EXHIBIT 10.21

STANDARD NET INDUSTRIAL LEASE

INFORMATION SCHEDULE

This Information Schedule is a part of the Lease between the parties named
below. The information in this Schedule is further explained and detailed
in the rest of the Lease, most particularly in the referenced Lease
Paragraphs.

INFORMATION PARAGRAPH

DATE OF LEASE: March 13, 1996 #1

PARTIES: LANDLORD: National Life Insurance Company #1,19
c/o Koll Investment Management
4343 Von Karman Avenue
Newport Beach, CA 92660
Attention: Thomas K. Arai

Copy: Koll Investment Management
4343 Von Karman Avenue
Newport Beach, CA 92660
Attention: Herbert L. Roth

TENANT: Callaway Golf Company #1,19
2285 Rutherford Rd.
Carlsbad, CA 92008-8815
Attention: Donald H. Dye, President

PREMISES: Approximately 63,083 Square Feet at 5858 Dryden Place, #2.1
Carlsbad, CA Exhibits A&B

Adjacent Site Improvements: (if none, so state) #2.1(b)
None Exhibit B

LANDLORD'S WORK: See Exhibit C #3.1,
Exhibit C

OCCUPANCY: The "Date of Occupancy" shall be July 1, 1996 #3.2

TERM: The "Lease Term" shall commence upon execution of #4
the lease document by Tenant and Landlord and expire
August 31, 2002.

RENTS: Fixed Minimum Rent: See Exhibit E #5

ADDITIONAL RENTS: Tenant's share of the Operating Costs, Real Estate #5.2, 7.3,
Taxes, and Insurance Premiums is established at one 8.2(b),10.1, 11
hundred percent (100%). Utilities are as set forth
herein.

SECURITY DEPOSIT: The initial Security Deposit is $28,387.35 #5.4
$28,387.35

PERMITTED USES: Office, research and development, assembly, #6.1
manufacturing, repair, warehouse and distribution
of sports equipment and related products.

LANDLORD'S BROKER: CB Commercial #20

TENANT'S BROKER: CB Commercial #20

ADDITIONAL EXHIBITS: The following Exhibits are attached to and made a part
of this Lease.

A. Description of the Premises
B. Plan of the Premises
C. Landlord's Work and Tenant's Work
D. Dangerous/Hazardous Chemicals and Materials
E. Rent Schedule
F. Reports & Documents

Page 1

STANDARD NET INDUSTRIAL LEASE

1. PARTIES. This is made as of the date shown in the Information Schedule,
between the parties as provided in said Schedule.

2. PREMISES, PROPERTY.

2.1 PREMISES. In consideration of the agreements in this Lease and other
consideration paid, Landlord leases to the Tenant and Tenant leases from
Landlord:

2.1(a) The "Premises" consists of land and the "Building" located at 5858
Dryden Place, Carlsbad, CA, as described in Exhibit A and the Information
Schedule and are shown on Exhibit "B".

2.1(b) INTENTIONALLY DELETED

2.1(c) INTENTIONALLY DELETED

3. IMPROVEMENTS, DATE OF OCCUPANCY.

3.1 COMPLETION OF CONSTRUCTION. The Landlord's Work is described in Exhibit
"C". Any items to be paid for by Tenant are as shown in Exhibit "C". Landlord
will use reasonable efforts to deliver the Premises to Tenant in substantial
compliance with the plans and specifications listed in Exhibit "C" on or before
the date provided in the Information Schedule, subject to Article 15. Plans and
specifications to be provided by Tenant will be available to Landlord as
provided in the Information Schedule.

3.2 DATE OF OCCUPANCY. Date of Occupancy shall be July 1, 1996.

3.3 POSSESSION.

Tenant may cancel this lease if possession is not provided within ninety
(90) days from the projected Date of Occupancy. Tenant agrees not to seek
damages if Landlord fails to complete Landlord's work or if occupancy is delayed
due to any of the events in Article 15 or any other cause.

4. TERM: Commencement and Termination. The Lease is as provided in the
Information Schedule. If the Tenant is on the Premises before the Date of
Occupancy the terms of the Lease (except rentals) will govern. This lease is
not terminable by Tenant, except as expressly stated.

5. RENTS, SECURITY DEPOSITS.

5.1(a) FIXED MINIMUM RENT. Tenant agrees to pay Landlord Fixed Minimum Rent
(the Rent) for the Premises in the amounts listed in the Rent Schedule attached
hereto as Exhibit "E". The Rent will be paid in monthly installments, in
advance, without offset, deduction or prior demand, on the first day of each
month of the original and any renewal Lease Term. The Rent for the time from
the Date of Occupancy to the first day of the next calendar month will be paid
on the Date of Occupancy.

5.1(b) RENT TAX. If any governmental agency imposes any tax measured by the
amount of rent paid, Tenant will pay such tax at the time of each payment of
Fixed Minimum Rent or Additional Rent.

5.1(c) COST OF LIVING INCREASE. INTENTIONALLY DELETED.
SEE ATTACHED RENT SCHEDULE (Exhibit "E").

5.2(a) ADDITIONAL RENT. In addition to the Fixed Minimum Rent, Tenant will pay
as Additional Rent Tenant's Share of the Property Costs which includes:
insurance premiums, (whether elective or required), Real Property Taxes, and
Tenant's Share of Operating Costs. Operating Costs include all costs and
expenses of any kind or nature incurred by Landlord in managing, operating,
equipping, policing, protecting, lighting, repairing, replacing and maintaining
the Industrial Park and the common areas, including, but not limited to,
maintenance and repairs, common area utilities, water and sewer, landscaping,
irrigation systems, cleaning, snow removal, signaled, lighting, pest control,
security costs, supplies, trash removal, parking lot sweeping, personal property
taxes, Owners' Association dues, maintenance of and replacement of equipment,
exterior painting, roof repairs, parking lot repairs, seal coating, and
striping, plumbing repairs, and compensation and benefits of employees involved
in such work. Excluded from Operating Costs are net income taxes, financing
costs, capital improvements, leasing commissions, advertising expenses,
renovation of space for new tenants, and renovation as a result of casualty from
causes against which Landlord carries insurance. If Tenant fails to pay its
share of these expenses, Landlord shall have the remedies provided for the
failure to pay rent.

5.2(b) PAYMENT OF ADDITIONAL RENT. Additional rent, together with any tax
measured by the amount of additional rent, will be paid in monthly installments
on the first day of each month in an amount reasonably established from time to
time by Landlord. Property Costs for periods including time outside the Lease
Term will be prorated. Landlord will provide an accounting of actual costs at
least annually and any refund due Tenant, or payment due Landlord, shall be paid
within fifteen (15) days from receipt of notice.

5.2(c) TENANT'S SHARE. Tenant's Share is the percentage obtained by dividing
the number of square feet of leasable area in the Building. The Tenant's Share
is initially established as set forth in the Information Schedule.

5.3 RENT OBLIGATIONS INDEPENDENT; ABATEMENT; PRORATION; WHERE PAYABLE; LATE
CHARGES. The rent obligations are independent of any other obligations of
Tenant or Landlord, and Tenant is not entitled to any abatement or reduction in
rent except as expressly provided. Tenant waives the benefit of any statute
which would alter this agreement of the parties. Rent due for any period which
is less than one month will be prorated. Rent is payable to Landlord at the
address listed in the Information Schedule or such other places the Landlord may
designate from time to time in writing. A five percent (5%) handling fee is due
on any rent not paid within ten (10) days of the due date, unless Landlord
elects to pursue actions under Paragraph 13.

5.4 SECURITY DEPOSIT.

Upon execution of this Lease, Tenant shall deposit with Landlord a cash
Security Deposit in the amount provided in the Information Schedule. Landlord
may apply all or part of the Security Deposit to any unpaid rent or other
charges due from Tenant or to cure any default of Tenant. If Landlord uses any
part of the Security Deposit, Tenant shall restore the Security Deposit to its
full amount within ten (10) days after Landlord's written request. Tenant's
failure to comply with this provision shall be a material default. No interest
is payable on the Security Deposit. Landlord is not required to keep the
Security Deposit in a separate account and no trust relationship is created as
to the Security Deposit.

6. USE.

Page 2

6.1 USE. Tenant covenants and agrees to use the Premises for no purpose other
than those listed in the Information Schedule.

6.2 COMPLIANCE WITH LAW. Tenant, at its expense, will comply promptly with all
statutes, ordinances, rules and regulations, orders and requirements (including
the recommendations of fire rating organizations, Tenant's and Landlord's
underwriters and insurance companies), in effect during the Lease Term
regulating the use of the Premises by Tenant. Tenant will not carry on, nor
permit any dangerous or offensive activity so as to create damage to the
Property, waste, a nuisance, or, disturbance to other tenants.

6.3 ENVIRONMENTAL PROTECTIONS. Tenant acknowledges that there are in effect
federal, state, and local laws, regulations, and guidelines, and that additional
and other laws, regulations, and guidelines may hereinafter be enacted to take
effect relating to or affecting the Premises, and concerning the impact on the
environment of construction, land use, maintenance and operation of structures,
and the conduct of business. Tenant will not cause or permit to be caused, any
act or practice, by negligence, omission, or otherwise that would adversely
affect the environment, or do anything or permit anything to be done that would
violate any of said laws, regulations or guidelines. Tenant agrees to comply
with Exhibit "D" ("Control of Dangerous/Hazardous Chemicals and Materials").
Tenant shall indemnify, defend, protect and hold Landlord, its employees,
agents, officers and directors, harmless from and against all claims, accidents,
suits, proceedings, judgments, losses, costs, damages, liabilities (including,
without limitation, sums paid in settlement of claims), deficiencies, fines,
penalties, punitive damages or expenses (including, without limitation,
reasonable attorneys', experts', and consultants' fees, investigation and
laboratory fees, court costs and litigation expenses) resulting from any adverse
affect to the environment by Tenant, directly or indirectly resulting from the
presence of any Hazardous Materials in, on, or under the Premises that were
introduced to the Premises by Tenant. All obligations of Tenant under this
Article 6.3 shall survive the expiration or earlier termination of the Lease.

Tenant shall have no liability for the clean up of, or otherwise in connection
with, any spill, accidents or improper discharges of dangerous/hazardous
chemicals or materials which occurred prior to the Date of Occupancy, unless
caused by Tenant, and Landlord agrees to indemnify, defend, protect and hold
Tenant, its employees, agents, officers and directors and shareholders, harmless
from and against all claims, suits, proceedings, judgments, losses, costs,
damages, fines, penalties, punitive damages and expenses (including, without
limitation, reasonable attorney's, expert's and consultant's fees, investigation
and laboratory fees, court costs and litigation expenses) resulting from or
related to such spills, accidents or improper discharges of dangerous/hazardous
chemicals or materials occurring prior to the Date of Occupancy, unless caused
by Tenant. The obligation of Landlord under this section shall survive
termination of this lease agreement.

6.4 CONDITION OF PREMISES. Landlord has delivered the following reports and
documents listed in Exhibit F. Tenant has reviewed said reports and documents
and determined at its sole discretion that the property is suitable and accepts
property's condition as described in these reports. Tenant accepts the Premises
in the condition existing as of the date of this Lease, subject only to the
completion of Landlord's Work.* Tenant accepts the Premises subject to all
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations governing use of the Premises and to any covenants or restrictions
of record, and matters disclosed by any attached exhibits. Tenant acknowledges
that Landlord and Landlord's agent have not made any representation or warranty
as to the suitability of the Premises for Tenant's business.

* Subject to completion of cleanup of Hazardous Materials from Premises by
Landlord.

/s/ TKA /s/ DHD
------------------- -----------------
Landlord's Initials Tenant's Initials

7. MAINTENANCE, REPAIRS AND ALTERATIONS.

7.1 TENANT'S OBLIGATIONS. During the Lease Term, Tenant shall maintain,
replace and keep the Premises, fixtures and equipment in good and clean order,
condition and repair, including, but not limited to, all windows and doors and
their fixtures, loading dock equipment (dock levelers, overhead doors, dock
shelters, seals and bumpers), pavement under the sole use of Tenant, electrical
system, lighting (fixtures, bulbs, ballasts, starters, and diffusers), plumbing,
heating and cooling system and equipment, floors, sprinkler system, interior
wall surfaces, interior partitions, mezzanines and all Adjacent Site
Improvements. Tenant will maintain maintenance contracts satisfactory to
Landlord covering the air conditioners and insurance policies covering boilers.
Tenant waives the benefits of any statute which would give Tenant the right to
make repairs at Landlord's expense or to terminate this Lease because of
Landlord's failure to keep the Premises in good order, condition and repair.

Tenant agrees to store trash in suitable containers outside the Building.
Tenant agrees not to store goods, pallets, drums, or any other materials outside
the Premises.

Tenant shall not place a load upon any floor of the Premises exceeding the floor
load per square foot area which such floor was designed to carry and which is
allowed by law. Use by Tenant of any mezzanines for storage is at Tenant's sole
risk and Tenant agrees to indemnify Landlord from any claims resulting from any
such use.

In the event Landlord designates specific parking areas within the parking and
loading areas, Tenant will cause its employees, agents, and invitees to park
only in the designated areas.

No repair or servicing of any motorized vehicle shall be allowed in the Premises
or in any parking or loading areas, roadways, or service areas within the
Industrial Park. No vehicle (including equipment, trailers, and machinery)
shall be abandoned or disabled or in a state of non-operation or disrepairship
upon the property of the Landlord, and Tenant shall enforce this restriction
against Tenant's employees, agents, and invitees. Should Landlord determine
that a violation of this restriction has occurred, Landlord shall have the right
to cause the offending vehicle to be removed and all costs of such removal shall
be the obligation of the Tenant responsible for such vehicle within ten (10)
days of written notice to Tenant.

7.2 LANDLORD'S OBLIGATIONS. Landlord will maintain the roof, the structural
integrity of the exterior walls, structural supports and foundations of the
Building and the paved areas of the Industrial Park (except for pavement under
Tenant's sole use), unless covered by the provisions of Paragraph 9.3. Landlord
may enter the Premises on reasonable notice to carry out its obligations.
Landlord will not unduly interfere with Tenant's operations. Landlord is not
liable for any reasonable interruption of Tenant's use of the Premises.

It is expressly agreed between the parties that the Landlord will not be liable
to the Tenant for any damage or injury which may be sustained by the Tenant or
those claiming through Tenant as a result of leaks in the roof, foundation or
outside walls. The Landlord will be liable to the Tenant only in the event of
the Landlord's willful refusal to repair the roof, foundation and outside walls
or Landlord's gross negligence in making such repairs.

7.3 RAIL SPUR USE & COSTS. INTENTIONALLY DELETED

7.4 SURRENDER OF PREMISES. At the end of the term, or any other termination,
Tenant will return the Premises in good, clean condition and operating order,
after completing all maintenance and replacement which is Tenant's
responsibility. Damage by ordinary wear and tear is excepted to the extent that
it is not part of Tenant's obligation to maintain and replace. Also excepted is
casualty from causes against which Landlord carries insurance. Extraordinary
wear and tear due to Tenant's use of the Premises is the responsibility of
Tenant. Damage to the Premises caused by Paragraph 7.5(c) removals will be
repaired by Tenant.

Page 3

Tenant shall notify Landlord in writing at least 120 days prior to vacating the
Premises and shall within 30 days prior to vacating arrange to meet with
Landlord for a joint inspection of the Premises prior to vacating. If Tenant
fails to give such notice or to arrange for such inspection, then Landlord's
inspection of the Premises shall be deemed correct for the purpose of
determining Tenant's responsibility for repairs and restoration of the Premises.

7.5 ALTERATIONS AND ADDITIONS.

7.5(a) CONSENT. Tenant will not make any alterations or improvements to the
Premises, or changes to the exterior of the Premises, or the exterior of the
Building without Landlord's prior written consent. Landlord may condition its
consent with any of the following:

(i) Tenant's agreement to remove any alterations or improvements upon
termination, and to restore the Premises to the prior condition.

(ii) Alien and completion bond equal to the estimated cost of
improvements.

(iii) Insurance necessary to protect both parties while work is in
progress.

(iv) Waivers of Liens from all contractors or sub-contractors involved in
the alterations or improvements.

7.5(b) LIENS. Claims for labor or materials for, or purporting to be for,
labor or materials furnished to Tenant shall be paid by Tenant when due, or
secured by bond, so as to immediately discharge any liens filed against the
Premises, Building, or Industrial Park. In the event Tenant does not discharge
any such liens, Landlord shall have the right, but not the obligation, to
discharge such liens. Any such amount paid or incurred by Landlord shall be
immediately due and payable as additional rent by Tenant to Landlord together
with interest at the rate indicated in Paragraph 24.10 from the date of payment
by Landlord until paid by Tenant.

7.5(c) SURRENDER OR REMOVAL OF ALTERATIONS. Unless removal is required by
Landlord, at Landlord's option, all alterations or improvements will become the
property of Landlord and will be surrendered with the Premises at the end of the
Lease Term or other termination, without payment. Tenant's machinery and
equipment, unless it is fixed to the Premises so that it cannot be removed
without material damage, remains the property of Tenant and may be removed by
Tenant subject to Paragraph 7.4.

8. INSURANCE.

8.1(a) LIABILITY INSURANCE. During the Lease Term, Tenant will maintain a
broad form policy of commercial general liability insurance insuring Landlord,
its employees, agents and real estate managers and Tenant against liability
arising out of the use, occupancy or maintenance of the Premises. The insurance
will be for not less than $1,000,000 combined single limit personal injury and
property damage. The limits of the insurance will not limit the liability of
Tenant. The policy will contain cross-liability endorsements and additional
insured endorsements and will insure Tenant's performance of the indemnity
provisions of Paragraph

8.1(b) If Tenant fails to maintain the required insurance, landlord may, but is
not obligated to, maintain the insurance at Tenant's expense. The policy shall
expressly provide that it is not subject to invalidation of the Landlord's
interest by reason of any act or omission on the part of Tenant.

8.2(a) LANDLORD'S INSURANCE. During the Lease Term, Landlord will maintain
policies of insurance covering loss or damage to the Building in the amount of
the full replacement value, providing protection against all perils included
within the classification of fire and extended coverage. Landlord may elect to
provide comprehensive general liability insurance, rent loss, vandalism,
malicious mischief, sprinkler leakage, war, automobile, umbrella, flood, boiler,
air conditioner and all-risk insurance. The insurance will provide for payment
for loss to Landlord or to the holder of a first mortgage or deed of trust on
the property.

8.2(b) PAYMENT OF PREMIUMS; INSURANCE POLICIES. Landlord shall pay the
Premiums for the insurance policies maintained by Landlord under Paragraph
8.2(a) and Tenant shall pay Landlord as Additional Rent, Tenant's Share of the
Premiums as provided in Paragraph 5.2. If the Lease Term expires before the
expiration of the insurance period, Tenant's liability shall be prorated on an
annual basis.

8.2(c) TENANT'S PERSONAL PROPERTY. Tenant assumes all risk of loss or damage
to Tenant's Property. Tenant assumes the risk that loss or damage to Tenant's
Property, to the Premises or to the Property may result in loss of income,
profits or good will to the business of Tenant or other persons interested in
Tenant's Property. Tenant releases and holds Landlord harmless from liability
for these losses or damage, except arising out of Landlord's gross negligence or
willful misconduct. Tenant's Property includes all goods, equipment, inventory,
merchandise, records and other personal property and all fixtures, improvements
and betterments placed in or about the Premises, belonging to Tenant or any
person connected with, or claiming under or through Tenant. Tenant agrees to
indemnify Landlord and save it harmless from all loss or claims, including
reasonable attorneys fees and costs in defending a claim, arising out of loss or
damage to Tenant's Property belonging to others. Landlord means Landlord, its
employees and agents.

TENANT SHALL PROVIDE INSURANCE TO THE EXTENT OF NOT LESS THAN NINETY PERCENT
(90%) OF THE FAIR MARKET VALUE OF TENANT'S PROPERTY AS APPRAISED BY TENANT'S
INSURER(S), WITH AN AGREED AMOUNT ENDORSEMENT. TENANT, AT ITS SOLE COST AND
EXPENSE, SHALL OBTAIN THE INSURANCE COVERAGES NECESSARY TO PROVIDE PROTECTION
FOR THE RISKS AND OBLIGATIONS TO INDEMNIFY ASSUMED BY TENANT AND SHALL MAINTAIN
SUCH INSURANCE FOR THE LEASE TERM. TENANT AGREES TO NOTIFY EACH INSURANCE
CARRIER OF THE TENANT'S ASSUMPTION OF RISK, RELEASE AND INDEMNIFICATION STATED
ABOVE. TENANT ACKNOWLEDGES THAT ITS INSURANCE COVERAGES COULD BE VOIDED OR
OTHERWISE ADVERSELY AFFECTED BY THE FOREGOING PARAGRAPH UNLESS THE INSURANCE
CARRIER HAS WAIVED ITS RIGHT OF SUBROGATION OR HAS OTHERWISE AGREED TO THE ABOVE
ASSUMPTION OF RISK, RELEASE AND HOLD HARMLESS AGREEMENT AND INDEMNIFICATION.

8.3(a) TENANT'S INSURANCE POLICIES. Insurance carried by Tenant will be with
responsible carriers acceptable to Landlord and licensed in the State in which
the Property is located. The Tenant will deliver to Landlord certified copies
of the policies of insurance or certificates evidencing the existence and
amounts of the insurance. No policy shall be cancelable or subject to reduction
of coverage or other modification except after 30 days prior written notice to
Landlord. Tenant shall, at least 30 days prior to the expiration of the
policies, furnish Landlord with renewals or "Binders" for the policies, or
Landlord may order the required insurance and charge the cost to Tenant pursuant
to Paragraph 23.

8.3(b) INCREASED RISK. Tenant will not do anything or permit anything to be
done or any hazardous condition to exist ("Increased Risk") which shall
invalidate or cause the cancellation of the insurance policies carried by either
Tenant or Landlord. If Tenant does or permits any Increased Risk which causes
an increase in the cost of Landlord's insurance policies then Tenant shall
reimburse Landlord pursuant to Paragraph 23 for additional premiums attributable
to any act, omission or operation of Tenant causing

Page 4

the increase in the premiums, including, but not limited to, non-compliance with
recommendations under Paragraph 6.2. Payment of additional premiums will not
excuse Tenant from terminating or removing the Increased Risk unless Landlord
agrees in writing. Absent agreement, Tenant shall promptly terminate or remove
the Increased Risk.

8.4 WAIVER OF SUBROGATION ON PROPERTY POLICIES. Each party releases the
other party from any and all liability or responsibility (to the other party or
anyone claiming through or under them by way of subrogation or otherwise) for
loss or damage to property resulting from causes insured against, except if such
casualty has been caused by the fault or gross negligence of the other party, or
anyone for whom such party may be responsible.

8.5 INDEMNIFY. Tenant shall indemnify and hold harmless Landlord, its
agents, employees and real estate managers, from and against any and all claims
arising from: (a) Tenant's use of the Premises, (b) the conduct of Tenant's
business or anything else done or permitted by Tenant to be done in or about the
Premises or elsewhere in the Industrial Park, (c) any breach or default in the
performance of Tenant's obligations under the Lease, or arising from any
negligence of the Tenant, or Tenant's agents, contractors or employees. Tenant
shall defend Landlord against all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim, action or proceeding. In
case any action or proceeding is brought against Landlord by reason of a claim,
Tenant, upon notice from Landlord, shall defend the same at Tenant's expense by
counsel satisfactory to Landlord. Tenant assumes all risk of damage to property
or injury to persons, in or about the Premises arising from any cause and Tenant
waives all such claims against Landlord, except claims due to Landlord's gross
negligence or willful misconduct. The liability of Tenant to indemnify Landlord,
its agents and employees, shall not extend to any matter against which landlord
shall be effectively protected by insurance, provided that if any liability
shall exceed the amount of effective and collectable insurance, the liability of
Tenant shall apply to the excess. Whether the insurance is "effective" depends
in part, but not by way of limitation, on the absence of any defense to coverage
made by the insurer.

9. CASUALTY DAMAGE.

9.1 DAMAGE TO PREMISES. Tenant will give immediate notice to Landlord of
fire or other casualty damage to the Premises. Landlord will repair the
Premises, except damage from items in which Tenant is responsible for under
Paragraph 6.3 herein and unless it decides to terminate under Paragraph 9.2.
Tenant will be obligated to pay prorata fixed and additional rent on the portion
of the Premises it can occupy.

9.2(a) PREMISES DAMAGE. If the Building is substantially destroyed or the
damage requires more than 180 days from the date of the damage to repair, either
Landlord or Tenant has the option to terminate this Lease by giving written
notice within 30 days after the date of the damage (except Tenant shall not have
such option if less than twenty-five percent (25%) of the Premises is damaged,
in which case the provisions of 9.2(b) shall apply). This Lease shall terminate
either 30 days after receipt of the notice or the date Tenant vacates the
Premises, whichever is sooner.

9.2(b) REPAIRS REQUIRING LESS THAN 180 DAYS TO REPAIR. If the estimated repair
time is less than 180 days and Landlord diligently pursues repair, Tenant may
not terminate if repair time runs over 180 days due to causes beyond Landlord's
control.

9.2(c) DAMAGE DURING LAST SIX MONTHS OF TERM. If casualty damage occurs to the
Premises or to the Building during the last six (6) months of the Lease Term,
Landlord may terminate this Lease. If Tenant has an unexpired option to extend
the option to extend or renew must be exercised within twenty (20) days of the
casualty. If the option is exercised Landlord may not cancel unless there is
substantial damage. If the option is not exercised, the option is terminated
and Landlord may terminate the Lease.

9.3 NEGLIGENCE OF TENANT - UNINSURED LOSS. An "Insured Loss" is damage
caused by an event which is either required to be or which has been elected by
Landlord to be covered by insurance described in Paragraph 8.2(a). If casualty
damage occurs which is not an Insured Loss and which is due to a negligent or
willful act of Tenant, Tenant will repair the damage at its expense and will
remain liable for the full rent during repair. Termination under Paragraph 9.2
will not be available to Tenant.

9.4 TENANT CLAIMS. No compensation, claims, or diminution of rent will be
paid or allowed by Landlord, by reason of inconvenience, annoyance, or injury to
business, arising from the necessity of repairing any other portion of the
Building, however, the necessity may occur.

10. REAL PROPERTY TAXES.

10.1 PAYMENT OF TAXES. Landlord shall pay the Real Property Taxes on the
Property during the Lease Term and Tenant shall pay Landlord as Additional Rent
Tenant's share of the Real Property Taxes as provided in Paragraph 5.2 If the
premises are not separately assessed, Tenant's share of the real property tax
payable by Tenant shall be prorated.

10.2 DEFINITION OF "REAL PROPERTY TAX". The term "Real Property Tax" includes
any form of assessment, license fee, levy, penalty or tax (other than
inheritance or estate taxes), imposed by an authority with direct or indirect
power to tax any legal or equitable interest of Landlord in the real property of
which the Premises are a part, but shall not include any rent tax payable by
Tenant under Paragraph 5, nor any corporate franchise or income taxes.

10.3 PERSONAL PROPERTY TAXES. Tenant will pay, before delinquent, all taxes
assessed against trade fixtures, furnishings, equipment and all other personal
property of Tenant. Tenant will cause these items to be assessed and billed
separately from the real property of Landlord.

11. UTILITIES. Tenant will pay directly to the appropriate supplier, the
cost of all water/sewer, gas, heat, light, electrical, telephone, refuse
disposal and other utilities and services supplied to the Premises, and any
taxes on those bills. If any services are not separately metered, Tenant will
pay as Additional Rent as provided in Paragraph 5.2 a proportion of all jointly-
metered utilities used by other occupants of the property based either upon type
and extent of use or on area, as reasonably determined by Landlord.

12. ASSIGNMENT AND SUBLETTING.

12.1 LANDLORD'S CONSENT REQUIRED. Tenant will not voluntarily or by
operation of law assign, transfer, mortgage, sublet or otherwise transfer or
encumber all or any part of Tenant's interest in this Lease or in the Premises,
without Landlord's prior written consent which consent may not be unreasonably
withheld by Landlord. Any attempted assignment, transfer, mortgage, encumbrance
or subletting without consent shall be void as against Landlord, and shall
constitute a breach of the Lease.

12.2 NO RELEASE OF TENANT. Regardless of Landlord's consent, no subletting or
assignment will alter the primary liability of Tenant to pay the rent and to
perform all other obligations to be performed by Tenant. Acceptance of rent from
any other person will not be deemed a waiver by Landlord of any provision of
this Lease. Consent to one assignment or subletting will not be deemed consent
to any subsequent assignment or subletting.

Page 5

12.3 PARTICIPATION BY LANDLORD. In the event of any assignment or sublease
involving rent in excess of the Fixed Minimum Rent or Additional Rent required
under this Lease (Excess Rent), Landlord shall participate in the Excess Rent.
Tenant shall promptly forward to Landlord fifty percent (50%) of all such Excess
Rent collected from the assignee or subtenant and shall supply Landlord with
true copies as executed of all assignments and subleases.

12.4 PROCESSING FEES. If Landlord consents to a sublease or assignment,
Tenant will pay a processing fee of $350.

13. DEFAULTS; REMEDIES.

13.1 EVENTS OF DEFAULT. It is a default under this Lease if any of the
following "Events of Default" happens:

(a) if any Fixed Monthly Rent is not paid when due and default continues
for a period of 5 days; or

(b) if any additional rent is not paid when due and default continues
for a period of 10 days; or

(d) if Tenant defaults under any of the terms of this Lease other than
those in 13.1(a), (b) and (c), and default continues for fifteen
(15) days after written notice (except if default cannot be
completely cured within fifteen (15) days, it will not be an Event
of Default if Tenant starts to cure within the fifteen (15) day
period, and in good faith continually proceeds to remedy the
default); or

(e) if Tenant or any person who has guaranteed performance, files a
voluntary petition in bankruptcy or is adjudicated a bankrupt or
insolvent, or files a petition or answer seeking relief under any
federal, state or other statue or regulation, or seeks or consents
or acquiesces in the appointment of a trustee, receiver or
liquidator of Tenant or guarantor, or of all or any substantial part
of Tenant's properties or of the Premises or any or all rents,
earnings, or income or makes an assignment for the benefit of
creditors, or admits in writing its inability to pay its debts
generally as they become due; or

(f) if a petition is filed against Tenant, or any person who has
guaranteed performance, seeking relief under any federal, state or
other statue or regulation, which remains undismissed or unstayed
for an aggregate of 60 days (whether or not consecutive), or if a
trustee, receiver or liquidator of Tenant or guarantor, or of all or
any substantial part of its properties or of the Premises or any or
all rents, or income is appointed without the consent or
acquiescence of Tenant, or guarantor, and the appointment remains
unvacated or unstayed for an aggregate of 60 days (whether or not
consecutive).

(g) in the event Tenant or Tenant's subsidiary or affiliate shall lease
other Premises from Landlord, any default under such other leases
shall be deemed to be a default under this Lease and Landlord may
enforce all rights and remedies for an Event of Default herein.

13.2 NOTICE; TERMINATION.

Landlord at any time after the happening of an Event of Default may
declare an Event of Default by written notice to Tenant specifying the Event(s)
of Default. In the same or a later written notice Landlord may elect that this
Lease terminate at 5:00 p.m. on the date listed by Landlord. The date will be at
least 5 days after the giving of the termination notice (including the
termination date). On the date in the notice, subject to Paragraph 13.4, the
Lease and all interests demised will terminate and all rights of the Tenant
shall cease. The termination will not take place if before the stated date and
time.

(i) Tenant has paid all arrears of fixed minimum rent and additional rent
and all other amounts payable by Tenant, (together with interest
pursuant to paragraph 24.10) and as additional rent all expenses
(including, without limitation, attorney's fees and expenses)
incurred by Landlord due to any default by Tenant, (the
"Arrearages"), and

(ii) all other defaults have been cured to the satisfaction of Landlord.

13.3 REPOSSESSION, RE-LETTING. After notice of an Event of Default, whether
before or after a termination as provided in Paragraph 13.2, Landlord, without
further notice and with no liability to Tenant, may repossess the Premises, by
summary proceedings, ejectment or otherwise, and may remove Tenant and all other
persons and any and all property from the Premises. After such repossession,
Landlord may (but is under no obligation to) re-let the Premises, any part
thereof, or the Premises with additional premises, on account of Tenant (until
Landlord makes demand for final damages), in Tenant's or Landlord's name,
without notice to Tenant, for a term (which may be more or less than the period
which would have been the balance of the term of this Lease) and on conditions
(including concessions, periods of rent free use, or alterations) and for
purposes which Landlord determines and Landlord may receive the rents. Landlord
is not liable for failure to collect any rent due upon any such reletting.

13.4 SURVIVAL OF TENANT'S OBLIGATIONS; DAMAGES. No provisions in Paragraphs
13.1, 13.2 and 13.3 will relieve Tenant of its liability and obligations under
this Lease, all of which will survive. Landlord will not be deemed to accept a
surrender of Tenant's lease or otherwise discharge Tenant because Landlord takes
or accepts possession of the Premises or exercises control over them as
provided. Acceptance of surrender and discharge may be done only by an
instrument executed on behalf of Landlord by its duly authorized officer or
employee.

In the event of termination or repossession following an Event of Default,
Tenant will pay to Landlord the Arrearages up to the earlier of the date of
termination or repossession. Further Tenant, until the end of what would have
been the term of this Lease in the absence of termination and whether or not the
Premises or any part have been re-let, is liable to Landlord for, and will pay
to Landlord, as liquidated and agreed "Current Damages" for Tenant's default:

(a) the Fixed Minimum Rent and all additional rent and other charges
payable by Tenant or which would be payable if this Lease had not
terminated, plus all Landlord's expenses in connection with any
reletting, including, without limitation, repossession costs,
brokerage commission, legal expenses, attorney's fees, expenses of
employees, alteration costs, and expenses of preparation for such
reletting. LESS

(b) the net proceeds, if any, of any re-letting on account of Tenant
pursuant to Paragraph 13.3. If the Premises have been relet with
additional premises, the net proceeds, if any, of reletting shall be
prorated.

Tenant shall pay Current Damages to Landlord monthly on the days on which the
Fixed Minimum Rent would have been payable if the Lease were not terminated, and
Landlord is entitled to recover from Tenant each month.

Page 6

After termination under Paragraph 13.2, whether or not Landlord has
collected Current Damages, Tenant will pay to Landlord, on demand, as liquidated
and agreed "Final Damages" for Tenant's default and in lieu of all Current
Damages beyond the date of demand, an amount equal to the present cash value on
the date of demand on the Fixed Minimum Rent and additional rent and other
charges which would have been payable from the date of demand for what would
have been the unexpired term of this Lease if it has not been terminated plus
the Arrearages to the earlier of the date of termination or repossession and
Current Damages up to the date of demand which remain unpaid.

If any statute or rule of law governing a proceeding in which Final Damages are
to be proved validly limits the amount to an amount less than that provided for,
Landlord is entitled to the maximum amount allowable under the statute or rule
of law. The discount rate of interest shall be as provided in Paragraph 24.10.

14. CONDEMNATION.

14.1 PERMANENT CONDEMNATION. If the Premises or any portion are taken under the
power of eminent domain, or sold under the threat of the exercise of the power
(both called "Condemnation"), this Lease will terminate as to the part taken as
of the first date the condemning authority takes either title or possession. If
the portion of the Premises taken is more than twenty-five percent (25%) or
makes the balance unfit for Tenant's use, Tenant has the option to terminate
this Lease as of the date the condemning authority takes possession. The option
will be exercised in writing as follows:

(i) within thirty (30) days after Landlord or the condemning authority has
given Tenant written notice of the taking; or

(ii) absent notice, within ten (10) days after the condemning authority has
taken possession.

If Tenant does not terminate, this Lease will remain in full force and effect as
to the portion of the Premises remaining. The rent will be proportionately
reduced.

Any award for Condemnation is the Landlord's, whether the award is made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages. Tenant is entitled to any award for damage to
Tenant's trade fixtures and removable personal property and moving expenses. If
this Lease is not terminated, Landlord, to the extent of severance damages
received, will repair damage to the Premises caused by Condemnation except to
the extent that Tenant has been reimbursed by the condemning authority. Tenant
will pay any amount in excess of the severance damages required to complete the
repair.

14.2 TEMPORARY CONDEMNATION. Upon Condemnation of all or a part of the Premises
for temporary use, this Lease will continue without change or abatement in
Tenant's obligations, as between Landlord and Tenant. Tenant is entitled to the
award made for the use. If the Condemnation extends beyond the term of the
Lease, the award will be prorated between the Landlord and the Tenant as of the
expiration date of the term. The Tenant is responsible for the cost of any
restoration work required to place the Premises in the condition they were in
prior to Condemnation unless the release of the Premises occurs after
termination. In such case, Tenant will assign to the Landlord any claim it may
have against the condemning authority. If Tenant has received restoration
funds, it will give the funds to the Landlord within 15 days after demand.

15. FORCE MAJEURE. If Landlord's performance of any obligations under any
provision in this Lease is delayed by an act or neglect of Tenant, Act of God,
strike, labor dispute, unavailability of materials, boycott, governmental
restrictions, riots, insurrection, war, catastrophe, or act of the public enemy,
the period for the beginning or completion of the obligation is extended for a
period equal to the delay.

16. SUBORDINATION. This Lease, at Landlord's option, will be subordinate to
any form of security now or later placed on the Property and to all advances
made on the security and to all renewals, modifications, consolidations,
replacements and extensions. Tenant's right to quiet possession of the Premises
will not be disturbed if Tenant is not in default under this Lease, unless it is
otherwise terminated under the terms. If any mortgagee, trustee or ground
lessor elects to have this Lease prior to the lien of its security, and gives
written notice to Tenant, the Lease will be deemed prior to the security,
whether dated before or after the date of the security, or the recording date.
Tenant agrees to execute any required documents, and Tenant irrevocably appoints
Landlord as Tenant's attorney-in-fact to do so, if Tenant fails to so execute
within ten (10) days after written demand.

17. ESTOPPEL CERTIFICATE. Tenant, after not less than ten (10) days prior
written notice from Landlord, will deliver to Landlord a written statement (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of the modification and certifying that this Lease,
as so modified, is in full force and effect) and the date to which the rent and
other charges are paid in advance, if any, (ii) stating the amount of the
security deposit, if any, held by Landlord and (iii) acknowledge that there are
not, to Tenant's knowledge, any uncured defaults on the part of Landlord, or
stating any claimed defaults. The statement may be relied upon by any
prospective purchaser or lender of the Premises.

Tenant's failure to deliver the statement within said time will be conclusive
upon Tenant (i) that this lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that any security
deposit is as represented by Landlord, (iii) that there are no uncured defaults
in Landlord's performance, and (iv) that not more than one month's rent has been
paid in advance.

If Landlord desires to sell or finance or refinance all or part of the Premises,
Tenant agrees to deliver to any proposed purchaser or lender named by Landlord
all financial statements of Tenant previously made public as may be reasonably
required by the proposed purchaser or lender. The statements will include the
past three years' financial statements of Tenant. All financial statements will
be received by Landlord in confidence and will be used only for these purposes.

18. CORPORATE AUTHORITY. If Tenant is a corporation, each individual executing
this Lease on behalf of the corporation represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of the corporation, in
accordance with a duly adopted resolution of the Board of Directors of the
corporation, or in accordance with the bylaws of the corporation, and that this
Lease is binding upon the corporation.

19. NOTICES. All notices required or permitted under this Lease shall be in
writing and shall be deemed duly given if sent by United States certified or
registered mail, return receipt requested, or by Federal Express or other major
overnight courier that provides evidence of delivery, addressed to Landlord or
Tenant, respectively, at the addresses provided in the Information Schedule.

Either party by notice as provided above may change the address for notices
and/or payment of rent.

20. BROKER'S FEE. Landlord and Tenant represent and warrant to each other that
except as listed in the Information Schedule, no broker, agent or finder has
been employed by it in connection with this Lease and no commission are payable
by it to any person. Tenant and Landlord each agree to indemnify, defend and
save harmless the other from any expenses of claim for fees or commissions
resulting from the indemnifying party having dealt with any broker agent or
finder in negotiating this Lease. Landlord and Tenant acknowledge that the
broker(s) in this transaction are as listed in the Information Schedule and that
payments of

Page 7

commissions will be in accordance with their respective agreements.
Tenant represents it did not deal with any other broker, agent or finder
purporting to represent Landlord.

21. LANDLORD'S ACCESS. Landlord and Landlord's agents have the right to enter
the Premises at reasonable times for the purpose of inspecting, showing the
Premises to prospective purchasers, tenants, lenders, and making alterations,
repairs, improvements or additions to the Premises or to the Building that
Landlord deems necessary or desirable. Landlord may place any ordinary "For
Sale" or "For Lease" signs on the Premises or the Building, without rebate of
rent liability.

22. LANDLORD'S LIABILITY. The term "Landlord" means only the owner or owners
of the fee title at the time in question. If the Landlord (or the then grantor)
transfers any title or interest, from and after the date of transfer the
Landlord (or the then grantor) is relieved of all liability for Landlord's
obligations. Any Security Deposit not delivered to the grantee is excepted.
Landlord's obligations under this Lease shall thereafter be binding on
Landlord's successors and assigns. Tenant agrees to attorn to any transferee or
lender of Landlord.

23. LANDLORD'S RIGHT. If Tenant fails to make any required payment or defaults
in performing any other term in this Lease, Landlord may, but need not (and
without waiving the default), make such payment or remedy other defaults for
Tenant's account and at Tenant's expense, immediately and without notice in case
of emergency, otherwise on five (5) days written notice to Tenant. The costs,
with interest under Article 24.10, and with charge equaling 15% of the cost (to
cover Landlord's overhead), is due as additional rent with Tenant's next fixed
minimum rent installment.

24. MISCELLANEOUS.

24.1 TIME OF ESSENCE. Time is of the essence under this Lease.

24.2 COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Tenant is both a covenant and a condition.

24.3 CAPTIONS. Article and paragraph captions are only for convenience.

24.4 INCORPORATION OF PRIOR AGREEMENTS, AMENDMENTS. This Lease contains all
agreement of the parties with respect to any matter mentioned. No prior
agreement or understanding is effective after execution of this Lease. This
Lease may be modified in writing only, signed by the parties. The exhibits
listed on the Information Schedule and attached to this Lease are part of this
Lease as fully as if placed in the body of the Lease.

24.5 CUMULATIVE REMEDIES. No remedy or election is exclusive but, wherever
possible, is cumulative with all other remedies at law or in equity.

24.6 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. The valid portions of the Lease shall be interpreted together to
accomplish the intent of the parties.

24.7 MERGER. The voluntary or other surrender by Tenant or a mutual
cancellation will work a merger, and at Landlord's option, will terminate
existing subtenancies or operate as an assignment of subtenancies.

24.8 HOLDING OVER. If Tenant retains possession after the Lease Term expires,
without the written consent of Landlord, the occupancy will be a tenancy from
month-to-month at a rent in the amount of twice the last fixed minimum rent plus
all additional rent and other charges payable, and upon all other terms
contained herein. Any options (i.e. renewal, expansion) and rights of first
refusal contained in the Lease are terminated in the event of a holdover
tenancy.

24.9 WAIVERS. Waiver by Landlord of any provision is not a waiver of any other
provision or of any subsequent breach by Tenant of the same or any other
provision. Landlord's consent or approval of any act will not make it
unnecessary to obtain Landlord's consent or approval in the future. The
acceptance of rent by Landlord is not a waiver of any breach by Tenant other
than a failure of Tenant to pay the particular rent accepted, regardless of
whether Landlord knows of such a breach.

24.10 INTEREST ON PAST-DUE OBLIGATIONS. Any amount due to Landlord not paid
when due will bear interest from the date due at the prime lending rate in
effect from time to time at the Chase Manhattan Bank, N.A. in New York City or
the highest rate of interest payable under the law, whichever is lower. Payment
of interest will not cure any default by Tenant under this Lease except as
expressly provided.

24.11 ATTORNEY FEES. If either party brings an action regarding terms or
rights under this Lease, the prevailing party in any action, on trial or appeal,
is entitled to reasonable attorney's fees as fixed by he court to be paid by the
losing party. The term "attorney's fees" shall include, but is not limited to,
reasonable attorney's fees incurred in any and all judicial, bankruptcy,
reorganization, administrative or other proceeding, including appellate
proceedings, whether the proceedings arise before or after entry of a final
judgment and all costs and disbursements in connection with the matter.

24.12 WAIVER OF JURY TRIAL. Landlord and Tenant each waive trial by jury in
any action, proceeding, or counterclaim brought by either of the parties to this
Lease against the others on any matter whatsoever arising out of or in any way
connected with this Lease or its termination, the relationship of Landlord and
Tenant, Tenant's use or occupancy of the Premises, and/or any claim of injury or
damage and any emergency statutory or any other statutory remedy.

24.13 RECORDING. Tenant will not record this Lease without Landlord's written
consent. Any recordation, at Landlord's option, will constitute a non-curable
default of Tenant.

24.14 SIGNS AND AUCTIONS. Tenant shall not place any sign upon or conduct any
auction on the Premises without Landlord's prior written consent.

24.15 SECURITY. Tenant acknowledges that the rents reserved in this Lease do
not include the cost of security guards or other security measures, and that
Landlord has no obligation to provide such services. Tenant assumes all
responsibility for the protection of Tenant, its agents, employees and invitees
from acts of third parties.

24.16 RELOCATION OF TENANT. INTENTIONALLY DELETED

24.17 EASEMENTS AND RESTRICTIVE COVENANTS. Landlord reserves the right to
grant and record easements, cross easements, rights, restrictive covenants and
conditions and dedications which it deems necessary or desirable. The grants
will not unreasonably interfere with Tenant's use of the Premises. Tenant
agrees to promptly execute documents requested by Landlord. Failure to execute
will be a material breach under this Lease.

Page 8

24.18 RULES AND REGULATIONS. Tenant will comply with Landlord's rules and
regulations respecting the Industrial Park. Notice of the rules and regulations
will be posted or given to Tenant.

24.19 BINDING EFFECT; CHOICE OF LAW. Subject to provisions restricting
assignments or subletting and to the provisions of Paragraph 22, this Lease will
bind the parties, their personal representatives, successors and assigns. This
Lease shall be governed by the laws of the state in which the Premises are
located.

24.20 ABSENCE OF OPTION. The submission of this Lease for examination does not
constitute a reservation of/or an option for the Premises and this Lease becomes
effective only upon execution by Landlord.

25. OPTION TO PURCHASE

25.1 GRANT OF OPTION. Landlord hereby grants to Tenant the exclusive right and
option to purchase the Property subject to the terms and conditions as set forth
in this section. Time is of the essence with respect to all matters relating to
the Option, including but not limited to, the time to exercise the option and
the time to close the purchase and sale.

25.2 TERM OF OPTION. The term of the Option granted herein shall begin on the
July 1, 1996 and expire on June 30, 1997.

25.3 EXERCISE OF OPTION. Tenant shall exercise the Option by delivering, at
any time during the term of the Option, an unconditional written notice of
exercise to Landlord. Upon delivery of such notice, Tenant shall be deemed to
have exercised the Option and Tenant shall become unconditionally and
irrevocably obligated to buy, and Landlord shall become unconditionally and
irrevocably obligated to sell the Property in accordance with the terms and
conditions set forth herein.

25.4 TERMS OF SALE. The terms of the sale shall be as follows:

(a) CLOSING. The Closing shall mean delivery and recordation of the
Grant Deed and the payment by Tenant to Landlord of the Purchase
Price for the Property.

(b) EARNEST MONEY DEPOSIT. The sum of Twenty-five Thousand and no/100ths
Dollars ($25,000.00).

(d) TITLE INSURER. First American Title Insurance Company

(e) PURCHASE PRICE. The aggregate consideration, to be paid by Tenant to
Landlord for the Property is shall be Three Million and 00/100ths
Dollars ($3,000,000.00). In addition, if Tenant exercises its Option
to purchase the Property, Tenant will reimburse Landlord for any
Tenant Improvement Allowance that has been disbursed up to Two
Hundred Thousand and no/100ths Dollars ($200,000.00).

(f) TITLE POLICY. Landlord will provide Tenant with an CLTA owner's
policy of title insurance, with liability in the amount of the
Purchase Price, insuring Tenant as owner of good, marketable and
indefeasible fee title to the Property subject to real property
taxes and assessments and other matters of record. Within 10 days
after Tenant exercises the Option, Landlord shall provide Tenant
with a preliminary title report, accompanied by copies of all
exceptions listed in Schedule B of the title report, other than
standard exceptions. If the preliminary title report, accompanied by
the exceptions is not delivered within 10 days, the Closing Date
shall be extended by the number of days in excess of 10 before the
report, accompanied by the exceptions, is delivered. Should Tenant
fail to disapprove any of the exceptions by written notice to
Landlord within 5 days after delivery of the report, accompanied by
the exceptions, the exceptions shall be deemed approved. If Tenant
gives written notice to Landlord of disapproval within 5 such days,
the Closing Date shall be extended by 30 days to give Landlord the
opportunity to clear the disapproved exceptions, if Landlord in its
sole discretion chooses to do so. Tenant may terminate the purchase
transaction by written notice to Landlord not sooner than 10 days
and not later than 2 days before the closing date if Landlord has
not cleared all disapproved exceptions to the reasonable
satisfaction of Tenant. If Tenant does not exercise its right to
terminate, Tenant shall be deemed to have approved the condition of
title and is obligated to close the transaction. If Tenant exercises
such termination right, the Options Purchase shall terminate and the
lease shall remain in full force and effect through the balance of
the lease term. Tenant will pay the additional premium to upgrade to
an ALTA policy and for any endorsements.

(g) DEPOSIT. Upon opening of Escrow, Tenant shall deposit with Escrow
Holder the Earnest Money Deposit in cash, by cashier's check or by
wire transfer of immediately available funds. The Earnest Money
Deposit shall be invested by Escrow Holder in an interest bearing
account acceptable to Tenant with all interest accruing thereon
credited to Tenant. If this transaction is terminated for any reason
other than a default by Tenant, then Escrow Holder is hereby
instructed to return the Earnest Money Deposit, together with any
interest earned thereon, to Tenant.

(h) CLOSING FUNDS. The Purchase Price, less the amount of the Earnest
Money Deposit and interest accrued thereon, shall be payable in
cash, by cashier's check or by wire transfer of immediately
available funds.

(i) OPENING OF ESCROW. Tenant shall open Escrow immediately on exercise
of the Option. This lease shall constitute escrow instructions to
Escrow Holder and escrow shall be opened upon delivery by Tenant to
Escrow Holder of the written notice of the exercise of Option, a
fully signed copy of this Lease and the Earnest Money Deposit (the
"Opening of Escrow"). Escrow Holder shall notify both parties as to
the date of the opening of Escrow.

(j) CLOSING DATE. The Closing shall occur thirty (30) days following the
exercise of the Option.

(k) CLOSING CONDITIONS. Escrow Holder shall not close escrow until as a
condition to Closing for Tenant's benefit, the Title Insurer has
irrevocably committed to issue the Title Policy as described above
and otherwise in form and substance reasonably acceptable to Tenant.
Prior to closing, the terms of this Lease will govern as to the
obligations of the Tenant and Landlord. All rent obligations on
behalf of Tenant shall be due during escrow period and be prorated
to the time of closing.

(l) DISCLAIMERS. Tenant is familiar with the property and may perform
any reasonable studies to determine the condition of the Property
prior to the exercise of option. Tenant agrees that it will inspect
and assess the property prior to the close of escrow and that,
except as expressly provided herein, tenant will rely solely upon
tenant's examinations and investigations in electing whether or not
to purchase the property. Notwithstanding anything herein to the
contrary, it is expressly understood and agreed that Tenant is
purchasing the property "as is" and "where is," and with all faults
and defects, latent or otherwise, and that, except as expressly
provided herein, Landlord is making no representations or
warranties, either express or implied, by operation of law or
otherwise, with respect to the quality, physical condition or value
of the property, the presence or absence of hazardous substances in,
on, under or about the property, the zoning classification of the
property, the compliance of the

Page 9

property with applicable law, or the income or expenses from or of
the property. Without limiting the foregoing, it is understood and
agreed that the Landlord makes no warranty of habitability,
suitability, merchantability, fitness for a particular purpose or
fitness for any purpose.

(m) CLOSING COSTS. Tenant shall pay the following: (I) the documentary
transfer tax, stamp tax or other recording fees or charges, in the
amount required to be paid by law, (ii) recording costs for the
Grant Deed, and (iii) one half the escrow fee. Landlord shall pay
title insurance premium costs for a CLTA policy and one half the
escrow fee.

(n) ESCROW CANCELLATION CHARGES. In the event that this escrow shall
fail to close by reason of the default of either party hereunder,
the defaulting party shall be liable for all escrow cancellation
charges. in the event that the escrow shall fail to close for any
other reason, tenant shall be liable for all escrow cancellation
charges.

(o) ADDITIONAL ESCROW INSTRUCTIONS. If required by Escrow Holder, Tenant
and Landlord shall execute Escrow Holder's usual form of
supplemental escrow instructions for transactions of this type;
provided, however, that in the event that any portion of such
additional escrow instructions shall be inconsistent with the
provisions of this Lease, the provisions of this Lease shall prevail
to the extent of any inconsistency.

(p) LIQUIDATED DAMAGES. IF ESCROW FAILS TO CLOSE DUE TO TENANT'S BREACH
OF THE TERMS OF SALE, LANDLORD SHALL BE RELEASED FROM ALL OF ITS
OBLIGATIONS UNDER THE OPTION, AND ESCROW HOLDER SHALL, IF IT HAS NOT
DONE SO ALREADY, IMMEDIATELY DELIVER, DESPITE ANY INSTRUCTIONS TO
THE CONTRARY, THE EARNEST MONEY DEPOSIT PLUS INTEREST EARNED TO
LANDLORD, AND LANDLORD SHALL BE ENTITLED TO RETAIN THE EARNEST MONEY
DEPOSIT PLUS SUCH INTEREST AS LIQUIDATED DAMAGES. TENANT AND
LANDLORD SHALL INDEMNIFY ESCROW HOLDER FOR ANY LIABILITY, COSTS AND
EXPENSES BY REASON OF ESCROW HOLDER'S GOOD FAITH COMPLIANCE WITH
THIS PARAGRAPH. THE PARTIES EXPRESSLY AGREE THAT THE AMOUNT OF THE
EARNEST MONEY DEPOSIT, PLUS INTEREST, IS A REASONABLE ESTIMATE OF
THE EXTENT TO WHICH LANDLORD WOULD BE DAMAGED BY TENANT'S BREACH OF
THE TERMS OF SALE, IN LIGHT OF THE DIFFICULTY THE PARTIES WOULD HAVE
IN DETERMINING LANDLORD'S ACTUAL DAMAGES AS A RESULT OF SUCH BREACH
BY TENANT. LANDLORD'S RETENTION OF THE EARNEST MONEY DEPOSIT AS
LIQUIDATED DAMAGES SHALL BE LANDLORD'S EXCLUSIVE REMEDY FOR DAMAGES
BY REASON OF TENANT'S BREACH OF THE TERMS OF SALE. TENANT'S BREACH
OF THE TERMS OF SALE AND THE TERMINATION OF LANDLORD'S OBLIGATIONS
UNDER THE OPTION SHALL NOT OTHERWISE AFFECT THE OBLIGATIONS OF THE
PARTIES UNDER THE LEASE AND THE LEASE SHALL, EXCEPT FOR THE OPTION,
REMAIN IN FULL FORCE AND EFFECT.

/s/ TKA /s/ DHD
------------------- -----------------
LANDLORD'S INITIALS TENANT'S INITIALS

Both parties acknowledge that they have reviewed this lease thoroughly and have
given their voluntary consent to the provisions. The Landlord and Tenant agree
that, at execution, the terms are commercially reasonable and show the intent of
the parties.

The parties hereto have executed this Lease on the dates specified below.

LANDLORD:
NATIONAL LIFE INSURANCE COMPANY
By: Koll Investment Management
its Authorized Agent

By: /s/ Thomas K. Arai
---------------------------
Senior Vice President
On: March 16, 1996
---------------------------

TENANT:
CALLAWAY GOLF COMPANY
A California Corporation

By: /s/ Donald H. Dye
---------------------------
Title: Donald H. Dye, President
On: March 15, 1996
---------------------------

Page 10

EXHIBIT "A"

DESCRIPTION OF THE PREMISES AND ADJACENT SITE IMPROVEMENTS

The Premises are described as follows:

Lot 20 of Carlsbad Tract Number 81-46 Unit #1, in the City of Carlsbad, County
of San Diego, State of California, according to Map 11287, filed in the office
of the County Recorder of San Diego County July 18, 1985, including the building
thereon (approximately 63,083 square feet) and parking lot and other
improvements thereto. The premises is commonly referred to as 5858 Dryden
Place, Carlsbad, CA.

The Adjacent Site Improvements are described as follows: None.

Page 11

EXHIBIT "B"

PLAN OF THE PREMISES

[THIS EXHIBIT CONSISTS OF AN 11 X 14 INCH DRAWING
OF THE FOOTPRINT OF THE IMPROVEMENTS INCLUDING THE TWO STORY
BUILDING AND PARKING AREA]

Page 12

EXHIBIT "C"

DESCRIPTION OF LANDLORD'S WORK AND TENANT'S WORK

Landlord will provide a two hundred thousand and 00/100ths dollar ($200,000.00)
tenant improvement allowance. The tenant improvement allowance will include
tenant improvement allowance costs, space planning, permits, fees and any other
costs directly related towards the build out of the Tenant's space.

The allowance shall be paid to Tenant within ten (10) business days of
submission of evidence of expenditure by Tenant for construction costs, space
planning, permits, fees or other costs related to Tenant's space.

Page 13

EXHIBIT "D"

CONTROL OF DANGEROUS/HAZARDOUS CHEMICALS AND MATERIALS

In consideration of existing and future legislation concerning the handling,
storage, use and disposition of dangerous/hazardous chemicals and materials,
Tenant acknowledges the risks and liabilities associated with same agrees to the
following:

A. Tenant shall determine what laws, regulations and ordinance regarding the
handling, storage, use and disposition of dangerous/hazardous chemicals and
materials apply to Tenant's business with respect to the leased premises.
Tenant shall take all reasonable and necessary steps, including any
inspections, tests or studies, as required by such laws to cause prompt and
ongoing compliance therewith.

B. Tenant agrees to immediately notify Landlord and the appropriate
authorities of any spills, accidents, or improper discharges of any
dangerous/hazardous chemicals and materials. Further, in addition to and
in further support of and compliance with other hold harmless and
indemnification obligations, Tenant acknowledges and assumes total
responsibility for any and all dangerous/hazardous chemicals and materials
it may handle, store, use and dispose of in or about Tenant's leased
premises. Such responsibility shall include, but not be limited to,
medical costs and personal injury awards (compensatory and/or punitive),
environmental cleanups and related costs, governmental fines against
Landlord and/or Tenant resulting from Tenant's willful and/or negligent
handling, storage, use, disposition of dangerous/hazardous chemicals and
materials, and/or Tenant's non-compliance with acceptable law.

C. Tenant shall, upon Owner or governmental request, disclose the type and
quantity of dangerous/hazardous chemicals and materials Tenant is/has
handled, stored, used, disposed of in or about Tenant's leased premises.

D. Tenant shall endeavor to:

1. Maintain and control all inventories of dangerous/hazardous chemicals
and materials handled, stored, used, disposed of in or about tenant's
leased premises.

2. Educate managers, employees, and shipping personnel on the property
handling, storage, use, disposition of dangerous/hazardous chemicals
and materials.

3. Develop a dangerous/hazardous chemicals and materials accident plan.

4. Isolate key use and storage areas of dangerous/hazardous chemicals and
materials from ground waters, surface waters, and soils.

5. Keep informed about existing and future governmental requirements
concerning dangerous/hazardous chemicals and materials and Tenant's
respective compliance obligations.

Page 14

EXHIBIT "E"

RENT SCHEDULE

Pursuant to the terms of Paragraphs 32. & 5 of the Lease, the Fixed Minimum Rent
shall be as listed below:

July 1, 1996 through August 31, 1996 $0.00/month*
September 1, 1996 through August 31, 1997 $28,387.35/month
September 1, 1997 through August 31, 1998 $29,238.97/month
September 1, 1998 through August 31, 1999 $30,116.14/month
September 1, 1999 through August 31, 2000 $31,019.62/month
September 1, 2000 through August 31, 2001 $31,950.21/month
September 1, 2001 through August 31, 2002 $32,908.72/month

* Tenant shall pay Additional Rent as defined in Section 5.2 (a) of the Lease
from July 1, 1996 through August 31, 1996.

Page 15

EXHIBIT "F"

REPORTS & DOCUMENTS

A.L.T.A. Survey, dated 5/18/89

OxyChem Material Safety Data Sheets, dated 8/28/92.

"Report of Preliminary Environmental Site Assessment," dated 10/22/92 -
Law/Crandall, Inc.

"Environmental Property Evaluation," dated 11/3/92 - TRC Environmental
Corporation

"Questions and Answers About Electric and Magnetic Fields," dated 21/92 -
Environmental Protection Agency

Law/Crandall letter, dated 1/11/93.

Law/Crandall letter, dated 3/18/93

Vista Site Assessment Plus Report, dated 1/4/95

San Diego Gas & Electric letter, dated 1/19/95

"Cost Proposal for Phase II Environmental Assessment," dated 2/1/95 - Geraghty &
Miller letter

Koll Management Services fax, dated 2/21/95

Koll Management Services fax, dated 3/15/95

Koll Management Services fax, dated 4/25/95

Geraghty & Miller, Inc. memo, dated 12/11/95

"Results of Limited Phase II Environmental Assessment," dated 5/30/95 - Geraghty
& Miller, Inc.

Geraghty & Miller, Inc. memo, dated 6/1/95

"Cost Estimate for Additional Drilling and Soil Sampling," dated 8/1/95 -
Geraghty & Miller, Inc.

Geraghty & Miller, Inc. memo, dated 8/28/95

Geraghty & Miller, Inc. memo, dated 11/2/95

Geraghty & Miller, Inc. memo, dated 12/11/95

Geraghty & Miller, Inc. memo, dated 2/14/96

"Cost Estimate for Soil Excavation," dated 2/14/96 - Geraghty & Miller, Inc.

Page 16