30, as the same shall be amended from time to time,
     petroleum, petroleum-related substances, asbestos, and any other materials
     requiring remediation now or in the future under federal, state or local
     statutes, ordinances, regulations or policies.

          (b)  Lessee represents, warrants and covenants (i) that it will use
     and store in, on or about the Premises, only those Hazardous Materials that
     are necessary for Lessee to conduct its business activities on the
     Premises, (ii) that, with respect of any such Hazardous Materials, Lessee
     shall comply with all applicable federal, state and local laws, rules,
     regulations, policies and authorities relating to the storage, use,
     disposal or cleanup of Hazardous Materials, including, but not limited to,
     the obtaining of property permits, and (iii) that it will not dispose of
     any Hazardous Materials in, on or about the Premises under any
     circumstances.

          (c)  Lessee shall immediately notify Lessor of any inquiry, test,
     investigation or enforcement proceeding by or against Lessee, Lessor or the
     Premises concerning a Hazardous Material. Lessee acknowledges that Lessor,
     as the owner of the Premises, shall have the right, at its election, in its
     own name or as Lessee's agent, to negotiate, defend, approve and appeal, at
     Lessee's expense, any action taken or order issued with regard to a
     Hazardous Material by an applicable governmental authority.

          (d)  If Lessee's storage, use or disposal of any Hazardous Material in
     on or adjacent to the Premises results in any contamination of the
     Premises, the soil or surface or groundwater, Lessee agrees to clean up
     said contamination. Lessee further agrees to indemnify, defend and hold
     Lessor harmless from and against any claims, liabilities, losses, suits,
     causes of action, costs, expenses or fees, including attorneys' fees and
     costs, arising out of or in connection with any remediation, cleanup work,
     inquiry or enforcement proceeding in connection therewith, and any
     Hazardous Materials currently or hereafter used, stored or disposed of by
     Lessee or its agents, employees, contractors or invitees in, on or adjacent
     to the Premises.

          (e)  Notwithstanding any other right of entry granted to Lessor under
     this Lease, Lessor shall have the right to enter the Premises or to have
     consultants enter the Premises throughout the term of this Lease for the
     purpose of (1) determining whether the Premises are in conformity with
     federal, state and local statues, regulations, ordinances, and policies
     including those pertaining to the environmental condition of the Premises,
     (2) conducting any environmental audit or investigation of the Premises for
     purposes of sale, transfer, conveyance or financing, (3) determining
     whether Lessee has complied with this Paragraph 29, and (4) determining the
     corrective measures, if any, required of Lessee to ensure the safe use,
     storage and disposal of Hazardous Materials, or to remove Hazardous
     Materials (except to the extent used, stored or disposed of by Lessee or
     its agents, employees, contractors or invitees in compliance with
     applicable law). Lessee agrees to provide access and reasonable assistance
     for such inspections. In addition, concurrently with its execution and
     delivery of this Lease and at any time prior to such an inspection upon
     Lessor's request, Lessee shall complete responses to Questions 1-20 of an
     Environmental Site Assessment Transaction Screen Questionnaire in the form
     of Exhibit "C" attached hereto. Such inspections may include, but are not
     limited to, entering the Premises or adjacent property with drill rigs or
     other machinery for the purpose of obtaining laboratory samples. Lessor
     shall not be limited in the number of such inspections disclose the
     presence of Hazardous Materials used, stored or disposed of by Lessee or
     its agents, employees, contractors or invitees, Lessee shall reimburse

                                       14

<PAGE>

      Lessor for the cost of such inspections within ten (10) days of receipt of
      a written statement thereof. If such consultants determine that the
      Premises are contaminated with Hazardous Materials used, stored or
      disposed of by Lessee or its agents, employees, contractors or invitees,
      Lessee shall, in a timely manner, at its expense, remove such Hazardous
      Materials or otherwise comply with the recommendations of such consultants
      to the reasonable satisfaction of Lessor and any applicable governmental
      agencies. The right granted to Lessor herein to inspect the Premises shall
      not create a duty on Lessor's part to inspect the Premises, or liability
      of Lessor for Lessee's use, storage or disposal of Hazardous Materials, it
      being understood that Lessee shall be solely responsible for all liability
      in connection therewith.

            (f)   Lessee shall surrender the Premises to Lessor upon the
      expiration or earlier termination of this Lease free of debris, waste and
      Hazardous Materials used, stored or disposed of by Lessee or its agents,
      employees, contractors or invitees, and in a condition which complies with
      all governmental statues, ordinances, regulations and policies,
      recommendations of consultants hired by Lessor, and such other reasonable
      requirements as may be imposed by Lessor.

            (g)   Lessee's obligations under this Paragraph 29 shall survive
      termination of this Lease.

            (h)   Lessee acknowledges having received from Lessor (i) a Phase I
      environmental assessment previously conducted on the Premises, and (ii)
      responses to Questions 1-20 of an Environmental Site Assessment
      Transaction Screen Questionnaire in the form of Exhibit "C" attached
      hereto completed to the actual knowledge of Lessor's designated
      representative therein, on behalf of Lessor, without investigation or
      inquiry, as of the Lease Date. Lessee shall have no liability or
      responsibility with respect to any matter identified in such assessment or
      questionnaire.

            (i)   Lessor shall not require Lessee to clean up, remediate or
      comply with Hazardous Materials Laws to the extent that the compliance is
      required as a result of the fact that Hazardous Materials were located in
      or on the Premises or Property prior to the Commencement Date (or Lessee's
      occupancy of the Premises, whichever occurs earlier), and except to the
      extent that Lessee contributes to the presence of such Hazardous Materials
      or exacerbates the conditions associated with such Hazardous Materials.

30.   General Provisions:
      ------------------

            (i)   Time. Time is of the essence in this Lease and with respect of
      each and all of its provisions in which performance is a factor.

            (ii)  Successors and Assigns. The covenants and conditions herein
      contained, subject to the provisions as to assignment, apply to and bind
      the heirs, successors, executors, administrators and assigns of the
      parties hereto.

            (iii) Recordation. Lessee shall not record this lease or a short
      form memorandum hereof without the prior written consent of Lessor.

                                       15

<PAGE>

          (iv)  Lessor's Personal Liability. The liability of Lessor (which, for
     purposes of this Lease, shall include Lessor and the owner of the Premises
     if other than the Lessor) to Lessee for any default by Lessor under the
     terms of this Lease shall be limited to the actual interest of Lessor and
     its present or future partners in the Premises and Lessee agrees to look
     solely to Lessor's or Lessor's present or future partners' active interest
     in the Premises for the recovery of any judgment against Lessor, it being
     intended that Lessor shall not be personally liable for any judgment or
     deficiency. The liability of Lessor under this Lease is limited to its
     period of ownership of title to the Premises, and Lessor shall be released
     from liability accruing subsequent to the date of such transfer upon
     transfer of title to the Premises.

          (v)   Separability. Any provisions of this Lease which shall prove to
     be invalid, void or illegal shall in no way affect, impair or invalidate
     any other provisions hereof and such other provision shall remain in full
     force and effect.

          (vi)  Choice of Law. This Lease shall be governed by the laws of the
     State of California.

          (vii) Integration. This Lease supersedes any prior agreements and
     contains the entire agreement of the parties on matters covered. No other
     agreement, statement or promise made by any party that is not in writing
     and signed by all parties to this Lease shall be binding.

          (ix)  Warranty of Authority. Each person executing this agreement on
     behalf of a party represents and warrants that (1) such person is duly and
     validly authorized to do so on behalf of the entity it purports to so bind,
     and (2) if such party is a partnership, corporation or trustee, that such
     partnership, corporation or trustee has full right and authority to enter
     into this Lease and perform all of its obligations hereunder.

          (x)   Notices. All notices and demands required or permitted to be
     sent to the Lessor or Lessee shall be in writing and should be sent by
     United State certified mail or by personal delivery or by overnight
     courier, addressed to Lessor c/o SARES REGIS Group, 18802 Bardeen Avenue,
     Irvine, California 92612-1521, Attn: Director of Property Services, with a
     copy to J.P. Morgan Investment Management, 522 Fifth Avenue, New York, NY
     10036, Attn: Ann E. Cole, or to Lessee at 7834 C.F. Hawn Freeway, Dallas,
     Texas 75217, Attention: Real Estate Department, or to such other place as
     such party may designate in a notice to the other party given as provided
     herein. Notice shall be deemed given upon the earlier of actual receipt or
     the third day following deposit in the United State mail.

                                       16

<PAGE>

                             EXHIBIT "A" - PREMISES

           Ontario Industrial Lease dated September 30, 1996, between

                             DAL TILE CORPORATION,
                          a Pennsylvania corporation
                                  ("Lessee"),
                                      and
                       ONTARIO INDUSTRIAL PARTNERS, INC.,
                             a Delaware corporation
                                   ("Lessor")

                                     [PLAN]

<PAGE>

                        EXHIBIT "B" - TENANT IMPROVEMENTS

                                   Page 1 of 2

           Ontario Industrial Lease dated September 30, 1996, between

                              DAL TILE CORPORATION,
                           a Pennsylvania corporation
                                   ("Lessee"),
                                       and
                       ONTARIO INDUSTRIAL PARTNERS, INC.,
                             a Delaware corporation
                                   ("Lessor")

     This Exhibit, entitled "Tenant Improvements," is and shall constitute
Exhibit "B" to the Lease Agreement, dated as of the Lease Date, by and between
Lessor and Lessee for the Premises. The terms and conditions of this Exhibit "B"
are hereby incorporated into and are made a part of the Lease. Capitalized terms
used, but not otherwise defined, in this Exhibit "B" have the meanings ascribed
to such terms in the Lease.

     1.   Lessor agrees to, at Lessor's cost, improve the Premises as described
     in Paragraph 2 below (the "Tenant Improvements").

     2.   The Tenant Improvements shall consist of the following specifications:

          A.   Office: Provide approximately 8,000 square feet of office space
               ------
               in two areas which shall include:

               *    Primary Office Area: Approximately 6,000 square feet to
                    -------------------
                    include four (4) private offices, one (1) truckers' lounge,
                    open area, conference room, small computer room, small
                    storage room, a large lunch room and two (2) restrooms
                    inside, four (4) restrooms in warehouse.

               *    Future Office Area: Approximately 2000 square feet with one
                    ------------------
                    (1) private office, open area, two (2) restrooms.

               B.   Electrical: A minimum of 800 amp 270/480 volt, 3 phase.
                    ----------

               C.   Warehouse Lighting: To be high pressure metal halide. The
                    ------------------
                    locations to accommodate Lessee but consistent with ESFR
                    sprinkler design, not to exceed 25 foot-candles general
                    warehouse lighting.

               D.   Loading: Fifty-three (53) single dock doors along front of
                    -------
                    building with load levelers on 27 of the doors and edge of
                    dock plates on the balance. All doors to have locks and
                    canopies (or a single canopy covering all doors, at Lessor's
                    option).

<PAGE>

                        EXHIBIT "B" - TENANT IMPROVEMENTS

                                   Page 2 of 2

          E.   Warehouse Floor: To have two coats of heavy duty polyurothane
               ---------------
               floor sealer (tenant company 400 or equal).

     The Primary Office Area, Electrical, Warehouse Lighting, Loading and
Warehouse Floor are collectively sometimes referred to as the "Primary Tenant
Improvements".

<PAGE>

                                  EXHIBIT "C"

6.   Transaction Screen Questionnaire

     6.1  Persons to be Questioned---The following questions should be asked of
(1) the current owner of the property, (2) any major occupant of the property
or, if the property does not have any major occupants, at least 10% of the
occupants of the property, and (3) in addition to the current owner and the
occupants identified in (2), any occupant likely to be using, treating,
generating, storing or disposing of hazardous substances or petroleum products
on or from the property. A major occupant is any occupant using at least 40% of
the leasable area of the property or any anchor tenant when the property is a
shopping center. In a multifamily property containing both residential and
commercial uses, the preparer does not need to ask questions of the residential
occupants. The preparer should ask each person to answer all questions to the
best of the respondent's actual knowledge and in good faith. When completing the
site visit column, the preparer should be sure to observe the property and any
buildings and other structures on the property. The guide provides further
details on the appropriate use of this questionnaire.

        Description of Site: Address:

                      3625 E. Jurupa Street
        -------------------------------------------------
                      Ontario, CA 91761
        -------------------------------------------------

        _________________________________________________

<TABLE>
<CAPTION>
                                  Question                             Owner               Occupants              Observed During
                                                                                           (if applicable)        Site Visit
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                     <C>                     <C>
1.   Is the property or any adjoining property used for an        Yes    [No]   Unk/1/     Yes   No   Unk       Yes    No    Unk
     industrial use?

2.   To the best of your knowledge, has the property or           Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     any adjoining property been used for an industrial
     use in the past?

3.   Is the property or any adjoining property used as a          Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     gasoline station, motor repair facility, commercial
     printing facility, dry cleaners, photo developing
     laboratory, junkyard or landfill, or as a waste
     treatment, storage, disposal, processing, or
     recycling facility?

4.   To the best of your knowledge, has the property or           Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     any adjoining property been used as a gasoline
     station, motor repair facility, commercial printing
     facility, dry cleaners, photo developing laboratory,
     junkyard or landfill, or as a waste treatment,
     storage, disposal, processing, or recycling facility?

5.   Are there currently to the best of your knowledge, or        Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     to the best of your knowledge have there been
     previously any damaged or discarded automotive or
     industrial batteries, or pesticides, paints, or other
     chemicals in individual containers of greater than 5
     gal (19 L) in volume or 50 gal (109 L) in the
     aggregate, stored on or used at the property or at
     the facility?

6.   Are there currently to the best of your knowledge,or         Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     to the best of your knowledge  have there been
     previously, any industrial drums (typically 55 gal
     (208 L)) or sacks of chemicals located on the
     property or at the facility?

7.   Has fill dirt been brought onto the property that            Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     originated from a contaminated site or that is of an
     unknown origin? There was no fill dirt brought on
     site during construction.

8.   Are there currently, or to the best of your knowledge        Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     have there been previously, any pits, ponds, or lagoons
     located on the property in connection with waste
     treatment or waste disposal?

9.   Is there currently to the best of your knowledge, or         Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     to the best of your knowledge has there been
     previously, any stained soil on the property?

10.  Are there currently, or to the best of your knowledge        Yes     No    Unk        Yes   No   Unk       Yes    No    Unk
     have there been previously, any registered or
     unregistered storage tanks (above or underground)
     located on the property?

                                                                  SEE PHASE I

11.  Are there currently to the best of your knowledge, or        Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     have there been previously, any vent pipes, fill pipes,
     or access ways indicating a fill pipe protruding from the
     ground on the property or adjacent to any structure
     located on the property?

12.  Are there currently, or to the best of your knowledge        Yes    [No]   Unk        Yes   No   Unk       Yes    No    Unk
     have there been previously, any flooring, drains, or
     walls located within the facility that are stained by
     Substances other than water or are emitting foul odors?
</TABLE>

Unk = "unknown" or "no response"
Copyright (C) 1993 AMERICAN SOCIETY FOR TESTING AND MATERIALS, Philadelphia, PA
This document is an excerpt of E1528-93: Standard Practice for Environmental
Site Assessments: Transaction Screen Process, which is under the jurisdiction of
ASTM Committee E-50 on Environmental Assessment and is the direct
responsibility of Subcommittee E50.02 on Commercial Real Estate Transactions.
This questionnaire represents only items 5.1 through 6.1 of E 1528-93 and should
not be construed as being the complete standard. It is necessary to the full
standard prior to using this questionnaire. For the complete standard, or
to order additional copies of this questionnaire contact ASTM Customer Service
at (215) 299-5585.

<PAGE>

<TABLE>
<CAPTION>
                Question                                  Owner             Occupants            Observed During
                                                                            (if applicable        Site Visit
-----------------------------------------------------------------------------------------------------------------
<S>                                                  <C>   <C>    <C>      <C>    <C>   <C>      <C>    <C>   <C>
13.  If the property is served by a private          Yes   [No]   Unk      Yes    No    Unk      Yes    No    Unk
     well or non-public water system, have
     contaminants been identified in the well
     or system that exceed guidelines
     applicable to the water system or has
     the well been designated as contaminated
     by any government environmental/health
     agency?

14.  Does the owner or occupant of the               Yes   [No]   Unk      Yes    No    Unk      Yes    No    Unk
     property have any knowledge of
     environmental liens or governmental             SEE PHASE I
     notification relating to past or
     recurrent violations of environmental
     laws with respect to the property or any
     facility located on the property?

15.  Has the owner to the best of its                Yes   [No]   Unk      Yes    No    Unk      Yes    No    Unk
     knowledge or occupant of the property
     been informed of the past or current
     existence of hazardous substances or
     petroleum products or environmental
     violations with respect to the property
     or any facility located on the
     property?

16.  Does the owner or occupant of the               Yes    No    Unk      Yes    No    Unk      Yes    No    Unk
     property have any knowledge of any
     environmental site assessment of the            SEE PHASE I
     property or facility that indicated the
     presence of hazardous substances or
     petroleum products on, or contamination
     of, the property or recommended further
     assessment of the property?

17.  Does the owner to the best of its               Yes   [No]   Unk      Yes    No    Unk      Yes    No    Unk
     knowledge or occupant of the property know
     of any past, threatened, or pending
     lawsuits or administrative proceedings
     concerning a release or threatened
     release of any hazardous substance or
     petroleum products involving the
     property by any owner or occupant of the
     property?

18.  Does the property discharge wastewater          Yes   [No]   Unk      Yes    No    Unk      Yes    No    Unk
     on or adjacent to the property other
     than storm water into a sanitary sewer
     system?

19.  To the best of your knowledge, since            Yes   [No]   Unk      Yes    No    Unk      Yes    No    Unk
     owner purchased the property have any
     hazardous substances or petroleum
     products, unidentified waste materials,
     tires, automotive or industrial
     batteries or any other waste materials
     been dumped above grade, buried and/or
     burned, on the property?

20.  Is there a transformer, capacitor, or           Yes   [No]   Unk      Yes    No    Unk      Yes    No    Unk
     any hydraulic equipment for which there
     are any records indicating the presence
     of PCBs?
</TABLE>

                 Government Records/Historical Sources Inquiry
                   (See guide. Section 10 of ASTM E 1528-93)

21.  Do any of the following Federal government record
     systems list the property or any property within the
     circumference of the area noted below:

<TABLE>

                                                                                  SEE PHASE I
                                                                             -----------------------
<S>                                                                          <C>         <C>     <C>
           National Priorities List (NPL)--within 1.0 mile (1.6 km)?            Yes     No

           CERCLIS List--within 0.5 mile (0.8 km)?                              Yes     No

           RCRA TSD Facilities--within 1.0 mile (1.6 km)?                       Yes     No

22.  Do any of the following state record systems list the
     property or any property within the circumference of
     the area noted below:

     List maintained by state environmental agency of
     hazardous waste sites identified for investigation or
     remediation that is the state agency equivalent to
     NPL--within approximately 1.0 mile (1.6 km)?                               Yes     No

     List maintained by state environmental agency of sites
     identified for investigation or remediation that is
     the state equivalent to CERCLIS within 0.5 mile (0.8 km)?                          Yes      No

     Leaking Underground Storage Tank (LUST) List--within 0.5
     mile (0.8 km)?                                                             Yes     No

     Solid Waste/Landfill Facilities--within 0.5 mile (0.8 km)?                 Yes     No

23.  Based upon a review of fire insurance maps or consultation
     with the local fire department serving the property  all as
     specified in the guide, are any buildings or other
     improvements on the property or on an adjoining property
     identified as having been used for an industrial use or
     uses likely to lead to contamination of the property?                      Yes     No       N/A
</TABLE>

Copyright (C) 1993 AMERICAN SOCIETY FOR TESTING AND MATERIALS, Philadelphia, PA
This document is an excerpt of E 1528-93: Standard Practice for Environmental
Site Assessments: Transaction Screen Process, which is under the jurisdiction of
ASTM Committee E.50 on Environmental Assessment and is the direct responsibility
of Subcommittee E50.02 on Commercial Real Estate Transactions. This
questionnaire represents only items 5.1 through 6.1 of E1528-93 and should not
be constructed as being the complete standard. It is necessary to refer to the
full standard prior to using this questionnaire. For the complete standard, or
to order additional copies of this questionnaire, contact ASTM Customer Service
at (215) 299-5585.

<PAGE>

The preparer of the transaction screen questionnaire must complete and sign the
following statement. (For definition of preparer and user, see 5.3 or 3.3.25 of
ASTM E 1528-93.)

This questionnaire was completed by:

Name    TOM GARLOCK
     ---------------------------------------------------------------------------

Title   SUP - CONSTRUCTION
      --------------------------------------------------------------------------

Firm    SARES - REGIS GROUP
      --------------------------------------------------------------------------

Address   18802 BARDEEN AVE
        ------------------------------------------------------------------------

          IRVINE, CA 92612
        ------------------------------------------------------------------------

Phone number   714-756-5959
             -------------------------------------------------------------------

Date   10/1/96
     ---------------------------------------------------------------------------

================================================================================

If the preparer is different than the user, complete the following:

Name of user ___________________________________________________________________

User's address _________________________________________________________________

               _________________________________________________________________

User's phone number ____________________________________________________________

Preparer's relationship to site ________________________________________________

Preparer's relationship to site ________________________________________________
   (for example, principal, employee, agent, consultant)

================================================================================

Copies of the completed questionnaire    Copies of the completed questionnaire
have been filed at:                      have been mailed or delivered to:

______________________________________   _______________________________________

______________________________________   _______________________________________

______________________________________   _______________________________________

================================================================================

Preparer represents that to the best of the preparer's knowledge the above
   statements and facts are true and correct and to the best of the preparer's
   actual knowledge, no material facts have been suppressed or misstated.

Signature   /s/ Tom Garlock                 Date  10/1/96
          --------------------------------       -------------------------------

Signature ________________________________  Date _______________________________

Signature ________________________________  Date _______________________________

Copyright (C) 1993 AMERICAN SOCIETY FOR TESTING AND MATERIALS, Philadelphia, PA
This document is an excerpt of E 1528-93: Standard Practice for Environmental
Site Assessments: Transaction Screen Process, which is under the jurisdiction of
ASTM Committee E 50 on Environmental Assessment and is the direct responsibility
of Subcommittee E 50.02 on Commercial Real Estate Transactions. This
questionnaire represents only items 5.1 through 6.1 of E1528.93 and should not
be construed for being the complete standard. It is necessary to refer to the
full standard prior to using his questionnaire. For the complete standard, or to
order additional copies of this questionnaire contact ASTM Customer Service at
(215) 299-5585.

<PAGE>

                       EXHIBIT "D" - RULES & REGULATIONS

           Ontario Industrial Lease dated September 30, 1996, between

                              DAL TILE CORPORATION,
                           a Pennsylvania corporation
                                   ("Lessee"),
                                       and
                       ONTARIO INDUSTRIAL PARTNERS, INC.,
                             a Delaware corporation
                                   ("Lessor")

     1.  Neither Lessee nor any of its agents, employees, servants, licensees,
clients or visitors nor any of the operations and activities of Lessee shall
cause or permit any disturbing noises or objectionable odors to be produced upon
or to emanate from the Premises.

     2.  All trash, rubbish or litter removed from the Premises by Lessee shall
be placed only in such areas and/or receptacles as may be designated or provided
by Lessor.

     3.  Lessee shall not store any materials, equipment, products, pallets,
etc., outside the Premises without the reasonable prior written consent of
Lessor.

     4.  No sign, placard, picture, advertisement, name or notice shall be
displayed, painted, or affixed by Lessee in or on any part of the Premises
without the prior written consent of Lessor and then only of such color, size,
character, style, material, installation and in such places as shall be approved
and designated by Lessor.

     5.  Neither Lessee nor any agents, employees, servants, licensees, clients
or visitors shall use the Park or the Premises for housing, lodging, or
sleeping purposes. No immoral or unlawful purpose will be allowed in or on any
portion of the Park.

     6.  No birds, fowl, or animals shall be brought into or kept in or about
the Premises without the prior written consent of Lessor.

     7.  Lessor will not be responsible for lost, stolen or damaged personal
property, equipment, money, merchandise or any article from the Premises or
common areas regardless of whether loss, theft, or damage occurs when the
Premises are locked against entry or not.

     8.  Any damage done to the Premises in any way by the movement of
furniture, equipment, or merchandise within, into or out of the Premises by
Lessee's servants, subtenants, agents, employees, visitors or invitees shall be
the responsibility of and paid by Lessee.

<PAGE>

                                 ADDENDUM NO. 1
                                 --------------

                             OPTION TO EXTEND LEASE

                         (Fair Market Value Adjustment)

                                   Page 1 of 2

           Ontario Industrial Lease dated September 30, 1996, between

                              DAL TILE CORPORATION,
                           a Pennsylvania corporation
                                   ("Lessee"),
                                       and
                       ONTARIO INDUSTRIAL PARTNERS, INC.,
                             a Delaware corporation
                                    ("Lessor")

     The capitalized terms used and not otherwise defined herein shall have the
same definitions as set forth in the Lease. The provisions of this Addendum
shall supersede any inconsistent or conflicting provisions of the Lease.

A.   Option to Extend Term.
     ---------------------

          1.  Grant of Option. Lessor hereby grants to Lessee the option (the
              ---------------
"Option") to extend the term of the Lease for an additional consecutive term of
five (5) years (the "Extension"), on the same terms and conditions as set forth
in the Lease, except the Base Rent shall be the amount determined as set forth
below. The Option shall be exercised only by written notice delivered to Lessor
at least one hundred eighty (180) days before the expiration of the initial term
of the Lease. If Lessee fails to deliver to Lessor written notice of the
exercise of the Option within the time period prescribed above, the Option shall
lapse and there shall be no further right to extend the term of the Lease. The
Option shall be exercisable by Lessee on the express conditions that (i) at the
time of the exercise of the Option, and thereafter at all times prior to the
commencement of the Extension, an Event of Default shall not have occurred and
be continuing under the Lease, and (ii) Lessee has not been ten (10) or more
days late in the payment of Rent more than a total of five (5) times during the
term of the Lease. If Lessee properly exercises the Option, "term", as used
herein and in the Lease, shall be deemed to include the Extension, unless
specified otherwise herein or in the Lease.

          2.  Personal Option. The Option is personal to Lessee. If Lessee
              ---------------
subleases or assigns or otherwise transfers any interest under the Lease prior
to the exercise of the Option, the Option shall lapse. If Lessee subleases or
assigns or otherwise transfers any interest of Lessee under the Lease after the
exercise of the Option but prior to the commencement of the Extension, the
Option shall lapse and the term of the Lease shall expire as if the Option were
not exercised.

B.   Calculation of Base Rent.
     ------------------------

          The Base Rent during the Extension shall be increased, as of the
commencement of the Extension (the "Rental Adjustment Date") to the "Fair Market
Value" of the Premises, determined in the

<PAGE>

                    ADDENDUM NO. 1 - OPTION TO EXTEND LEASE

                                   Page 2 of 2

following manner: Not later than one hundred (100) days prior to the Rental
Adjustment Date, Lessor and Lessee shall meet in an effort to negotiate, in good
faith, the Fair Market Value of the Premises as of the Rental Adjustment Date.
If Lessor and Lessee have not agreed upon the Fair Market Value of the Premises
at least ninety (90) days prior to the Rental Adjustment Date, the Fair Market
Value shall be determined by the following appraisal method:

                (i)  If Lessor and Lessee are not able to agree upon the Fair
Market Value of the Premises within the time period described above, then Lessor
and Lessee shall attempt to agree in good faith upon a single appraiser not
later than seventy-five (75) days prior to the Rental Adjustment Date. If Lessor
and Lessee are unable to agree upon a single appraiser within such time period,
then Lessor and Lessee shall each appoint one appraiser not later than
sixty-five (65) days prior to the Rental Adjustment Date, and Lessor and Lessee
shall each give written notice to the other of such appointment at the time of
such appointment. Within ten (10) days thereafter, the two appointed appraisers
shall appoint a third appraiser. If either Lessor or Lessee fails to appoint its
appraiser and to give written notice thereof to the other party within the
prescribed time period, the single appraiser appointed shall determine the Fair
Market Value of the Premises. If both parties fail to appoint appraisers within
the prescribed time periods, then the first appraiser thereafter selected by a
party (such selection to be by written notice thereof to such appraiser and the
other party) shall determine the Fair Market Value of the Premises. 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. All appraisers shall have
at least five (5) years' experience in the appraisal of commercial/industrial
real property in the area in which the Premises are located and shall be members
of professional organizations such as MAI or its equivalent.

                (ii) 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 Rental Adjustment Date, as monthly rent, to a ready and willing landlord of
property comparable to the Premises 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 Market Value of the
Premises. Otherwise, the Fair Market Value of the Premises 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. Lessor and Lessee shall
instruct the appraiser(s) to complete their determination of the Fair Market
Value not later than thirty (30) days prior to the Rental Adjustment Date. If
the Fair Market Value is not determined prior to the Rental Adjustment Date,
then Lessee shall continue to pay to Lessor the Base Rent applicable to the
Premises immediately prior to the Rental Adjustment Date until the Fair Market
Value is determined. When the Fair Market Value of the Premises is determined,
Lessor shall deliver notice thereof to Lessee, and Lessee shall pay to Lessor,
within ten (10) days after receipt of such notice, the difference between the
Base Rent actually paid by Lessee to Lessor for the period after the Rental
Adjustment Date and the new Base Rent determined hereunder effective as of the
Rental Adjustment Date. In no event shall the Base Rent be reduced below the
Base Rent applicable to the Premises immediately prior to the Rental Adjustment
Date.

<PAGE>

     (xi)  Interlineation. The use of underlining or strikeouts (strikeouts)
within the Lease is for reference purposes only. No other meaning or emphasis is
intended by this use, nor should any be inferred.

LESSEE:

DAL TILE CORPORATION,
a Pennsylvania corporation

By:  /s/ [ILLEGIBLE]
    -------------------------------------

    Its:  Exec. V.P & CFO
          -------------------------------

By:  /s/ [ILLEGIBLE]
    -------------------------------------

    Its:   [ILLEGIBLE]
          -------------------------------

LESSOR:

ONTARIO INDUSTRIAL PARTNERS, INC.,
a Delaware corporation

By:  /s/ [ILLEGIBLE]
    -------------------------------------

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

                                       17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]