Document:

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                                                                   EXHIBIT 10.28

                           AMB Property Corporation
                         Industrial Multi-Tenant Lease

1.   Basic Provisions ("Basic Provisions").

     1.1   Parties: This Lease ("Lease") dated November 12, 1999, is made by and
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between AMB PROPERTY, L.P., a Delaware limited partnership, ("Landlord") and
COST-U-LESS, INC., a Washington corporation, ("Tenant") (collectively the
"Parties," or individually a "Party").

     1.2   Premises: A portion, outlined on Exhibit A attached hereto
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("Premises"), of the two building phase located at 2055 Burroughs Avenue, in the
City of San Leandro, State of California, consisting of approximately 81,225
rentable square feet. The Premises and the Phase is located in the industrial
center commonly known as Williams/Burroughs (the "Industrial Center"). Tenant
shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.3
below), but shall not have any rights to the roof, exterior walls or utility
raceways of the Building or to any other buildings in the Industrial Center. The
Premises, the Building, the Common Areas, the land upon which they are located
and all other buildings and improvements thereon are herein collectively
referred to as the "Industrial Center."

     1.3   Term: Five (5) years and Zero (0) months ("Term") commencing February
           ----
1, 2002 ("Commencement Date") and ending January 31, 2007 ("Expiration Date").

     1.4   Base Rent: $31,271.63 monthly Base Rent is due and payable for the
           period February 1, 2002, to and including January 31, 2003. Monthly
           Base Rent for the month of February, 2002, in the amount of
           $31,271.63, plus estimated monthly Operating Expenses (based upon
           Landlord's 1999 budget) in the amount of $5,254.33, for the total
           amount of $37,525.96, shall be paid in advance on or before November
           1, 2001.
           $32,083.88 monthly Base Rent is due and payable for the period
           February 1, 2003, to and including January 31, 2004.
           $32,896.13 monthly Base Rent is due and payable for the period
           February 1, 2004, to and including January 31, 2005.
           $33,708.38 monthly Base Rent is due and payable for the period
           February 1, 2005, to and including January 31, 2006.
           $34,520.63 monthly Base Rent is due and payable for the period
           February 1, 2006, to and including January 31, 2007.

     1.5   Tenant's Share of Operating Expenses ("Tenant's Share"):
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           (a)  Industrial Center               33.5%
           (b)  Building                         100%
           (c)  Phase (Burroughs Avenue)          67%

     1.6   Tenant's Estimated Monthly Rent Payment: Following is the estimated
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monthly Rent payment to Landlord pursuant to the provisions of this Lease. This
estimate is made at the inception of the Lease and is subject to adjustment
pursuant to the provisions of this Lease:

           (a)  Base Rent (Paragraph 4.1)                $31,271.63
           (b)  Estimated Operating Expenses (1999)      $ 6,254.33
                Estimated Monthly Payment                $37,525.96

     1.7   Security Deposit: $41,000.00 ("Security Deposit"), subject, however,
           ----------------
to the provisions of Section 5 herein.

     1.8   Permitted Use ("Permitted Use"): Warehouse and distribution of non-
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hazardous product, but only to the extent permitted by the City of San Leandro
and any and all agencies having jurisdiction.

     1.9   Guarantor:  None
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     1.10  Addenda and Exhibits: Attached hereto are the following Addenda and
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Exhibits, all of which constitute a part of this Lease:

           (a)  Addendum 1: Remedies Addendum
           (b)  Addendum 2: Option to Extend
           (c)  Exhibits:   Exhibit A: Diagram of Premises
                            Exhibit B: Commencement Date Certificate
                            Exhibit C: Rules and Regulations
                            Exhibit D: Tenant Move-in and Lease Renewal
                            Environmental Questionnaire
                            Exhibit E: Construction Obligations

     1.11  Address for Rent Payments: All amounts payable by Tenant to Landlord
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shall until further notice from Landlord be paid to AMB Property, L.P. at the
following address:

           c/o Legacy Partners Commercial, Inc.
           P.O. Box 842514
           Dallas, TX 75284-2514

2.   Premises, Parking and Common Areas.

     2.1   Letting. Landlord hereby leases to Tenant and Tenant hereby leases
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from LANDLORD the Premises upon all of the terms, covenants and conditions set
forth in this Lease. Any statement of square footage set forth in this Lease or
that may have been used in calculating Base Rent and/or Operating Expenses is an
approximation which

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Landlord and Tenant agree is reasonable and the Base Rent and Tenant's Share
based thereon is not subject to revision whether or not the actual square
footage is more or less. Tenant accepts the Premises in its present condition,
state of repair and operating order and in its present "As-Is" condition. The
term "Premises" as used in this Lease shall also include the leasing by Tenant
of that certain fenced yard area adjacent to the Building on the south end, (the
"Yard Area") in the location and as depicted in Exhibit A, which is attached
hereto and incorporated herein by this reference. Tenant's and Tenant's
Representatives' (hereafter defined) use and occupancy of the Yard Area shall be
exclusive only as to (i) the other tenants of the Park and (ii) the public in
general but not including Landlord and its authorized representatives,
employees, invitees, contractors and similarly affiliated parties for the
purposes of fulfilling Landlord's obligations hereunder as well as for purposes
of Landlord's exercise of its rights and remedies hereunder. Tenant shall use,
maintain and repair the Yard Area subject to, and in accordance with, the terms
and provisions of this Lease, including but not limited to, the provisions of
Section 11 hereinbelow. Tenant acknowledges that the Yard Area shall not be used
for the storage of debris, pallets, batteries, racking, shelving, fencing,
furniture, furniture parts, cans, barrels, trash and baled cardboard. Tenant may
not keep loose cardboard or other recyclable material in the Yard Area unless it
is kept in a covered trash receptacle or container. The Yard Area shall be used
to provide the only parking for Tenant's and Tenant's Representative's vehicles.
Tenant shall use its best efforts to keep the Yard Area clean at all times. In
addition to the foregoing, Tenant shall be solely responsible and liable for any
and all security measures related to the Yard Area and Landlord shall not in any
manner or circumstance be liable nor responsible for any vehicles, goods,
personal property or similar items stored, kept and/or situated in, on or about
the Yard Area at any time during the term of this Lease. Nothing contained
herein shall limit, impair or otherwise diminish Landlord's and its authorized
representatives' rights and ability to enter the Yard Area for purposes of
performing Landlord's obligations under this Lease.

     2.2  Common Areas - Definition. "Common Areas" are all areas and facilities
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outside the Premises and within the exterior boundary line of the Industrial
Center and interior utility raceways within the Premises that are provided and
designated by the Landlord from time to time for the general non-exclusive use
of Landlord, Tenant and other tenants of the Industrial Center and their
respective employees, suppliers, shippers, tenants, contractors and invitees.

     2.3  Common Areas - Tenant's Rights. Landlord hereby grants to Tenant, for
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the benefit of Tenant and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Landlord under the terms hereof or under the terms of any rules and
regulations or covenants, conditions and restrictions governing the use of the
Industrial Center.

     2.4  Common Areas - Rules and Regulations. Landlord shall have the
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exclusive control and management of the Common Areas and shall have the right,
from time to time, to establish, modify, amend and enforce reasonable Rules and
Regulations with respect thereto in accordance with Paragraph 16.19.

     2.5  Common Area Changes. Landlord shall have the right, in Landlord's sole
          -------------------
discretion, from time to time:

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

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

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

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

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

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

     2.6  Parking. Tenant may use a proportionate share of undesignated vehicle
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parking spaces, unreserved and unassigned, on those portions of the Common Areas
designated by Landlord for such parking. Tenant shall not use more parking
spaces than such number. Such parking spaces shall be used only for parking by
vehicles no larger than full sized passenger automobiles or pick-up trucks.
Tenant shall not permit or allow any vehicles that belong to or are controlled
by Tenant or Tenant's employees, suppliers, shippers, customers or invitees to
be loaded, unloaded or parked in areas other than those designated by Landlord
for such activities. If Tenant permits or allows any of the prohibited
activities described herein, then Landlord shall have the right, without notice,
in addition to such other rights and remedies that it may have, to remove or tow
away the vehicle involved and charge the cost to Tenant, which cost shall be
immediately payable as additional rent upon demand by Landlord.

3.   Term.

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

     3.2  Delay in Possession. If for any reason Landlord cannot deliver
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possession of the Premises to Tenant by the Commencement Date, Landlord shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder. In such case,
Tenant shall not, except as otherwise provided herein, be obligated to pay Rent
or perform any other obligation of Tenant under the terms of this Lease until
Landlord delivers possession of the Premises to Tenant. The term of the Lease
shall commence on the earlier of (i) the date Tenant takes possession of the
Premises to Tenant or (ii) 10 days following notice to Tenant that Landlord is
prepared to tender possession of the Premises to Tenant. If possession of the
Premises is not delivered to Tenant within 90 days after the Commencement Date
and such delay is not due to Tenant's acts, failure to act or omissions Tenant
may by notice in writing to Landlord within 10 days after the end of said 90 day
period cancel this Lease and the parties shall be

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discharged from all obligations hereunder. If such written notice of Tenant is
not received by Landlord within said 10 day period, Tenant's right to cancel
this Lease shall terminate.

     3.3  Commencement Date Certificate. At the request of Landlord, Tenant
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shall execute and deliver to Landlord a completed certificate ("Commencement
Date Certificate") in the form attached hereto as Exhibit B.

4.   Rent.

     4.1  Base Rent. Tenant shall pay to Landlord Base Rent and other monetary
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obligations of Tenant to Landlord under the terms of this Lease (such other
monetary obligations are herein referred to as "Additional Rent") in lawful
money of the United States, without offset or deduction, in advance on or before
the first day of each month. Base Rent and Additional Rent for any period during
the term hereof which is for less than one full month shall be prorated based
upon the actual number of days of the month involved. Payment of Base Rent and
Additional Rent shall be made to Landlord at its address stated herein or to
such other persons or at such other addresses as Landlord may from time to time
designate in writing to Tenant. Base Rent and Additional Rent are collectively
referred to as "Rent". All monetary obligations of Tenant to Landlord under the
terms of this Lease are deemed to be rent.

     4.2  Operating Expenses. Tenant shall pay to Landlord on the first day of
          ------------------
each month during the term hereof, in addition to the Base Rent, Tenant's Share
of all Operating Expenses in accordance with the following provisions:

          (a)    "Operating Expenses" are all costs incurred by Landlord
relating to the ownership and operation of the Industrial Center, Building and
Premises including, but not limited to, the following:

               (i)    The operation, repair, maintenance and replacement in
neat, clean, good order and condition of the Common Areas, including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
drainage systems, lighting facilities, fences and gates, exterior signs and
tenant directories.

               (ii)   Water, gas, electricity, telephone and other utilities
servicing the Common Areas.

               (iii)  Trash disposal, janitorial services, snow removal,
property management fee equal to 10% of Operating Expenses and security
services.

               (iv)   Reserves set aside for maintenance, repair and
replacement of the Common Areas and Building.

               (v)    Real Property Taxes.

               (vi)   Premiums for the insurance policies maintained by
Landlord under Paragraph 8 hereof.

               (vii)  Environmental monitoring and insurance programs,
provided, however, if Tenant does not use or store Hazardous Substances (as
hereinafter defined) then Landlord shall not pass through costs for
environmental monitoring.

               (viii) Monthly amortization of capital improvements to the
Common Areas and the Building. The monthly amortization of any given capital
improvement shall be the sum of the (i) quotient obtained by dividing the cost
of the capital improvement by Landlord's estimate of the number of months of
useful life of such improvement plus (ii) an amount equal to the cost of the
capital improvement times 1/12 of the lesser of 12% or the maximum annual
interest rate permitted by law.

               (ix)   Maintenance of the Building including, but not limited to,
painting, caulking and repair and replacement of Building components, including,
but not limited to, roof, and fire detection and sprinkler systems.

               (x)    Heating, ventilating and air conditioning systems ("HVAC")

               (xi)   If Tenant fails to maintain the Premises, any expense
incurred by Landlord for such maintenance.

          (b)  Tenant's Share of Operating Expenses that are not specifically
attributed to the Premises or Building ("Common Area Operating Expenses") shall
be that percentage shown in Paragraph 1.5(a). Tenant's Share of Operating
Expenses that are attributable to the Building ("Building Operating Expenses")
shall be that percentage shown in Paragraph 1.5(b). Tenant's Share of Operating
Expenses that are not specifically attributable to the Premises or the Building
("Phase Operating Expenses") shall be that percentage shown in Paragraph 1.5(e).
Landlord in its sole discretion shall determine which Operating Expenses are
Common Area Operating Expenses, Building Operating Expenses or expenses to be
entirely borne by Tenant.

          (c)  The inclusion of the improvements, facilities and services set
forth in Subparagraph 4.2(a) shall not be deemed to impose any obligation upon
Landlord to either have said improvements or facilities or to provide those
services.

          (d)  Tenant shall pay monthly in advance on the same day as the Base
Rent is due Tenant's Share of estimated Operating Expenses in the amount set
forth in Paragraph 1.6. Landlord shall deliver to Tenant within 90 days after
the expiration of each calendar year a reasonably detailed statement showing
Tenant's Share of the actual Operating Expenses incurred during the preceding
year. If Tenant's estimated payments under this Paragraph 4(d) during the
preceding year exceed Tenant's Share as indicated on said statement, Tenant
shall be credited the amount of such overpayment against Tenant's Share of
Operating Expenses next becoming due. If Tenant's estimated payments under this
Paragraph 4.2(d) during said preceding year were less than Tenant's Share as
indicated on said statement, Tenant shall pay to Landlord the amount of the
deficiency within 10 days after delivery by Landlord to tenant of said
statement. At any time Landlord may adjust the amount of the estimated Tenant's
Share of Operating Expenses and HVAC maintenance costs to reflect Landlord's
estimate of such expenses for the year.

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          Notwithstanding the foregoing, during the initial term of this Lease
only (specifically, the period commencing February 1, 2002, to and including
January 31, 2007), Landlord shall not pass through to Tenant any costs for the
replacement of the roof of the Building, which shall be defined as the 81,225 sf
Premises at 2055 Burroughs Avenue.

5.   Security Deposit. Tenant shall deposit with Landlord upon Tenant's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security for
Tenant's faithful performance of Tenants obligations under this Lease. If Tenant
fails to pay Base Rent or Additional Rent or otherwise defaults under this Lease
(as defined in Paragraph 13.1), Landlord may use the Security Deposit for the
payment of any amount due Landlord or to reimburse or compensate Landlord for
any liability, cost, expense, loss or damage (including attorney's fees) which
Landlord may suffer or incur by reason thereof. Tenant shall on demand pay
Landlord the amount so used or applied so as to restore the Security Deposit to
the amount set forth in Paragraph 1.7. Landlord shall not be required to keep
all or any part of the Security Deposit separate from its general accounts
during the Term of the Lease. Notwithstanding the foregoing, Landlord, prior to
the Commencement Date of this Lease, shall place the Security Deposit in an
interest-bearing account for the period beginning with the full execution of
this Lease and terminating on the Commencement Date of this Lease. Upon Lease
Commencement, the accrued interest shall be remitted to Tenant upon Landlord's
receipt of Tenant's written notice that the interest payment is due. Upon the
Commencement Date of this Lease, the Security Deposit shall cease to earn
interest and Landlord shall have no further obligation to keep the Security
Deposit in an interest-bearing account. Landlord shall, at the expiration or
earlier termination of the term hereof and after Tenant has vacated the
Premises, return to Tenant that portion of the Security Deposit not used or
applied by Landlord. No part of the Security Deposit shall be considered to be
held in trust, to bear interest, or to be prepayment for any monies to be paid
by Tenant under this Lease.

6.   Use.

     6.1  Permitted Use. Tenant shall use and occupy the Premises only for the
          -------------
Permitted Use set forth in Paragraph 1.8. Tenant shall not commit any nuisance,
permit the emission of any objectionable noise or odor, suffer any waste, make
any use of the Premises which is contrary to any law or ordinance or which will
invalidate or increase the premiums for any of Landlord's insurance. Tenant
shall not service, maintain or repair vehicles on the Premises, Building or
Common Areas. Tenant shall not store foods, pallets, drums or any other
materials outside the Premises.

     6.2  Hazardous Substances.
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          (a) Reportable Uses Require Consent. The term "Hazardous Substance" as
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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 potential liability of Landlord to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Tenant
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Landlord and compliance in a timely manner (at
Tenant's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Requirements require that a notice be given to persons entering or
occupying the Premises or neighboring properties. Notwithstanding the foregoing,
Tenant may, without Landlord's prior consent, but upon notice to Landlord and in
compliance with all Applicable Requirements, use any ordinary and customary
materials reasonably required to be used by Tenant in the normal course of the
Permitted Use, so long as such use is not a Reportable Use and does not expose
the Premises, or neighboring properties to any meaningful risk of contamination
or damage or expose Landlord to any liability therefor. In addition, Landlord
may (but without any obligation to do so) condition its consent to any
Reportable Use of any Hazardous Substance by Tenant upon Tenant's giving
Landlord such additional assurances as Landlord, in its reasonable discretion,
deems necessary to protect itself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefor, including but
not limited to the installation (and, at Landlord's option, 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.

          (b) Duty to Inform Landlord. If Tenant knows, or has reasonable cause
              -----------------------
to believe, that a Hazardous Substance is located in, under or about the
Premises or the Building, Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous
Substance. Tenant shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under or about the Premises (including, without
limitation, through the plumbing or sanitary sewer system).

          (c) Indemnification. Tenant shall indemnify, protect, defend and hold
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Landlord, Landlord's affiliates, Lenders, and the officers, directors,
shareholders, partners, employees, managers, independent contractors, attorneys
and agents of the foregoing ("Landlord Entities") and the Premises, harmless
from and against any and all damages, liabilities, judgments, costs, claims,
liens, expenses, penalties, loss of permits and attorneys' and consultants' fees
arising out of or involving any Hazardous Substance brought onto the Premises by
or for Tenant or by any of Tenant's employees, agents, contractors or invitees.
Tenant's obligations under this Paragraph 6.2(c) shall include, but not be
limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Tenant, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved.
Tenant's obligations under this Paragraph 6.2(c) shall survive the expiration or
earlier termination of this Lease.

     6.3  Tenant's Compliance with Requirements. Tenant shall, at Tenant's sole
          -------------------------------------
cost and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements," which term is used in this Lease to mean all

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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 Landlord'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), now in effect or which may hereafter come into effect.
Tenant shall, within 5 days after receipt of Landlord's written request, provide
Landlord with copies of all documents and information evidencing Tenant's
compliance with any Applicable Requirements and shall immediately upon receipt,
notify Landlord 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 Tenant or the Premises to comply with any
Applicable Requirements.

     6.4  Inspection; Compliance with Law. In addition to Landlord's
          -------------------------------
environmental monitoring and insurance program, the cost of which is included in
Operating Expenses, Landlord and the holders of any mortgages, deeds of trust or
ground leases on the Premises ("Lenders") shall have the right to enter the
Premises at any time in the case of an emergency, and otherwise at reasonable
times, with reasonable prior notice, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Tenant with this Lease and all
Applicable Requirements. Landlord shall be entitled to employ experts and/or
consultants in connection therewith to advise Landlord with respect to Tenant's
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance on or from the Premises. The cost and expenses of any such
inspections shall be paid by the party requesting same unless a violation of
Applicable Requirements exists or is imminent or the inspection is requested or
ordered by a governmental authority. In such case, Tenant shall upon request
reimburse Landlord or Landlord's Lender, as the case may be, for the costs and
expenses of such inspections.

     6.5  Tenant Move-in Questionnaire. Prior to executing this Lease, Tenant
          ----------------------------
has completed, executed and delivered to Landlord Tenant's Move-in and Lease
Renewal Environmental Questionnaire (the "Tenant Move-in Questionnaire"), a copy
of which is attached hereto as Exhibit D and incorporated herein by this
                               ---------
reference. Tenant covenants, represents and warrants to Landlord that the
information on the Tenant Move-in Questionnaire is true and correct and
accurately describes the use(s) of Hazardous Substances which will be made
and/or used on the Premises by Tenant.

7.   Maintenance, Repairs, Trade Fixtures and Alterations.

     7.1  Tenant's Obligations. Subject to the provisions of Paragraph 7.2
          --------------------
(Landlord's Obligations), Paragraph 9 (Damage or Destruction) and Paragraph 14
(Condemnation), Tenant shall, at Tenant'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 reasonable or readily accessible to Tenant and
whether or not the need for such repairs occurs as a result of Tenant's use, any
prior use, the elements or the age of such portion of the Premises) including,
without limiting the generality of the foregoing, all equipment or facilities
specifically serving the Premises, such as plumbing, heating, air conditioning,
ventilating, electrical, lighting facilities, fire hose connectors if within the
Premises, fixtures, interior walls, interior surfaces of exterior walls,
ceilings, floors, windows, doors, plate glass, skylights and dock doors related
equipment (including but not limited to dock levelers, bumpers, lights and
adjacent dock wells), but excluding any items which are the responsibility of
Landlord pursuant to Paragraph 7.2 below. Tenant'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.

     7.2  Landlord's Obligations. Subject to the provisions of Paragraph 6
          ----------------------
(Use), Paragraph 7.1 (Tenant's Obligations), Paragraph 9 (Damage or Destruction)
and Paragraph 14 (Condemnation), Landlord at its expense and not subject to
reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and
repair the foundations and exterior walls of the Building and utility systems
outside the Building. Landlord, subject to reimbursement pursuant to Paragraph
4.2, shall keep in good order, condition and repair the air conditioning systems
servicing the Premises, Building roof and Common Areas.

     7.3  Alterations. Tenant shall not install any signs, fixtures,
          -----------
improvements, nor make or permit any other alterations or additions to the
Premises without the prior written consent of Landlord, which consent shall not
be withheld unreasonably. If any such alteration or addition is expressly
permitted by Landlord, Tenant shall deliver at least twenty (20) days prior
notice to Landlord, from the date Tenant intends to commence construction,
sufficient to enable Landlord to post a Notice of Non-Responsibility. In all
events, Tenant shall obtain all permits or other governmental approvals prior to
commencing any of such work and deliver a copy of same to Landlord. All
alterations and additions shall be installed by a licensed contractor approved
by Landlord, which approval shall not be withheld or delayed unreasonably, at
Tenant's sole expense in compliance with all applicable Laws (including, but not
limited to, the ADA as defined herein), Recorded Matters, and Rules and
Regulations. Tenant shall keep the Premises and the property on which the
Premises are situated free from any liens arising out of any work performed,
materials furnished or obligations incurred by or on behalf of Tenant. As a
condition to Landlord's consent to the installation of any fixtures, additions
or other improvements, Landlord may require Tenant to post and obtain a
completion and indemnity bond for up to one hundred twenty-five percent (125%)
of the cost of the work.

     7.4  Surrender/Restoration. Tenant shall surrender the Premises by the end
          ---------------------
of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair
ordinary wear and tear excepted. Without limiting the generality of the above,
Tenant shall remove all personal property, trade fixtures and floor bolts, patch
all floors and cause all lights to be in good operating condition.

8.   Insurance; Indemnity.

     8.1  Payment of Premiums. The cost of the premiums for the insurance
          -------------------
policies maintained by Landlord under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date of Expiration
Date.

                                       5
<PAGE>

     8.2  Tenant's Insurance.
          -------------------

          (i)   At its sole cost and expense, Tenant shall maintain in full
force and effect during the Term of the lease the following insurance coverages
insuring against claims which may arise from or in connection with the Tenant's
operation and use of the leased premises.

                (a) Commercial General Liability with minimum limits of
$1,000,000 per occurrence; $3,000,000 general aggregate for bodily injury,
personal injury and property damage. If required by Landlord, liquor liability
coverage will be included.

                (b) Workers' Compensation insurance with statutory limits and
Employers Liability with a $1,000,000 per accident limit for bodily injury or
disease.

                (c) Automobile Liability covering all owned, non-owned and hired
vehicles with a $1,000,000 per accident limit for bodily injury and property
damage.

                (d) Property insurance against all risks of loss to any tenant
improvements or betterments and business personal property on a full replacement
cost basis with no coinsurance penalty provision; and Business Interruption
Insurance with a limit of liability representing loss of at least approximately
six months of income.

          (ii)  Tenant shall deliver to AMB or Landlord's property management
company certificates of all insurance reflecting evidence of required coverages
prior to initial occupancy; and annually thereafter.

          (iii) If, in the opinion of Landlord's insurance advisor, the amount
of scope of such coverage is deemed inadequate at any time during the Term,
Tenant shall increase such coverage to such reasonable amounts or scope as
Landlord's advisor deems adequate.

          (iv) All insurance required under Paragraph 8.2 (i) shall be primary
and non-contributory (ii) shall provide for severability of interests, (iii)
shall be issued by insurers, licensed to do business in the state in which the
Premises are located and which are rated A:VII or better by Best's Key Rating
Guide, (iv) shall be endorsed to include Landlord and such other persons or
entities as Landlord may from time to time designate, as additional insureds
(Commercial General Liability only), and (v) shall be endorsed to provide at
least 30-days prior notification of cancellation or material change in coverage
to said additional insureds.

     8.3  Landlord's Insurance. Landlord shall maintain all risk, including
          --------------------
insurance covering the buildings within the Industrial Center, Commercial
General Liability and such other insurance in such amounts and covering such
other liability or hazards as deemed appropriate by Landlord, provided, however,
that Landlord shall not be obligated to maintain earthquake or flood coverage.
The amount and scope of coverage of Landlord's insurance shall be determined by
Landlord from time to time in its sole discretion and shall be subject to such
deductible amounts as Landlord may elect. Landlord shall have the right to
reduce or terminate any insurance or coverage. Premiums for any such insurance
shall be a Common Area Operating Expense.

     8.4  Waiver of Subrogation. To the extent permitted by law and without
          ---------------------
affecting the coverage provided by insurance required to be maintained
hereunder, Landlord and Tenant each waive any right to recover against the other
on account of any and all claims Landlord or Tenant may have against the other
with respect to property insurance actually carried, or required to be carried
hereunder, to the extent of the proceeds realized from such insurance coverage.

     8.5  Indemnity. Tenant shall protect, indemnify and hold the Landlord
          ---------
Entities harmless from and against any and all loss, claims, liability or costs
(including court costs and attorney's fees) incurred by reason of:

          (i)    any damage to any property (including but not limited to
property of any Landlord Entity) or death or injury to any person occurring in
or about the Premises, the Building or the Industrial Center to the extent that
such injury or damage shall be caused by or arise from any actual or alleged
act, neglect, fault or omission by or of Tenant, its agents, servants,
employees, invitees, or visitors;

          (ii)   the conduct or management of any work or anything whatsoever
done by the Tenant on or about the Premises or from transactions of the Tenant
concerning the Premises;

          (iii)  Tenant's failure to comply with any and all governmental laws,
ordinances and regulations applicable to the condition or use of the Premises or
its occupancy; or

          (iv)   any breach or default of the part of Tenant in the performance
of any covenant or agreement on the part of the Tenant to be performed pursuant
to this Lease.

The provisions of this Paragraph 8.5 shall survive the termination of this Lease
with respect to any claims or liability accruing prior to such termination.

     8.6  Exemption of Landlord from Liability. Except to the extent caused by
          ------------------------------------
the gross negligence or willful misconduct of Landlord, Landlord Entities shall
not be liable for and Tenant waives any claims against Landlord Entities for
injury or damage to the person or the property of Tenant, Tenant's employees,
contractors, invitees, customers or any other person in or about the Premises,
Building or Industrial Center from any cause whatsoever, including, but not
limited to, damage or injury which is caused by or results from (i) 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 (ii) from the condition of the Premises,
other portions of the Building or Industrial Center. Landlord shall not be
liable for any damages arising from any act or neglect of any other tenant of
Landlord nor from the failure by Landlord to enforce the provisions of any other
lease in the Industrial Center. Notwithstanding Landlord's negligence or breach
of this Lease, Landlord shall under no circumstances be liable for injury to
Tenant's business, for any loss of income or profit therefrom or any indirect,
consequential or punitive damages.

                                       6
<PAGE>

9.   Damage or Destruction.

     9.1  Termination Right. Tenant shall give Landlord immediate written notice
          -----------------
of any damage to the Premises. Subject to the provisions of Paragraph 9.2, if
the Premises or the Building shall be damaged to such an extent that there is
substantial interference for a period exceeding 120 consecutive days with the
conduct by Tenant of its business at the Premises, Tenant, at any time prior to
commencement of repair of the Premises and following 10 days written notice to
Landlord, may terminate this Lease effective 30 days after delivery of such
notice to Landlord. Such termination shall not excuse the performance by Tenant
of those covenants which under the terms hereof survive termination. Rent shall
be abated in proportion to the degree of interference during the period that
there is such substantial interference with the conduct of Tenant's business at
the Premises. Abatement of rent and Tenant's right of termination pursuant to
this provision shall be Tenant's sole remedy for failure of Landlord to keep in
good order, condition and repair the foundations and exterior walls of the
Building, Building roof, utility systems outside the Building, the Common Areas
and HVAC.

     9.2  Damage Caused by Tenant. Tenant's termination rights under Paragraph
          -----------------------
9.1 shall not apply if the damage to the Premises or Building is the result of
any act or omission of Tenant or of any of Tenant's agents, employees,
customers, invitees or contractors ("Tenant Acts"). Any damage resulting from a
Tenant Act shall be promptly repaired by Tenant. Landlord at its option may at
Tenant's expense repair any damage caused by Tenant Acts. Tenant shall continue
to pay all rent and other sums due hereunder and shall be liable to Landlord for
all damages that Landlord may sustain resulting from a Tenant Act.

10.  Real Property Taxes.

     10.1 Payment of Real Property Taxes. Landlord shall pay the Real Property
          ------------------------------
Taxes due and payable during the term of this Lease and, except as otherwise
provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Operating Expenses in accordance with the provisions of Paragraph
4.2.

     10.2 Real Property Tax Definition. As used herein, the term "Real Property
          ----------------------------
Taxes" is any form of tax or assessment, general, special, ordinary or
extraordinary, imposed or levied upon (a) the Industrial Center, (b) any
interest of Landlord in the Industrial Center, (c) Landlord's right to rent or
other income from the Industrial Center, and/or (d) Landlord's business of
leasing the Premises. Real Property Taxes include (i) any license fee,
commercial rental tax, excise tax, improvement bond or bonds, levy or tax; (ii)
any tax or charge which replaces or is in addition to any of such above-
described "Real Property Taxes" and (iii) any fees, expenses or costs (including
attorney's fees, expert fees and the like) incurred by Landlord in protesting or
contesting any assessments levied or any tax rate. The term "Real Property
Taxes" shall also include any increase resulting from a change in the ownership
of the Industrial Center or Building, or the improvements thereon, the execution
of this Lease or any modification, amendment or transfer thereof. Real Property
Taxes for tax years commencing prior to, or extending beyond, the term of this
Lease shall be prorated to coincide with the corresponding Commencement Date of
Expiration Date.

     10.3 Joint Assessment. If the Building is not separately assessed, Real
          ----------------
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed.

     10.4 Tenant's Property Taxes. Tenant shall pay prior to delinquency all
          -----------------------
taxes assessed against and levied upon Tenant's improvements, fixtures,
furnishings, equipment and all personal property of Tenant contained in the
Premises or stored within the Industrial Center.

11.  Utilities. Tenant shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity, telephone,
security, gas and cleaning of the Premises, together with any taxes thereon. For
any such utilities and services that are not billed or metered separately to
Tenant, including without limitation, water, Tenant shall pay to Landlord, as
Additional Rent, without prior notice or demand, on the Commencement Date and
thereafter on the first (1st) day of each month throughout the balance of the
Term of this Lease the amount which is attributable to Tenant's use of the
utilities or similar services, as reasonably estimated and determined by
Landlord based upon factors such as size of the Premises and intensity of use of
such utilities by Tenant such that Tenant shall pay the portion of such charges
reasonably consistent with Tenant's use of such utilities and similar services
("Utility Expenses"). If Tenant disputes any such estimate or determination,
then Tenant shall either pay the estimated amount or cause the Premises to be
separately metered at Tenant's sole expense.

12.  Assignment and Subletting.

     12.1 Landlord's Consent Required.
          ---------------------------

          (a) Tenant shall not assign, transfer, mortgage or otherwise transfer
or encumber (collectively, "assign") or sublet all or any part of Tenant's
interest in this Lease or in the Premises without Landlord's prior written
consent which consent shall not be unreasonably withheld. Relevant criteria in
determining reasonability of consent include, but are not limited to, credit
history of a proposed assignee or sublessee, references from prior landlords,
any change or intensification of use of the Premises or the Common Areas and any
limitations imposed by the Internal Revenue Code and the Regulations promulgated
thereunder relating to Real Estate Investment Trusts. Assignment or sublet shall
not release Tenant from its obligations hereunder. Tenant shall not (i) sublet
or assign or enter into other arrangements such that the amounts to be paid by
the sublessee or assignee thereunder would be based, in whole or in part, on the
income or profits derived by the business activities of the sublessee or
assignee; (ii) sublet the Premises or assign this Lease to any person in which
Landlord owns an interest, directly or indirectly (by applying constructive
ownership rules set forth in Section 856(d)(5) of the Internal Revenue Code (the
"Code"); or (iii) sublet the Premises or assign this Lease in any other manner
which could cause any portion of the amounts received by Landlord pursuant to
this Lease or any sublease to fail to qualify as "rents from real property"
within the meaning of Section 856(d) of the Code, or which could cause any other
income received by Landlord to fail to qualify as income described in Section
856(c)(2) of the Code. The requirements of this Section 12.1 shall apply to any
further subleasing by any subtenant.

          (b) A change in the control of Tenant shall constitute an assignment
requiring Landlord's consent. The transfer, on a cumulative basis, of 25% or
more of the voting or management control of Tenant shall constitute a change in
control for this purpose.

                                       7
<PAGE>

     12.2 Lease Termination. If, as of the effective date of any permitted
          -----------------
assignment or subletting the then remaining term of this Lease is less than
three (3) years, Landlord may terminate the Lease as of the date of assignment
or subletting subject to the performance by Tenant of those covenants which
under the terms hereof survive termination.

     12.3 Excess Consideration. In the event of any assignment or sublease,
          --------------------
Landlord shall receive as additional rent hereunder fifty percent (50%) of
Tenant's "Excess Consideration" derived from such assignment or sublease. If
          --------------------
Tenant shall elect to assign or sublet, Tenant shall use reasonable and good
faith efforts to secure consideration from any such assignee or subtenant which
would be generally equivalent to then-current market rent, but in no event shall
Tenant's monetary obligations to Landlord, as set forth in this Lease, be
reduced. In the event of a sublease, "Excess Consideration" shall mean all rent,
                                      --------------------
additional rent or other consideration actually received by Tenant from such
subtenant and/or actually paid by such subtenant on behalf of Tenant in
connection with the subletting in excess of the rent, additional rent and other
sums payable by Tenant under this Lease during the term of the sublease on a per
square foot basis if less than all of the Premises is subleased, less marketing
costs, attorneys' fees and brokerage commissions, if any, reasonably incurred by
Tenant to procure the sublease, and the cost of any alterations made by Tenant
specifically for the benefit of such subtenant. In the event of an assignment,
"Excess Consideration" shall mean key money, bonus money or other consideration
 --------------------
paid by the assignee to Tenant in connection with such assignment, and any
payment in excess of fair market value for services rendered by Tenant to
assignee or for assets, fixtures, inventory, equipment, or furniture transferred
by Tenant to assignee in connection with such assignment, less marketing costs,
attorneys' fees and brokerage commissions, if any, reasonably incurred by Tenant
to procure the assignment, and the cost of any alterations made by Tenant
specifically for the benefit of such assignee. If part of the Excess
Consideration shall be payable by the assignee or subtenant other than in case,
then Landlord's share of such non-cash consideration shall be in such form as is
reasonably satisfactory to Landlord.

13.  Default; Remedies.

     13.1 Default. The occurrence of any one of the following events shall
          -------
constitute an event of default on the part of Tenant ("Default"):

          (a) The abandonment of the Premises by Tenant;

          (b) Failure to pay any installment of Base Rent, Additional Rent or
any other monies due and payable hereunder, said failure continuing for a period
of 3 days after the same is due;

          (c) A general assignment by Tenant or any guarantor for the benefit of
creditors;

          (d) The filing of a voluntary petition in bankruptcy by Tenant or any
guarantor, the filing of a voluntary petition for an arrangement, the filing of
a petition, voluntary or involuntary, for reorganization, or the filing of an
involuntary petition by Tenant's creditors or guarantors;

          (e) Receivership, attachment, of other judicial seizure of the
Premises or all or substantially all of Tenant's assets on the Premises;

          (f) Failure of Tenant to maintain insurance as required by Paragraph
8.2;

          (g) Any breach by Tenant of its covenants under Paragraph 6.2;

          (h) Failure in the performance of any of Tenant's covenants,
agreements or obligations hereunder (except those failures specified as events
of Default in other Paragraphs of this Paragraph 13.1 which shall be governed by
such other Paragraphs), which failure continues for 10 days after written notice
thereof from Landlord to Tenant provided that, if Tenant has exercised
reasonable diligence to cure such failure and such failure cannot be cured
within such 10 day period despite reasonable diligence, Tenant shall not be in
default under this subparagraph unless Tenant fails thereafter diligently and
continuously to prosecute the cure to completion;

          (i) Any transfer of a substantial portion of the assets of Tenant, or
any incurrence of a material obligation by Tenant, unless such transfer or
obligation is undertaken or incurred in the ordinary course of Tenants business
or in good faith for equivalent consideration, or with Landlord's consent; and

          (j) The default of any guarantors of Tenant's obligations hereunder
under any guaranty of this Lease, or the attempted repudiation or revocation of
any such guaranty.

     13.2 Remedies. In the event of any Default by Tenant, Landlord shall have
          --------
the remedies set forth in the Addendum attached hereto entitled "Landlord's
Remedies in Event of Tenant Default".

     13.3 Late Charges. Tenant hereby acknowledges that late payment by Tenant
          ------------
to Landlord of rent and other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges. Accordingly, if any installment of rent or
other sum due from Tenant shall not be received by Landlord or Landlord's
designee within 5 days after such amount shall be due, then, without any
requirement for notice to Tenant, Tenant shall pay to Landlord a late charge
equal to 5% of such overdue amount. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's Default with respect
to such overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies granted hereunder.

14.  Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of exercise of said power (all
of which are herein called "condemnation"), this Lease shall terminate as to the
part so taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the floor area of the Premises, or
more than 25% of the portion of the Common Areas designated for Tenant's
parking, is taken by condemnation, Tenant may, at Tenant's option, to be
exercised in writing within 10 days after Landlord shall have given Tenant
written notice of such taking (or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession) terminate this Lease
as of the date the condemning

                                       8
<PAGE>

authority takes such possession. If Tenant does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Landlord, provided, however, that Tenant shall be
entitled to any compensation, separately awarded to Tenant for Tenant's
relocation expenses and/or loss of Tenants trade fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Landlord shall to
the extent of its net severance damages in the condemnation matter, repair any
damage to the Premises caused by such condemnation authority. Tenant shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.

15.  Estoppel Certificate and Financial Statements.

     15.1 Estoppel Certificate. Each party (herein referred to as "Responding
          --------------------
Party") shall within 10 days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party, to
the extent it can truthfully do so, an estoppel certificate in the form attached
hereto, plus such additional information, confirmation a/or statements as be
reasonably requested by the Requesting Party.

     15.2 Financial Statement. If Landlord desires to finance, refinance, or
          -------------------
sell the Building, Industrial Center or any part thereof, Tenant and all
Guarantors shall deliver to any potential lender or purchaser designated by
Landlord such financial statements of Tenant and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Tenant's financial statements for the past 3 years. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

16.  Additional Covenants and Provisions.

     16.1 Severability. The invalidity of any provision of this Lease, as
          ------------
determined by a court of competent jurisdiction, shall not affect the validity
of any other provision hereof.

     16.2 Interest on Past-Due Obligations. Any monetary payment due Landlord
          --------------------------------
hereunder not received by Landlord within 10 days following the date on which it
was due shall bear interest from the date due at 11% per annum, but not
exceeding the maximum rate allowed by law in addition to the late charge
provided for in Paragraph 13.3.

     16.3 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.

     16.4 Landlord Liability. Tenant, its successors and assigns, shall not
          ------------------
assert nor seek to enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Industrial Center.
Tenant agrees to look solely to such interest for the satisfaction of any
liability or claim against Landlord under this Lease. In no event whatsoever
shall Landlord (which term shall include, without limitation, any general or
limited partner, trustees, beneficiaries, officers, directors, or stockholders
of Landlord) ever be personally liable for any such liability.

     16.5 No Prior or Other Agreements. This Lease contains all agreements
          ----------------------------
between the Parties with respect to any matter mentioned herein, and supersedes
all oral, written prior or contemporaneous agreements or understandings.

     16.6 Notice Requirements. All notices required or permitted by this Lease
          -------------------
shall be in writing and may be delivered in person (by hand or by messenger or
courier service) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission
during normal business hours, and shall be deemed sufficiently given if served
in a manner specified in the Paragraph 16.6. 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 Tenant's
taking possessing of the Premises, the Premises shall constitute Tenant's
address for the purpose of mailing or delivering notices to Tenant. A copy of
all notices required or permitted to be given to Landlord hereunder shall be
concurrently transmitted to such party or parties at such addresses as Landlord
may from time to time hereafter designate by written notice to Tenant.

     16.7 Date of Notice. Any notice sent by registered or certified mail,
          --------------
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given 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 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 or facsimile confirmation of receipt of the transmission thereof,
provided a copy is also delivered via hand or overnight delivery or certified
mail. If notice is received on a Saturday or a Sunday or a legal holiday, it
shall be deemed received on the next business day.

     16.8 Waivers. No waiver by Landlord of a Default by Tenant shall be deemed
          -------
a waiver of any other term, covenant or condition hereof, or of any subsequent
Default by Tenant of the same or any other term, covenant or condition hereof.

     16.9 Holdover. Tenant has no right to retain possession of the Premises or
          --------
any part thereof beyond the expiration or earlier termination of this Lease. If
Tenant holds over with the consent of Landlord: (i) the Base Rent payable shall
be increased to 150% of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination; (ii) Tenant's right to
possession shall terminate on 30 days notice from Landlord and (iii) all other
terms and conditions of this Lease shall continue to apply. Nothing contained
herein shall be construed as a consent by Landlord to any holding over by
Tenant. Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, demands, actions, losses, damages, obligations,
costs and expenses, including, without limitation, attorneys' fees incurred or
suffered by Landlord by reason of Tenant's failure to surrender the Premises on
the expiration

                                       9
<PAGE>

or earlier termination of this Lease in accordance with the provisions of this
Lease.

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

     16.11  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.

     16.12  Landlord. The covenants and obligations contained in this Lease on
            --------
the part of Landlord are binding on Landlord, its successors and assigns, only
during and in respect of their respective period of ownership of such interest
in the Industrial Center. In the event of any transfer or transfers of such
title to the Industrial Center, Landlord (and in case of any subsequent
transfers or conveyances, the then grantor) shall be concurrently freed and
relieved from and after the date of such transfer or conveyance, without any
further instrument or agreement, of all liability with respect to the
performance of any covenants or obligations on the part of Landlord contained in
this Lease thereafter to be performed.

     16.13  Attorneys' Fees and Other Costs. If any Party brings an action or
            -------------------------------
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding shall be entitled
to reasonable attorneys' fees. The term "Prevailing Party" shall include,
without limitation, a Party who substantially obtains or defeats the relief
sought. Landlord shall be entitled to attorneys' fees, costs and expenses
incurred in preparation and service of notices of Default and consultations in
connection therewith, whether or not a legal action is subsequently commenced in
connection with such Default or resulting breach. Tenant shall reimburse
Landlord on demand for all reasonable legal, engineering and other professional
services expenses incurred by Landlord in connection with all requests by Tenant
for consent or approval hereunder.

     16.14  Landlord's Access; Showing Premises; Repairs. Landlord and
            --------------------------------------------
Landlord's agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times upon reasonable notice
for the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements or additions to the
Premises or to the Building, as Landlord may reasonably deem necessary. Landlord
may at any time place on or about the Premises or Building any ordinary "For
Sale" signs and Landlord may at any time during the last 180 days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Landlord shall be without abatement of rent or liability to
Tenant.

     16.15  Signs. Tenant shall not place any signs at or upon the exterior of
            -----
the Premises or the Building, except that Tenant may, with Landlord's prior
written consent, install (but not on the roof) such signs as are reasonably
required to advertise Tenant's own business so long as such signs are in a
location designated by Landlord and comply with sign ordinances and the signage
criteria established for the Industrial Center by Landlord.

     16.16  Termination: Merger. Unless specifically stated otherwise in writing
            -------------------
by Landlord, the voluntary or other surrender of this Lease by Tenant, the
mutual termination or cancellation hereof, or a termination hereof by Landlord
for Default by Tenant, shall automatically terminate any sublease or lesser
estate in the Premises; provided, however, Landlord shall, in the event of any
such surrender, termination or cancellation, have the option to continue any one
or all of any existing subtenancies. Landlord's failure within 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 Landlord's election to
have such event constitute the termination of such interest.

     16.17  Quiet Possession. Upon payment by Tenant of the Base Rent and
            ----------------
Additional Rent for the Premises and the performance of all of the covenants,
conditions and provisions on Tenant's part to be observed and performed under
this Lease, Tenant shall have quiet possession of the Premises for the entire
term hereof subject to all of the provisions of this Lease.

     16.18  Subordination; Attornment; Non-Disturbance.
            -------------------------------------------

            (a)  Subordination. This Lease shall be subject and subordinate to
any ground lease, mortgage, deed of trust, or other hypothecation or mortgage
(collectively, "Mortgage") now or hereafter placed by Landlord 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. Tenant agrees that any person holding any
Mortgage shall have no duty, liability or obligation to perform any of the
obligations of Landlord under this Lease. In the event of Landlord's default
with respect to any such obligation, Tenant will give any Lender, whose name and
address have previously in writing been furnished Tenant, notice of a default by
Landlord. Tenant may not exercise any remedies for default by Landlord unless
and until Landlord and the Lender shall have received written notice of such
default and a reasonable time (not less than 90 days) shall thereafter have
elapsed without the default having been cured. If any Lender shall elect to have
this Lease superior to the lien of its Mortgage and shall give written notice
thereof to Tenant, this Lease shall be deemed prior to such Mortgage. The
provisions of a Mortgage relating to the disposition of condemnation and
insurance proceeds shall prevail over any contrary provisions contained in this
Lease.

            (b)  Attornment. Subject to the non-disturbance provisions of
subparagraph C of this Paragraph 16.18, Tenant agrees to attorn to a Lender or
any other party who acquires ownership of the Premises by reason of a
foreclosure of a Mortgage. In the event of such foreclosure, such new owner
shall not: (i) be liable for any act or omission of any prior landlord or with
respect to events occurring prior to acquisition of ownership, (ii) be subject
to any offsets or defenses which Tenant might have against any prior Landlord,
or (iii) be liable for security deposits or be bound by prepayment of more than
one month's rent.

            (c)  Non-Disturbance. With respect to Mortgage entered into by
Landlord after the execution of this Lease, Tenant's subordination of this Lease
shall be subject to receiving assurance (a "non-disturbance agreement") from the
Mortgage holder that Tenant's possession and this Lease will not be disturbed so
long as Tenant is not in default and attorns to the record owner of the
Premises.

            (d)  Self-Executing. The agreements contained in this Paragraph
16.18 shall be effective without

                                       10
<PAGE>

the execution of any further documents; provided, however, that upon written
request from Landlord or a Lender in connection with a sale, financing or
refinancing of Premises, Tenant and Landlord 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. Landlord is hereby irrevocably vested with full power to subordinate
this Lease to a Mortgage.

     16.19  Rules and Regulations. Tenant agrees that it will abide by, and to
            ---------------------
cause its employees, suppliers, shippers, customers, tenants, contractors and
invitees to abide by all the rules and regulations attached hereto as Exhibit C
("Rules and Regulations") which Landlord may change from time to time for the
management, safety, care, and cleanliness of the Common Areas, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Industrial
Center and their invitees. Landlord shall not be responsible to Tenant for the
non-compliance with said Rules and Regulations by other tenants of the
Industrial Center.

     16.20  Security Measures. Tenant acknowledges that the rental payable to
            -----------------
Landlord hereunder does not include the cost of guard service or other security
measures. Landlord has no obligations to provide same. Tenant assumes all
responsibility for the protection of the Premises, Tenant, its agents and
invitees and their property from the acts of third parties.

     16.21  Reservations. Landlord reserves the right to grant such easements
            ------------
that Landlord deems necessary and to cause the recordation of parcel maps, so
long as such easements and maps do not reasonably interfere with the use of the
Premises by Tenant. Tenant agrees to sign any documents reasonable requested by
Landlord to effectuate any such easements or maps.

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

     16.23  Offer. Preparation of this Lease by either Landlord or Tenant or
            -----
Landlord's agent or Tenant's agent and submission of same to Tenant or Landlord
shall not be deemed an offer to lease. This Lease is not intended to be binding
until executed and delivered by all Parties hereto.

     16.24  Amendments. This Lease may be modified only in writing, signed by
            ----------
the parties in interest at the time of the modification.

     16.25  Multiple Parties. Except as otherwise expressly provided herein, if
            ----------------
more than one person or entity is named herein as Tenant, the obligations of
such persons shall be the joint and several responsibility of all persons or
entities named herein as such Tenant.

     16.26  Authority. Each person signing on behalf of Landlord or Tenant
            ---------
warrants and represents that she or is authorized to execute and deliver this
Lease and to make it a binding obligation of Landlord or Tenant.

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

<TABLE>
<S>                                                    <C>
Landlord:                                              Tenant:

AMB PROPERTY, L.P.,                                    COST-U-LESS, INC.,
a Delaware limited partnership                         a Washington corporation

By: AMB PROPERTY CORPORATION,
    a Maryland corporation, its general partner

    By:  /s/ John L. Rossi                             By:  /s/ Roy Sorensen
         ----------------------------------               --------------------------------------------
         John L. Rossi                                    Roy Sorensen

    Its: Vice President                                Its: Vice President/Secretary

Telephone: (415) 394-9000                              Telephone: (425) 644-4241 Ext. 54

Facsimile: (415) 394-9001                              Facsimile: (425) 641-3383

Executed at: SF, CA                                    Executed at: 12410 32/nd/ St. Bellevue, WA
            -------------------------------                        -----------------------------------

on: 12/2/99                                            on: 11/16/99
    ---------------------------------------                -------------------------------------------

Landlord's Address:                                    Tenant's Address:

505 Montgomery Street, 5/th /Floor                     12410 SE 32/nd/ Street
San Francisco, CA 94111                                Bellevue, Washington 98005
</TABLE>

With a copy to:

Legacy Partners Commercial, Inc.
101 Lincoln Center Drive/4/th/ Floor
Foster City, California 94404
Attention: Williams/Burroughs
Phone: (650) 571-2200
FAX:   (650) 571-2211

                                       11
<PAGE>

                                   Exhibit A
                              Diagram of Premises

                              (IMAGE OF PREMISES)

                                       1
<PAGE>

                                   Exhibit B
                         Commencement Date Memorandum

     LANDLORD:           AMB PROPERTY, L.P., a Delaware limited partnership

     TENANT:             COST-U-LESS, INC., a Washington corporation

     LEASE DATE:         November 12, 1999

     PREMISES:           2055 Burroughs Avenue
                         San Leandro, California 94577

     Tenant hereby accepts the Premises as being in the condition required under
     the Lease.
     The Commencement Date of the Lease is ________________,________.
     The Expiration Date of the Lease is ________________,_______.

<TABLE>
Landlord:                                              Tenant:
<S>                                                    <C>
AMB PROPERTY, L.P.,                                    COST-U-LESS, INC.,
a Delaware limited partnership                         a Washington corporation

By:  AMB PROPERTY CORPORATION,

     a Maryland corporation, its general partner

     By:__________________________                     By:____________________________________
        John L. Rossi                                     J. Jeffrey Meder

     Its: Vice President                               Its: President and Chief Executive Officer

Telephone: (415) 394-9000                              Telephone: (425) 644-4241 Ext. 54

Facsimile: (415) 394-9001                              Facsimile: (425) 641-3383

Executed at:______________________                     Executed at:___________________________

on:_______________________________                     on:____________________________________
</TABLE>

                                       1
<PAGE>

                                   Exhibit C
                              Rules & Regulations

1.   No advertisement, picture or sign of any sort shall be displayed on or
     outside the Premises or the Building without the prior written consent of
     Landlord. Landlord shall have the right to remove any such unapproved item
     without notice and at Tenant's expense.

2.   Tenant shall not regularly park motor vehicles in designated parking areas
     after the conclusion of normal daily business activity.

3.   Tenant shall not use any method of heating or air conditioning other than
     that supplied by Landlord without the prior written consent of Landlord.

4.   Tenant shall not use, keep or permit to be used or kept any foul or noxious
     gas or substance or any flammable or combustible materials on or around the
     Premises, the Building or the Industrial Center.

5.   Tenant shall not alter any lock or install any new locks or bolts on any
     door at the Premises without the prior consent of Landlord.

6.   Tenant agrees not to make any duplicate keys without the prior consent of
     Landlord.

7.   Tenant shall not disturb, solicit or canvas any occupant of the Building or
     Industrial Center and shall cooperate to prevent same.

8.   No person shall go on the roof without Landlord's permission.

9.   Business machines and mechanical equipment belonging to Tenant which cause
     noise or vibration that may be transmitted to the structure of the
     Building, to such a degree as to be objectionable to Landlord or other
     Tenants, shall be placed and maintained by Tenant, at Tenant's expense, on
     vibration eliminators or other devices sufficient to eliminate noise or
     vibration.

10.  All goods, including material used to store goods, delivered to the
     Premises of Tenant shall be immediately moved into the Premises and shall
     not be left in parking or receiving areas overnight.

11.  Tractor trailers which must be unhooked or parked with doily wheels beyond
     the concrete loading areas must use steel plates or wood blocks under the
     dolly wheels to prevent damage to the asphalt paving surfaces. No parking
     or storing of such trailers will be permitted in the auto parking areas of
     the Industrial Center or on streets adjacent thereto.

12.  Forklifts which operate on asphalt paving areas shall not have solid rubber
     tires and shall only use tires that do not damage the asphalt.

13.  Tenant is responsible for the storage and removal of all trash and refuse.
     All such trash and refuse shall be contained in suitable receptacles stored
     behind screened enclosures at locations approved by Landlord.

14.  Tenant shall not store or permit the storage or placement of goods, or
     merchandise or pallets or equipment of any sort in or around the Premises,
     the Building, the Industrial Center or any of the Common Areas of the
     foregoing. No displays or sales of merchandise shall be allowed in the
     parking lots or other Common Areas.

15.  Tenant shall not permit any animals, including, but not limited to, any
     household pets, to be brought or kept in or about the Premises, the
     Building, the Industrial Center or any of the Common Areas of the
     foregoing.

16.  Tenant shall not permit any motor vehicles to be washed on any portion of
     the Premises or in the Common Areas of the Industrial Center, nor shall
     Tenant permit mechanical work or maintenance of motor vehicles to be
     performed on any portion of the premises or in the Common Areas of the
     Industrial Center.

                                       1
<PAGE>

                                   Exhibit D
         Tenant Move-in and Lease Renewal Environmental Questionnaire
                   for Commercial and Industrial Properties

                       Property Name: Williams/Burroughs

       Property Address: 2055 Burroughs Avenue, San Leandro, California

                Exhibit D to the Lease Dated November 12, 1999
                                    Between
                  COST-U-LESS, INC., a Washington corporation
                                  ("Tenant")
                                      and

              AMB PROPERTY, L.P., a Delaware limited partnership
                                 ("Landlord")

Instructions: The following questionnaire is to be completed by the Tenant
Representative with knowledge of the planned/existing operations for the
specified building/location. A copy of the completed form must be attached to
all new leases and renewals, and forwarded to the Owner's Risk Management
Department. Please print dearly and attach additional sheets as necessary.

1.0  Process Information

Describe planned use (new Lease) or existing operations (lease renewal), and
include brief description of manufacturing processes employed.

     General Merchandise Warehouse
--------------------------------------------------------------------------------
________________________________________________________________________________
________________________________________________________________________________

2.0  Hazardous Materials

     2.1  Are any of the following materials handled on the property? Yes___
          No  X
              -
          (A material is handled if it is used, generated, processed, produced,
          packaged, treated, stored, emitted, discharged, or disposed.) If so,
          complete this section. If this question is not applicable, skip this
          section and go on to Section 5.0.

          [_] Explosives            [_] Fuels        [_] Oils
          [_] Solvents              [_] Oxidizers    [_] Organics/lnorganics
          [_] Acids                 [_] Bases        [_] Pesticides
          [_] Gases                 [_] PCBs         [_] Radioactive Materials
          [_]Other (please specify)

     2.2  If any of the groups of materials checked in Section 2.1, please list
          the specific material(s), use(s), and quantity of each chemical used
          or stored on the site in the Table below. If convenient, you may
          substitute a chemical inventory and list the uses of each of the
          chemicals in each category separately.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
            Material      Physical State     Usage   Container    Number of        Total
                          (Solid, Liquid,              Size       Containers      quantity
                              or Gas)
--------------------------------------------------------------------------------------------------
            <S>           <C>                <C>     <C>          <C>             <C>
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>

     2.3  Describe the planned storage area location(s) for these materials.
          Please include site maps and drawings as appropriate.

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

3.0  Hazardous Wastes

     Are hazardous wastes generated?                       Yes    No  X
                                                                      -

     If yes, continue with the next question. If not, skip this section and go
     to Section 4.0.

     3.1  Are any of the following wastes generated, handled, or disposed of
          (where applicable) on the property?

           [_] Hazardous wastes                  [_] Industrial Wastewater
           [_] Waste oils                        [_] PCBs
           [_] Air emissions                     [_] Sludges
           [_] Regulated Wastes                  [_] Other (please specify)

                                       1
<PAGE>

     3.2  List and quantify the materials identified in Question 3-1 of this
          section.

<TABLE>
          ________________________________________________________________________________________________________
          Waste Generated         RCRA listed    Source        Approximate             Waste           Disposition
                                    Waste?                  Monthly Quantity      Characterization
          <S>                     <C>            <C>        <C>                   <C>                  <C>
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
</TABLE>

     3.3  Please include name, location, and permit number (e.g. EPA ID No.) for
          transporter and disposal facility, if applicable). Attach separate
          pages as necessary.

<TABLE>
          ________________________________________________________________________________________________________
          Transporter/Disposal    Facility Location      Transporter (T) or         Permit Number
             Facility Name                              Disposal (D) Facility
          <S>                     <C>                   <C>                         <C>
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
</TABLE>

     3.4  Are pollution controls or monitoring employed in the process to
          prevent or minimize the release of wastes into the
          environment?                                            Yes____ No  X
                                                                             ---
          If so, please describe.

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

4.0  USTS/ASTS

     4.1  Are underground storage tanks (USTs), aboveground storage tanks
          (ASTs), or associated pipelines used for the storage of petroleum
          products, chemicals, or liquid wastes present on site (lease renewals)
          or required for planned operations (new tenants)?
                                                               Yes ____  No  X
                                                                            ---

          If not, continue with section 5.0. If yes, please describe capacity,
          contents, age, type of the USTs or ASTs, as well any associated leak
          detection / spill prevention measures. Please attach additional pages
          if necessary.

<TABLE>
<CAPTION>
          ________________________________________________________________________________________________________
              Capacity       Contents          Year          Type (Steel,         Associated Leak
                                             Installed     Fiberglass, etc)      Detection / Spill
                                                                                Prevention Measures*
          ________________________________________________________________________________________________________
          <S>                <C>             <C>           <C>                  <C>
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
          ________________________________________________________________________________________________________
</TABLE>

          *Note: The following are examples of leak detection / spill prevention
          measures:

<TABLE>
          <S>                                 <C>                           <C>
          Integrity testing                   Inventory reconciliation      Leak detection system
          Overfill spill protection           Secondary containment         Cathodic protection
</TABLE>

     4.2  Please provide copies of written tank integrity test results and/or
          monitoring documentation, if available.

     4.3  Is the UST/AST registered and permitted with the appropriate
          regulatory agencies?
                                                       Yes ____   No ____

          If so, please attach a copy of the required permits.

     4.4  If this Questionnaire is being completed for a lease renewal, and if
          any of the USTs/ASTs have leaked, please state the substance released,
          the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions
          taken, and all remedial responses to the incident.

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

     4.5  If this Questionnaire is being completed for a lease renewal, have
          USTs/ASTs been removed from the property?       Yes____   No____
          If yes, please provide any official closure letters or reports and
          supporting documentation (e.g., analytical test results, remediation
          report results, etc.).

                                       2
<PAGE>

     4.6  For Lease renewals, are there any above or below ground pipelines on
          site used to transfer chemicals or wastes?            Yes ____ No ____

          For new tenants, are installations of this type required for the
          planned operations?                                   Yes ____ No ____

          If yes to either question, please describe.

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

5.0  Asbestos Containing Building Materials

     Please be advised that this property participates in an Asbestos Operations
     and Maintenance Program, and that an asbestos survey may have been
     performed at the Property. If provided, please review the information that
     identifies the locations of known asbestos containing material or presumed
     asbestos containing material. All personnel and appropriate subcontractors
     should be notified of the presence of these materials, and informed not to
     disturb these materials. Any activity that involves the disturbance or
     removal of these materials must be done by an appropriately trained
     individual/contractor.

6.0  Regulatory

     6.1  For Lease Renewals, are there any past, current, or pending regulatory
          actions by federal, state, or local environmental agencies alleging
          noncompliance with regulations?
                                                                Yes ____ No ____
          If so, please describe.

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

     6.2  For lease renewals, are there any past, current, or pending lawsuits
          or administrative proceedings for alleged environmental damages
          involving the property, you, or any owner or tenant of the property?
                                                                Yes ____ No ____
          If so, please describe.

          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

     6.3  Does the operation have or require a National Pollutant Discharge
          Elimination System (NPDES),or equivalent permit?      Yes ____ No  X
                                                                            ---
          If so, please attach a copy of this permit.

          For Lease renewals, have there been any complaints from the
          surrounding community regarding facility operations?
                                                                Yes ____ No ____

          Have there been any worker complaints or regulatory investigations
          regarding hazardous material exposure at the facility?
                                                                Yes ____ No ____

          If so, please describe status and any corrective actions taken. Please
          attach additional pages as necessary.
          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

     6.4  Has a Hazardous Materials Business Plan been developed for the site?
                                                                Yes ____ No  X
                                                                            ---
          If so, please attach a copy.

Certification

I am familiar with the real property described in this questionnaire. By signing
below, I represent and warrant that the answers to the above questions are
complete and accurate to the best of my knowledge. I also understand that the
Owner will rely on the completeness and accuracy of my answers in assessing any
environmental liability risks associated with the property.

                              Signature: /s/ James F. Arcuri
                                        ---------------------------------------

                              Name: James F. Arcuri
                                   --------------------------------------------

                              Title: Vice President Real Estate/Construction
                                    -------------------------------------------

                              Date: 11/15/99
                                   --------------------------------------------

                              Telephone: 425-644
                                        ---------------------------------------

Please provide a copy of the completed questionnaire to:

Mr. Steve Campbell
AMB Property, L.P.
505 Montgomery Street, Fifth Floor
San Francisco, CA 94111

                                       3
<PAGE>

                                   Exhibit E
                           Construction Obligations

This exhibit, entitled "Tenant Improvements", is and shall constitute Exhibit E
                                                                      ---------
to that certain Lease Agreement dated November 12, 1999 (the "Lease"), by and
between AMB PROPERTY, L.P., a Delaware limited partnership, ("Landlord"), and
COST-U-LESS, INC., a Washington corporation, ("Tenant"), for the leasing of
certain premises located at 2055 Burroughs Avenue, San Leandro, California (the
"Premises"). The terms, conditions and provisions of this Exhibit E are hereby
                                                          ---------
incorporated into and are made a part of the Lease. Any capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to such
terms as set forth in the Lease.

1.   Tenant Improvements. Subject to the conditions set forth below, Landlord
     -------------------
agrees to construct and install certain improvements ("Tenant Improvements") in
the Building of which the Premises are a part in accordance with the Approved
Final Drawings (defined below) and pursuant to the terms of this Exhibit E.
                                                                 ---------

2.   Definition. "Tenant Improvements" as used in this Lease shall include only
     ----------
those interior improvements to be made to the Premises as specified in the
Approved Final Drawings (defined below) and agreed to by Tenant and Landlord in
accordance with the provisions hereof. "Tenant Improvements" shall specifically
not include (i) any alterations, additions or improvements installed or
constructed by Tenant, (ii) any of Tenant's trade fixtures, racking, security
equipment, equipment, furniture, furnishings, telephone and/or data equipment,
telephone and/or data lines or other personal property, and (iii) any
supplemental fire protection improvements or equipment, including without
limitation, in-rack fire sprinklers, hose racks, reels, smoke vents, and draft
curtains (collectively, "Tenant's Installations").

3.   Tenant's Initial Plans; the Work. Tenant desires Landlord to perform
     --------------------------------
certain Tenant Improvements in the Premises. The Tenant Improvements shall be in
substantial accordance with the plan(s) and scope of work (collectively, the
"Initial Plans") which will be prepared by Legacy Partners C.D.S., Inc. after
the parties meet and confer to agree upon a scope of work immediately after
execution of this Lease. Within fifteen (15) business days from the date
Landlord and Tenant meet to discuss the scope of work, Landlord shall deliver to
Tenant the Initial Plans. A copy of the Initial Plans shall be attached hereto
as Schedule 1, as soon as practicable thereafter. Such work, as shown in the
   ----------
Initial Plans and as more fully detailed in the Approved Final Drawings (as
defined and described in Section 4 below), shall be hereinafter referred to as
the "Work". Not later than five (5) days after the Initial Plans are prepared
and delivered to Tenant, Tenant or Tenant's Representatives shall furnish to
Landlord such additional plans, drawings, specifications and finish details as
Landlord may reasonably request to enable Landlord's architects and engineers,
as applicable, to prepare mechanical, electrical and plumbing plans and to
prepare the Final Drawings, including, but not limited to, a final telephone
layout and special electrical connections, if any. All plans, drawings,
specifications and other details describing the Work which have been, or are
hereafter, furnished by or on behalf of Tenant shall be subject to Landlord's
approval, which approval shall not be unreasonably withheld. Landlord shall not
be deemed to have acted unreasonably if it withholds its approval of any plans,
specifications, drawings or other details or of any Change Request (hereafter
defined in Section 11 below) because, in Landlord's reasonable opinion, the work
as described in any such item, or any Change Request, as the case may be (a) is
likely to adversely affect Building systems, the structure of the Building or
the safety of the Building or its occupants; (b) might impair Landlord's ability
to furnish services to Tenant or other tenants in the Building; (c) would
increase the cost of operating the Building or the Park; (d) would violate any
applicable governmental, administrative body's or agencies' laws, rules,
regulations, ordinances, codes or similar requirements (or interpretations
thereof); (e) contains or uses Hazardous Materials; (f) would adversely affect
the appearance of the Building or the Park; (g) might adversely affect another
tenant's premises or such other tenant's use and enjoyment of such premises; (h)
is prohibited by any ground lease affecting the Building, the Lot and/or the
Park, any Recorded Matters or any mortgage, trust deed or other instrument
encumbering the Building, the Lot and/or the Park; (i) is likely to be
substantially delayed because of unavailability or shortage of labor or
materials necessary to perform such work or the difficulties or unusual nature
of such work; (j) is not, at a minimum, in accordance with Landlord's Building
Standards (defined below); or (k) would increase the Tenant Improvement Costs
(defined in Section 9 below) by more than ten percent (10%) from the cost
originally estimated and anticipated by the parties. The foregoing reasons,
however, shall not be the only reasons for which Landlord may withhold its
approval, whether or not such other reasons are similar or dissimilar to the
foregoing. Neither the approval by Landlord of the Work or the Initial Plans or
any other plans, specifications, drawings or other items associated with the
Work nor Landlord's performance, supervision or monitoring of the Work shall
constitute any warranty or covenant by Landlord to Tenant of the adequacy of the
design for Tenant's intended use of the Premises. Tenant agrees to, and does
hereby, assume full and complete responsibility to ensure that the Work and the
Approved Final Drawings are adequate to fully meet the needs and requirements of
Tenant's intended operations of its business within the Premises and Tenant's
use of the Premises.

4.   Final Drawings and Approved Final Drawings. If necessary for the
     ------------------------------------------
performance of the Work, and to the extent not already included as part of the
Initial Plans attached hereto, Landlord shall prepare or cause to be prepared
final working drawings and specifications for the Work (the "Final Drawings")
based on and consistent with the Initial Plans and the other plans,
specifications, drawings, finish details or other information furnished by
Tenant or Tenant's Representatives to Landlord and approved by Landlord pursuant
to Section 3 above. Tenant shall cooperate diligently with Landlord and
Landlord's architect, engineer and other representatives and Tenant shall
furnish within five (5) days after any request therefor, all information
required by Landlord or Landlord's architect, engineer or other representatives
for completion of the Final Drawings. So long as the Final Drawings are
substantially consistent with the Initial Plans, Tenant shall approve the Final
Drawings within five (5) days after receipt of same from Landlord. Tenant's
failure to approve or disapprove such Final Drawings within the foregoing five
(5) day time period, shall be conclusively deemed to be approval of same by
Tenant. If Tenant reasonably disapproves of any matters included in the Final
Drawings because such items are not substantially consistent with the Initial
Plans, Tenant shall, within the aforementioned five (5) day period, deliver to
Landlord written notice of its disapproval and Tenant shall specify in such
written notice, in sufficient detail as Landlord may reasonably require, the
matters disapproved, the reasons for such disapproval, and the specific changes
or revisions necessary to be made to the Final Drawings to cause such drawings
to substantially conform to the Initial Plans. Any additional costs associated
with such requested changes or revisions shall be included as part of the Tenant
Improvement Costs (defined below). The foregoing procedure shall be followed by
the parties until the Final Drawings are acceptable to both Landlord and Tenant.
Landlord and Tenant shall indicate their approval of the Final Drawings by
initialing each sheet of the Final Drawings and delivering to one another a true
and complete copy of such initialed Final Drawings (the "Approved Final
Drawings"). A true and complete copy of the Approved Final Drawings shall be
attached to the Lease as Exhibit E-1 and shall be made a part thereof. Any
                         -----------
changes or revisions to the Approved Final Drawings requested by Tenant must
first be approved by Landlord, which approval shall not be unreasonably
withheld, subject to the provisions of Section 3 above. If Landlord approves
such requested changes or revisions, Landlord shall

                                       1
<PAGE>

cause the Approved Final Drawings to be revised accordingly and Landlord and
Tenant shall initial each sheet of the Approved Final Drawings as revised and
replace and attach a true and complete copy thereof to the Lease as Exhibit E-1.
                                                                    -----------
Landlord and Tenant hereby covenant to each other to cooperate with each other
and to act reasonably in the preparation and approval of the Final Drawings and
the Approved Final Drawings.

5.   Performance of Work. As soon as practicable after Tenant and Landlord
     -------------------
initial and attach to the Lease as Exhibit E-1 a true and complete copy of the
                                   -----------
Approved Final Drawings, Landlord shall submit the Approved Final Drawings to
the governmental authorities having rights of approval over the Work and shall
apply for the necessary approvals and building permits. Subject to the
satisfaction of all conditions precedent and subsequent to its obligations under
this Exhibit E, and further subject to the provisions of Section 10 hereof, as
     ---------
soon as practicable after Landlord or its representatives have received all
necessary approvals and building permits, Landlord will put the Approved Final
Drawings out for bid to several licensed, bonded and insured general
contractors. The Tenant Improvements shall be constructed by a general
contractor selected by Landlord (the "General Contractor"). Landlord shall
commence construction, or cause the commencement of construction by the General
Contractor, of the Tenant Improvements, as soon as practicable alter selection
of the General Contractor. Except as hereinafter expressly provided to the
contrary, Landlord shall cause the performance of the Work using (except as may
be stated or otherwise shown in the Approved Final Drawings) building standard
materials, quantities and procedures then in use by Landlord ("Building
Standards").

6.   Substantial Completion. Landlord and Tenant shall cause the General
     ----------------------
Contractor to Substantially Complete (defined below) the Tenant Improvements in
accordance with the Approved Final Drawings by the Commencement Date of the
Lease as set forth in Section 2 of the Lease (the "Completion Date"), subject to
delays due to (a) acts or events beyond its control including, but not limited
to, acts of God, earthquakes, strikes, lockouts, boycotts, casualties,
discontinuance of any utility or other service required for performance of the
Work, moratoriums, governmental agencies, delays on the part of governmental
agencies and weather, (b) the lack of availability or shortage of specialized
materials used in the construction of the Tenant Improvements, (c) any matters
beyond the control of Landlord, the General Contractor or any subcontractors,
(d) any changes required by the fire department, building and/or planning
department, building inspectors or any other agency having jurisdiction over the
Building, the Work and/or the Tenant improvements (except to the extent such
changes are directly attributable to Tenant's use or Tenant's specialized tenant
improvements, in which event such delays are considered Tenant Delays) (the
events and matters set forth in Subsections (a), (b), (c) and (d) are
collectively referred to as "Force Majeure Delays"), or (e) any Tenant Delays
(defined in Section 7 below). The Tenant Improvements shall be deemed
substantially complete on the date that the General Contractor issues to
Landlord a notice of substantial completion, or the date that the building
officials of the applicable governmental agency(s) issues its final approval of
the construction of the Tenant Improvements whether in the form of the issuance
of a final permit, certificate of occupancy or the written approval evidencing
its final inspection on the building permit(s), or the date on which Tenant
first takes occupancy of the Premises, whichever first occurs ("Substantial
Completion", or "Substantially Completed", or "Substantially Complete"). Tenant
hereby acknowledges and agrees that the term "Substantial Completion" of the
Tenant improvements as used herein will not include the completion of any work
                                        ---
associated with Tenant's installations, including without limitation, Tenant's
high-pile storage requirements, Tenant's racking systems, and work related to
any requirements of governmental and regulatory agencies with respect to any of
Tenant's installations. If the Work is not deemed to be Substantially Completed
on or before the scheduled Completion Date, (i) Landlord agrees to use
reasonable efforts to Substantially Complete the Work as soon as practicable
thereafter, (ii) the Lease shall remain in full force and effect, (iii) Landlord
shall not be deemed to be in breach or default of the Lease or this Exhibit E as
                                                                    ---------
a result thereof and Landlord shall have no liability to Tenant as a result of
any delay in occupancy (whether for damages, abatement of all or any portion of
the Rent, or otherwise), and (iv) except in the event of any Tenant Delays,
which will not affect the Commencement Date but will extend the Completion Date
without any penalty or liability to Landlord, and notwithstanding anything to
the contrary contained in the Lease, the Commencement Date and the Expiration
Date of the term of the Lease (as defined in Section 2 of the Lease) shall be
extended commensurately by the amount of time attributable to such Force Majeure
Delays, and Landlord and Tenant shall execute a written amendment to the Lease
evidencing such extensions of time, substantially in the form of Exhibit F to
                                                                 ---------
the Lease. Subject to the provisions of Section 10.2 of the Lease, the Tenant
Improvements shall belong to Landlord and shall be deemed to be incorporated
into the Premises for all purposes of the Lease, unless Landlord, in writing,
indicates otherwise to Tenant.

7.   Tenant Delays. There shall be no extension of the scheduled Commencement
     -------------
Date or Expiration Date of the term of the Lease (as otherwise permissibly
extended in accordance with the provisions of Section 6 above) if the Work has
not been Substantially Completed by the scheduled Commencement Date due to any
delay attributable to Tenant and/or any of Tenant's Representatives or Tenant's
intended use of the Premises (collectively, "Tenant Delays"), including, but not
limited to, any of the following described events or occurrences: (a) delays
related to changes made or requested by Tenant to the Work and/or the Approved
Final Drawings; (b) the failure of Tenant to furnish all or any plans, drawings,
specifications, finish details or other information required under Sections 3
and 4 above; (c) the failure of Tenant to comply with the requirements of
Section 10 below; (d) Tenant's requirements for special work or materials,
finishes, or installations other than the Building Standards or Tenant's
requirements for special construction or phasing; (e) any changes required by
the fire department, building or planning department, building inspectors or any
other agency having jurisdiction over the Building, the Work and/or the Tenant
Improvements if such changes are directly attributable to Tenant's use or
Tenant's specialized tenant improvements; (f) the completion of any work
associated with Tenant's Installations, including without limitation, Tenant's
high-pile storage requirements, Tenant's racking systems, and work related to
any requirements of governmental and regulatory agencies with respect to any of
Tenant's Installations; (g) the performance of any additional work pursuant to a
Change Request that is requested by Tenant; (h) the performance of work in or
about the Premises by any person, firm or corporation employed by or on behalf
of Tenant, including, without limitation, any failure to complete or any delay
in the completion of such work; and/or (i) any and all delays caused by or
arising from acts or omissions of Tenant and/or Tenant's Representatives, in any
manner whatsoever, including, but not limited to, any and all revisions to the
Approved Final Drawings. Any delays in the construction of the Tenant
Improvements due to any of the events described above, shall in no way extend or
affect the date on which Tenant is required to commence paying Rent under the
terms of the Lease. It is the intention of the parties that all of such delays
will be considered Tenant Delays for which Tenant shall be wholly and completely
responsible for any and all consequences related to such delays, including,
without limitation, any costs and expenses attributable to increases in labor or
materials.

8.   Tenant Improvement Allowance. Landlord shall provide an allowance for the
     ----------------------------
planning and construction of the Tenant Improvements for the Work to be
performed in the Premises, as described in the Initial Plans and the Approved
Final Drawings, in the amount of Ten thousand and 00/100 Dollars ($10,000.00)
(the "Tenant Improvement Allowance") based upon an allowance of Zero and 12/100
Dollars ($0.12) per rentable square foot for 81,225 rentable square feet of the
Premises to be improved, as described in the Initial Plans and the Approved
Final Drawings. Tenant

                                       2
<PAGE>

shall not be entitled to any credit, abatement or payment from Landlord in the
event that the amount of the Tenant Improvement Allowance specified above
exceeds the actual Tenant Improvement Costs. The Tenant Improvement Allowance
shall only be used for tenant improvements typically installed by Landlord in
warehouse buildings. The Tenant Improvement Allowance shall be the maximum
contribution by Landlord for the Tenant Improvement Costs and shall be subject
to the provisions of Section 10 below.

9.   Tenant Improvement Costs. The Tenant Improvements' cost (the "Tenant
     ------------------------
Improvement Costs") shall mean and include any and all costs and expenses of the
Work, including, without limitation, all of the following:

     (a)  All costs of preliminary space planning and final architectural and
engineering plans and specifications (including, without limitation, the scope
of work, all plans and specifications, the Initial Plans, the Final Drawings and
the Approved Final Drawings) for the Tenant Improvements, and architectural
fees, engineering costs and fees, and other costs associated with completion of
said plans;

     (b)  All costs of obtaining building permits and other necessary
authorizations and approvals from the City of San Leandro and other applicable
agencies and jurisdictions;

     (c)  All costs of interior design and finish schedule plans and
specifications including as-built drawings;

     (d)  All direct and indirect costs of procuring, constructing and
installing the Tenant Improvements in the Premises, including, but not limited
to, the construction fee for overhead and profit, the cost of all on-site
supervisory and administrative staff, office, equipment and temporary services
rendered by Landlord's consultants and the General Contractor in connection with
construction of the Tenant Improvements, and all labor (including overtime) and
materials constituting the Work;

     (e)  All fees payable to the General Contractor, architect and Landlord's
engineering firm if they are required by Tenant to redesign any portion of the
Tenant Improvements following Tenant's approval of the Approved Final Drawings;
and

     (f)  A construction management fee payable to Landlord in the amount of
five percent (5%) of all direct and indirect costs of procuring, constructing
and installing the Tenant Improvements in the Premises and the Building.

10.  Excess Tenant Improvement Costs. The term "Excess Tenant Improvement Costs"
     -------------------------------
as used herein shall mean and refer to the aggregate of (i) all costs related to
any and all Change Requests/Change Orders, and (ii) the amount by which the
actual Tenant Improvement Costs (exclusive of all costs referred to in item (i)
above) (the "Actual TI Costs") exceed the Tenant Improvement Allowance, subject
to the remaining provisions of this Section 10. Tenant shall pay to Landlord the
Excess Tenant Improvement Costs within ten (10) days of Landlord's delivery to
Tenant of a written demand therefor together with a reconciliation of such
costs. No Work shall be commenced until Tenant has fully complied with the
preceding provisions of this Section 10. If Tenant fails to remit the sums so
demanded by Landlord pursuant to Section 8 above and this Section 10 within the
time periods required, Landlord may, at its option, declare Tenant in default
under the Lease.

11.  Change Requests. No changes or revisions to the Approved Final Drawings
     ---------------
shall be made by either Landlord or Tenant unless approved in writing by both
parties. Upon Tenant's request and submission by Tenant (at Tenant's sole cost
and expense) of the necessary information and/or plans and specifications for
any changes or revisions to the Approved Final Drawings and/or for any work
other than the Work described in the Approved Final Drawings ("Change Requests")
and the approval by Landlord of such Change Request(s), which approval Landlord
agrees shall not be unreasonably withheld, Landlord shall perform the additional
work associated with the approved Change Request(s), at Tenant's sole cost and
expense, subject, however, to the following provisions of this Section 11. Prior
to commencing any additional work related to the approved Change Request(s),
Landlord shall submit to Tenant a written statement of the cost of such
additional work and a proposed tenant change order therefor ("Change Order") in
the standard form then in use by Landlord. Tenant shall execute and deliver to
Landlord such Change Order and shall pay the entire cost of such additional work
in the following described manner. Any costs related to such approved Change
Request(s), Change Order and any delays associated therewith, shall be added to
the Tenant Improvement Costs and shall be paid for by Tenant as and with any
Excess Tenant Improvement Costs as set forth in Section 10 above. The billing
for such additional costs to Tenant shall be accompanied by evidence of the
amounts billed as is customarily used in the business. Costs related to approved
Change Requests and Change Orders shall include without limitation, any
architectural or design fees, Landlord's construction fee for overhead and
profit, the cost of all on-site supervisory and administrative staff, office,
equipment and temporary services rendered by Landlord and/or Landlord's
consultants, and the General Contractor's price for effecting the change. If
Tenant fails to execute or deliver such Change Order, or to pay the costs
related thereto, then Landlord shall not be obligated to do any additional work
related to such approved Change Request(s) and/or Change Orders, and Landlord
may proceed to perform only the Work, as specified in the Approved Final
Drawings. Landlord shall equitably adjust the amount of the Tenant Improvement
Costs for any deletions in the scope of the Work.

12.  Termination. If the Lease is terminated prior to the Completion Date, for
     -----------
any reason due to the default of Tenant hereunder, in addition to any other
remedies available to Landlord under the Lease, Tenant shall pay to Landlord as
Additional Rent under the Lease, within five (5) days of receipt of a statement
therefor, any and all costs incurred by Landlord and not reimbursed or otherwise
paid by Tenant through the date of termination in connection with the Tenant
Improvements to the extent planned, installed and/or constructed as of such date
of termination, including, but not limited to, any costs related to the removal
of all or any portion of the Tenant Improvements and restoration costs related
thereto. Subject to the provisions of Section 10.2 of the Lease, upon the
expiration or earlier termination of the Lease, Tenant shall not be required to
remove the Tenant Improvements it being the intention of the parties that the
Tenant Improvements are to be considered incorporated into the Building.
Notwithstanding anything to the contrary contained herein, Landlord shall have
the right to terminate the Lease, upon written notice to Tenant, if Landlord is
unable to obtain a building permit for the Tenant Improvements within one
hundred eighty (180) days from the date the Lease is signed by Tenant.

13.  Tenant Access. Landlord, in Landlord's reasonable discretion and upon
     -------------
receipt of a written request from Tenant, may grant Tenant a license to have
access to the Premises prior to the Completion Date to allow Tenant to do other
work required by Tenant to make the Premises ready for Tenant's use and (the
"Tenant's Pre-Occupancy Work"). It shall be a condition to the grant by Landlord
and continued effectiveness of such license that:

                                       3
<PAGE>

     (a)  Tenant shall give to Landlord a written request to have such access
not less than five (5) business days prior to the date on which such proposed
access will commence (the "Access Notice"). The Access Notice shall contain or
be accompanied by each of the following items, all in form and substance
reasonably acceptable to Landlord: (i) a detailed description of and schedule
for Tenant's Pre-Occupancy Work; (ii) the names and addresses of all
contractors, subcontractors and material suppliers and all other representatives
of Tenant who or which will be entering the Premises on behalf of Tenant to
perform Tenant's Pre-Occupancy Work or will be supplying materials for such
work, and the approximate number of individuals, itemized by trade, who will be
present in the Premises; (iii) copies of all contracts, subcontracts, material
purchase orders, plans and specifications pertaining to Tenant's Pre-Occupancy
Work; (iv) copies of all licenses and permits required in connection with the
performance of Tenant's Pre-Occupancy Work; (v) certificates of insurance (in
amounts satisfactory to Landlord and with the parties identified in, or required
by, the Lease named as additional insureds) and instruments of indemnification
against all claims, costs, expenses, penalties, fines, and damages which may
arise in connection with Tenant's Pre-Occupancy Work; and (vi) assurances of the
ability of Tenant to pay for all of Tenant's Pre-Occupancy Work and/or a letter
of credit or other security deemed appropriate by Landlord securing Tenant's
lien-free completion of Tenant's Pre-Occupancy Work.

     (b)  Such pre-term access by Tenant and Tenant's employees, agents,
contractors, consultants, workmen, mechanics, suppliers and invitees shall be
subject to scheduling by Landlord.

     (c)  Tenant's employees, agents, contractors, consultants, workmen,
mechanics, suppliers and invitees shall fully cooperate, work in harmony and
not, in any manner, interfere with Landlord or Landlord's agents or
representatives in performing the Work and any additional work pursuant to
approved Change Orders, Landlord's work in other areas of the Building or the
Park, or the general operation of the Building. If at any time any such person
representing Tenant shall not be cooperative or shall otherwise cause or
threaten to cause any such disharmony or interference, including, without
limitation, labor disharmony, and Tenant fails to immediately institute and
maintain corrective actions as directed by Landlord, then Landlord may revoke
such license upon twenty-four (24) hours' prior written notice to Tenant.

     (d)  Any such entry into and occupancy of the Premises or any portion
thereof by Tenant or any person or entity working for or on behalf of Tenant
shall be deemed to be subject to all of the terms, covenants, conditions and
provisions of the Lease, excluding only the covenant to pay Rent. Landlord shall
not be liable for any injury, loss or damage that may occur to any of Tenant's
Pre-Occupancy Work made in or about the Premises or to any property placed
therein prior to the commencement of the term of the Lease, the same being at
Tenant's sole risk and liability. Tenant shall be liable to Landlord for any
damage to any portion of the Premises, the Work or the additional work related
to any approved Change Orders caused by Tenant or any of Tenant's employees,
agents, contractors, consultants, workmen, mechanics, suppliers and invitees. In
the event that the performance of Tenant's Pre-Occupancy Work causes extra costs
to be incurred by Landlord or requires the use of other Building services,
Tenant shall promptly reimburse Landlord for such extra costs and/or shall pay
Landlord for such other Building services at Landlord's standard rates then in
effect.

14.  Lease Provisions; Conflict. The terms and provisions of the Lease, insofar
     --------------------------
as they are applicable, in whole or in part, to this Exhibit E, are hereby
                                                     ---------
incorporated herein by reference, and specifically including all of the
provisions of Section 31 of the Lease. In the event of any conflict between the
terms of the Lease and this Exhibit E, the terms of this Exhibit E shall
                            ---------                    ---------
prevail. Any amounts payable by Tenant to Landlord hereunder shall be deemed to
be Additional Rent under the Lease and, upon any default in the payment of same,
Landlord shall have all rights and remedies available to it as provided for in
the Lease.

                                       4
<PAGE>

                                  Addendum 1

            Landlord's Remedies Addendum In Event of Tenant Default
                             (State of California)

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

               (1)  the worth at the time of award of any unpaid Rent and any
other sums due and payable which have been earned at the time of such
termination; plus

               (2)  the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable which would have been earned
after termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus

               (3)  the worth at the time of award of the amount by which the
unpaid Rent and any other sums due and payable for the balance of the term of
this Lease after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; plus

               (4)  any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course would be likely to result
therefrom, including, without limitation, any costs or expenses incurred by
Landlord (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, preserving, restoring, replacing, cleaning, altering or
rehabilitating the Premises or any portion thereof, including such acts for
reletting to a new tenant or tenant's; (iii) for leasing commissions; or (iv)
for any other costs necessary or appropriate to relet the Premises; plus

               (5)  such reasonable attorneys' fees incurred by Landlord as a
result of a Default, and costs in the event suit is filed by Landlord to enforce
such remedy; and plus

               (6)  at Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
law. As used in subparagraphs (1) and (2) above, the "worth at the time of
award" is computed by allowing interest at an annual rate equal to twelve
percent (12%) per annum or the maximum rate permitted by law, whichever is less.
As used in subparagraph (3) above, the "worth at the time of award" is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award, plus one percent (1%). Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
Default of Tenant hereunder.

          (b)  Continuation of Lease. In the event of any Default by Tenant,
               ---------------------
then in addition to any other remedies available to Landlord at law or in equity
and under this Lease, Landlord shall have the remedy described in California
Civil Code Section 1951.4 (Landlord may continue this Lease in effect after
Tenant's Default and abandonment and recover Rent as it becomes due, provided
tenant has the right to sublet or assign, subject only to reasonable
limitations).

          (c)  Re-entry. In the event of any Default by Tenant, Landlord shall
               --------
also have the right, with or without terminating this Lease, in compliance with
applicable law, to re-enter the Premises and remove all persons and property
from the Premises; such property may be removed and stored in a public warehouse
or elsewhere at the cost of and for the account of Tenant.

          (d)  Reletting. In the event of the abandonment of the Premises by
               ---------
Tenant or in the event that Landlord shall elect to re-enter or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Paragraph a, Landlord may from time to time, without terminating
this Lease, relet the Premises or any part thereof for such term or terms and at
such rental or rentals and upon such other terms and conditions as Landlord in
its sole discretion may deem advisable with the right to make alterations and
repairs to the Premises. In the event that Landlord shall elect to so relet,
then rentals received by Landlord from such reletting shall be applied in the
following order: (1) to reasonable attorneys' fees incurred by Landlord as a
result of a Default and costs in the event suit is filed by Landlord to enforce
such remedies; (2) to the payment of any indebtedness other than Rent due
hereunder from Tenant to Landlord; (3) to the payment of any costs of such
reletting; (4) to the payment of the costs of any alterations and repairs to the
Premises; (5) to the payment of Rent due and unpaid hereunder; and (6) the
residue, if any, shall be held by Landlord and applied in payment of future Rent
and other sums payable by Tenant hereunder as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied to the payment of Rent hereunder,
be less than the Rent payable during the month by Tenant hereunder, then Tenant
shall pay such deficiency to Landlord. Such deficiency shall be calculated and
paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, any
costs and expenses incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from such reletting.

          (e)  Termination. No re-entry or taking of possession of the Premises
               -----------
by LANDLORD pursuant to this Addendum shall be construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any Default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such Default.

          (f)  Cumulative Remedies. The remedies herein provided are not
               -------------------
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.

                                       1
<PAGE>

          (g)  No Surrender. No act or conduct of Landlord, whether consisting
               ------------
of the acceptance of the keys to the Premises, or otherwise, shall be deemed to
be or constitute an acceptance of the surrender of the Premises by Tenant prior
to the expiration of the Term, and such acceptance by Landlord of surrender by
Tenant shall only flow from and must be evidenced by a written acknowledgment of
acceptance of surrender signed by Landlord. The surrender of this Lease by
Tenant, voluntarily or otherwise, shall not work a merger unless Landlord elects
in writing that such merger take place, but shall operate as an assignment to
Landlord of any and all existing subleases, or Landlord may, at its option,
elect in writing to treat such surrender as a merger terminating Tenant's estate
under this Lease, and thereupon Landlord may terminate any or all such subleases
by notifying the sublessee of its election so to do within five (5) days after
such surrender.

          (h)  Notice Provisions. Tenant agrees that any notice given by
               -----------------
Landlord pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements
for notice under California Code of Civil Procedure Section 1161, and Landlord
shall not be required to give any additional notice in order to be entitled to
commence an unlawful detainer proceeding.

Tenant Initials               Landlord Initials

/s/
-----------------             _________________

                                       2
<PAGE>

                                  Addendum 2
                          Option to Extend the Lease

This Addendum 2 ("Addendum") is incorporated as a part of that certain Lease
Agreement dated November 12, 1999 (the "Lease"), by and between COST-U-LESS,
INC., a Washington corporation ('Tenant"), and AMB PROPERTY, LP., a Delaware
limited partnership, ("Landlord"), for the leasing of those certain premises
located at 2055 Burroughs Avenue, San Leandro, California 94577 as more
particularly described in Exhibit A to the Lease (the "Premises"). Any
                          ---------
capitalized terms used herein and not otherwise defined herein shall have the
meaning ascribed to such terms as set forth in the Lease.

1.   Grant of Extension Option. Subject to the provisions, limitations and
     -------------------------
conditions set forth in Paragraph 5 below, Tenant shall have an Option
("Option") to extend the term of the Lease for five (5) years (the "Extended
Term").

2.   Tenant's Option Notice. If Landlord does not receive written notice from
     ----------------------
Tenant of its exercise of this Option on a date which is not more than two
hundred forty (240) days nor less than one hundred eighty (180) days prior to
the end of the initial term of the Lease (the "Option Notice"), all rights under
this Option shall automatically terminate and shall be of no further force or
effect.

3.   Establishing the Initial Monthly Base Rent for the Extended Term. The
     ----------------------------------------------------------------
initial monthly Base Rent for the Extended Term shall be the then current market
rent for similar space within the competitive market area of the Premises (the
"Fair Rental Value"). "Fair Rental Value" of the Premises means the fair market
rental value of the Premises as of the commencement of the Extended Term, taking
into consideration all relevant factors, including length of term, the uses
permitted under the Lease, the quality, size, design and location of the
Premises, including the condition and value of existing tenant improvements, and
the monthly base rent paid by tenants for premises comparable to the Premises,
and located within the competitive market area of the Premises as reasonably
determined by Landlord.

Neither Landlord nor Tenant shall have the right to have a court or any other
third party entity establish the Fair Rental Value. If Landlord and Tenant are
unable to agree on the Fair Rental Value for the Extended Term within ten (10)
days of receipt by Landlord of the Option Notice, Landlord and Tenant being
obligated only to act in good faith, this Option shall automatically terminate
and the Lease shall terminate at the end of its initial term.

In no event shall the monthly Base Rent for any period of the Extended Term be
less than the highest monthly Base Rent charged during the initial term of the
Lease. Upon determination of the initial monthly Base Rent for the Extended Term
in accordance with the terms outlined above, Landlord and Tenant shall
immediately execute, at Landlord's sole option, either the standard lease
agreement then in use by Landlord, or an amendment to this Lease. Such new lease
agreement or amendment, as the case may be, shall set forth among other things,
the initial monthly Base Rent for the Extended Term and the actual commencement
date and expiration date of the Extended Term. Tenant shall have no other right
to extend the term of the Lease under this Addendum unless Landlord and Tenant
otherwise agree in writing.

4.   Condition of Premises and Brokerage Commissions for the Extended Term. If
     ---------------------------------------------------------------------
Tenant timely and properly exercises this Option, in strict accordance with the
terms contained herein: (1) Tenant shall accept the Premises in its then "As-Is"
condition and, accordingly, Landlord shall not be required to perform any
additional improvements to the Premises; and (2) Tenant hereby agrees that it
will be solely responsible for any and all brokerage commissions and finder's
fees payable to any broker now or hereafter procured or hired by Tenant or who
otherwise claims a commission based on any act or statement of Tenant ("Tenant's
Broker") in connection with the Option; and Tenant hereby further agrees that
Landlord shall in no event or circumstance be responsible for the payment of any
such commissions and fees to Tenant's Broker.

5.   Limitations On, and Conditions To, Extension Option. This Option is
     ---------------------------------------------------
personal to Tenant and may not be assigned, voluntarily or involuntarily,
separate from or as part of the Lease. At Landlord's option, all rights of
Tenant under this Option shall terminate and be of no force or effect if any of
the following individual events occur or any combination thereof occur: (1)
Tenant has been in default at any time during the initial term of the Lease, or
is currently in default of any provision of the Lease; and/or (2) Tenant has
assigned its rights and obligations under all or part of the Lease or Tenant has
subleased all or part of the Premises; and/or (3) Tenant's financial condition
is unacceptable to Landlord at the time the Option Notice is delivered to
Landlord; and/or (4) Tenant has failed to properly exercise this Option in a
timely manner in strict accordance with the provisions of this Addendum; and/or
(5) Tenant no longer has possession of all or any part of the Premises under the
Lease, or if the Lease has been terminated earlier, pursuant to the terms of the
Lease.

6.   Time is of the Essence. Time is of the essence with respect to each and
     ----------------------
every time period described in this Addendum.

                                       1<PAGE>

                                                                   EXHIBIT 10.29

                                    PARTIES

                      PUKEROA ORUAWHATA HOLDINGS LIMITED

                                ("the Lessor")

                                      AND

                               CUL (NZ) LIMITED

                                ("the Lessee")

                                      AND

                                COST-U-LESS INC

                               ("the Guarantor")

      ------------------------------------------------------------------
                              AGREEMENT TO LEASE
      ------------------------------------------------------------------

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

                                  BURTON & CO
                                  SOLICITORS
                                   AUCKLAND
<PAGE>

AGREEMENT dated the     day of

PARTIES

1.   PUKEROA ORUAWHATA HOLDINGS LIMITED ("the Lessor")

2.   CUL (NZ) LIMITED ("the Lessee")

3.   COST-U-LESS INC ("the Guarantor")

BACKGROUND

A.   The Lessor is establishing a retail and food court centre, as part of the
     Rotorua Central Development on the Land to include a bulk retail outlet for
     the Lessee.

B.   The Lessee is a wholly owned subsidiary of Cost-U-Less Inca USA based
     publicly listed company.

C.   The Lessor has agreed to grant a lease to the Lessee and the Lessee has
     agreed to accept a lease of the Premises upon completion of the Building
     Project.

THE PARTIES AGREE

1.   INTERPRETATION

1.1  In this Agreement unless the context otherwise requires:

     "Building" means the building to be erected by the Lessor on the Land
     (hatched red on the scheme plan attached as Schedule 2).

     "Building Contract" means the building contract to be entered into between
     the lessor and the Building Contractor in relation to the Building.

     "Building Contractor" means the contractor selected by the Lessor for the
     purpose of completing the Building Project.

     "Building Project" means the construction of the Building:

     (a) in accordance with the Final Plans and Specifications; and

     (b) all site works and other improvements associated therewith.

     "Commencement Date" means the later of:

     (a) the Date of Practical Completion; or

     (b) 30 November 1999; or

     (c) the date six weeks from the Fitout Date.

     "Date of Practical Completion" means the date upon which the Building has
     been substantially completed so that it is capable of being occupied, used
     and enjoyed without material inconvenience (with all necessary services
     completed and in
<PAGE>

                                       2

     operation for all portions of the Premises) notwithstanding that there may
     be items of a comparatively minor nature that require finishing, alteration
     or remedial action. A certificate issued by the Design Consultant as to the
     Date of Practical Completion shall be conclusive and binding on the parties
     provided however that the Commencement Date shall not be later than the
     Lessee commencing full trading from the Premises.

     "Design Consultant" means the consultant selected by the Lessor to
     supervise the construction of the Building in terms of the Building
     Contract, and may be either an architect or an engineer.

     "Final Plans and Specifications" means the final working drawings and
     construction plans and specifications for the Building Project developed by
     the Design Consultant in accordance with the Scheme Plan attached as
     Schedule 2 and the Specification attached as Schedule 4.

     "Fitout Date" means the date that it becomes reasonably practical by way of
     notice from the Lessor to the Lessee for the Lessee to have access to the
     Premises for the purposes of carrying out the Lessee's Fitout.

     "Land" means the land owned by the Lessor situate at Amohau Street being
     more particularly described as all that parcel of land containing 13.0156
     hectares more or less and being Lots I and 2 on Deposited Plans.49884 and
     being the land comprised and described in Certificate of Title Volume
     55D/Folio 543 (South Auckland Registry) SUBJECT TO:

     1.   Part IVA Conservation Act 1987

     2.   Sections 10 and 11 Crown Minerals Act 1991

     3.   Mortgage B.298747.2

     4.   Gazette Notice B.506418.1

     5.   Easements created by Transfer B532280.1.

     "Lease" means the lease to be granted by the Lessor to the Lessee in
     accordance with this Agreement.

     "Lessee's Fitout" means those works to be undertaken by the Lessee's
     contractors and at the Lessee's sole cost pursuant to clause 3 to meet the
     occupational requirements of the Lessee including where appropriate:

     (a)  The provision and erection within the Premises of all internal
          partitioning together with any necessary fittings;

     (b)  All telephone and data wiring installations to the Lessee's
          requirements;

     (c)  Any additions or modifications to the Final Plans and Specifications
          relating to any of the following required by the Lessee, whether as a
          result of the Lessee's fitting out of the Premises or otherwise:

          (i)   Electrical services, wiring and fittings;

          (ii)  Fire sprinkler system;
<PAGE>

                                       3

          (iii)  Security system;

          (iv)   Plumbing installation and fittings;

          (v)    Signage; (vi)  Music system;

          (vii)  Other services and reticulation;

          (viii) Any other work shown in the Final Plans and Specifications.

     "Outgoings" has the meaning defined in the form of lease attached as
     Schedule 3.

     "Permitted Use" means the use specified in Schedule 1.

     "Premises" means the premises described in Schedule 1.

     "Relevant Authority" means any local body government or other authority
     having jurisdiction or authority over the Building Project or the Rotorua
     Central Development or the Land.

     "Rotorua Central Development" means the stage 2 and stage 3 developments by
     the Lessor, the general location and layout of which is shown hatched red
     and green respectively on the Scheme Plan attached as Schedule 2.

1.2  For the purpose of interpretation and construction of this Agreement:

     (a)  Words importing one gender include the other genders as the case may
          require;

     (b)  Words importing a singular or plural number include the plural and
          singular number respectively;

     (c)  A "person" shall include any individual, company, corporation, firm,
          partnership, joint venture, association, organisation, trust, state or
          agency of a state, government department or municipal authority in
          each case whether or not having a separate legal personality;

     (d)  This Agreement shall benefit and be binding upon the parties and their
          respective successors and personal representatives and any permitted
          assignees or transferees of their rights and references to the parties
          shall be construed accordingly;

     (e)  Clause headings appear only for sake of convenience and shall not
          affect the construction of this Agreement;

     (f)  Terms defined in the form of lease attached to this Agreement shall
          (except where the context otherwise requires) have the same meaning in
          this Agreement;

     (g)  In the event of any conflict between the provisions of this Agreement
          and the form of lease attached, then the express provisions of this
          Agreement shall prevail.
<PAGE>

                                       4

2.  BUILDING PROJECT

2.1  (a)  The Lessor shall cause the Building to be constructed and the Building
          Project to be completed substantially in accordance with the Final
          Plans and Specifications and the requirements of any Relevant
          Authority.

     (b)  The Lessor agrees that the Final Plans and Specifications will
          generally accord with the quality, scope, performance and function
          shown and described in Schedules 2 and 4.

     (c)  The Lessor will proceed with all due diligence to make all necessary
          applications to the Relevant Authority for all consents required for
          the Building Project including, without limitation, consents required
          pursuant to the Resource Management Act 1991 and the Building Act
          1991. Having made such applications the Lessor will pursue all aspects
          of the applications without delay.

     (d)  Subject to any delay beyond the control of the Lessor, the Lessor
          shall cause to be done all things reasonably necessary to achieve
          completion of the Building Project on or before 30 November 1999.

2.2  Unavailability or delays in availability

     If through unavailability or delays in availability of materials through no
     fault of the Lessor or if through any other cause whatsoever beyond the
     control of the Lessor it is impractical for the Lessor to incorporate in
     the Building any material, finish, product or system referred to in the
     Final Plans and Specifications or if it becomes necessary or expedient for
     the Lessor to undertake or incorporate an amendment in respect of anything
     shown or described in the Final Plans and Specifications then the Lessor
     may substitute an alternative material, finish, product or system or
     undertake or incorporate such amendment of a kind and nature to be
     determined by the Lessor. Such substitution or amendment shall adhere to or
     preserve to the maximum extent practical the quality and intent as set out
     in the Final Plans and Specifications.

2.3  Lessee's Right of inspection

     The Lessee shall at all reasonable times by prior notification to the
     Lessor be entitled to inspect the Final Plans and Specifications for the
     Building Project and by arrangement with the Lessor to inspect the Building
     during the progress of construction PROVIDED THAT in so doing it shall not
     unreasonably impede or interfere with the Building Project or the Building
     Contractor or any subcontractors.

3.  LESSEE'S FITOUT

3.1  The Lessee shall, as soon as practicable after execution of this Agreement
     but prior to commencing any work, at the cost of the Lessee, produce in
     conjunction with its architects plans, specifications and associated
     documentation (in accord with NZIA conditions) for the Lessee's Fitout to
     meet the occupational/operational requirements of the Lessee and deliver
     them to the Lessor for approval, such approval not to be unreasonably
     withheld or delayed.

3.2  The Lessor shall provide to the Lessee on the Fitout Date access to the
     Premises to commence work on the Lessee's Fitout free of any rental,
     outgoings and other charges. The Lessee and the Lessor will ensure that
     their respective contractors shall co-operate as far as practicable to
     ensure that the Building Project and the
<PAGE>

                                       5

     Lessee's Fitout proceed smoothly. The Lessee's contractors will be
     responsible for putting their equipment into position and for their own
     power requirements.

4.  THE LEASE

4.1  (a)  The Lessor shall grant to the Lessee and the Lessee shall take a lease
          of the Premises ("the Lease").

     (b)  The term of the Lease shall commence on the Commencement Date.

     (c)  The terms of the Lease shall be as set out in Schedule 1 and shall
          otherwise include all terms and conditions set out in this Agreement
          and be in the form of and upon the terms and conditions set out in the
          form of lease attached as Schedule 3.

     (d)  The Lessee will pay to the Lessor a rental deposit equal to two months
          rental on the date that this Agreement becomes unconditional. The
          rental deposit will be offset against the first two months rental
          payable to the Lessor.

4.2  The Lessor shall be entitled to carry out and complete any finishing work
     in the Premises or to the Building Project requiring completion or remedial
     work without causing unreasonable interference to the Lessee even though
     the term of the Lease may have commenced.

4.3  The Lessee reserves the right to exclude the insurance payable from the
     building operating expenses, on satisfaction of a replacement policy
     payable directly by the Lessee and in such case the provision in item 6 of
     Outgoings and clause 9 of the Lease shall be deleted.

4.4  The Lessor or its solicitor shall deliver or post the Lease to the Lessee
     or to the solicitors for the Lessee for execution and the Lessee shall
     execute and return or procure the execution and return of the Lease as the
     case may be together with any costs for which the Lessee is responsible
     under this Agreement to the Lessor or the Lessor's solicitors within 14
     days of such posting or delivery.

4.5  Until the Lease has been executed the Lessee and the Lessor shall be bound
     by the terms contained in this Agreement and in the form of lease as if the
     same had been completed and executed in accordance with this Agreement.

4.6  In the event of a conflict between any term of this Agreement and the terms
     of the form of lease attached as Schedule 3 the provisions of this
     Agreement shall prevail and the terms of this Agreement shall not merge in
     the Lease but shall remain in full force and effect.

4.7  Subject to clause 4.8 the initial annual rent payable shall be the Annual
     Rent referred to in item 10 of Schedule 1.

4.8  (a)  The parties agree that the area of the Premises is estimated as
          follows:

          Ground Floor         3,653 m2

          Dock Apron             645 m2
                             ----------
                               4,298 m2
<PAGE>

                                       6

          As soon as practical the Lessor shall cause a registered surveyor to
          determine the rentable area of the Premises and such determination
          shall be final.

     (b)  For the purposes of such determination the rentable area of the
          Premises shall be measured in accordance with the PLEINZ/BOMA Guide
          Method 3 in force at the time for measurement of major retail
          premises.

     (c)  Upon determination of the rentable area of the Premises the annual
          rent referred to in Schedule 1 shall be adjusted by multiplying the
          rentable area so determined by $135.00 per square metre (plus GST) for
          the ground floor space and $70.00 per square metre (plus GST) for the
          Dock Area and the "Lessee's Percentage of Outgoings" specified in item
          12 of Schedule 1 shall be calculated in accordance with Schedule 1.
          Following such determination the Lease shall be completed including
          such details. The parties shall adjust any rental and outgoings
          promptly following such determination.

4.9  The Annual Rent shall be reviewed in accordance with the Rent Review clause
     in the Lease in Schedule 3 on the third anniversary of the Commencement
     Date and three yearly thereafter PROVIDED THAT the new Annual Rent for each
     review period shall not be less than the Annual Rent payable by the Lessee
     at the commencement of the term of the Lease.

5.   MISCELLANEOUS

5.1  The Lessor shall be entitled at any time to dispose of its interest in the
     Land and this Agreement PROVIDED THAT any such disposal shall be subject to
     the rights of the Lessee pursuant to this Agreement.

5.2  The Lessee shall not prior to the date of execution of the Lease sell,
     assign or agree to sell or assign its interest under this Agreement or the
     Lease.

5.3  The Lessee shall not lodge any caveat against the title to the Land.

5.4  The Lessee and the Lessor shall each pay their own legal costs of and
     incidental to the negotiation, preparation and completion of this Agreement
     and any consents. The Lessee shall pay the Lessor's solicitor's costs of
     negotiating and preparing the Lease. Otherwise the provisions of clause 6
     of the Lease shall apply.

6.  NOTICES

6.1  Any notice to be given to the Lessee under this Agreement shall be
     sufficiently given if:

     (a)  delivered to any Director of the Lessee; or

     (b)  sent to the Lessee through the general post addressed to the Lessee at
          the Lessee's address stated in Schedule 1 (which notice shall be
          deemed to have been given at the expiration of 48 hours after the
          notice has been posted); or

     (c)  delivered to the solicitor for the Lessee; or

     (d)  served in accordance with any other mode of service authorised by law.
<PAGE>

                                       7

7.   CONFIDENTIALITY

7.1  Neither party shall make any announcement to the press without the written
     approval of the other and then only in such form as the parties shall
     agree. Otherwise the terms of this Agreement are confidential to the
     parties and their professional advisers and neither party shall disclose
     any of the terms and conditions hereof without the prior written approval
     of the other except as required by law.

8.   FAXED EXECUTION

8.1  This Agreement may be executed by each party signing a like copy of the
     same and the copies shall be read as one document. Facsimile copies of the
     Agreement received by a party shall be interpreted as being conclusive
     evidence of the execution of the same in terms of this clause. Each party
     shall sign an original of the same as soon as possible if the provisions of
     this clause are utilised and shall supply such original to the other party
     forthwith.

9.   ARBITRATION

9.1  Any dispute which may arise as to the interpretation of this Agreement or
     as to any matter arising out of this Agreement shall be submitted to the
     arbitration of such person as the parties can agree upon or, failing such
     agreement, of such person as shall be appointed by the President for the
     time being of the Arbitrators and Mediators of NZ Incorporated and such
     arbitration shall be conducted in all respects in accordance with the
     Arbitration Act 1996 or any Act passed in substitution thereof and in
     accordance with the substantive law of New Zealand. The notice requiring
     arbitration may include a request for conciliation. If such a request is
     made and is acceded to by the other party then the parties shall endeavour
     to agree on a conciliator and shall submit the matter to him. The
     conciliator shall discuss the matter with the parties and endeavour to
     resolve it by their agreement. All discussions in conciliation shall be
     without prejudice, and shall not be referred to in any later proceedings.
     Failing agreement the conciliator may by written decision himself determine
     the matter. The conciliator's determination shall be binding on both
     parties unless within 10 working days a party notifies the other in writing
     that it rejects the conciliator's determination. The parties shall bear
     their own costs in the conciliation, and shall pay an equal share of the
     costs of the conciliator.

10.  CONDITIONS

10.1 This Agreement is subject to the following conditions:

     (a)  The Lessee obtaining approval from its board of directors within 20
          working days of the date of execution of this Agreement by both
          parties; and

     (b)  The Lessor holding a valid resource consent which permits the Lease
          granted under this Agreement to enable the Building Project and to
          permit the Premises to be used for their Permitted Use within 60
          working days of the date of execution of this Agreement by both
          parties; and

     (c)  The Lessor's board approval within 15 working days of the date of
          execution of this Agreement by both parties. No binding contract will
          exist until both parties have executed this Agreement and same has
          been approved as aforesaid. In consideration of the Lessee's agreement
          to accept this clause the Lessor shall pay $1.00 (if demanded) to the
          Lessee if the Agreement is avoided under this clause.
<PAGE>

                                       8

     (d)  Completion of a schedule of Lessee's works upon terms satisfactory to
          both parties within 20 working days of the date of execution of this
          Agreement by both parties.

11.  GUARANTEE

11.1 In consideration of the Lessor entering into this Agreement the Guarantor
     (and if more than one, each of them jointly and severally) hereby
     acknowledges and guarantees to the Lessor the due and punctual payment of
     Rent and all other moneys payable by the Lessee under this Agreement and
     the performance by the lessee of all the covenants conditions agreements
     and provisions to be observed by the Lessee under this Agreement and under
     the Lease.

12.2 The Guarantor agrees that no release delay or other indulgence given by
     the Lessor to the Lessee or any alteration in the terms of this Agreement
     or the Lease or any other thing whatsoever whereby the Guarantor as a
     surety only would have been so released shall release prejudice or affect
     the Guarantor's liability as Guarantor.

12.3 The Guarantor agrees that as between the Guarantor and the Lessor the
     Guarantor may for all purposes be treated as Lessee and the Lessor shall be
     under no obligation to take proceedings against the Lessee before taking
     proceedings against the Guarantor. The Guarantor agrees upon demand to
     execute the form of Guarantee in the attached form of Lease.

IN WITNESS of which this Agreement has been executed.

SIGNED by,               )  /s/                        Director
                            ---------------------
PUKEROA ORUAWHATA        )
HOLDINGS LIMITED         )  /s/                        Director
                            ---------------------
in the presence of:      )

Witness:  /s/

Occupation:  Chartered Accountant

Address:  Rotorua

SIGNED by                )  /s/                        Director
                            ---------------------
CUL (NZ) LIMITED         )
in the presence of:      )  /s/                        Vice President
                            ---------------------

Witness:  /s/

Occupation:   RETAIL CONSULTANT

Address:      P.O. Box 5207
              Wellesley St
              Auckland
<PAGE>

                                       9

SIGNED by                )  /s/                        Director
                            ---------------------
COST-U-LESS INC          )
in the presence of:      )  _____________________      Director

Witness:                 /s/

Occupation:              VICE PRESIDENT REAL ESTATE/CONSTRUCTION

Address:                 BELLEVUE, WA
<PAGE>

                                  SCHEDULE 1

1.    LESSOR

     (a) PUKEROA ORUAWHATA HOLDINGS LIMITED

     (b) (i)   Lessor's Address during period of construction and fit out:

               C/- RCG
               PO Box 5207 Wellesley Street Auckland

               Telephone:  (09) 303 1501
               Facsimile:  (09) 303 1506

         (ii)  Lessor's Address after completion of fit out:

               C/- Hulton Patchell
               Chartered Accountants
               1225 Pukuatua Street
               PO Box 1197
               Rotorua

     (c) Lessor's Solicitor:

         Rangitauira & Co (J Rangitauira)
         PO Box 1693
         Rotorua

         Telephone:     (07) 348 0034
         Facsimile:     (07) 346 2933

2.   LESSEE

     (a)  CUL (NZ) LIMITED

     (b)  Lessee's Address:

          PO Box 62263
          Mt Wellington

          Telephone:
          Facsimile:

     (c)  Lessee's Solicitors:

          Burton & Co (Nigel Burton)
          PO Box 8889
          Symonds Street
          Auckland

          Telephone:     (09) 300 3777
          Facsimile:     (09) 300 3770
<PAGE>

                                      11

3.   BUILDING

     The building to be erected on the Land.

4.   PREMISES

     All those premises comprising part of the Land and Building hatched in red
     on the plan annexed hereto and having a building area of approximately 3653
     square metres (39,306 sqft) on the ground level plus 645 square metres
     (6,940 sqft) for the Dock Apron subject to measurement in accordance with
     clause 4.8(b), including the non-exclusive right to use 150 carparks
     provided within the vicinity of the Premises outlined blue on the plan
     annexed hereto.

5.   INITIAL TERM

     10 years.

6.   COMMENCEMENT DATE

     The later of:

     (a) the Date of Practical Completion; or

     (b) 30 November 1999; or

     (c) the date six weeks from the Fitout Date.

     PROVIDED HOWEVER that the Commencement Date shall not be later than the
     date that the Lessee commences full trading from the Premises.

7.   EXPIRY DATE OF INITIAL TERM

     The date one day prior to the tenth anniversary of the Commencement Date.

8.   RENEWAL TERMS

     Two further terms of five years each.

9.   FINAL EXPIRY DATE

     (If both rights of renewal are exercised) the date two days prior to the
     20th  anniversary of the Commencement Date.

10.  ANNUAL RENT

     Subject to determination under clause 4.8, $135.00 per square metre per
     annum plus GST for the Ground Floor space and $70.00 per square metre per
     annum plus GST for the Dock Apron.

11.  MONTHLY ANNUAL RENT INSTALMENT

     One-twelfth of the Annual Rent plus GST as determined by clause 4.8.
<PAGE>

                                      12

12.  LESSEE'S PERCENTAGE OF OUTGOINGS

     A percentage rate equal to the proportion that the net rentable area of the
     Premises, excluding the dock area as calculated in accordance with clause
     4.8, bears to the rentable area of the building.

13.  DEPOSIT

     The Lessee shall pay to the Lessor or its agent two months rent in advance.
     Payment of such funds will be required at the time this Agreement becomes
     unconditional in all respects.

14.  DEFAULT RATE

     5% above the base lending rate of the Lessor's bankers.

15.  RENT REVIEW DATE(S)

     In accordance with clauses 4.9.

16.  PERMITTED USE

     Retailer specialising in the wholesale cash and carry business.

17.  IMPROVEMENTS RENT PERCENTAGE

     12%

18.  INSURANCE

     Full replacement and reinstatement. The Lessee may insure the Building via
     its international insurance policy subject to the Lessor's reasonable
     approval.
<PAGE>

                                  SCHEDULE 2

                                  Scheme Plan
<PAGE>

                           [FLOOR PLAN APPEARS HERE]
<PAGE>

                                   SCHEDULE 3

                              Standard Lease Terms
<PAGE>

                     DEED OF LEASE                     THIRD EDITION 1993 (2)

DEED made the    day of

LANDLORD  PUKEROA ORUAWHATA HOLDINGS LIMITED

TENANT  CUL (NZ) LIMITED

GUARANTOR  COST-U-LESS INC

THE LANDLORD leases to the Tenant and the Tenant takes on lease the premises
described in the First Schedule together with the right to use:
a)  The Landlord's fixtures and fittings contained in the premises.
b)  The common areas of the property.
c)  The car parks described in the First Schedule.

FOR the term from the commencement date and at the annual rent (subject to
review if applicable) as set out in the First Schedule.

THE LANDLORD AND THE TENANT covenant as set out in the Second Schedule.

THE GUARANTOR covenants with the Landlord as set out in the Guarantee in the
Third Schedule.

SIGNED by the Landlord         /s/                 Director
in the presence of:            -------------------
                                                   Director/Authorised Signatory
                               -------------------

SIGNED by the Tenant           /s/                 Director
in the presence of:            -------------------
                                                   Director/Authorised Signatory
                               -------------------

SIGNED by the Guarantor        /s/                 Director
in the presence of:            -------------------
                                                   Director/Authorised Signatory
                               -------------------
<PAGE>

                                FIRST SCHEDULE

PREMISES: All those premises comprising part of the land and building hatched in
          red on the plan annexed and having a building area of approximately
          3653 square metres (39,306 sq ft) on the ground level plus 645 square
          metres (6,940 sq ft) for the Dock Apron subject to measurement

CARPARKS: [150] shown outlined in blue on the annexed plan

TERM:     Ten (10) years

COMMENCEMENT DATE: The 18th day of November 1999
FURTHER TERMS:     Two (2) further terms of five (5) years each

RENEWAL DATES:     The 18th day of November 2009 and the 18th day of November
                   2014

FINAL EXPIRY DATE: The 17th day of November 2019

ANNUAL RENT:        $511,009.95 plus GST
(Subject to review if  applicable)

MONTHLY PAYMENTS OF RENT: $42,584.16 plus GST

RENT PAYMENT DATES: The 18th day of each month commencing on the 18th
day of November 1999

REVIEW DATES:    The 18th day of November 2002, 2005, 2008 and, if day of 2011
and 2014 and, if further renewed, the 18th day of November 2017

PROPORTION OF OUTGOINGS: 82.95%
(Clause 3.1)

DEFAULT INTEREST RATE:     5% per annum above the Landlord's banker's overdraft
                           rate at the time of default.

BUSINESS USE: Retail specialising in the wholesale cash and carry business

IMPROVEMENTS RENT PERCENTAGE:            12%
(Clause 23)

INSURANCE           -- Full replacement and reinstatement.

                       (Delete one)
<PAGE>

                                   OUTGOINGS
                                  (Clause 3)

1.  Rates or levies payable to any local or territorial authority.

2.  Charges for water gas electricity telephones and other utilities or
    services.

3.  Rubbish collection charges.

4.  New Zealand Fire Service charges and the maintenance charges in respect of
    all fire detection and fire fighting equipment.

5.  Such portion of the Landlords land tax as the value of the land forming part
    of the property bears to the total value of all land included in the
    Landlord's assessment for land tax.

[6. Insurance premiums and related valuation fees. (Clause 9).]

7.  Service contract charges for air conditioning, lifts and other building
    services.

8.  Cleaning maintenance and repair charges including charges for repainting,
    decorative repairs and the maintenance and repair of building services to
    the extent that such charges do not comprise part of the cost of a service
    maintenance contract, but excluding charges for structural repairs to the
    building (minor repairs to the roof of the building shall not be a
    structural repair).

9.  The provisioning of toilets and other shared facilities.

10. The cost of ground maintenance i.e. lawns, gardens and planted areas
    including plant hire and replacement.

11. Yard and carparking area maintenance and repair charges but excluding
    charges for structural repairs to the building.

12. Body Corporate charges for insurance premiums and related valuation fees and
    reasonable management administration expenses.

13. The costs incurred and payable by the landlord in supplying to the
    territorial authority a building warrant of fitness and obtaining reports as
    required by Section 45 of the Building Act 1991.

                                SECOND SCHEDULE

TENANT'S PAYMENTS

Rent

1.1  THE Tenant shall pay the annual rent by equal monthly payments in advance
     (or as varied pursuant to any rent review) on the rent payment dates. The
     first monthly payment (together with rent calculated on a daily basis for
     any period from the commencement date of the term to the first rent payment
     date) shall be payable on the first rent payment date. All rent shall be
     paid without any deductions by direct payment to the Landlord or as the
     Landlord may direct.

Rent Review

2.1  THE annual rent may be reviewed by the Landlord as follows:

     (a) The Landlord shall commence a review by not earlier than three (3)
         months prior to a review date or at any time up to the next following
         review date giving written notice to the Tenant specifying the annual
         rent considered by the Landlord to be the current market rent as at
         that review date.

     (b) If, by written notice to the Landlord within twenty-eight (28) days
         after receipt of the Landlord's notice, the Tenant disputes that the
         proposed new annual rent is the current market rent then the new rent
         shall be determined in accordance with clause 2.2. BUT the new rent
         shall not be less than the annual rent payable at the Commencement
         Date.

     (c) If the Tenant fails to give such notice (time being of the essence) the
         Tenant shall be deemed to have accepted the annual rent specified in
         the Landlord's notice.

     (d) The annual rent so determined or accepted shall be the annual rent from
         the review date or the date of the Landlord's notice if such notice is
         given later than three (3) months after the review date.

     (e) Pending the determination of the new rent, the Tenant shall pay the
         rent specified in the Landlord's notice provided that the rent is
         substantiated by a registered valuer's report. Upon determination of
         the new rent an appropriate adjustment shall be made.

     (f) The rent review at the option of either party may be recorded in a Deed
         the cost of which and the stamp duty thereon shall be payable by the
         tenant.
<PAGE>

2.2  IMMEDIATELY following receipt by the Landlord of the Tenant's notice the
     parties shall endeavour to agree upon the current market rent, but if
     agreement is not reached within fourteen (14) days then the new rent maybe
     determined either:

     (a) By one party giving written notice to the other requiring the new  rent
         to be determined by arbitration, or

     (b) If the parties so agree by registered valuers acting as experts and not
         as arbitrators as follows:

         (1) Each party shall appoint a valuer and give written notice of the
             appointment to the other party within fourteen (14) days of the
             parties agreeing to so determine the new rent.

         (2) If the party receiving a notice fails to appoint a valuer within
             the fourteen (14) day period then the valuer appointed by the other
             party shall determine the new rent and such determination shall be
             binding on both parties.

         (3) The valuers appointed before commencing their determination shall
             appoint an umpire who need not be a registered valuer.

         (4) The valuers shall determine the current market rent of the premises
             and if they fail to agree then the rent shall be determined by the
             umpire.

         (5) Each party shall be given the opportunity to make written or verbal
             representations to the valuers or the umpire subject to such
             reasonable time and other limits as the valuers or the umpire may
             prescribe and they shall have regard to any such representations
             but not be bound thereby.

     When the new rent has been determined the arbitrators or the valuers shall
     give written notice thereof to the parties. The notice shall provide as to
     how the costs of the determination shall be borne and such provision shall
     be binding on the parties.

Outgoings

3.1  THE Tenant shall pay the outgoings in respect of the property which are
     specified in the First Schedule. Where any outgoing is not separately
     assessed or levied in respect of the premises then the Tenant shall pay
     such proportion thereof as is specified in the First Schedule or if no
     proportion is specified then such fair proportion as shall be agreed or
     failing agreement determined by arbitration.

3.2  THE Landlord may vary the proportion of any outgoing payable to ensure that
     the tenant pays a fair proportion of the outgoing.

3.3  IF any outgoing is rendered necessary by another tenant of the property or
     that tenant's employees, contractors or invitees causing damage to the
     property or by another tenant failing to comply with that tenant's leasing
     obligations, then such outgoing shall not be payable by the Tenant.

3.4  THE outgoings shall be apportioned between the Landlord and the Tenant in
     respect of periods current at the commencement and termination of the term.

3.5  THE outgoings shall be payable on demand or if required by the Landlord by
     monthly instalments on each rent payment date of such reasonable amount as
     the Landlord shall determine calculated on an annual basis. Where any
     outgoing has not been taken into account in determining the monthly
     instalments it shall be payable on demand.

3.6  AFTER the 31st March in each year of the term or such other date in each
     year as the Landlord may specify, and after the end of the term, the
     Landlord shall supply to the Tenant reasonable details of the actual
     outgoings for the year or period then ended. Any over payment shall be
     credited or refunded to the Tenant and any deficiency shall be payable to
     the Landlord on demand.

3.7  THE Tenant's liability to pay outgoings during the term shall subsist
     notwithstanding the end or earlier termination of the term.

3.8  NOTWITHSTANDING any other provision in this lease, but with the exception
     of clause 18.2, the Tenant shall only be liable to pay the outgoings
     specified in the first schedule.
<PAGE>

Goods and Services Tax

4.1  THE Tenant shall pay to the Landlord or as the Landlord shall direct the
     Goods and Services Tax payable by the Landlord in respect of the rental and
     other payments payable by the Tenant hereunder. The tax in respect of the
     rental shall be payable on each occasion when any rental payment falls due
     for payment and in respect of any other payment shall be payable upon
     demand.

4.2  IF the Tenant shall make default in payment of the rental or other moneys
     payable hereunder and the Landlord becomes liable to pay additional Goods
     and Services Tax then the Tenant shall on demand pay to the Landlord the
     additional tax.

Interest on Unpaid Money

5.   IF the Tenant defaults in payment of the rent or other moneys payable
     hereunder for fourteen (14) days then the Tenant shall pay on demand
     interest at the default interest rate on the moneys unpaid from the due
     date for payment down to the date of payment.

Costs

6.   THE Tenant shall pay the Landlord's solicitors costs of and incidental to
     the preparation of this lease and any variation or renewal or any Deed
     recording a rent review and the stamp duty payable, and the Landlord's
     legal costs (as between solicitor and client) of and incidental to the
     enforcement or attempted enforcement of the Landlord's rights remedies and
     powers under this lease.

Indemnity

7.   THE Tenant shall indemnify the Landlord against all damage or loss
     resulting from any act or omission on the part of the Tenant or the
     Tenant's employees contractors or invitees. The Tenant shall recompense the
     Landlord for all expenses incurred by the Landlord in making good any
     damage to the property resulting from any such act or omission. The Tenant
     shall be liable to indemnify only to the extent that the Landlord is not
     flatly indemnified under any policy of insurance.

LANDLORD'S PAYMENTS

Outgoings

8.   SUBJECT to the Tenant's compliance with the provisions of Clause 3 the
     Landlord shall pay all outgoings in respect of the property not payable by
     the Tenant direct. The Landlord shall be under no obligation to minimise
     any liability by paying any outgoing or tax prior to receiving payment from
     the Tenant.

[Insurance

9.   THE Landlord shall at all times during the term keep and maintain any
     buildings on the property insured under a policy of the type shown in the
     First Schedule against loss damage or destruction by fire and such other
     risks as the Landlord may reasonably determine and such cover may extend to
     --

     (a) a twelve (12) month indemnity in respect of consequential loss of rent,

     (b) loss damage or destruction of windows and other glass and all the
         Landlord's fixtures fittings and chattels, and

     (c) adequate public risk cover. ]
<PAGE>

MAINTENANCE AND CARE OF PREMISES

Tenant's Obligations

10.1 THE Tenant shall (subject to any maintenance covenant by the landlord) in
     a proper and workmanlike manner and to the reasonable requirements of the
     Landlord:

     (a) Maintain the premises

         Keep and maintain the interior of the premises including the Landlord's
         fixtures and fittings in the same clean order repair and condition as
         they were in at the commencement of this lease and will at the end or
         earlier determination of the term quietly yield up the same in the like
         clean order repair and condition. In each case the Tenant shall not be
         liable for fair wear and tear arising from reasonable use or damage by
         fire earthquake flood storm act of God inevitable accident or any risk
         against which the Landlord is insured unless the insurance moneys are
         rendered irrecoverable in consequence of any act or default of the
         Tenant or the Tenant's agents employees contractors or invitees.

     (b) Repair minor breakage

         Repair all glass breakages and breakage or damage to all doors windows
         light fittings and power points of the premises and shall keep that
         portion of the electrical system of the premises from the switchboard
         to all power outlets in good operating condition. This provision shall
         apply notwithstanding any other provision in this lease.

     (c) Painting

         Paint and decorate those parts of the interior of the premises which
         have previously been painted and decorated when the same reasonably
         require repainting and redecoration.

     (d) Floor coverings

         Keep all floor coverings in the premises clean and replace all worn or
         damaged floor coverings with floor coverings of a similar quality when
         reasonably required by the Landlord.

     (e) Make good defects

         Make good any damage to the property caused by improper careless or
         abnormal use by the Tenant or those for whom the Tenant is responsible.

10.2  WHERE the Tenant is leasing all of the property the Tenant shall:

     (a) Maintain yards

         Keep and maintain any car parks parings and other sealed or surfaced
         areas in good order and repair.

     (b) Care of grounds

         Keep any grounds yards and surfaced areas in a tidy condition and
         maintain any garden or lawn areas ill a tidy and cared for condition.

     (c) Water and drainage

         Keep and maintain the storm or waste water drainage system including
         downpipes and guttering clear and unobstructed.

     (d) Other works

         Carry out such works to the property as the Landlord may require in
         respect of which outgoings are payable by the Tenant.

10.3 THE Tenant shall not be liable for the maintenance or repair of any
     building service the subject of a service maintenance contract but this
     clause shall not release the Tenant from any obligation to pay for the cost
     of any such contract or charges in respect of any such maintenance or
     repair.

10.4 WHERE the Tenant is obligated to make good damage to the property of the
     Landlord then the Landlord shall reimburse the Tenant for the cost of
     making good the damage to the extent of any insurance moneys receivable by
     the Landlord in respect of such damage.

Toilets

11.  THE toilets sinks and drains shall be used for their designed purposes only
and no substance or matter shall be deposited in them which could damage or
block them.
<PAGE>

Rubbish Removal

12.  THE Tenant shall regularly cause all rubbish and garbage to be removed from
     the premises and will keep any rubbish bins or containers in a tidy
     condition.  The Tenant will also at the Tenant's own expense cause to be
     removed all trade waste boxes and other goods or rubbish not removable in
     the ordinary course by the local authority.

Landlord's Maintenance

13.1 THE Landlord shall keep and maintain the building and all building
     services in good order and repair but the Landlord shall not be liable for
     any:

     (a) Repair or maintenance which the Tenant is responsible to undertake; or

     (b) Want of repair or defect in respect of building services so long as the
         Landlord is maintaining a service maintenance contract covering the
         work to be done; or

     (c) Repair or maintenance which is not reasonably necessary for the
         Tenant's use and enjoyment of the premises.

     (d) Loss suffered by the Tenant arising from any want of repair or defect
         unless the Landlord shall have received notice in writing thereof from
         the Tenant and shall not within a reasonable time thereafter have taken
         appropriate steps to remedy the same.

13.2 THE Landlord shall keep and maintain service maintenance contracts for
     lifts, airconditioning and at the Landlord's option any other building
     services unless it is the obligation of the Tenant to maintain such
     contracts.

Notification of Defects

14.  THE Tenant shall give to the Landlord prompt notice of any accident to or
     defect in the premises of which the Tenant may be aware and in particular
     in relation to any pipes or fittings used in connection with the water
     electrical gas or drainage services.

Landlord's Right of Inspection

15.  THE Landlord and the Landlord's employees Contractors and invitees may at
     all reasonable times enter upon the premises to view their condition. If
     the Landlord shall give the Tenant written notice of any failure on the
     part of the Tenant to comply with any of the requirements of Clause I0 the
     Tenant shall with all reasonable speed so comply.

Landlord may Repair

16.  IF default shall be made by the Tenant in the due and punctual compliance
     with any repair notice given pursuant to the previous clause or in the
     event that any repairs for which the Tenant is responsible require to be
     undertaken as a matter of urgency then without prejudice to the Landlord's
     other rights and remedies expressed or implied the Landlord may by the
     Landlord's employees and contractors with all necessary equipment and
     material at all reasonable times enter upon the premises to execute such
     works. Any moneys expended by the Landlord in executing such works shall be
     payable by the Tenant to the Landlord upon demand together with interest
     thereon at the default interest rate from the date of expenditure down to
     the date of payment.

Access for Repairs

17.  THE Tenant shall permit the Landlord and the Landlord's employees and
     contractors at all reasonable times to enter the premises to carry out
     repairs to the premises or adjacent premises and to install inspect repair,
     renew or replace any services where the same are not the responsibility of
     the Tenant all such repairs inspections and work to be carried out with the
     least possible inconvenience to the Tenant.
<PAGE>

USE OF PREMISES

Business Use

18.1 THE Tenant shall not without the prior written consent of the Landlord use
     or permit the whole or any part of the premises to be used for any use
     other than the business use. The Landlord's consent shall not be
     unreasonably or arbitrarily withheld in respect of any proposed use

     (a) not in substantial competition with the business of any other occupant
         of the property which might be affected by the use,

     (b) reasonably suitable for the premises and

     (c) conforming with all town planning ordinances, provisions and consents.

     If any change in use renders any increased or extra premium payable in
     respect of any policy or policies of insurance on the premises the Landlord
     as a condition of granting consent may require the Tenant to pay the
     increased or extra premium.

18.2 IF any change in use requires compliance with Section 46 of the Building
     Act 1991 the Landlord, as a condition of granting consent, may require the
     Tenant to comply with Section 46 of the Act and to pay all compliance
     costs.

18.3 IF the premises are a retail shop the Tenant shall keep the premises open
     for business during usual trading hours and fully stocked with appropriate
     merchandise for the efficient conduct of the Tenant's business.

Lease of Premises Only

19.  THE tenancy shall relate only to the premises and the Landlord shall at all
     times be entitled to use occupy and deal with the remainder of the property
     without reference to the Tenant and the Tenant shall have no rights in
     relation thereto other than the rights of use herein provided.

Neglect of Other Tenant

20.  THE Landlord shall not be responsible to the Tenant for any act of default
     or neglect of any other tenant of the property.

Signage

21.  THE Tenant shall not affix paint or exhibit or permit to be affixed painted
     or exhibited any name sign name-plate signboard or advertisement of any
     description on or to the exterior of the building or the appurtenances
     thereof without the prior approval in writing of the Landlord but such
     approval shall not be unreasonably or arbitrarily withheld in respect of
     signage descrying the Tenant's business. If approved the signage shall be
     secured in a substantial and proper manner so as not to cause any damage to
     the building or any person and the Tenant shall at the end or sooner
     determination of the term remove the signage and make good any damage
     occasioned thereby.

Additions and Alterations

22.1 THE Tenant shall neither make nor allow to be made any alterations or
     additions to any part of the premises without first producing to the
     Landlord on every occasion plans and specifications and obtaining the
     written consent of the Landlord (not to be unreasonably or arbitrarily
     withheld) for that purpose. If the Landlord shall authorise any alterations
     or additions the Tenant will at the Tenant's own expense if required by the
     Landlord at the end of the term reinstate the premises. The Tenant will
     promptly discharge and procure the withdrawal of any liens or charges of
     which notice may be given to the Tenant or the Landlord in respect of any
     work carried out by the Tenant.

22.2 THE Tenant, when undertaking any "building work" to the premises (as that
     term is defined in the Building Act 1991), shall comply with all statutory
     requirements including the obtaining of building consents and code
     compliance certificates pursuant to that Act.
<PAGE>

Compliance with Statutes and Regulations

23.1 THE Tenant shall comply with the provisions of all statues, ordinances,
     regulations and by-laws relating to the use of the premises by the Tenant
     or other  occupant and will also comply with the provisions of all
     licences, requisitions and notices issued by any competent authority in
     respect of the premises or their use by the Tenant or other occupant
     PROVIDED THAT:

     (a) The Tenant shall not be required to make any structural repairs or
         alterations other than those required by reason of the particular
         nature of the business carried on by the Tenant or other occupant of
         the premises or the number or sex of persons employed on the premises.

     (b) The Tenant shall not be liable to discharge the Landlord's obligations
         as owner under the Building Act 1991 unless any particular obligation
         is the responsibility of the Tenant as an occupier of the premises.

23.2 If the Landlord is obliged by any such legislation or requirement to
     expend moneys on any improvement addition or alteration to the premises
     then the Landlord shall be entitled to charge in addition to the rent an
     annual sum equal to the Improvements Rent Percentage of the amount so
     expended by the Landlord and the monthly payments of rent shall increase
     accordingly from the first day of the month in which such improvement
     addition or alteration is completed. If the Landlord would be obliged to
     expend an unreasonable amount then the Landlord may determine this lease
     and any dispute as to whether or not the amount is unreasonable shall be
     determined by arbitration.

No Noxious Use

24.  THE Tenant shall not

     (a) bring upon or store within the premises nor allow to be brought upon or
         stored within the premises any machinery goods or things of an
         offensive noxious illegal or dangerous nature, or of such weight size
         or shape as is likely to cause damage to the building or any surfaced
         area,

     (b) use the premises or allow them to be used for any noisome noxious
         illegal or offensive trade or business, or

     (c) allow any act or thing to be done which may be or grow to be a nuisance
         disturbance or annoyance to the Landlord, other tenants of the
         property, or any other person, and generally the Tenant shall conduct
         the Tenant's business upon the premises in a clean quiet and orderly
         manner free from damage nuisance disturbance or annoyance to any such
         persons but the carrying on by the Tenant in a reasonable manner of the
         business use or any use to which the Landlord has consented shall be
         deemed not to be a breach of this clause.

Tenant not to Void Insurances

25.  THE Tenant shall not carry on or allow upon the premises any trade or
     occupation or allow to be done any act or thing which

     (a) shall make void or voidable any policy of insurance on the property or

     (b) may render any increased or extra premium payable for any policy of
         insurance except where in circumstances in which any increased premium
         is payable the Tenant shall have first obtained the consent of the
         insurer of the premises and the Landlord and made payment to the
         insurer of the amount of any such increased or extra premium as may be
         payable but the carrying on by the Tenant in a reasonable manner of the
         business use or of any use to which the Landlord has consented shall be
         deemed not to be a breach of this clause.

     In any case where in breach of this clause the Tenant has rendered any
     insurance less effective or void and the Landlord has suffered loss or
     damage thereby the Tenant shall forthwith compensate the Landlord in full
     for such loss or damage.
<PAGE>

DRAFT DAMAGE TO OR DESTRUCTION OF PREMISES

Total Destruction

26.  IF the premises or any portion of the building of which the premises may
     form part shall be destroyed or so damaged

     (a) as to render the premises untenantable then the term shall at once
         terminate or

     (b) in the reasonable opinion of the Landlord as to require demolition or
         reconstruction, then the Landlord may within three (3) months of the
         date of damage or destruction give the Tenant one (1) months written
         notice to terminate and a fair proportion of the rent and outgoings
         shall cease to be payable according to the nature and extent of the
         damage.

     Any termination pursuant to this clause shall be without prejudice to the
     rights of either party against the other.

Partial Destruction

27.1 IF the premises or any portion of the building of which the premises may
     form part shall be damaged but not so as to render the premises
     untenantable and

     (a) the Landlord's policy or policies of insurance shall not have been
         invalidated or payment of the policy moneys refused in consequence of
         some act or default of the Tenant and

     (b) all the necessary permits and consents shall be obtainable,

     THEN the Landlord shall with all reasonable speed expend all the insurance
     moneys received by the Landlord in respect of such damage towards repairing
     such damage or reinstating the premises and/or the building but the
     Landlord shall not be liable to expend any sum of money greater than the
     amount of the insurance money received.

27.2 Any repair or reinstatement may be carried out by the Landlord using such
     materials and form of construction and according to such plan as the
     Landlord thinks fit and shall be sufficient so long as it is reasonably
     adequate for the Tenant's occupation and use of the premises.

27.3 Until the completion of the repairs or reinstatement a fair proportion of
     the rent and outgoings shall cease to be payable according to the nature
     and extent of the damage.

27.4 If any necessary permit or consent shall not be obtainable or the
     insurance moneys received by the Landlord shall be inadequate for the
     repair or reinstatement then the term shall at once terminate but without
     prejudice to the rights of either party against the other.

DEFAULT

Distress

28.  THE Landlord may distrain for rent or other moneys payable under this lease
     remaining unpaid fourteen (14) days after due date.
<PAGE>

Re-Entry

29.  THE Landlord may re-enter the premises at the time or at any time hereafter

     (a) if the rent shall be in arrear fourteen (14) days after any of the rent
         payment dates,

     (b) in case of breach by the Tenant of any covenant or agreement on the
         Tenant's part herein expressed or implied,

     (c) if the Tenant shall make or enter into or endeavour to make or enter
         into any composition assignment or other arrangement with or for the
         benefit of the Tenant's creditors,

     (d) in the event of the insolvency bankruptcy or liquidation of the Tenant,

     (e) if the Tenant shall suffer distress or execution to issue against the
         Tenant's property goods or effects under any judgment against the
         Tenant in any Court for a sum in excess of five thousand dollars
         ($5000.00)

     and the term shall terminate on such re-entry but without prejudice to the
     rights of either party against the other.

Loss on Re-entry

30.  UPON re-entry the Landlord may remove from the premises any chattels in the
     apparent possession of the Tenant and place them outside the premises and
     the Landlord shall not be answerable for any loss resulting from the
     exercise of the power of re-entry.

Essentiality of Payments

31.1 FAILURE to pay rent or other moneys payable hereunder on the due date
     shall be a breach going to the essence of the Tenant's obligations under
     the Lease. The Tenant shall compensate the Landlord and the Landlord shall
     be entitled to recover damages from the Tenant for such breach. Such
     entitlement shall subsist notwithstanding any determination of the lease
     and shall be in addition to any other right or remedy which the Landlord
     may have.

31.2 THE acceptance by the Landlord of arrears of rent or other moneys shall
     not constitute a waiver of the essentiality of the Tenant's continuing
     obligation to pay rent and other moneys.

Repudiation

32.  THE Tenant shall compensate the Landlord and the Landlord shall be entitled
     to recover damages for any loss or damage suffered by reason of any acts or
     omissions of the Tenant constituting a repudiation of the lease or the
     Tenant's obligations under the lease. Such entitlement shall subsist
     notwithstanding any determination of the lease and shall be in addition to
     any other right or remedy which the Landlord may have.

REMOVAL OF TENANT'S FIXTURES

33.  THE Tenant not being in breach may at any time before and will if required
     by the Landlord at the end or earlier termination of the term remove all
     the Tenant's fixtures and fittings and make good at the Tenant's own
     expense all resulting damage and if not removed within seven (7) days of
     the Landlord's request ownership of the Tenant's fixtures and fittings
     passes to the Landlord.
<PAGE>

QUIET ENJOYMENT

34.  THE Tenant paying the rent and performing and observing all the covenants
     and agreements herein expressed and implied shall quietly hold and enjoy
     the premises throughout the term without any interruption by the Landlord
     or any person claiming under the Landlord.

RENEWAL OF TERM

35.  IF the Tenant has not been in breach of this lease and has given to the
     Landlord written notice to renew the lease at least three (3) calendar
     months before the end of the term then the Landlord will at the cost of the
     Tenant renew the lease for the next further term from the renewal date as
     follows:

     (a) The annual rent subject to clause 2.2 shall not be less than the rent
         payable at Commencement Date.

     (b) Such annual rent shall be subject to review during the further  term on
         the review dates or if no dates are specified then after the lapse of
         the equivalent periods of time as are provided herein for rent reviews.

     (c) The renewed lease shall otherwise be upon and subject to the covenants
         and agreements herein expressed and implied except that the term of
         this lease plus all further terms shall expire on or before the final
         expiry date.

ASSIGNMENT OR SUBLETTING

36.1 THE Tenant shall not assign sublet or otherwise part with the possession
     of the premises or any part thereof without first obtaining the written
     consent of the Landlord which the Landlord shall give if the following
     conditions are fulfilled:

     (a) The Tenant proves to the satisfaction of the Landlord that the proposed
         assignee or subtenant is (or in the case of a company the shareholders
         of the proposed assignee or subtenant are) respectable responsible and
         has the financial resources to meet the Tenant's commitments under this
         lease.

     (b) All rent and other moneys payable have been paid and there is not any
         subsisting breach of any of the Tenant's covenants.

     (c) In the case of an assignment a deed of covenant in customary form
         approved or prepared by the Landlord is duly executed and delivered to
         the Landlord.

     (d) In the case of an assignment to a company (other than a listed public
         company) a deed of guarantee in customary form approved or prepared by
         the Landlord is duly executed by the principal shareholders of that
         company and (if required by the Landlord) by the Directors and
         delivered to the Landlord.

     (e) The Tenant pays the Landlord's proper costs and disbursements in
         respect of the approval or preparation and stamping of any deed of
         covenant or guarantee and (if appropriate) all fees and charges payable
         in respect of any reasonable enquiries made by or on behalf of the
         Landlord concerning any proposed assignee subtenant or guarantor.

36.2 WHERE the Landlord consents to a subletting the consent shall extend only
     to the subletting and notwithstanding anything contained or implied in the
     sublease the consent shall not permit any subtenant to deal with the
     sublease in any way in which the Tenant is restrained from dealing without
     consent.

36.3 ANY assignment or subletting of the type or in the manner referred to in
     Section 109 (2) of the Property Law Act 1952 shall be a breach of the
     provisions of this lease.

36.4 WHERE any Tenant is an unlisted company then any change in the legal or
     beneficial ownership of any or its shares or issue of new capital whereby
     in either case there is a change in the effective management or control of
     the company is deemed to be an assignment of this lease.
<PAGE>

UNIT TITLE COVENANTS

Body Corporate

37.1 THE expression "Body Corporate" means the Body Corporate incorporated
     under the Unit Titles Act 1972 ("the Act") in respect of the property.

Act and Rules Paramount

37.2 THIS lease shall be subject to the provisions of the rules of the Body
     Corporate and the provisions of the Act.

Insurance

37.3 THE Landlord's obligation to insure the building shall be satisfied by the
     Body Corporate maintaining the same insurance covers in accordance with the
     Act.

Indemnity

37.4 THE Tenant's obligation to indemnify the Landlord as herein expressed is
     extended to include the Body Corporate but only to the extent that the Body
     Corporate is not fully indemnified under any policy of insurance.

Lessor's Obligations

37.5 THE Landlord shall observe and perform all of the Landlord's obligations
     as a member of the Body Corporate and shall use the Landlord's best
     endeavours to ensure that the Body Corporate complies with its rules and
     the provisions of the Act.

Consents

37.6 WHERE in this lease the consent of the Landlord is required in respect of
     any matter then the like consent of the Body Corporate shall also be
     required if the consent of the Body Corporate to any such matter would be
     necessary under its rules or the Act.

GENERAL

Holding Over

38.  IF the Landlord permits the Tenant to remain in occupation of the premises
     after the expiration or sooner determination of the term, such occupation
     shall be a monthly tenancy only terminable by one month's written notice at
     the rent then payable and otherwise on the same covenants and agreements
     (so far as applicable to a monthly tenancy) as herein expressed or implied.

Access for Re-Letting

39.  THE Tenant will at all reasonable times during the period of three months
     immediately preceding expiration of the term permit intending tenants and
     others with written authority from the Landlord or the Landlord's agents at
     all reasonable times to view the premises.

Suitability.

40.  NO warranty or representation expressed or implied has been or is made by
     the Landlord that the premises are now suitable or will remain suitable or
     adequate for use by the Tenant or that any use of the premises by the
     Tenant will comply with the by-laws or ordinances or other requirements of
     any authority having jurisdiction.
<PAGE>

Waiver

41.  NO waiver or failure to act by the Landlord in respect of any breach by the
     Tenant shall operate as a waiver of another breach.

Land Transfer Title or Mortgagee's consent

42.  THE Landlord shall not be required to do any act or thing to enable this
     lease to be registered or be required to obtain the consent of any
     mortgagee of the premises to this lease and the Tenant will not register a
     caveat in respect of the Tenant's interest hereunder.

Notice

43.  SUBJECT to the provisions of the Property Law Act 1952 any notice to be
     given to the Landlord or the Tenant hereunder shall be deemed sufficiently
     served if

     (a) sent by registered post to the addressee's last known address in New
         Zealand, or

     (b) in the case of a body corporate sent to its registered office, or

     (c) if there is no last known address or registered office, placed
         conspicuously on any part of the premises.

     Any notice so posted or placed shall be deemed to have been served on the
     day following the posting or placing thereof. Anything served or given by
     the Landlord shall be valid if served or given under the hand of the
     Managing Director, General Manager, Secretary or a director or other
     authorised representative of the Landlord.

Arbitration

44.1 UNLESS any dispute or difference is resolved by mediation or other
     agreement, the same shall be submitted to the arbitration of one arbitrator
     who shall conduct the arbitral proceedings in accordance with the
     Arbitration Act 1996 and any amendment thereof or any other statutory
     provision then relating to arbitration.

44.2 IF the parties are unable to agree on the arbitrator, an arbitrator shall
     be appointed, upon request of any party, by the President or Vice President
     for the time being of the District Law Society of the district within which
     the premises are situated. That appointment shall be binding on all parties
     to the arbitration and shall be subject to no appeal. The provisions of
     Article 11 of the First Schedule of the Arbitration Act 1996 are to be read
     subject hereto and varied accordingly.

44.3 THE procedures prescribed in this clause shall not prevent the landlord
     from taking proceedings for the recovery of any rent or other monies
     payable hereunder which remain unpaid or from exercising the rights and
     remedies in the event of such default prescribed in clauses 28 and 29
     hereof.

Interpretation

45.  IN this lease

     (a)  "the Landlord" and "the Tenant" means where appropriate the executors,
          administrators, successors and permitted assigns of the Landlord and
          the Tenant.

     (b)  "the property" and "the building" mean the land and building(s) of the
          Landlord which comprise or contain the premises. Where the premises
          are part of a unit title development the words "the property" mean the
          land and building(s) comprised in the development.

     (c)  "the common areas" means those parts of the property the use of which
          is necessary for the enjoyment of the premises and which is shared
          with other tenants and occupiers.

     (d)  Whenever words appear in this lease that also appear in the First
          Schedule then those words shall mean and include the details supplied
          after them in the First Schedule

     (e)  Where the context requires or admits, words importing the singular
          shall import the plural and vice versa.
<PAGE>

ADDITIONAL CLAUSES

Non Exclusive Right to Use Carparks

46.  The Lessee and Guarantor acknowledge that the carparking provided is not
     for the exclusive use of the Lessee's customers.
<PAGE>

                                THIRD SCHEDULE

                                   GUARANTEE

IN CONSIDERATION of the Landlord entering into the lease at the Guarantor's
request the Guarantor:

  (a) guarantees payment of the rent and the performance by the Tenant of the
      covenants in the lease, and

  (b) indemnifies the Landlord against any loss the Landlord might suffer should
      the lease be lawfully disclaimed or abandoned by any liquidator, receiver
      or other person.

THE GUARANTOR covenants with the Landlord that:

1.   NO release delay or other indulgence given by the Landlord to the Tenant or
     to the Tenant's successors or assigns or any other thing whereby the
     Guarantor would have been released had the Guarantor been merely a surety
     shall release prejudice or affect the liability of the Guarantor as a
     guarantor or as indemnifier.

2.   AS between the Guarantor and the Landlord the Guarantor may for all
     purposes be treated as the Tenant and the Landlord shall be under no
     obligation to take proceedings against the Tenant before taking proceedings
     against the Guarantor.

3.   THE guarantee is for the benefit of and may be enforced by any person
     entitled for the time being to receive the rent.

4.   AN assignment of the lease and any rent review in accordance with the lease
     shall not release the Guarantor from liability.

5.   SHOULD there be more than one Guarantor their liability under this
     guarantee shall be joint and several.
<PAGE>

                              Dated
                              -----------------------------------------

                              Between

                              PUKEROA ORUAWHATA HOLDINGS LIMITED

                                                          Landlord

                              and

                              CUL (NZ) LIMITED

                                                          Tenant

                              and

                              COST-U-LESS INC

                                                          Guarantor

                              =========================================
                                           DEED OF LEASE
                              =========================================

<PAGE>

                                   SCHEDULE 4

                                 Specifications
<PAGE>

                           [FLOOR PLAN APPEARS HERE]

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