<PAGE>

                                                                   Exhibit 10.11

                         Stafford Distribution Center

                             Industrial Net Lease

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

               LANDLORD:            Stafford Limited Partnership

               TENANT:              HomeGrocer.com, Inc.,
                                    a Washington corporation

               PREMISES ADDRESS:    Suite 310
                                    9445 S.W. Ridder Road
                                    Wilsonville, OR  97070

               PREMISES AREA:       83,462 Square Feet

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

                              City of Wilsonville

                               Washington County

                                    Oregon
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                         Page
-------                                                                                         ----
<S>                                                                                             <C>
1.     BASIC LEASE TERMS.....................................................................      1

2.     PREMISES..............................................................................      3

3.     TERM..................................................................................      3

4.     RENT..................................................................................      4

       4.1  Base Rent........................................................................      4

       4.2  Rent Adjustment..................................................................      4

       4.3  Expenses.........................................................................      5

            (1)  Expenses Defined............................................................      6

            (2)  Exclusions..................................................................      7

            (3)  Tenant's Protest of Tax Assessments.........................................      8

            (4)  Annual Estimate of Expenses; Tenant's Share.................................      8

            (5)  Monthly Payment of Expenses; Annual Recap...................................      8

       4.4  Rent Without Offset..............................................................      9

       4.5  Late Charge......................................................................      9

5.     SECURITY DEPOSITS.....................................................................     10

       5.1  Prepaid Rent.....................................................................     10

       5.2  Letters of Credit................................................................     10

6.     CONDITION AND USE OF PREMISES AND PROJECT FACILITIES..................................     11

7.     SIGNS; ALARMS.........................................................................     12

8.     PERSONAL PROPERTY TAXES...............................................................     13

9.     PARKING...............................................................................     13

10.    UTILITIES.............................................................................     13

11.    MAINTENANCE...........................................................................     13

12.    ALTERATIONS...........................................................................     14

13.    RELEASE AND INDEMNITY.................................................................     15

14.    TENANT'S RIGHT TO AUDIT...............................................................     16

       14.1 Audit Threshold..................................................................     16

       14.2 Copy of Audit....................................................................     16

       14.3 Tenant Not in Default............................................................     16
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                          <C>
     14.4  Limits for Subtenants and Assignees...........................................    16

15.  INSURANCE AND WAIVER OF SUBROGATION.................................................    16

     15.1  Liability Insurance...........................................................    16

     15.2  Property Insurance............................................................    17

     15.3  Business Interruption Insurance...............................................    17

     15.4  Insurance Policies............................................................    17

     15.5  Waiver of Subrogation.........................................................    18

16.  DESTRUCTION.........................................................................    18

17.  CONDEMNATION........................................................................    18

     17.1  Definitions...................................................................    18

     17.2  Obligations to be Governed by Lease...........................................    19

     17.3  Total or Partial Taking.......................................................    19

     17.4  Award.........................................................................    19

18.  ASSIGNMENT OR SUBLEASE..............................................................    19

19.  DEFAULT.............................................................................    21

20.  LANDLORD'S REMEDIES.................................................................    22

     20.1  Remedies......................................................................    22

     20.2  Performance by Landlord of Tenant's Obligations...............................    22

21.  LANDLORD'S DEFAULT..................................................................    23

22.  ENTRY ON PREMISES...................................................................    23

23.  SUBORDINATION; ESTOPPEL CERTIFICATES................................................    24

     23.1  Subordination/Nondisturbance..................................................    24

     23.2  Estoppel Certificates.........................................................    24

     23.3  Remedy........................................................................    25

24.  NOTICE..............................................................................    25

25.  WAIVER..............................................................................    25

26.  SURRENDER OF PREMISES; HOLDING OVER.................................................    26

     26.1  Surrender.....................................................................    26

     26.2  Holding Over..................................................................    26

     26.3  Failure to Surrender..........................................................    27

27.  MORTGAGEE PROTECTION................................................................    27

28.  LIMITATION OF LIABILITY.............................................................    27

29.  HAZARDOUS SUBSTANCES................................................................    27
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                               <C>
     29.1  Landlord's Warranty...............................................................     27

     29.2   Landlord's Indemnity.............................................................     28

     29.3   Tenant's Use of Hazardous Substances.............................................     28

     29.4   Tenant's Indemnity...............................................................     28

     29.5   Landlord's Compliance............................................................     29

30.  MISCELLANEOUS PROVISIONS................................................................     29

     30.1   Time of Essence..................................................................     29

     30.2   Successor........................................................................     29

     30.3   Landlord's Consent...............................................................     29

     30.4   Commissions......................................................................     29

     30.5   Reciprocal Covenant on Notification of ADA Violations............................     29

     30.6   Attorney Fees....................................................................     30

     30.7   Landlord's Successors............................................................     30

     30.8   Interpretation...................................................................     30

     30.9   Execution and Liability..........................................................     30

     30.10  Construction of Lease Provisions.................................................     30

     30.11  Force Majeure; Building Components...............................................     30
</TABLE>


EXHIBIT A      THE PREMISES
EXHIBIT B      THE PROJECT
EXHIBIT C      SIGN REGULATIONS
EXHIBIT D-1    INITIAL TENANT PARKING PLAN
EXHIBIT D-2    MODIFIED TENANT PARKING PLAN
EXHIBIT E      EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE
EXHIBIT F      FORM OF LETTER OF CREDIT

                                      iii
<PAGE>

                                   NET LEASE


1.   BASIC LEASE TERMS.

     1.1  Date of Lease:                     April 18, 2000

     1.2  Tenant:                            HomeGrocer.com, Inc., a Washington
                                             corporation

          Address (Leased Premises):         9445 S.W. Ridder Road, Suite 310
                                             Wilsonville, OR 97070

          Telephone:                         (425) 201-7500
          Facsimile:                         (425) 201-7875

          Addresses (For Notices):           10230 N.E. Points Drive Kirkland,
                                             WA 98033
                                             Attention: Vice President
                                               Operations

                                             10230 N.E. Points Drive Kirkland,
                                             WA 98033
                                             Attention: Legal Department

     1.3  Landlord:                          Stafford Limited Partnership, an
                                             Oregon limited partnership

                                             in care of its managing agent,
                                             Specht Properties, Inc.
                                             15400 SW Millikan Way
                                             Beaverton, OR 97006

     1.4  Tenant's Use of Premises:          Warehouse, distribution, office and
                                             other legal uses

     1.5  Premises Area:                     83,462 Rentable Square Feet

     1.6  Project Area:                      247,984 Rentable Square Feet

     1.7  Premises Percent of Project:       33.66%

     1.8  Initial Term of Lease:             121 full calendar months, beginning
                                             with the Commencement Date

                                      -1-
<PAGE>

     1.9  Base Monthly Rent:                           $30,847.84
          Due Date of First Payment:                   Upon Execution of Lease
                                                       by Landlord and Tenant
                                                       (to be applied to the
                                                       rent due for the second
                                                       full calendar month of
                                                       this Lease)

          Default & Landlord Advance Interest Rate:    12% per annum

     1.10 Rent Adjustment (Initial One):

          (1)  Cost of Living:                         Intentionally Omitted

          (2)  Step Increase:                          The Base Rent increase
                                                       adjustment provisions of
                                                       Section 4.2(1) apply as
                                                       follows:

               Effective Date of Increase              New Base Monthly Rent
               April 1, 2003                           $33,251.55
               April 1, 2006                           $35,872.25
               April 1, 2009                           $38,726.65

          (3)  Prepaid toward Last Month's Rent:       $38,726.65 (payable upon
                                                       execution of Lease by
                                                       Landlord and Tenant)

          (4)  Non-refundable cleaning fee:            $0

          (5)  Broker(s):                              Colliers International;
                                                       Hadley Stevens &
                                                       Marandas; Macadam Forbes;
                                                       Specht Properties, Inc.

          (6)  Brokerage Commission Payable by:        Landlord

          (7)  Guarantors:                             None

                                      -2-
<PAGE>

2.   PREMISES.

     2.1  Landlord hereby leases to Tenant and Tenant leases from Landlord,
          those certain Premises described in Section 1 and in Exhibit A
          attached hereto (the "Premises"), located in the Project described on
          Exhibit B (the "Project"), upon all of the conditions set forth
          herein. Tenant's percentage of the Project ("Premises Percent of
          Project") as set forth in Section 1.7 shall be adjusted from time to
          time if the size of the Project or the Premises is changed by
          subsequent development of additional property or sale of a portion of
          the Project.

     2.2  Tenant shall have the right, during the 60-day period immediately
          following the Date of Lease and at its sole expense, to have
          recalculated the number of rentable square feet included in the
          Premises and/or the Project. If the recalculation demonstrates to
          Landlord's reasonable satisfaction that the actual rentable square
          feet included in the Premises and/or the Project are materially
          different from those set forth in Sections 1.5 and/or 1.6 above, as
          applicable, the Premises Percent of Project and all other amounts
          payable hereunder by Tenant shall be equitably adjusted. Any such
          recalculation by Tenant shall use the NAIOP Area Standard.

3.   TERM.

     3.1  Subject to the provisions of this Lease, the initial term of this
          Lease (the "Initial Term") shall be for the period set forth in
          Section 1.8 commencing on the date (the "Commencement Date") that is
          the later of April 1, 2000, or the date on which Landlord delivers
          exclusive possession of the Premises to Tenant. If the Commencement
          Date occurs after April 1, 2000, due to causes other than Landlord's
          negligence or willful misconduct, this Lease shall not be void or
          voidable; rather, all terms and conditions of this Lease shall remain
          in full force and effect; provided, however, that if Landlord has not
          delivered exclusive possession of the Premises to Tenant by August 1,
          2000, Tenant may act to terminate this Lease by providing Landlord
          with notice that if exclusive possession of the Premises has not been
          tendered to Tenant within 30 days from the date of such notice, the
          Lease will be terminated. If a delay in possession is caused solely by
          Tenant's failure to perform any obligation in accordance with this
          Lease, the Initial Term shall commence on the date on which the
          Commencement Date would have occurred but for such failure by Tenant,
          and Tenant shall have no right to terminate this Lease due to such
          delay.

     3.2  At the expiration of the Initial Term of this Lease, Tenant may extend
          this Lease for up to two (2) successive terms of five (5) years each
          (the "Extension Terms") by giving Landlord written notice of its
          intention to do so at least one year prior to the expiration of the
          Term of this Lease then in effect. The Extension Terms shall be upon
          all the terms and conditions of this Lease, except for the term and
          the amount of Base Monthly Rent. The Base Monthly Rent for the
          Extension Terms will be determined as set forth in Section 4.2(2)
          below. The word "Term" shall be

                                      -3-
<PAGE>

          used throughout this Lease to include both the Initial Term and
          Extension Terms. The time periods set forth herein for the exercise of
          the Extension Terms are of the essence, and the requirements for the
          exercise of the Extension Terms will be strictly construed.

4.   RENT.

     4.1  Base Rent. Tenant shall pay Landlord the Base Monthly Rent set forth
          in Section 1.9 monthly, in advance, on the first day of each and every
          calendar month ("Base Monthly Rent") during the Term of this Lease;
          provided, (a) Tenant shall pay no Base Monthly Rent for the first full
          calendar month of the Initial Term, and (b) the Base Monthly Rent due
          for the second full calendar month shall be due and payable upon
          execution of this Lease by Landlord and Tenant. If the Commencement
          Date occurs on a day other than the first day of a calendar month, the
          Base Monthly Rent for that partial calendar month shall be prorated on
          a daily basis and shall be due and payable on the Commencement Date.

     4.2  Rent Adjustment.

          (1)  The Base Monthly Rent for the Initial Term shall be increased to
               the amounts and at the times set forth in Section 1.10(2).

          (2)  If Tenant exercises its option to extend the Term pursuant to
               Section 3.2, the Base Monthly Rent for the Extension Term(s)
               shall be the greater of the Base Monthly Rent in effect during
               the final year of the then-expiring Term of this Lease or the
               Market Rent as of the end of the then-expiring Term of this
               Lease. The Market Rent shall be ninety-five percent (95%) of the
               monthly rent then payable under comparable leases for comparable
               space and comparable terms by tenants in buildings of comparable
               quality in the Wilsonville, Oregon, area. The Market Rent shall
               be determined as follows:

               (a)  At least one hundred eighty (180) days prior to the
                    commencement of the applicable Extension Term, Landlord
                    shall provide written notice to Tenant setting forth the
                    then Market Rent as determined by Landlord (the "Landlord
                    Market Rent"). If Tenant does not object in writing
                    delivered to Landlord within five (5) business days after
                    its receipt of Landlord's notice setting forth the Landlord
                    Market Rent, the Landlord Market Rent shall be the Base
                    Monthly Rent for the applicable Extension Term.

               (b)  If Tenant timely objects to the Landlord Market Rent, the
                    parties shall have thirty (30) days after Tenant's objection
                    notice in which to agree on the Market Rent.

                                      -4-
<PAGE>

               (c)  If the parties are unable to agree on the Market Rent within
                    that 30-day period, then within ten (10) days after the
                    expiration of that period, each party, at its cost and by
                    giving notice to the other party, shall appoint a real
                    estate appraiser, each with an MAI designation and at least
                    five (5) years of commercial appraisal experience in the
                    Portland metropolitan area, to appraise and set the Market
                    Rent. If a party does not appoint an appraiser within ten
                    (10) days after the other party has given notice of the name
                    of its appraiser, the single appraiser appointed shall be
                    the sole appraiser and shall set the Market Rent. If the two
                    appraisers are appointed by the parties as stated in this
                    Section, they shall meet promptly and attempt to set the
                    Market Rent. If they are unable to agree within thirty (30)
                    days after the second appraiser has been appointed, they
                    shall attempt to select a third appraiser meeting the
                    qualifications stated in this Section 4.2(2) within ten (10)
                    days after the last day the two appraisers are given to set
                    the Market Rent. If they are unable to agree on the third
                    appraiser, either of the parties to this Lease, by giving
                    ten (10) days' notice to the other party, can apply to the
                    presiding judge of the circuit court for the county where
                    the Premises are located for the selection of a third
                    appraiser who meets the qualifications stated in this
                    Section. Each of the parties shall bear one half of the cost
                    of appointing the third appraiser and of paying the third
                    appraiser's fee. The third appraiser, however selected,
                    shall be a person who has not previously acted in any
                    substantial capacity for either party.

               (d)  The third appraiser shall meet with the other two appraisers
                    appointed by the parties and a majority of them will
                    determine, not less than thirty (30) days prior to the last
                    day of the then-expiring Term of this Lease, the Market Rent
                    for the applicable Extension Term.

     4.3  Expenses. The purpose of this Section 4.3 is to ensure that Tenant
          bears a share of all Expenses related to the use, operation,
          maintenance, repair and insurance of the Project, except depreciation
          of the Project, loan repayment (except as in Section 4.3(1) (g)
          below), and real estate commissions. Accordingly, beginning with the
          Commencement Date, Tenant shall be responsible for and shall pay to
          Landlord Tenant's Share (as defined below) of Expenses related to the
          Project on or before the first day of each and every month.

                                      -5-
<PAGE>

          (1)  Expenses Defined. The term "Expenses" shall mean all reasonable
               and necessary costs and expenses of the use, operation,
               maintenance, repair and insurance of the Project, including,
               without limitation, the following costs:

               (a)  All supplies, materials, labor and equipment, used in or
                    related to the Project;

               (b)  All utilities, including without limitation, water,
                    electricity, gas, heating, lighting, sewer, waste disposal,
                    security, and all charges relating to the Project;

               (c)  All maintenance, management, janitorial and service
                    agreements related to the Project;

               (d)  All legal expenses and accounting costs (excluding legal
                    costs of negotiating, terminating or extending leases, or
                    legal costs incurred in proceedings against any tenant other
                    than Tenant) incurred by Landlord in relation to the
                    Project;

               (e)  All insurance premiums and costs, including but not limited
                    to the premiums and costs of fire, casualty and liability,
                    rental abatement, and earthquake insurance related to the
                    Project, and the cost of damage to the common areas of the
                    Project unless such damage is covered by Landlord's
                    insurance or would be covered by insurance that Landlord is
                    required to carry under this Lease;

               (f)  All maintenance and repair costs relating to the areas
                    within or around the Project, including without limitation,
                    sidewalks, landscaping, service areas, driveways, parking
                    areas, walkways, building exteriors (including painting),
                    signs and directories, including, for example, costs of
                    resurfacing and restriping parking areas, repairing (but not
                    replacing) roofs and walls, and including any assessments
                    charged or levied by a Tenant's Association, if any;

               (g)  Amortization (principal and interest) over their useful life
                    of the cost of capital improvements made to the Project
                    which may be required by any government authority or which
                    will improve the operating efficiency of the Project;

               (h)  All other costs of managing, maintaining, repairing,
                    operating and insuring the Project, including, for example,
                    clerical, supervisory and janitorial staff costs;

                                      -6-
<PAGE>

               (i)  The cost of capital improvements (principal and interest),
                    amortized over their useful life, designed to protect the
                    health and safety of the tenants in the Building or as
                    required by any government entity;

               (j)  "Real Property Taxes," which include all taxes, assessments
                    (general and special) and other impositions or charges which
                    may be taxes, charged, levied, assessed or imposed upon or
                    against all or any portion of or in relation to the Project,
                    any leasehold estate in the Premises or measured by rent
                    from the Premises, including any increase caused by the
                    transfer, sale or encumbrance of the Project or any portion
                    thereof. "Real Property Taxes" also includes any form of
                    assessment levy penalty, charge or tax (other than gift,
                    estate, inheritance, net income or franchise taxes) imposed
                    by any authority having a direct or indirect power to tax or
                    charge, including without limitation any city, county,
                    state, federal or any improvement or other district, whether
                    such tax is: (1) determined by the area of the Project or
                    the rent or other sums payable under this Lease; (2) upon or
                    with respect to any legal or equitable interest of Landlord
                    in the Project or any part thereof; (3) upon this
                    transaction or any document to which Tenant is a party
                    creating a transfer in any interest in the Project; (4) in
                    lieu of or as a direct substitute in whole or in part of or
                    in addition to any real property taxes on the Project; (5)
                    based on any parking spaces or parking facilities provided
                    in the Project; or (6) in consideration for services, such
                    as police protection, fire protection, street, sidewalk and
                    roadway maintenance, refuse removal or other services that
                    may be provided by any governmental or quasi-governmental
                    agency from time to time which were formerly provided
                    without charge or with less charge to property owners or
                    occupants; and

               (k)  The cost of Landlord's compliance with Environmental Laws
                    (as defined below) except to the extent that any such
                    expense resulted from the fault of Landlord, or was incurred
                    as the result of condition existing prior to the date of
                    this Lease or as the result of the act or omission of
                    another tenant of the Project.

          (2)  Exclusions. Notwithstanding anything in this Lease to the
               contrary, the term "Expenses" shall not include any of the
               following costs:

               (a)  Costs resulting from the willful misconduct of Landlord, its
                    employees or agents;

               (b)  Costs for which Landlord is reimbursed by any insurance
                    carried by Landlord;

                                      -7-
<PAGE>

               (c)  Any costs or expenses relating to any workletter to
                    construct tenant improvements;

               (d)  Allowances, concessions, permits, licenses, inspections or
                    other costs and expenses incurred in completing, fixturing,
                    renovating or otherwise improving, decorating or
                    redecorating space for tenants (including Tenant),
                    prospective tenants or other occupants or prospective
                    occupants of the Project, or vacant leasable space in the
                    Project, or constructing or finishing demising walls and
                    public corridors with respect to any such space whether such
                    work or alteration is performed for the initial occupancy by
                    such tenant or occupancy thereafter; and

               (e)  Costs for which Landlord is reimbursed by others.

          (3)  Tenant's Protest of Tax Assessments. In any year which Landlord
               does not protest the Real Property Tax assessment levied against
               the Project Tenant may choose to protest the assessment in
               Landlord's name. If Tenant chooses to protest the assessment,
               Landlord shall fully cooperate with Tenant's efforts provided
               that Tenant pays all costs and expenses necessary to conduct such
               protest. In the event either Landlord or Tenant protests such
               assessment and a reduction in the Real Property Taxes results,
               Tenant shall be entitled to the benefit of such reassessment,
               either as an Expense adjustment pursuant to Section 4.3(5) of
               this Lease or as a refund if this Lease has expired, if such
               reassessment results in an overpayment by Tenant to Landlord of
               Tenant's Share of Real Property Taxes.

          (4)  Annual Estimate of Expenses; Tenant's Share. Prior to the
               commencement of each calendar year of the Term of this Lease,
               Landlord shall prepare and deliver to Tenant a reasonable
               estimate of Expenses for the Project for the coming year.
               Tenant's share of all actual Expenses shall be determined by
               multiplying the total of all actual Expenses by the Premises
               Percent of Project set forth in Section 1.7 (herein "Tenant's
               Share"). The estimate of annual Expenses for any year during the
               Term of this Lease shall not exceed one hundred ten percent
               (110%) of the estimate of annual Expenses for the immediately
               preceding calendar year unless Landlord provides Tenant with
               reasonable documentation supporting such increase.

          (5)  Monthly Payment of Expenses; Annual Recap. Tenant shall pay to
               Landlord monthly in advance, as additional rent, one-twelfth of
               the product achieved by multiplying the then current estimate of
               annual Expenses by the Premises Percent of Project set forth in
               Section 1.7. Within ninety (90) days following the end of each
               calendar year (including the year during which this Lease expires
               or is terminated), Landlord shall

                                      -8-
<PAGE>

               prepare an accounting of actual Expenses incurred during the
               prior calendar year. If the amount of additional rent paid by
               Tenant as Tenant's Share during the preceding calendar year was
               less than the actual amount of Tenant's Share of Expenses,
               Landlord shall so notify Tenant and Tenant shall pay to Landlord
               the difference between said two amounts within thirty (30) days
               of receipt of such notice. Such amount shall be deemed to have
               accrued during the prior calendar year and shall be due and
               payable from Tenant even though the Term of this Lease may have
               expired or this Lease may have been terminated prior to Tenant's
               receipt of the notice. If the amount of additional rent paid by
               Tenant as Tenant's Share during the preceding calendar year was
               greater than the actual amount of Tenant's Share of Expenses,
               Landlord shall promptly so notify Tenant and such overpayment
               shall be paid to Tenant within one hundred twenty (120) days
               after the end of the calendar year. Such amount will be due and
               payable from Landlord, even though the Term of this Lease may
               have expired or this Lease may have been terminated prior to
               Tenant's receipt of the notice. In no event shall such credit be
               used to offset or in any way reduce the Base Monthly Rent payable
               by Tenant.

     4.4  Rent Without Offset. All Base Monthly Rent and additional rent
          (hereinafter collectively referred to as "rent") shall be paid by
          Tenant to Landlord monthly in advance on the first day of every
          calendar month, at the address shown in Section 1.3, or at such other
          place as Landlord may designate in writing from time to time. All rent
          shall be paid without prior demand or notice and without any deduction
          or offset whatsoever except as specifically set forth in this Lease.
          All rent shall be paid in lawful currency of the United States of
          America. All rent due for any partial month shall be prorated, when
          appropriate, at the rate of one-thirtieth (1/30) of the total monthly
          rent per day.

     4.5  Late Charge. Time is of the essence to the performance of this Lease.
          Tenant acknowledges that late payment by Tenant to Landlord of any
          rent or other sums due under this Lease will cause Landlord to incur
          costs and damages, including but not limited to processing and
          accounting charges and late charges that may be imposed on Landlord by
          the terms of any encumbrance secured by the Premises, as well as the
          loss of the use and time value of money. Landlord and Tenant
          specifically agree and acknowledge that the exact amount of such costs
          and damages would be difficult or impossible to prove. Tenant agrees
          that, if any rent or other sum due from Tenant is not received within
          five (5) days from when due, Tenant shall pay to Landlord an
          additional sum equal to five percent (5%) of the amount that is due;
          provided, however, that such late charges will not be assessed if
          Tenant, within five (5) days after notice from Landlord of such
          failure to make a timely payment, pays the entire unpaid amount to
          Landlord. Landlord will be required to provide Tenant with such notice
          of delinquency only once during each calendar year. Landlord and
          Tenant hereby agree that they have attempted to estimate the amount of
          costs and damages which would result from delay in

                                      -9-
<PAGE>

          payment, and that the agreed late charge represents a fair and
          reasonable estimate of the costs and damages that Landlord will incur
          by reason of any such late payment in light of the anticipated or
          actual harm which would be caused by such delay, the difficulties of
          proof of loss, and the inconvenience or non-feasibility of Landlord
          otherwise obtaining an adequate remedy. Additionally, all such
          delinquent rent or other sums, plus this late charge, shall bear
          interest from the date due at the rate per annum set forth in Section
          1.9 above; provided, however, that interest will not be assessed on
          delinquent rent and other sums if Tenant, within five (5) days after
          notice from Landlord of such delinquent rent or other sum, pays the
          entire unpaid amount to Landlord. Landlord will be required to provide
          Tenant with such notice of delinquency only once during each calendar
          year. Any payments of any kind returned for insufficient funds will be
          subject to an additional handling charge of $25.00. If Landlord
          employs a collection agency to recover delinquent charges, Tenant
          agrees to pay all collection agency fees charged to Landlord in
          addition to rent, late charges, interest and other sums payable under
          this Lease. Tenant shall pay a charge of $75 to Landlord for
          preparation of a demand for delinquent rent.

5.   SECURITY DEPOSITS.

     5.1  Prepaid Rent. Upon the execution of this Lease, Tenant shall pay to
          Landlord the prepaid rent set forth in Section 1.10(3) (herein the
          "Prepaid Rent"), and if Tenant is not in default under any provisions
          of this Lease, the Prepaid Rent shall be applied toward the Base
          Monthly Rent due for the last full month of the Term. The parties
          agree that Landlord's obligations with respect to the Prepaid Rent are
          not those of a trustee, and Landlord may commingle the Prepaid Rent
          with other funds. Landlord shall not be required to pay Tenant
          interest on the Prepaid Rent. If Landlord uses or applies all or any
          portion of said Prepaid Rent to cure or remedy a breach of or default
          by Tenant under this Lease, Landlord shall notify Tenant of such use
          or application, and Tenant, within five (5) days after written demand
          therefor, shall deposit cash with Landlord in an amount sufficient to
          restore the Prepaid Rent to the full extent of the amount set forth in
          Section 1.10(3). Tenant's failure to so restore the Prepaid Rent shall
          be a default under this Lease. In the event Landlord transfers its
          interest in this Lease, Landlord shall transfer the then remaining
          amount of the Prepaid Rent to Landlord's successor in interest, and
          thereafter Landlord shall have no further liability to Tenant with
          respect to such Prepaid Rent. Landlord shall be entitled to
          immediately endorse and cash any check tendered as Prepaid Rent;
          however, such endorsement and cashing shall not constitute Landlord's
          acceptance of this Lease.

     5.2  Letters of Credit. Upon the execution of this Lease, Tenant shall
          deliver to Landlord one or more letters of credit (the "Letters of
          Credit") in the aggregate amount of $409,000 to further secure the
          performance of Tenant's obligations under this Lease. The Letters of
          Credit will be irrevocable, issued by U.S. Bank National Association,
          and in a form substantially similar to the form attached to

                                     -10-
<PAGE>

          this Lease as Exhibit F. Upon a default by Tenant under this Lease,
          Landlord, in its sole discretion and upon notice to Tenant, may draw
          upon the full amount of the Letters of Credit and may retain, as
          liquidated damages, the entire amount paid under the Letters of
          Credit. The Letters of Credit will not expire before and may be drawn
          upon by Landlord until a date that is three years after the
          Commencement Date of this Lease. Landlord and Tenant agree that it
          would be impractical and extremely difficult to estimate the damages
          that Landlord may suffer if Tenant defaults on this Lease within the
          first three years of the Initial Term, and that Landlord's obtaining
          an adequate remedy in the event of such default would be inconvenient
          or nonfeasible. Landlord and Tenant agree that the aggregate amount of
          the Letters of Credit is a reasonable estimate of the minimum
          detriment and harm that Landlord would suffer in the event that Tenant
          defaults under this Lease during the first three years of the Initial
          Term.

6.   CONDITION AND USE OF PREMISES AND PROJECT FACILITIES.

     6.1  Tenant shall use the Premises solely for the purposes set forth in
          Section 1.4 and for no other purpose without obtaining the prior
          written consent of Landlord. Tenant has decided to lease the Premises
          based upon Tenant's independent investigations, inquiry, and business
          judgment.

     6.2  Tenant acknowledges that except as specifically set forth herein,
          neither Landlord nor any agent of Landlord has made any representation
          or warranty with respect to the Premises or the Project or with
          respect to the uses to which the Premises may be put or the
          suitability of the Premises or the Project for the conduct of Tenant's
          business, nor has Landlord agreed to undertake any modification,
          alteration or improvement to the Premises or to the Project, except as
          provided in writing in this Lease. Tenant has inspected the Premises
          and, except as specifically set forth herein, accepts the same "AS
          IS," provided, however, that Landlord hereby represents and warrants
          to Tenants as follows:

          (1)  All structural components of the Premises and the HVAC,
               electrical, plumbing, gas, and mechanical systems serving the
               Premises are in good condition and repair.

          (2)  Landlord covenants that Landlord has fee simple title to the
               Premises and has full right to make this Lease, and that Tenant
               shall have quiet and peaceful possession and enjoyment thereof as
               against any adverse claim of Landlord or any other party subject
               to the provisions of this Lease. This covenant shall be construed
               as a covenant running with the land, and is not, nor shall it be
               construed as, a personal covenant of Landlord, except to the
               extent of Landlord's interest in the Premises and only so long as
               such interest shall continue with respect to the Premises, and
               thereafter this covenant shall be binding only upon subsequent
               successors in interest of Landlord's interest in this Lease, to
               the extent of their respective

                                     -11-
<PAGE>

               interests, as and when they shall acquire the same, and so long
               as they shall retain such interest.

     6.3  Tenant acknowledges that Landlord may, from time to time, in its sole
          discretion, make such modifications, alterations, deletions or
          improvements to the Project as Landlord may deem necessary or
          desirable, which do not have a material adverse effect on Tenant's
          conduct of its business on the Premises, without compensation or
          notice to Tenant.

     6.4  Tenant shall promptly comply with all laws, ordinances, orders and
          regulations affecting the Premises and the Project, including without
          limitation any rules and regulations that may be attached to this
          Lease and to any reasonable and non-discriminatory modifications to
          those rules and regulations as Landlord may adopt from time to time.
          In the event of any conflict between the provisions of this Lease and
          the rules and regulations adopted by Landlord, the provisions of this
          Lease shall prevail.

     6.5  Tenant shall not do or permit anything to be done in or about the
          Premises or bring or keep anything in the Premises that will in any
          way increase the premiums paid by Landlord on its insurance related to
          the Project or which will in any way increase the premiums for fire or
          casualty insurance carried by other tenants in the Project. Tenant
          will not perform any act or carry on any practice that may injure the
          Premises or the Project, be a nuisance or menace to other tenants in
          the Project, or in any way interfere with the quiet enjoyment of such
          other tenants. Tenant shall not use the Premises for sleeping, washing
          clothes, cooking (other than the use by Tenant's employees of
          microwave ovens, vending machines, and beverage makers for their
          personal consumption) or the preparation, manufacture or mixing of
          anything that might emit any objectionable odor, noises, vibrations or
          lights onto such other tenants. If sound insulation is required to
          muffle noise produced by Tenant on the Premises, Tenant shall, at its
          own cost and using a contractor that is signatory to the applicable
          collective bargaining agreement, provide all necessary insulation.
          Tenant shall not overload any existing parking or service to the
          Premises. Pets and/or animals of any type shall not be kept on the
          Premises, unless assisting disabled persons.

7.   SIGNS; ALARMS. All signing shall comply with reasonable, non-discriminatory
     rules and regulations set forth by Landlord as may be modified from time to
     time. Current rules and regulations relating to signs are described on
     Exhibit C attached hereto. In the event of any conflict between the
     provisions of this Lease and Landlord's rules and regulations, the
     provisions of this Lease shall prevail. Tenant shall place no window
     covering (e.g., shades, blinds, curtains, drapes, screens, or tinting
     material), stickers, signs, lettering, banners or advertising or display
     material on or near exterior windows or doors if such materials are visible
     from the exterior of the Premises, without Landlord's prior written
     consent, which may be withheld, conditioned, or delayed in Landlord's sole
     discretion. If Landlord denies Tenant's request to place any such items on
     or near

                                     -12-
<PAGE>

     exterior windows or doors, Landlord will identify for Tenant the items, if
     any, that would be acceptable to be placed on or near exterior windows or
     doors. Similarly, Tenant may not install any alarm boxes, foil protection
     tape or other security equipment on the Premises without Landlord's prior
     written consent, which may be withheld, conditioned, or delayed in
     Landlord's reasonable discretion. Any material violating this provision may
     be removed by Landlord without compensation to Tenant.

8.   PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes,
     assessments, license fees and public charges levied, assessed or imposed
     upon its business operations as well as upon all trade fixtures, leasehold
     improvements, merchandise and other personal property in or about the
     Premises.

9.   PARKING. Landlord hereby grants to Tenant and Tenant's customers,
     suppliers, employees and invitees, a non-exclusive privilege to use the
     non-exclusive parking areas in the Project for the use of motor vehicles
     during the term of this Lease. Landlord reserves the right at any time to
     grant similar non-exclusive privileges to other tenants, to promulgate
     reasonable and non-discriminatory rules and regulations relating to the use
     of such parking areas, including reasonable restrictions on parking by
     tenants and employees, to designate specific spaces for the use of any
     tenant, to make changes in the parking layout from time to time, and to
     establish reasonable time limits on parking. Tenant shall have the
     exclusive right to park in the areas identified for exclusive parking on
     Exhibits D-1 and D-2, provided that final approval from the City of
     Wilsonville for such parking is first obtained. Landlord shall have no
     obligation to monitor or control such exclusive parking areas. Other than
     in areas identified for overnight parking on Exhibits D-1 and D-2,
     overnight parking is prohibited and any vehicle violating this or any other
     vehicle regulation adopted by Landlord is subject to removal at the owner's
     expense. Landlord will reasonably cooperate with Tenant, at no expense to
     Landlord, in Tenant's efforts to obtain approval from the City of
     Wilsonville to reconfigure the parking areas as set forth on Exhibits D-1
     and/or D-2. Landlord agrees not to change the ingress or egress to or from
     the Project in a manner that will materially impact Tenant's operation
     unless required to do so by law.

10.  UTILITIES. Tenant shall pay for all water, gas, heat, light, power, sewer,
     electricity, telephone or other service metered, chargeable or provided to
     the Premises. Landlord reserves the right to install separate meters for
     any such utility and to charge Tenant for the cost of such installation.

11.  MAINTENANCE.

     11.1 Landlord shall maintain, in good condition, the structural parts of
          the Premises, which shall include only the foundations, bearing and
          exterior walls (excluding glass), sub-flooring and roof (excluding
          skylights and smoke hatches), the unexposed electrical, plumbing and
          sewerage systems, including without limitation, those portions of the
          systems lying outside the Premises, exterior doors (excluding glass),
          window frames, and gutters and downspouts on the Building. The cost of
          all such maintenance (with the exception of amounts incurred by

                                     -13-
<PAGE>

          Landlord to remedy latent structural defects in the Premises) shall be
          considered "Expenses" for purposes of Section 4.3. Except as provided
          above, Tenant shall repair and maintain the Premises in good
          condition, including without limitation, maintaining, repairing and,
          if necessary, replacing all walls, floors, ceilings, interior doors,
          exterior and interior windows and plumbing and electrical fixtures as
          well as damage caused by Tenant, its agents, employees or invitees.

     11.2 A heating, ventilating and air conditioning maintenance contract is
          required by Landlord, the cost of which shall be the responsibility of
          Tenant, as well as all maintenance, repair, and parts replacement.
          Evidence of such contract shall be provided to Landlord within 30 days
          after the Commencement Date.

     11.3 Upon expiration or termination of this Lease, Tenant shall surrender
          the Premises to Landlord broom-clean, free of debris, and in the same
          condition as they existed on the Commencement Date, except for
          reasonable wear and tear and casualty damage that Tenant is not
          required to repair under this Lease.

     11.4 In the event Tenant incurs any reasonable expenses because of
          Landlord's failure to fulfill its obligations set forth in this
          Section 11 (provided that in a non-emergency situation Landlord has
          first received oral or written notice of the item requiring
          maintenance or repair, and has received a subsequent written notice
          from Tenant of Landlord's failure to respond to the first notice and
          has failed to commence the necessary maintenance or repairs within
          fifteen (15) days from its receipt of the second notice), Landlord
          agrees to reimburse Tenant for such reasonable expenses upon demand by
          Tenant, provided that Tenant first furnishes Landlord with reasonable
          documentation evidencing such expenditures. In the event of the
          failure of Landlord to so reimburse Tenant within 15 days after
          receiving Tenant's demand therefor, Tenant may deduct up to $5,000 of
          such expense per item, together with interest at the rate set forth in
          Section 1.9, out of any rent then or thereafter becoming due to
          Landlord hereunder. In the event of an emergency situation, where it
          is not reasonable for Tenant to provide Landlord with notice of the
          item requiring repair or maintenance and such repair or maintenance is
          Landlord's responsibility under this Section 11, Tenant may make the
          required repairs and shall be reimbursed by Landlord for the
          reasonable cost of such repairs, provided that Tenant first furnishes
          Landlord with reasonable documentation evidencing such expenditures.
          If Landlord does not reimburse Tenant for the reasonable cost of such
          repairs within 15 days after Tenant's demand therefor, Tenant may
          deduct from rent the reasonable cost of such repair, provided that
          Tenant may not deduct from rent a sum in excess of $2,000 spent by
          Tenant for each item requiring repair, together with interest as
          specified above.

12.  ALTERATIONS.

     12.1 Tenant must give Landlord prior notice before making any alterations
          to the Premises or Project, including any changes to the existing
          landscaping. Tenant may make non-structural alterations to the
          Premises that cost less than $15,000

                                     -14-
<PAGE>

          without Landlord's consent. All other alterations must receive
          Landlord's prior written consent, which will not be unreasonably
          withheld, conditioned, or delayed. At the end of each calendar year,
          Tenant shall provide Landlord with construction drawings of all such
          alterations and changes made to the Premises during that calendar
          year. For any alterations made by Tenant pursuant to this Section 12,
          Landlord may post notice of non-responsibility in accordance with the
          laws of the state in which the Premises are located. All alterations
          made shall remain on and be surrendered with the Premises upon
          expiration or termination of this Lease, except that Landlord may, not
          less than 60 days before the expiration of the Term of this Lease,
          elect to require Tenant to remove any alterations which Tenant has
          made to the Premises. If Landlord so elects, Tenant shall, at its own
          cost, restore the Premises to the condition designated by Landlord in
          its election before the last day of the Term of this Lease. Tenant
          shall promptly repair any damage to the Premises caused by the removal
          of such alterations.

     12.2 Should Landlord consent in writing to Tenant's alteration of the
          Premises, Tenant shall contract with a contractor signatory to the
          applicable collective bargaining agreement and reasonably approved by
          Landlord for the construction of such alterations, shall secure all
          appropriate governmental approvals and permits, and shall complete
          such alterations with due diligence in compliance with plans and
          specifications reasonably approved by Landlord. All such construction
          shall be performed in a manner which will not interfere with the lease
          rights or quiet enjoyment of other tenants of the Project. Tenant
          shall discharge from the Premises and Project, within 20 days after
          having received notice thereof, all liens which may result from
          construction of alterations or other improvements by or at the request
          of Tenant.

13.  RELEASE AND INDEMNITY. As material consideration to Landlord, and except in
     the event of Landlord's negligence or intentional misconduct, Tenant agrees
     that Landlord and its employees, officers, partners and directors shall not
     be liable for any injury or damage to the person, property, or business of
     Tenant, its employees, invitees, permitees, customers, or any other person
     in or about the Premises from any cause, and Tenant waives all claims
     against such parties for damage to persons or property arising for any
     reason, except only for damage or injury resulting directly from Landlord's
     breach of its express obligations under this Lease which Landlord has not
     cured within a reasonable time after receipt of written notice of such
     breach from Tenant or to the extent such claims arise from Landlord's
     negligence or intentional misconduct. In no event shall Landlord have any
     liability for any act or omission of Tenant, its employees, invitees,
     permitees or customers, or of any other tenant of the Project or its
     employees, invitees, permitees or customers. Tenant shall indemnify and
     hold harmless Landlord (and its employees, officers, partners, and
     directors), the Premises and the Project, from and against all damages,
     injuries, liabilities, losses, claims, costs and expenses (including
     without limitation Landlord's reasonable attorney fees) related to acts,
     events or omissions occurring in, on or about the Premises, or arising out
     of or in any way related to Tenant's use or occupancy of the Premises,
     Tenant's breach of any term of this Lease,

                                     -15-
<PAGE>

     or any work, activity or thing done, permitted or suffered by Tenant in, on
     or about the Premises or the Project, unless caused by Landlord's
     intentional misconduct.

14.  TENANT'S RIGHT TO AUDIT.

     14.1 Audit Threshold. If, during the Term of this Lease, Tenant's Share of
          Expenses for a full calendar year increases by more than five percent
          (5%) from Tenant's Share of Expenses for the immediately preceding
          full calendar year, Tenant may audit Landlord's common area actual
          operating costs in order to verify the accuracy of the Expense charges
          provided that:

          (1)  Tenant specifically designates the calendar year(s) that Tenant
               intends to audit, which shall be a year within three (3) years of
               the date of the audit but must be within the Term of this Lease;
               and

          (2)  Such audit will be conducted only during regular business hours
               at the office where Landlord maintains operating expense records
               and only after Tenant gives Landlord fourteen (14) days' prior
               notice of its intention to conduct an audit.

     14.2 Copy of Audit. Tenant shall deliver to Landlord a copy of the results
          of such audit within fifteen (15) days of its receipt by Tenant. No
          such audit shall be conducted if any other tenant has conducted an
          audit for the time period Tenant intends to audit and Landlord
          furnishes to Tenant a copy of the results of such audit.

     14.3 Tenant Not in Default. No audit shall be conducted at any time that
          Tenant is in default of any of the terms of the Lease.

     14.4 Limits for Subtenants and Assignees. No subtenant shall have any right
          to conduct an audit and no assignee shall conduct an audit for any
          period during which such subtenant or assignee was not in possession
          of the Premises.

15.  INSURANCE AND WAIVER OF SUBROGATION.

     15.1 Liability Insurance. Tenant, at its cost, shall maintain public
          liability insurance with a single combined liability limit of
          $5,000,000 insuring against the hazards of Premises and operations,
          independent contractors, contractual liability (covering the indemnity
          clauses contained herein at Sections 13 and 29), products and
          completed operations arising out of or in connection with Tenant's
          use, occupancy or maintenance of the Premises. Such insurance policy
          shall (1) name as additional insureds Landlord and its managing agent,
          whose names and addresses have previously been provided to Tenant by
          Landlord, (2) contain a cross liability provision, and (3) contain an
          endorsement to the effect that "the insurance provided the Landlord
          hereunder shall be primary and non-contributing with any other
          insurance available to the Landlord." Landlord shall maintain

                                     -16-
<PAGE>

          public liability insurance with a single combined liability limit of
          $5,000,000 insuring against the hazards of the Project and operations,
          independent contractors, contractual liability, products, and
          completed operations arising out of or in connection with Landlord's
          ownership, maintenance, and operation of the Project.

     15.2 Property Insurance. At its cost, Tenant shall maintain a policy of
          standard fire and extended coverage insurance with vandalism and
          malicious mischief endorsements and "all risk" coverage on all of
          Tenant's personal property, improvements, fixtures and alterations in
          or about the Premises, equal to their full replacement value. The
          proceeds from any such policy shall be used by Tenant for the
          replacement of personal property and the restoration of Tenant's
          improvements, fixtures or alterations deemed advisable by Tenant in
          its sole discretion unless otherwise required under this Lease. Said
          insurance shall provide for payment of loss to, and shall name as
          additional insured(s), the Landlord and the holders of mortgages or
          deeds of trust on the Project. If such insurance has a deductible
          clause, the deductible amount shall not exceed $10,000 per occurrence
          and Tenant shall be liable for such deductible. Landlord shall keep
          the Premises insured against fire and other risks covered by a
          standard fire insurance policy with an endorsement for extended
          coverage.

     15.3 Business Interruption Insurance. Tenant shall, at its cost, obtain
          business interruption insurance of such type and amount sufficient to
          pay all rent and other sums due hereunder for a period of at least
          twelve (12) months in the event of any cessation or reduction of
          Tenant's business for any reason, including without limitation, damage
          or destruction. In no event shall Landlord be liable to Tenant for any
          loss of income from the operation of Tenant's business for any reason
          whatsoever, including without limitation, from an inability to occupy
          the Premises.

     15.4 Insurance Policies. All insurance required to be provided by Tenant
          under this Lease:

          (1)  shall be issued in a form reasonably satisfactory to Landlord and
               shall be issued by insurance companies which are authorized to do
               business in the state in which the Premises are located and which
               are reasonably satisfactory and acceptable to Landlord, provided
               that such companies shall each enjoy a financial rating of at
               least an A-VIII status as rated in the most recent edition of
               Best's Insurance Reports; and

          (2)  shall contain an endorsement requiring at least thirty (30) days
               prior written notice of cancellation to Landlord and Landlord's
               lender, if any, before cancellation or change in coverage, scope
               or amount of any policy. Tenant shall deliver a certificate or
               copy of each insurance policy together with evidence of payment
               of all current premiums to Landlord within thirty (30) days of
               execution of this Lease. Tenant's failure to provide

                                     -17-

<PAGE>

               evidence of such coverage to Landlord may, in Landlord's sole
               discretion, constitute a default under this Lease.

     15.5   Waiver of Subrogation. Neither party shall be liable to the other
            (or to the other's successors or assigns) for any loss or damage
            caused by fire or any of the risks enumerated in a standard fire
            insurance policy with an extended coverage endorsement and
            earthquake coverage, and in the event of insured loss, neither
            party's insurance company shall have a subrogated claim against the
            other. This waiver shall be valid only if the insurance policy in
            question expressly permits waiver of subrogation or if the insurance
            company agrees in writing that such a waiver will not affect
            coverage under the policies. Each party agrees to use best efforts
            to obtain such an agreement from its insurer if the policy does not
            expressly permit a waiver of subrogation.

16.  DESTRUCTION. If, during the Term, the Premises or Project are more than
     twenty-five percent (25%) destroyed from any cause, or rendered
     inaccessible or unusable from any cause, Landlord may, in its sole
     discretion and without compensation or liability to Tenant, terminate this
     Lease by delivery of notice of termination to Tenant within thirty (30)
     days of such event. If, in Landlord's reasonable estimation, the Premises
     cannot be restored within one hundred twenty (120) days following such
     destruction, then Landlord shall immediately notify Tenant and Tenant may
     terminate this Lease by delivery of notice to Landlord within thirty (30)
     days of receipt of Landlord's notice; otherwise this Lease shall remain in
     full force and effect. If Landlord does not terminate this Lease and if in
     Landlord's estimation the Premises can be restored within one hundred
     twenty (120) days, then Landlord shall commence to restore the Premises in
     compliance with then existing laws and shall complete such restoration with
     due diligence. In such event this Lease shall remain in full force and
     effect except that the then current rent shall be abated based on the
     extent to which the restoration being made by Landlord shall interfere with
     the business being carried on by Tenant in the Premises. If Landlord does
     not complete its repair and restoration work of the Premises within one
     hundred twenty (120) days after the occurrence of the damage or
     destruction, Tenant, at its option, may terminate this Lease by written
     notice to Landlord that the Lease will terminate if repairs or restoration
     are not completed within thirty (30) days after the date of the notice.
     Landlord will not be required to repair or restore any injury or damage to
     the property of Tenant or make any repairs or restoration to any
     alterations, additions, fixtures, or improvements installed in the Premises
     by or at the expense of Tenant; however, Landlord and Tenant will
     reasonably cooperate with each other to make such repairs or restoration.

17.  CONDEMNATION.

     17.1   Definitions. The following definitions shall apply: (1)
            "Condemnation" means (a) the exercise of any governmental power of
            eminent domain, whether by legal proceedings or otherwise by
            condemnor, and (b) the voluntary sale or transfer by Landlord to any
            condemnor either under threat of condemnation or while legal

                                     -18-
<PAGE>

            proceedings for condemnation are proceeding; (2) "Date of Taking"
            means the date the condemnor has the right to possession of the
            property being condemned; and (3) "Award" means all compensation,
            sums or anything of value awarded, paid or received in connection
            with a total or partial Condemnation.

     17.2   Obligations to be Governed by Lease. If, during the Term of this
            Lease, there is any Condemnation of all or any part of the Premises
            or the Project, the rights and obligations of the parties shall be
            determined pursuant to this Lease.

     17.3   Total or Partial Taking. If Premises are totally taken by
            Condemnation, this Lease shall terminate on the Date of Taking. If
            only a portion of the Premises or Common Area is Condemned, this
            Lease shall continue in effect, except that Tenant may elect to
            terminate this Lease if the remaining portion is rendered unsuitable
            for Tenant's continued use. If Tenant elects to terminate this
            Lease, Tenant must exercise its right to terminate by giving notice
            to Landlord within thirty (30) days after the nature and extent of
            the Condemnation have been finally determined. If Tenant elects to
            terminate this Lease, Tenant shall also notify Landlord of the date
            of termination, which date shall not be earlier than thirty (30)
            days after Tenant has notified Landlord of its election to
            terminate. If any portion of the Premises or common area is taken by
            Condemnation and this Lease remains in full force and effect, (i)
            Landlord at its sole cost and expense shall restore the remainder of
            the Premises and/or common area within one hundred twenty (120) days
            after the Date of Taking, and the rent payable hereunder shall abate
            equitably until the completion of such restoration; and (ii) after
            the completion of Landlord's restoration of the Premises and/or
            common area, the rent shall be equitably reduced based on the extent
            to which Tenant's use of the Premises for the normal conduct of its
            business has been permanently diminished.

     17.4   Award. Landlord reserves all rights to damages and awards paid
            because of any partial or entire taking of the Premises. Tenant
            assigns to Landlord any right Tenant may have to the damages or
            award. Further, Tenant shall not make claims against Landlord or the
            condemning authority for damages. However, Tenant may claim and
            recover from the condemning authority a separate award for Tenant's
            moving expenses, business dislocation damages, Tenant's personal
            property and fixtures, the unamortized costs of leasehold
            improvements paid for by Tenant, and any other award that would not
            substantially reduce the award payable to Landlord. Each party shall
            seek its own award, at its own expense, and neither shall have any
            right to the award made to the other.

18.  ASSIGNMENT OR SUBLEASE.

     18.1   Tenant shall not assign or encumber its interest in this Lease or
            the Premises, nor sublease all or any part of the Premises, nor
            allow any other person or entity (except Tenant's authorized
            representatives, employees, invitees, or guests) to occupy or use
            all or any part of the Premises, without first obtaining Landlord's
            written consent, which consent will not be unreasonably withheld,
            conditioned, or

                                     -19-
<PAGE>

            delayed. Any such assignment or sublease shall not relieve Tenant of
            any obligation hereunder and Tenant shall remain liable to pay the
            rent and to perform all other obligations to be performed by Tenant
            under this Lease. Any assignment, encumbrance or sublease without
            Landlord's written consent shall be voidable and, at Landlord's
            election, shall constitute a default. Landlord's consent shall not
            be considered unreasonably withheld if, among other things, (a) the
            proposed subtenant's or assignee's financial responsibility does not
            meet the same criteria Landlord uses to select comparable tenants
            for the Premises; (b) the proposed subtenant's or assignee's
            business is not the same as Tenant's business or is not suitable for
            the Premises considering the business of other tenants of the
            Project and/or the Project's prestige; or (c) the proposed use is
            inconsistent with the use permitted by Section 1.3. The foregoing is
            not an exclusive list of the reasons for which Landlord may
            reasonably withhold its consent to a proposed assignment or
            sublease.

     18.2   Not withstanding Section 18.1, Tenant may assign or sublease part or
            all of the Premises without Landlord's consent to:

            (1)  Any corporation or partnership that controls, is controlled by,
                 or is under common control with, Tenant; or

            (2)  Any corporation resulting from the merger or consolidation with
                 Tenant; or

            (3)  Any entity that acquires all of the assets of the business that
                 is being conducted by Tenant on the Premises;

            provided, however, that before any such assignment or sublease shall
            be effective, the assignee or sublessee shall assume, in full, the
            obligations of Tenant under this Lease, and Tenant shall demonstrate
            to Landlord's reasonable satisfaction that the assignee or sublessee
            has a net worth at the time of such assignment or sublease, as
            determined under generally accepted accounting principles, of not
            less than $100,000,000. Any such assignment or sublease shall not
            release Tenant of any obligations hereunder or alter the primary
            responsibility of Tenant to pay rent and to perform all other
            obligations to be performed by Tenant under this Lease.

     18.3   Fifty percent (50%) of all rent and other consideration received by
            Tenant from an assignee or subtenant in excess of the rent payable
            by Tenant to Landlord under this Lease, without any deduction for
            leasing commissions or any other out-of-pocket expenses incurred by
            Tenant, which amount is to be prorated where a part of the Premises
            is subleased or assigned, shall be paid to Landlord within ten (10)
            days after Tenant's receipt thereof. If Tenant requests Landlord to
            consent to a proposed assignment or subletting, Tenant shall pay to
            Landlord, whether or not consent is ultimately given, $100 or
            Landlord's reasonable attorneys' fees incurred in connection with
            such request, whichever is greater.

                                     -20-
<PAGE>

     18.4   No interest of Tenant in this Lease shall be assignable by
            involuntary assignment through operation of law (including without
            limitation the transfer of this Lease by testacy or intestacy). Each
            of the following acts shall be considered an involuntary assignment:
            (a) If Tenant is or becomes bankrupt or insolvent, makes an
            assignment for the benefit of creditors, or institutes proceedings
            under the Bankruptcy Act in which Tenant is the bankrupt party; or
            if Tenant is a partnership or consists of more than one person or
            entity, if any partner of the partnership or other entity is or
            becomes bankrupt or insolvent, or makes an assignment for the
            benefit of creditors; or (b) if a writ of attachment or execution is
            levied on this Lease; or (c) if in any proceeding or action to which
            Tenant is a party, a receiver is appointed with authority to take
            possession of the Premises. An involuntary assignment shall
            constitute a default by Tenant and Landlord shall have the right to
            elect to terminate this Lease, in which case this Lease shall not be
            treated as an asset of Tenant.

19.  DEFAULT. In addition to the acts, events, and omissions elsewhere specified
     in this Lease constituting defaults, the occurrence of any of the following
     shall constitute a default by Tenant:

     19.1   The failure by Tenant to make any payment of rent or any other
            payment required to be made by Tenant under this Lease, as and when
            due, where such failure shall continue for a period of ten (10) days
            after written notice thereof from Landlord to Tenant.
            Notwithstanding the foregoing, Landlord shall not be obligated to
            give Tenant notice of default for failure to pay rent or other
            payment due under this Lease if Landlord has previously given Tenant
            notice of default for failure to pay rent or other payment two (2)
            times during the same calendar year.

     19.2   Failure of Tenant to comply with any term or condition or fulfill
            any obligation of this Lease (other than the payment of rent or
            other charges) within twenty (20) days after written notice by
            Landlord specifying the nature of the default. If the default is of
            such a nature that it cannot be completely remedied within the 20-
            day period, this provision shall be complied with if Tenant begins
            correction of the default within the 20-day period and thereafter
            proceeds with reasonable diligence and in good faith to effect the
            remedy as soon as practicable. During any calendar year, Tenant
            shall be entitled to only one (1) notice for the same type of
            default pursuant to this Section 19.2.

     19.3   Insolvency of Tenant; an assignment by Tenant for the benefit of
            creditors; the filing by Tenant of a voluntary petition in
            bankruptcy; an adjudication that Tenant is bankrupt or the
            appointment of a receiver of the properties of Tenant; the filing of
            any involuntary petition of bankruptcy and failure of Tenant to
            secure a dismissal of the petition within thirty (30) days after
            filing; or attachment of or the levying of execution on the
            leasehold interest and failure of Tenant to secure discharge of the
            attachment or release of the levy of execution within ten (10) days
            shall constitute a default. If the Lease has been assigned, the
            events of

                                     -21-
<PAGE>

            default so specified shall apply only with respect to the one then
            exercising the rights of Tenant under the Lease.

20.  LANDLORD'S REMEDIES.

     20.1   Remedies. In the event of default, Landlord shall have the remedies
            set forth in this Section 20. These remedies are not exclusive; they
            are cumulative and in addition to any remedies now or later allowed
            by law. Landlord may terminate Tenant's right to possession of the
            Premises at any time. No act by Landlord other than giving notice to
            Tenant shall terminate this Lease. Acts of maintenance, efforts to
            relet the Premises or the appointment of a receiver on Landlord's
            initiative to protect Landlord's interest under this Lease shall not
            constitute a termination of this Lease. Upon termination of this
            Lease, Landlord shall have the right to recover from Tenant: (1) The
            worth of the unpaid rent that had been earned at the time of
            termination of this Lease; (2) the worth of the amount of the unpaid
            rent that would have been earned after the date of termination of
            this Lease throughout the remaining Term of this Lease; and (3) any
            other amount necessary to compensate Landlord for Tenant's default,
            including without limitation brokerage commissions (including the
            unamortized portion of the brokerage commissions paid by Landlord in
            connection with this Lease), costs of reentry and reletting
            (including without limitation the cost of any cleanup, refurbishing,
            and removal of Tenant's property and fixtures), court costs, and
            attorney and collection fees and costs. "The worth," as used in
            Section 20.1(1), is to be computed by allowing interest at the rate
            per annum set forth in Section 1.9 above. "The worth," as used in
            Section 20.1(2), is to be computed by discounting the amount at the
            discount rate of the Federal Reserve Bank of San Francisco in effect
            at the time of termination of Tenant's right of possession. Landlord
            will use reasonable efforts to relet the Premises after termination
            of this Lease or Tenant's right to possession in an effort to
            mitigate damages.

     20.2   Performance by Landlord of Tenant's Obligations. All covenants and
            agreements to be performed by Tenant under any of the terms of this
            Lease shall be performed by Tenant at Tenant's sole cost and expense
            and without any abatement of rent. If Tenant shall fail to pay any
            sum of money owed to any party, other than Landlord, for which it is
            liable hereunder, or if Tenant shall fail to perform any other act
            on its part to be performed hereunder or otherwise violate any term
            or provision of this Lease including, without limitation, its
            obligations pursuant to Sections 6, 11, and 12, Landlord may,
            without waiving any default or releasing Tenant from any obligation
            hereunder, but shall not be obligated to, make any such payment or
            perform any such other act to be made or performed by Tenant. All
            sums so paid by Landlord and all necessary incidental costs,
            together with interest thereon from the date of such payment by
            Landlord at the rate per annum set forth in Section 1.9 above, shall
            be payable to Landlord on demand. Tenant covenants to pay any such
            sums.

                                     -22-
<PAGE>

21.  LANDLORD'S DEFAULT. In the event of any breach or default by Landlord under
     this Lease, which breach or default renders a material portion of the
     Premises unusable for the conduct of Tenant's business and continues for a
     period of thirty (30) days after written notice thereof from Tenant (or
     with reasonable notice in case of an emergency), then in addition to all
     other rights and remedies of Tenant under this Lease and at law or equity,
     Tenant may, but shall not be obligated to, cure such breach on behalf of
     Landlord and upon demand by Tenant, Landlord shall promptly pay to Tenant
     the costs and expenses of such cure, together with interest accruing on
     such amounts paid by Tenant at the rate set forth in Section 1.9. If,
     however, other than in the case of an emergency, the nature of such breach
     is such that it cannot be cured within thirty (30) days, then Tenant's
     right to cure such breach shall be suspended for such additional period of
     time as may be necessary to cure the breach so long as Landlord commences
     cure within thirty (30) days and thereafter diligently and continuously
     prosecutes the curing of the breach, and so long as continuation of the
     breach does not create material risk to the Premises or to persons using
     the Premises. When Tenant makes demand for payment, Tenant shall furnish
     Landlord with an itemized statement of the costs and expenses incurred for
     cure. If Landlord fails to pay any sums due Tenant under this Lease within
     ten (10) days after demand, Tenant may deduct up to $5,000 of the amounts
     paid by Tenant from rent then or thereafter due from Tenant. In the case of
     an emergency, a situation threatening to the safety of Tenant's employees,
     agents, contractors, invitees and licensees or damage to Tenant's personal
     property, Tenant may take such immediate action, after notifying Landlord,
     as necessary to ensure safety and prevent damage. Nothing above prevents
     Tenant from pursuing other remedies.

22.  ENTRY ON PREMISES. Landlord and its authorized representatives shall have
     the right to enter the Premises at all reasonable times, upon 24 hours'
     prior oral or written notice to Tenant (and with no prior notice in the
     event of an emergency) for any of the following purposes: (a) to determine
     whether the Premises are in good condition and whether Tenant is complying
     with its obligations under this Lease; (b) to do any necessary maintenance
     and to make any restoration to the Premises or the Project that Landlord
     has the right or obligation to perform; (c) to post "for sale" signs at any
     time during the Term, and to post "for rent" or "for lease" signs during
     the last ninety (90) days of the Term of this Lease, or during any period
     while Tenant is in default; (d) to show the Premises to prospective
     brokers, agents, buyers, tenants or persons interested in a sale, an
     exchange, or other transfer at any time during the Term; (e) to repair,
     maintain or improve the Project and to erect scaffolding and protective
     barricades around and about the Premises (but not so as to prevent entry to
     the Premises), or (f) to do any other act or thing necessary for the safety
     or preservation of the Premises or the Project. Except in the event of
     Landlord's negligence or intentional misconduct, (i) Landlord shall not be
     liable in any manner for any inconvenience, disturbance, loss of business,
     nuisance or other damage arising out of Landlord's entry onto the Premises
     as provided in this Section 22, and (ii) Tenant shall not be entitled to an
     abatement or reduction of rent if Landlord exercises its rights of entry
     granted herein. Landlord shall conduct its activities on the Premises as
     provided herein in a manner that will cause the least inconvenience,
     annoyance or disturbance to Tenant's conduct of business on the Premises.

                                     -23-
<PAGE>

     For each of these purposes, Landlord shall at all times have and retain a
     key with which to unlock all the doors in, upon and about the Premises,
     excluding Tenant's vaults and safes. Tenant shall not alter any lock or
     install a new or additional lock or bolt on any door of the Premises
     without the prior written consent of Landlord, which consent will not be
     unreasonably withheld, conditioned or delayed. If Landlord shall give its
     consent, Tenant shall in each case furnish Landlord with a key for any such
     lock.

23.  SUBORDINATION; ESTOPPEL CERTIFICATES.

     23.1   Subordination/Nondisturbance. This Lease shall be subject and
            subordinate to any mortgage or trust deed ("Encumbrance") now
            existing against the Premises or Project, and to any renewals,
            replacements, extensions or consolidations thereof. This Lease shall
            also be subject and subordinate to any Encumbrance placed on the
            Premises after the date of this Lease given to secure a loan made by
            a lender to Landlord, and to any renewals, replacements, extensions
            or consolidations thereof, provided that the holder of the
            Encumbrance shall agree in writing that so long as Tenant is not in
            default under this Lease beyond any applicable cure period and
            agrees to attorn to the such holder, Tenant's rights under this
            Lease shall not be disturbed and shall remain in full force and
            effect for the Term of the Lease, unless the Lease is otherwise
            terminated pursuant to its terms. In the event the holder of the
            Encumbrance or the purchaser at a foreclosure sale ("Successor
            Landlord") succeeds to the interest of Landlord under the Lease,
            such Successor Landlord shall not be bound by (i) any payment of
            rent or other charges for more than one month in advance, except the
            Prepaid Rent and free rent, if any, specified in this Lease; (ii)
            any amendment, modification, or termination of the Lease without
            Successor Landlord's consent after the Successor Landlord's name is
            given to Tenant unless the amendment, modification, or termination
            is specifically authorized by the original Lease and does not
            require Landlord's prior agreement or consent, or (iii) any
            liability for any act or omission of Landlord or any other prior
            landlord (but such Successor Landlord will be liable for all
            obligations accruing under the Lease after the date of the
            transfer). Tenant covenants and agrees to execute and deliver, upon
            demand by Landlord and in a form requested by Landlord, any
            additional documents evidencing the priority or subordination of
            this Lease.

     23.2   Estoppel Certificates. Either party ("Answering Party") shall from
            time to time, within ten (10) business days after receiving written
            request by the other party ("Asking Party"), execute and deliver to
            the Asking Party a written statement. This written statement, which
            may be relied upon by the Asking Party and any third party with whom
            the Asking Party is dealing shall certify:

            (1)  the accuracy of this Lease document;

            (2)  the Term of this Lease;

                                     -24-
<PAGE>

            (3)  that this Lease is unmodified and in full effect or in full
                 effect as modified, stating the date and nature of the
                 modification;

            (4)  whether to the Answering Party's knowledge the Asking Party is
                 in default or whether the Answering Party has any claims or
                 demands against this Lease and, if so, specifying the default,
                 claim, or demand;

            (5)  the amount of the current monthly rent;

            (6)  the dates to which rent has been paid in advance;

            (7)  the amount of any Prepaid Rent; and

            (8)  to other correct and reasonably ascertainable facts that are
                 covered by this Lease.

     23.3   Remedy. The Answering Party's failure to comply with its obligations
            in Section 23.2 shall be a default under this Lease. Notwithstanding
            Sections 19 and 21, the cure period for this default shall be five
            (5) business days after the Answering Party receives notice of the
            default. Furthermore, the Answering Party's failure to provide the
            requested statement shall be conclusive proof that (i) this Lease is
            in full force and effect, without modification except as may be
            represented by the Asking Party, (ii) there are no uncured defaults
            in the Asking Party's performance, and (iii) if Landlord is the
            Asking Party, not more than one month's rent has been paid in
            advance.

24.  NOTICE. Any notice, demand, request, consent, approval or communication
     desired by either party or required to be given, shall be in writing and
     served either personally or sent by prepaid certified first class mail,
     addressed as set forth in Section 1. Either party may change its address by
     notification to the other party. Notice shall be deemed to be communicated
     forty-eight (48) hours from the time of mailing, if mailed, or at time of
     service, if personally served or delivered by a reputable courier service
     providing proof of delivery.

25.  WAIVER. No delay or omission in the exercise of any right or remedy by
     Landlord or Tenant shall impair such right or remedy or be construed as a
     waiver. No act or conduct of Landlord, including without limitation,
     acceptance of the keys to the Premises, shall constitute an acceptance of
     the surrender of the Premises by Tenant before the expiration of the Term.
     Only written notice from Landlord to Tenant shall constitute acceptance of
     the surrender of the Premises and accomplish termination of the Lease prior
     to the stated expiration date of the Term. Landlord's or Tenant's consent
     to or approval of any act by the other party requiring Landlord's or
     Tenant's consent for approval shall not be deemed to waive or render
     unnecessary Landlord's consent to or approval of any subsequent act by the
     other party. Any waiver by Landlord or Tenant of any default must be in
     writing and shall not be a waiver of any other default concerning the same
     or any other provision of the Lease.

                                     -25-
<PAGE>

26.  SURRENDER OF PREMISES; HOLDING OVER.

     26.1   Surrender. Upon expiration of the Term or earlier termination of
            this Lease, Tenant shall surrender to Landlord the Premises and all
            tenant improvements and alterations in the condition described in
            Section 11.3 above. Tenant shall remove all personal property owned
            by Tenant and shall perform all restoration made necessary by the
            removal of any alterations or Tenant's personal property before the
            expiration of the Term, including for example, restoring all wall
            surfaces to the condition they were in prior to the date Tenant took
            possession of the Premises, except for ordinary wear and tear,
            casualty damage that Tenant is not obligated under this Lease to
            repair, and improvements and alterations that Tenant is not required
            under this Lease to remove. Landlord shall have the right to elect
            to retain or dispose of in any manner Tenant's personal property not
            so removed. Tenant waives all claims against Landlord for any damage
            to Tenant or such personal property resulting from Landlord's
            retention or disposal of Tenant's personal property, except for
            those claims arising from Landlord's intentional misconduct. Tenant
            shall be liable to Landlord for Landlord's costs for storage,
            removal and disposal of Tenant's personal property not removed from
            the Premises in accordance with this Lease.

     26.2   Holding Over.

            (1)  If Tenant, with Landlord's express written consent, remains in
                 possession of the Premises after expiration or sooner
                 termination of this Lease, such possession by Tenant shall be
                 deemed to be a month-to-month tenancy terminable on thirty (30)
                 day notice at any time, by either party. All provisions of this
                 Lease, except those pertaining to term and rent, shall apply to
                 the month-to-month tenancy. Tenant shall pay monthly rent in an
                 amount equal to one hundred twenty-five percent (125%) of the
                 rent payable by Tenant for the last year prior to the date of
                 such expiration or termination of this Lease. Acceptance by
                 Landlord of rent after such expiration or earlier termination
                 shall not result in a renewal or extension of this Lease.

            (2)  If Tenant holds over after the expiration of the Term or the
                 earlier termination hereof without the express written consent
                 of Landlord, Tenant shall become a tenant at sufferance only,
                 and shall pay a monthly rental rate equal to One Hundred Fifty
                 percent (150%) of the rent payable by Tenant for the last year
                 prior to the date of such expiration or termination of this
                 Lease, prorated on a daily basis, and subject to the terms,
                 covenants and conditions herein specified, so far as
                 applicable, including Section 4.3. Acceptance by Landlord of
                 rent after such expiration or earlier termination shall not
                 result in a renewal or extension of this Lease.

                                     -26-
<PAGE>

     26.3   Failure to Surrender. The foregoing provisions of this Section 26
            are in addition to and do not affect Landlord's right of re-entry or
            any rights of Landlord hereunder or as otherwise provided by law. If
            Tenant fails to surrender the Premises upon the expiration of this
            Lease despite written demand to do so by Landlord, Tenant shall
            indemnify Landlord and hold it harmless against and from all loss or
            liability, including without limitation, any claim made by any
            succeeding tenant founded on or resulting from such failure to
            surrender, together with any attorneys' fees and costs incurred by
            Landlord.

27.  MORTGAGEE PROTECTION. In the event of any default by Landlord, Tenant will
     give notice by registered or certified mail to any beneficiary of a deed of
     trust or a mortgagee of a mortgage covering the Premises whose address
     shall have been previously furnished to Tenant, and shall offer such
     beneficiary or mortgagee the same opportunity to cure the default,
     including time to obtain possession of the Premises by power of sale or a
     judicial foreclosure, if such should prove necessary to effect a cure.

28.  LIMITATION OF LIABILITY. In consideration of the benefits accruing
     hereunder, Tenant agrees that, in the event of any actual or alleged
     failure, breach or default of this Lease by Landlord, if Landlord is a
     partnership: (a) the sole and exclusive remedy shall be against the
     partnership and its partnership assets; (b) no partner of Landlord shall be
     sued or named as a party in any suit or action (except as may be necessary
     to secure jurisdiction of the partnership); (c) no service of process shall
     be made against any partner of Landlord (except as may be necessary to
     secure jurisdiction of the partnership); (d) no partner of Landlord shall
     be required to answer or otherwise plead to any service of process; (e) no
     judgment may be taken against any partner of Landlord; (f) any judgment
     taken against any partner of Landlord may be vacated and set aside at any
     time without hearing; (g) no writ of execution will ever be levied against
     the assets of any partner of Landlord. These covenants and agreements are
     enforceable both by Landlord and also by any partner of Landlord. Tenant
     agrees to look solely to Landlord's interest in the Project, and any
     proceeds therefrom, and to no other assets of Landlord for satisfaction of
     any liability with respect to this Lease.

     Tenant agrees that each of the foregoing provisions shall be applicable to
     any covenant or agreement either expressly contained in this Lease or
     imposed by statute or at common law.

29.  HAZARDOUS SUBSTANCES.

     29.1   Landlord's Warranty. Landlord represents and warrants to Tenant that
            as of the date of execution of this Lease, Landlord (without any
            affirmative duty to investigate) has no actual knowledge of any
            Hazardous Substances on the Premises. Landlord has received no
            notice of any alleged violation of Environmental Laws with respect
            to the Premises. For purposes of this Lease, the term "Hazardous
            Substances" shall mean and include all hazardous and toxic
            substances, waste or materials, any pollutant or contaminant,
            including, without limitation, PCBs, asbestos, asbestos-containing
            material, and raw materials that

                                     -27-
<PAGE>

            are included under or regulated by any Environmental Laws. For
            purposes of this Lease, the term "Environmental Laws" shall mean and
            include all federal, state, and local statutes, ordinances,
            regulations, and rules presently in force or hereafter enacted
            relating to environmental quality, contamination, and clean-up of
            Hazardous Substances, including, without limitation, the
            Comprehensive Environmental Response, Compensation and Liability Act
            of 1980, 42 U.S.C. ss. 6091 et seq., as amended by the Superfund
                                        ------
            Amendments and Reauthorization Act of 1986, the Resource
            Conservation and Recovery Act of 1976, 42 U.S.C. ss. 6091 et seq.,
                                                                      ------
            as amended by the Hazardous and Solid Waste Amendments of 1984, and
            state superlien and environmental clean-up statutes and all rules
            and regulations presently or hereafter promulgated under said
            statutes as amended.

     29.2   Landlord's Indemnity. Landlord agrees to indemnify Tenant and hold
            it harmless from and against any and all claims, damages, fines,
            judgments, penalties, costs, losses, liabilities, and expenses
            (including, without limitation, attorney fees, consultant and expert
            fees) sustained by Tenant during or after the Term of this Lease and
            attributable to (i) the presence in, on, under, or about the
            Premises, or any discharge or release in or from the Premises, of
            any Hazardous Substance prior to the date of this Lease, (ii)
            Landlord's failure to comply with any Environmental Law, or (iii)
            Landlord's breach of Section 29.1 of this Lease. The foregoing
            indemnity shall survive the expiration or earlier termination of
            this Lease.

     29.3   Tenant's Use of Hazardous Substances. Tenant, at its expense, shall
            comply with all Environmental Laws and with the requirements of
            attached Exhibit E throughout the Term of this Lease. Tenant shall
            not cause or permit any Hazardous Substances to be brought upon,
            kept, or used in or about the Premises by Tenant, its agents,
            employees, contractors, or invitees without the prior written
            consent of Landlord, which shall not be unreasonably withheld so
            long as Tenant demonstrates to Landlord's reasonable satisfaction
            that such Hazardous Substance is necessary or useful to Tenant's
            business and will be used, kept, and stored in a manner that
            complies with all Environmental Laws. Landlord consents to Tenant's
            use on the Premises of Hazardous Substances that consist of routine
            office, computer, and janitorial supplies or are contained in
            packaged products intended for resale to customers or are commonly
            used in the retail food industry for production of products intended
            for sale to customers (the "Permitted Hazardous Substances")
            provided that (i) such Permitted Hazardous Substances are used,
            kept, stored, and disposed of in accordance with all applicable
            Environmental Laws and (ii) prior to each annual anniversary of the
            Date of this Lease, Tenant provides Landlord with a detailed
            description of all Permitted Hazardous Substances that are then
            being used, kept, or stored on the Premises.

     29.4   Tenant's Indemnity. Tenant agrees to indemnify Landlord and hold it
            harmless from and against any and all claims, damages, fines,
            judgments, penalties, costs, losses (including, without limitation,
            loss in value of the Premises or the Project,

                                     -28-
<PAGE>

            damages due to loss or restriction of rentable or usable space, or
            any damages due to any adverse impact on marketing of the space and
            any and all sums paid for settlement of claims), liabilities and
            expenses (including, without limitation, attorney fees, consultant
            and expert fees) sustained by Landlord during or after the Term of
            this Lease and attributable to (i) any Hazardous Substances placed
            on, in, under, or about, or released or discharged from, the
            Premises or the Project by Tenant or Tenant's employees, agents,
            invitees, or contractors, (ii) Tenant's breach of any provision of
            Section 29.3 of this Lease, or (iii) Tenant's failure to comply with
            any Environmental Law. This indemnification includes, without
            limitation, any and all costs incurred in connection with any
            investigation of site conditions or any cleanup, remedial, removal,
            or restoration work required by any federal, state, or local
            governmental agency or political subdivision. Without limiting the
            foregoing, if the presence of any Hazardous Substance on the
            Premises or Project caused or permitted by Tenant or its employees,
            agents, invitees or contractors results in any contamination of the
            Premises, Tenant shall promptly take all actions at its sole expense
            as are necessary to return the Premises and Project to the condition
            existing prior to the release of any such Hazardous Substances,
            provided that Landlord's approval of such actions shall first be
            obtained, which approval shall not be unreasonably withheld so long
            as such actions would not potentially have any material adverse
            effect on the Premises or Project. The foregoing indemnity shall
            survive the expiration or earlier termination of this Lease.

     29.5   Landlord's Compliance. Landlord shall comply with all Environmental
            Laws relating to the Premises throughout the Term of this Lease.

30.  MISCELLANEOUS PROVISIONS.

     30.1   Time of Essence. Time is of the essence of each provision of this
            Lease.

     30.2   Successor. This Lease shall be binding on and inure to the benefit
            of the parties and their successors, subject to the limitations set
            forth in Section 18 of this Lease.

     30.3   Landlord's Consent. Any consent required by Landlord under this
            Lease must be granted in writing.

     30.4   Commissions. Each party represents that it has not had dealings with
            any real estate broker, finder or other person with respect to this
            Lease in any manner, except for the broker identified in Section
            1.10(5), who shall be compensated by the party identified in Section
            1.10(6).

     30.5   Reciprocal Covenant on Notification of ADA Violations. Within ten
            (10) days after receipt, Landlord and Tenant shall advise the other
            party in writing, and provide the other with copies of (as
            applicable), any notice alleging violation of the Americans with
            Disabilities Act of 1990 ("ADA") relating to any portion of

                                     -29-
<PAGE>

            the Property or of the Premises; any claims made or threatened in
            writing regarding noncompliance with the ADA and relating to any
            portion of the Property or of the Premises; or any governmental or
            regulatory actions or investigations instituted or threatened
            regarding noncompliance with the ADA and relating to any portion of
            the Property or the Premises.

     30.6   Attorney Fees. If either party commences an action against the other
            party arising out of or in connection with this Lease, the
            prevailing party shall be entitled to recover from the other party
            the prevailing party's reasonable attorney fees and costs of suit
            incurred at or prior to trial and on appeal, such fees to be set by
            the court or arbitrator before which the matter is heard.

     30.7   Landlord's Successors. In the event of a sale or conveyance by
            Landlord of the Project pursuant to which Landlord's entire interest
            in the Project is transferred, the same shall operate to release
            Landlord from any liability under this Lease accruing after the sale
            or conveyance, and in such event Landlord's successor in interest
            shall be solely responsible for all obligations of Landlord under
            this Lease.

     30.8   Interpretation. This Lease shall be construed and interpreted in
            accordance with the laws of the state in which the Premises are
            located. This Lease constitutes the entire agreement between the
            parties with respect to the Premises and the Project, except for
            such guarantees or modifications hereof as may be executed in
            writing by the parties from time to time. When required by the
            context of this Lease, the singular shall include the plural and
            vice versa, and any gender shall include the other and/or neuter.
            "Party" shall mean Landlord or Tenant. Each provision hereof is
            intended to be severable. The enforceability, invalidity or
            illegality of any provision shall not render the other provisions
            unenforceable, invalid or illegal, and the parties intend each
            provision to be enforced to the fullest extent permissible as
            determined by a court of competent jurisdiction if such court
            determines that any such provision is not fully enforceable as
            agreed herein.

     30.9   Execution and Liability. If more than one person or entity
            constitutes Tenant or Landlord, the obligations of Tenant or
            Landlord herein contained, subject to Section 28 of this Lease,
            shall be joint and several. Each person executing this Lease on
            behalf of Tenant or Landlord hereby represents and warrants his or
            her authority to do so.

     30.10  Construction of Lease Provisions. In the event of any ambiguity in
            any language in this Lease, or claim of ambiguity, the printed terms
            of this Agreement, including additions or addenda, shall not be
            construed against Landlord solely because Landlord authored or
            drafted such language.

     30.11  Force Majeure; Building Components. Landlord shall be excused for
            any delay, interruption or failure to provide the building
            components, systems, and services that are to be provided to Tenant
            under this Lease, to the extent that such

                                     -30-
<PAGE>

            delay, interruption or failure is due to matters that are beyond the
            Landlord's reasonable control, including without limitation,
            inclement weather, fire, catastrophe, strikes, civil commotion, acts
            of God or the public enemy, year 2000 compliance, acts or omissions
            of cities, counties or other governmental agencies, and the
            inability to obtain standard building materials. The term "building
            components, systems and services" shall include, without limitation,
            heating, ventilation and air conditioning; electrical; plumbing;
            lighting; sprinkler; elevator; security; automatic door and gate
            opening; closing and locking; card or keypad access or control; fire
            and smoke alarm, detection and reporting; telephone; computer
            automation; monitoring; and other building-related components,
            systems and services.


            IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as
of the date below.


LANDLORD:                                     TENANT:

STAFFORD LIMITED PARTNERSHIP                  HOMEGROCER.COM, INC., a Washington
an OREGON limited partnership                 corporation

     By:  THE SPECHT COMPANY
          Its General Partner


          By: /s/ Gregory L. Specht           By: /s/ Kristin H. Stred
             ---------------------------         -----------------------------
              Gregory L. Specht
              President                       Its: Jr. V.P. & General Counsel
                                                  ----------------------------
Date:         4/20/00                         Date: April 19, 2000
      ----------------------------------           ---------------------------

                                     -31-
<PAGE>

                                   EXHIBIT A

                                 The Premises


               Cross-hatched Area Represents The Leased Premises


                                     -A1-
<PAGE>

                                   EXHIBIT B

                                  The Project


                   Cross-hatched Area Represents The Project

                                     -B1-
<PAGE>

                                   EXHIBIT C


                               Sign Regulations


          These regulations have been established for the purpose of maintaining
the overall appearance of the Project. Compliance will be strictly enforced. Any
sign installed without the approval of the Landlord will be brought to
conformity at the expense of the Tenant.

1.   General Requirements.

     a.   Tenant shall submit a sketch of its proposed sign's logo and/or
          lettering to the Landlord for its approval, which approval shall not
          be unreasonably withheld, conditioned, or delayed.

     b.   The approved sketch will be delivered by the Landlord to the sign
          company designated by Tenant. The Tenant is responsible for the cost
          of the sign, and the Landlord will bill the Tenant to recover the
          cost.

     c.   Tenant shall be responsible for the fulfillment of all requirements of
          these regulations in accordance with the general specifications
          provided below.

2.   General Specifications.

     a.   Only raised foam letter signs will be allowed.

     b.   The sign dimensions are set forth below. These dimensions shall apply
          to all Tenant signs.

     c.   Tenants may select the style, size and color of the individual
          company's lettering and logo, subject to Landlord's reasonable
          approval as provided above.

     d.   Placement of the sign and method of attachment to the building will be
          reasonably directed by the Landlord.

     e.   Upon removal of any of Tenant's signs by Tenant, any damage to the
          building must be repaired and repainted at the Tenant's expense. All
          signs are the property of Tenant.

     f.   Except as provided herein, no advertising placards, banners, pennants,
          names, insignias, trademarks, or other descriptive material shall be
          affixed or maintained upon the glass planes or exterior walls of the
          building, landscaped areas, streets or parking areas.

                                    -C1-
<PAGE>

                                   EXHIBIT D

                          Tenant's Exclusive Parking



                                    -D1-
<PAGE>

                                   EXHIBIT E

                 Emissions, Storage, Use and Disposal of Waste


1.   Emissions.  Tenant shall not:

     a.   Permit any vehicle on the Premises owned by Tenant or any of its
          employees to emit exhaust which is in violation of any governmental
          law, rule, regulation or requirement;

     b.   Discharge, emit or permit to be discharged or emitted any liquid,
          solid or gaseous matter, or any combination thereof, into the
          atmosphere, the ground or any body of water, which matter, as
          reasonably determined by Landlord or any governmental entity, does, or
          may, pollute or contaminate the same, or is, or may become,
          radioactive or does, or may, adversely affect the (1) health or safety
          of persons, wherever located, whether on the Project or anywhere else;
          (2) condition, use or enjoyment of the Project or any other real or
          personal property, whether on the Project or anywhere else; or (3)
          Premises or any of the improvements thereto or thereon including
          buildings, foundations, pipes, utility lines, landscaping or parking
          areas;

     c.   Produce, or permit to be produced, any intense glare, light or heat
          except within an enclosed or screened area and then only in such
          manner that the glare, light or heat shall not be discernible from
          outside the Premises;

     d.   Create, or permit to be created, any sound pressure level which will
          interfere with the quiet enjoyment of any other tenant of the Project
          or any real property outside the Premises, or which will create a
          nuisance or violate any governmental law, rule regulation or
          requirement;

     e.   Create, or permit to be created, any ground vibration that is
          discernible outside the Premises;

     f.   Transmit, receive or permit to be transmitted or received, any
          electromagnetic, microwave or other radiation which is harmful or
          hazardous to any person or property in, on or about the Premises or
          anywhere else.

2.   Storage and Use.

     a.   Storage. Subject to the uses permitted and prohibited to Tenant under
          this Lease, Tenant shall store in appropriate leak proof containers
          all solid, liquid or gaseous matter, or any combination thereof, which
          matter, if discharged or emitted into the atmosphere, the ground or
          any body of water, does or may (1) pollute or contaminate the same in
          violation of applicable laws, or (2) adversely affect the (i) health
          or safety of persons, whether on the Premises or anywhere else;

                                     -E1-
<PAGE>

          (ii) condition, use or enjoyment of the Premises or any real or
          personal property, whether on the Premises or anywhere else; or (iii)
          Premises or any of the improvements thereto or thereon.

     b.   Use. In addition, without Landlord's prior written consent, Tenant
          shall not use, store or permit to remain on the Premises any solid,
          liquid or gaseous matter which is, or may become, radioactive. If
          Landlord does give its consent, Tenant shall store the materials in
          such a manner so as to comply with all applicable laws.

3.   Disposal of Waste.

     a.   Refuse Disposal. Tenant shall not keep any trash, garbage, waste or
          other refuse on the Premises except in sanitary containers and shall
          regularly and frequently remove same from the Premises. Tenant shall
          keep all incinerators, containers or other equipment used for the
          storage or disposal of such materials in a clean and sanitary
          condition.

     b.   Sewage Disposal. Tenant shall properly dispose of all sanitary sewage
          and shall not use the sewage disposal system (1) for the disposal of
          anything except sanitary sewage or (2) in excess of the lesser of the
          amount (a) reasonably contemplated by the uses permitted under this
          Lease or (b) permitted by any governmental entity. Tenant shall not
          commit any act that causes obstruction to the sewage disposal system.

     c.   Disposal of Other Waste. Tenant shall properly dispose of all other
          waste or other matter delivered to, stored upon, located upon or
          within, used on, or removed from, the Premises in such a manner that
          it does not, and will not, adversely affect the (1) health or safety
          of persons wherever located, whether on the Premises or elsewhere, (2)
          condition, use or enjoyment of the Premises or any other real or
          personal property, wherever located, whether on the Premises or
          anywhere else, or (3) Premises or any of the improvements thereto or
          thereon including buildings, foundations, pipes, utility lines,
          landscaping or parking areas.

4.   Compliance with Law. Notwithstanding any other provisions in this Lease to
     the contrary, Tenant shall comply with all laws, statutes, ordinances,
     regulations, rules and other governmental requirements in complying with
     its obligations under this Lease, and in particular, relating to the
     storage, use and disposal of hazardous or toxic matter.

                                     -E2-
<PAGE>

5.   Inspection and evidence of Compliance. Landlord and its authorized
     representatives shall have the right to enter the Premises, after not less
     than 24 hours' prior notice to Tenant (except that in the case of
     emergencies no prior notice is required), for purposes of inspection of
     Tenant's compliance with provisions of this Exhibit E, and Tenant shall
     fully cooperate with Landlord and shall allow Landlord and its authorized
     representatives to review Tenant's records relating to Tenant's storage,
     use and disposal of hazardous or toxic matter. Landlord's entries upon the
     Premises shall be done in such a manner so as to cause the least
     practicable interference with the conduct of Tenant's business on the
     Premises. Tenant shall, upon written request of Landlord, provide evidence
     of compliance with all state and federal rules and regulations regarding
     the emission, handling and storage of environmentally hazardous materials.

                                     -E3-
<PAGE>

                                   EXHIBIT F

                                                  U.S. BANK NATIONAL ASSOCIATION
                                                       INTERNATIONAL DEPARTMENT,
                                                    1420 FIFTH AVENUE, 5TH FLOOR
                                                         SEATTLE, WA 98101 U.S.A
                                                                SWIFTWEEKUS44EEA
                                                             TELEX: 6723211-5398
                                                             PHONE: 206-344-3398
                                                               FAX: 206-344-5374

                                    SAMPLE
                     ====================================
                     IRREVOCABLE STANDBY LETTER OF CREDIT
                     ====================================

AUGUST 18, 1999
________________________________________________________________________________
BENEFICIARY:                            APPLICANT:
                                        HOMEGROCER.COM, INC.
                                        10230 N.E. POINTS DRIVE
                                        KIRKLAND, WA 98033

________________________________________________________________________________
LETTER OF CREDIT NUMBER:     SLCSSEA00xxx
                             ------------
________________________________________________________________________________
EXPIRY DATE:
          AT: OUR COUNTERS PRESENTLY LOCATED AT 1420 FIFTH AVENUE, 5TH FLOOR,
          INTERNATIONAL DEPARTMENT, SEATTLE, WA, 98101 ON OR BEFORE 4:00 P.M.
________________________________________________________________________________
AMOUNT:

________________________________________________________________________________
WE HEREBY ISSUE THIS IRREVOCABLE STANDBY LETTER OF CREDIT AVAILABLE BY YOUR
DRAFT(S) DRAWN AT SIGHT ON U.S. BANK NATIONAL ASSOCIATION AND ACCOMPANIED BY THE
FOLLOWING DOCUMENTS:

1.   BENEFICIARY'S SIGNED STATEMENT THAT HOMEGROCER.COM, INC. HAS DEFAULTED
     UNDER THE TERMS AND CONDITIONS OF THE LEASE AGREEMENT SIGNED BETWEEN
     HOMEGROCER.COM, INC.
2.   THE ORIGINAL OF THIS LETTER OF CREDIT INCLUDING ANY AMENDMENTS.

ADDITIONAL CONDITIONS:
1.   ALL BANKING CHARGES OTHER THAN THOSE OF THE ISSUING BANK ARE FOR ACCOUNT
     OF THE BENEFICIARY.
2.   PARTIAL DRAWINGS ALLOWED.
3.   IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL BE AUTOMATICALLY
     EXTENDED, WITHOUT AMENDMENT, FOR AN ADDITIONAL PERIOD OF ONE YEAR FROM THE
     PRESENT EXPIRATION DATE OR EACH FUTURE EXPIRATION DATE, UNLESS WE HAVE
     NOTIFIED YOU IN WRITING NOT LESS THAN THIRTY (30) DAYS BEFORE SUCH
     EXPIRATION DATE THAT WE ELECT NOT TO RENEW THIS LETTER OF CREDIT, BUT IN NO
     EVENT WILL THIS LETTER OF CREDIT BE EXTENDED BEYOND                  . ALL
     WRITTEN NOTIFICATION SHALL BE SENT VIA COURIER.
4.   THIS LETTER OF CREDIT IS TRANSFERABLE BY U.S. BANK NATIONAL ASSOCIATION
     ONLY, UPON RECEIPT OF YOUR WRITTEN INSTRUCTIONS SUBMITTED IN

THIS PAGE 1 FORMS AN INTEGRAL PART OF LETTER OF CREDIT NO.
<PAGE>

      ACCORDANCE WITH THE ATTACHED TRANSFER FORM AND THE ORIGINAL OF THIS
      LETTER OF CREDIT TRANSFER FEES ARE FOR ACCOUNT OF THE BENEFICIARY.
--------------------------------------------------------------------------------

DRAFTS DRAWN UNDER THIS CREDIT MUST BEAR THE CLAUSE DRAWN UNDER U.S. BANK
NATIONAL ASSOCIATION IRREVOCABLE STANDBY LETTER OF CREDIT NO. SLCSSEA00XXX.

PURSUANT TO U.S. LAW WE ARE PROHIBITED FROM ISSUING, TRANSFERRING ACCEPTING OR
PAYING LETTERS OF CREDIT TO ANY PARTY OR ENTITY IDENTIFIED BY THE OFFICE OF
FOREIGN ASSETS CONTROL, U.S. DEPT. OF TREASURY, OR SUBJECT TO THE DENIAL OF
EXPORT PRIVILEGES BY THE U.S. DEPT. OF COMMERCE.

THIS CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTING
CREDITS (1999 REVISION) INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500.

WE HEREBY ENGAGE WITH YOU THAT DRAFT(S) DRAWN AND/OR DOCUMENTS PRESENTED UNDER
AND IN COMPLIANCE WITH THE TERMS OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT
WILL BE DULY HONORED UPON PRESENTATION TO US.

A CHARGE OF USD50.00 WILL BE DEDUCTED FROM THE PROCEEDS OF ANY DRAWING PRESENTED
WITH DISCREPANCIES.

                        U.S. BANK NATIONAL ASSOCIATION
                        INTERNATIONAL BANKING DIVISION

                        ______________________________
                             AUTHORIZED SIGNATURE

THIS PAGE 2 FORMS AN INTEGRAL PART OF LETTER OF CREDIT NO.