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                                                                   EXHIBIT 10.34

                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
           STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NET

               (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.   Basic Provisions ("Basic Provisions").

     1.1  Parties:  This Lease ("Lease"), dated for reference purposes only,
October 1, 1999, is made by and between Waples Corporation, a Delaware
corporation ("Lessor") and HomeGrocer.com, Inc., a Delaware corporation
("Lessee"), (collectively the "Parties," or individually a "Party").

     1.2  Premises: That certain real property, including alt improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 9389 Waples Street, San Diego located in the County of San Diego, State
of California, and generally described as (describe briefly the nature of the
property and, if applicable, the "Project", if the property is located within a
Project) the real property located at the above-referenced address which real
property includes improvements containing approximately 101,560 sq. ft. of
distribution and warehouse space, including approximately 10,000 sq. ft. of
improved office space ("Premises").  (See also Paragraph 2)

     1.3  Term:  Ten (10) years and no months ("Original Term") commencing
February 1, 2000 ("Commencement Date") and ending January 31,  2010 ("Expiration
Date"), subject, however, to Paragraph 50.  (See also Paragraph 3)

     1.4  Early Possession:  N/A ("Early Possession Date").  (See also
Paragraphs 3.2 and 3.3)

     1.5  Base Rent:  $68,045.20 per month subject to increase and as increased
in accordance with Paragraph 51 ("Base Rent"), payable on the first day of each
month commencing on the Commencement Date.  (See also Paragraph 4)

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

     1.6  Base Rent Paid Upon Execution: $68,045.20 as Base Rent for the
period _______.

     1.7  Security Deposit: $136,090 ("Security Deposit"). (See also Paragraph
5)

     1.8  Agreed Use:  To the extent permitted by the zoning ordinance(s)
applicable to the Premises, general office, warehouse and distribution of
products.  (See also Paragraph 6)

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

     1.10 Real Estate Brokers: (See also Paragraph 15)

     (a)  Representation: The following real estate brokers (collectively, the
"Brokers") and brokerage relationships exist in this transaction (check
applicable boxes):

     [X]  Capital Structures Corporation represents Lessor exclusively
("Lessor's Broker");

     [X]  CB Richard Ellis represents Lessee exclusively ("Lessee's Broker"); or

     [_]  [deletion]
     -------------------------------------------------------------------------

     [Deletion]

     1.11  Addenda and Exhibits.  Attached hereto is an Addendum [text deleted]
consisting of Paragraphs 50 through 71 and Exhibits A, B, C, D, E and F, all of
which constitute a part of this Lease.

2.   Premises.

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

     2.2  Condition.  [Deletion] The term "Start Date" shall mean the
Commencement Date or the Early Possession Date, whichever first occurs ("Start
Date"): the term "HVAC' shall mean the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC");
and the term "Building" shall mean any buildings on the Premises.  [Deletion]
See also Paragraph 52.

     2.3  Compliance.  [Deletion] The term "Applicable Requirements" shall mean
all applicable laws, covenants or restrictions of record, building codes,
regulations and ordinances ("Applicable Requirements") in effect on the Start
Date.  Lessee is responsible for determining whether or not the zoning is
appropriate for Lessee's intended use, and acknowledges that past uses of the
Premises may no longer be allowed. If the Premises do not comply with [deletion]
Applicable Requirements, correction of that non-compliance shall be the
obligation of Lessee at Lessee's sole cost and expense.  If the Applicable
Requirements are hereafter changed [deletion] so as to require during the term
of this Lease the construction of an addition to [illegible] alteration of the
Building, or the reinforcement or other physical modification of the Building
("Capital Expenditure"), Lessor and Lessee shall allocate the cost of such work
as follows:

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          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however that if (i) Paragraph 23(c)
below does not apply, (ii) such Capital Expenditure is required during the last
two (2) years of this Lease and (iii) the cost thereof exceeds the Aggregate
Total (as defined in Paragraph 2.3(b) below, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost thereof and the Aggregate Total.  If Lessee
elects termination, Lessee shall immediately cease the use of the Premises which
requires such Capital Expenditure and deliver to Lessor written notice
specifying a termination date at least ninety (90) days thereafter.  Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

          (b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(c); provided, however,
that if such Capital Expenditure is required during the last two years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor,
in writing, within ten (10) days after receipt of Lessor's termination notice
that Lessee will pay for such Capital Expenditure: provided, further, that if
Lessee's share of the costs of' such Capital Expenditure (exclusive of Interest)
exceeds the aggregate total of the next six (6) months of Base Rent then
becoming due or, if' less than six (6) months remain in the term of this Lease,
the aggregate total of six (6) times the Base Rent for the last full month of
the term of this Lease ("Aggregate Total"), then Lessee shall have the option to
terminate this Lease upon ninety (90) clays prior written notice to Lessor,
unless Lessor notifies Lessee, in writing, within ten (10) days after receipt of
Lessee's termination notice, that Lessor will pay for Lessee's share of the
Capital Expenditure to the extent, but only to the extent, that it exceeds the
Aggregate Total.  Upon receiving notice or information that a Capital
Expenditure is or may be required, the party receiving such notice or
information shall, as soon as reasonably possible thereafter, provide notice of
the same to the other party.  If Lessor does not elect to terminate, and fails
to tender its share of any such Capital Expenditure, Lessee may advance such
funds and deduct same, with Interest, from Rent until Lessor's share of such
costs have been fully paid.

          (c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements.  If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.

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

3.   Term.

     3.1  Term.  Subject to Paragraph 50, the Commencement Date, Expiration Date
and Original Term of this Lease are as specified in Paragraph 1.3.

     3.2  Early Possession.  If Lessee totally or partially occupies the
Premises prior to the Commencement Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
(including, but not limited to, the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.

     3.3  Delay In Possession.  Lessor agrees to [text deleted] deliver
possession of the Premises to Lessee immediately following the full execution
and delivery of this Lease by the parties.

     3.4  Lessee Compliance.  Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, it Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.

4.   Rent.  See also Paragraphs 51 and 70.

     4.1. Rent Defined.  All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").

     4.2  Payment.  Lessee shall cause payment of Rent to be received by Lessor
in lawful money of the United States, without offset or deduction (except as
specifically permitted in Paragraph 2.3(b) of this Lease), on or before the day
on which it is due. Rent for any period during the term hereof which is for less
than one (1) full calendar month shall be prorated based upon the actual number
of days of said month. Payment of Rent shall be made to Lessor at its address
stated herein or to such other persons or piece as Lessor may from time to time
designate in writing. Acceptance of a payment which is less than the amount then
due shall not be a waiver of Lessors rights to the balance of such Rent,
regardless of Lessors endorsement of any check so stating.

5.   Security Deposit.  Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee tails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with

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Lessor sufficient to restore said Security Deposit to the full amount required
by this Lease. If the Base Rent increases during the term of this Lease, Lessee
shell, upon written request from Lessor, deposit additional monies with Lessor
so that the total amount of the Security Deposit shall at all times bear the
same proportion to the increased Base Rent as the initial Security Deposit bore
to the initial Base Rent. Should the Agreed Use be amended to accommodate a
material change in the business of Lessee or to accommodate a sublessee or
assignee, Lessor shall have the right to increase the Security Deposit to the
extent necessary, in Lessors reasonable judgment, to account for any increased
wear and tear that the Premises may suffer as a result thereof. [Deletion]
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease. See also Paragraph 57.

6.   Use.

     6.1  Use.  Lessee may use and occupy the Premises only for the Agreed Use,
or any other legal use which is reasonably comparable thereto, and for no other
purpose; provided, however, that, to the extent legally necessary and only to
such extent, to enable Lessee to sell, for off-site distribution, alcoholic
beverages as part of its retail home grocery distribution business, Lessee may
(if permitted by but only in compliance with Applicable Requirements) operate an
on-site store for the retail sale of alcoholic beverages of a size and a
capacity not larger than the minimum reasonably necessary, in the opinion of
Lessee's counsel, to qualify for the license needed for the sale for off-site
delivery of alcoholic beverages as part of Lessee's home grocery retail sale and
distribution business. Lessee shall not use or permit the use of the Premises in
a manner that is unlawful, creates damage, waste or a nuisance, or causes damage
to neighboring properties. Lessor shall not unreasonably withhold or delay its
consent to any written request for a modification of the Agreed Use, so long as
the same will not impair the structural integrity of the improvements on the
Premises or the mechanical or electrical systems therein, is not significantly
more burdensome to the Premises. If Lessor elects to withhold consent, Lessor
shall within five (5) business days after such request give written notification
of same, which notice shall include an explanation of Lessors objections to the
change in use.

     6.2  Hazardous Substances.  See Paragraph 54.  [Deletion]

     6.3  Lessee's Compliance with Applicable Requirements.  Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date.  Lessee
shall, within (10) days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.

     6.4  Inspection; Compliance.  Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verify
compliance by Lessee with this Lease.  The cost of any such inspection shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by a governmental authority.  In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination and such violation or
contamination did not exist prior to the date of Lessee's first use or occupancy
of the Premises and was not caused by Lessor's negligence or intentional acts or
omissions.

7.   Maintenance; Repairs, Utility Installations; Trade Fixtures and
Alterations.

     7.1  Lessee's Obligations.

     (a)  In General.  Subject to the provisions of Paragraph 2.2 (Condition),
2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2
(Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee
shall, at Lessee's sole expense, keep the Premises, Utility Installations, and
Alterations in good order, condition and repair (whether or not the portion of
the Premises requiring repairs, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including but not limited to, all
equipment or facilities, such as plumbing, heating, ventilating, air-
conditioning, electrical, lighting facilities, boilers, pressure vessels, fire
protections system, fixtures, walls (interior and exterior, but subject to
Paragraphs 7.2 and 72) ceilings, floors, windows, doors, plate glass, skylights,
landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks
and parkways located in, on, or adjacent to the Premises.  Lessee, in keeping
the Premises in good order, condition and repair, shall exercise and perform
good maintenance practices, specifically including the procurement and
maintenance of the service contracts required by Paragraph 7.1(b) below.
Lessee's obligations shall include restorations, replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair.  Lessee shall, during the term of
this Lease, keep the exterior appearance of the Building in a first-class
condition consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

     (b)  Service Contracts.  Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, if any, if and when installed on the
Premises:  (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire
extinguishing systems, including fire alarm and/or smoke detection, (iv)
landscaping and irrigation systems, (v) roof covering and drains, (vi) driveways
and parking lots, (vii) clarifiers, (viii) basic utility feed to the perimeter
of the Building, and (ix) any other equipment, if reasonably required by Lessor.

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          (c)  Replacement.  Subject to Lessee's indemnification of Lessor as
set forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if an item described in Paragraph 7.1(b) cannot be repaired other
that at a cost which is in excess of 50% of the cost of replacing such item,
then such item shall be replaced by Lessor, and the cost thereof shall be
prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is one-hundred forty -three (including, that is plus, interest on the
unamortized balance), which Lessee reserving the right to prepay its obligation
at any time.

     7.2  Lessor's Obligations.  Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction), and 14 (Condemnation)
and 72 (Operating Expenses), it is intended by the Parties hereto that Lessor
have no obligation, in any manner whatsoever, to repair and maintain the
Premises, or the equipment therein, all of which obligations are intended to be
that of the Lessee. It is the intention of the Parties that the terms of (his
Lease govern the respective obligations of the Parties as to maintenance and
repair of the Premises, and they expressly waive the benefit of any statute now
or hereafter in effect to the extent it is inconsistent with the terms of this
Lease. Subject to Paragraphs 7.1(a) and 72 and except as a result of Lessee's
acts or omissions, Lessee is not obligated to maintain or liable for the
structural elements of the roof, bearing walls and foundation of the Building.

     7.3  Utility Installations; Trade Fixtures; Alterations.  See also
Paragraph 69.8.

          (a)  Definitions; Consent Required.  The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may. however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost
thereof during this Lease as extended does not exceed $50,000 in the aggregate
or $15,000 in any one year; see, however, Paragraph 55. If Lessor's consent is
required in connection with a proposed Alteration and Lessor does not notify
Lessee in writing within thirty (30) days following Lessor's receipt of Lessee's
request for approval and all other documentation and information as Is required
pursuant to Paragraph 7.3(b), then, subject to compliance with the terms of this
Lease, in general, and the conditions contained in Paragraph 7.3(b), in
particular, Lessor shall deemed to have approved the proposed Alteration.

          (b) Consent.  Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable governmental permits,
(ii) furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
- in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.

          (c)  Indemnification.  Lessee shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on or about the Premises, and Lessor shall have the
right to post notices of non-responsibility. If Lessee shall contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend and protect itself, Lessor and the Premises against the same and
shall pay and satisfy any such adverse judgment that may be rendered thereon
before the enforcement thereof. It Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to one and one-half times the amount of such
contested lien, claim or demand, indemnifying Lessor against liability for the
same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor's attorneys' fees and costs.

     7.4  Ownership; Removal; Surrender; and Restoration.

          (a)  Ownership.  [Deletion] Except as provided in Paragraph 69, all
Alterations and Utility Installations made by Lessee shall be the property of
Lessee, but considered a part of the Premises.  [Deletion]

          (b)  Removal.  [Deletion] Except as provided in Paragraph 69, all
Lessee Owned Alterations or Utility Installations shall be removed by the
expiration or termination of this Lease. Lessor may require the removal at any
time of all or any part of any Lessee Owned Alterations or Utility Installations
made without the required consent.

          (c)  Surrender/Restoration.  Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
(including wear and tear caused by Lessor's own negligent or intentional
wrongful acts or omissions) excepted. "Ordinary wear and tear" shall not include
any damage or deterioration that would have been prevented by good maintenance
practice. Lessee shall repair any damage occasioned by the installation,
maintenance or removal of Trade Fixtures, Lessee Owned Alterations antler
Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or groundwater contaminated by Lessee. Trade
Fixtures shall remain the property of Lessee and shall be removed by Lessee. The
failure by Lessee to timely vacate the Premises pursuant to this Paragraph
7.4(c) without the express written consent of Lessor shall constitute a holdover
under the provisions of Paragraph 26 below.

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8.   Insurance; Indemnity.

     8.1  Payment For Insurance.  Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $10,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term. Payment hall
be made by Lessee to Lessor within ten (10) days following receipt of an Invoice
or, if Lessor so instructs, in accordance with Paragraph 7.

     8.2  Liability Insurance.

          (a)  Carried by Lessee.  Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $5,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an 'insured contract' for the performance of Lessee's indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit- the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
Insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

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

     8.3  Property Insurance - Building, Improvements and Rental Value.

          (a)  Building and Improvements.  The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any groundlessor, and to any Lender(s) Insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof, If Lessor is the Insuring Party, however,
Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor, If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(including the perils of flood and/or earthquake), including coverage for debris
removal and the enforcement of any Applicable Requirements requiring the
upgrading, demolition, reconstruction or replacement of any portion of the
Premises as the result of a covered loss. Said policy or policies shall also
contain an agreed valuation provision in lieu of any coinsurance clause, waiver
of subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence,
and Lessee shall be liable for such deductible amount in the event of an Insured
Loss.

          (b)  Rental Value.  The Insuring Party shall obtain and keep in force
a policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such toss. Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.

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

     8.4  Lessee's Property/Business Interruption Insurance. See also Paragraph
56

          (a)  Property Damage.  Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per -occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.

          (b)  Business Interruption.  Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

          (c)  No Representation of Adequate Coverage.  Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

     8.5  Insurance Policies.  Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least A-X, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders"

                                      -5-
<PAGE>

evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the Insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

     8.6  Waiver of Subrogation.  Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for toss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of Insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the Insurance is not
invalidated thereby. The waivers set forth in this Paragraph 8.6 shall remain In
full force and effect irrespective of whether either party elects to "self-
insure." However, Lessee acknowledges and agrees that Lessee has no right to
"self-insure."

     8.7  Indemnity.  Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, representatives, employees, officers,
directors, shareholders. members and trustees, as well as Lessor's master or
ground lessor, partners and Lenders, of, from and against any and all claims,
demands, losses (including without limitation loss of rents or permits),
damages, costs, liens, judgments, penalties, attorneys' and consultants' fees,
expenses and/or liabilities arising out of, involving, or in connection with,
the use and/or occupancy of the Premises by Lessee, the conduct of Lessee's
business, any act, omission or neglect of Lessee, or its agents.
representatives, employees, contractors, or invitees and/or any Default or
Breach by Lessee in the performance in a timely manner of any obligation on
lessee's part to be performed under this Lease. The foregoing shall include, but
not limited to, defense or pursuit of any claim or any action or proceeding
Involved therein, and whether or not (in the case of claims made against Lessor)
litigated and/or reduced to judgment. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified. Lessee's
Indemnity and other obligations, liabilities and duties under this paragraph
shall survive the expiration or earlier termination of this Lease.

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

9.   Damage or Destruction.

     9.1  Definitions.

          (a)  "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in six (6) months or less from
the date of the damage or destruction. Lessor shall notify Lessee in writing
within thirty (30) days from the damage or destruction as to whether or not
damage is Partial or Total.

          (b)  "Premises Total Destruction"  shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in six (6) months or less
from the date of the damage or destruction.  Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

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

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

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

     9.2  Partial Damage-Insured Loss.  If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall make any applicable
insurance proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee's responsibility) as and when required to complete said repairs.
In the event, however, such shortage was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to
pay for the shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Lessee provides Lessor with the funds to cover
the same, or adequate assurance thereof within said ten (10) day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect.  If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within ten (10) days thereafter to: (i) make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter.  Lessee shall
not be entitled to reimbursement of any funds

                                      -6-
<PAGE>

contributed by the Lessee to repair any such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.

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

     9.4  Total Destruction.  Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate sixty (60) days
following such Destruction.  If the damages or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

     9.5  Damage Near End of Term.  If at any time during the last six (6)
months of this Lease there is damage for which the cost of repairs exceeds one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage.  Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires.  If Lessee duly exercises such option during such period
and provides Lessor with funds (or adequate assurance thereof) to cover any
shortage in insurance proceeds, Lessor shall at Lessor's commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect.  If Lessee fails to exercise such option and
provide such funds or assurances during such period, then this Lease shall
terminate on the date specified in the termination notice and the Lessee's
option shall be extinguished.

     9.6  Abatement of Rent; Lessee's Remedies.

          (a)  Abatement.  In the event of Premises Partial Damage or Premises
Total Destruction or Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance.  All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

          (b)  [Deletion]

     9.7  Termination - Advance Payments.  Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, Lessor shall refund to Lessee any
unearned an equitable adjustment shall be made concerning advance Base Rent
provided to the date of termination and any other unearned advance payments made
by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee's Security Deposit as has not been, or is not then required to be, used
by Lessor.

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

10.  Real Property Taxes.

     10.1 Definition of "Real Property Taxes."  As used herein, the term "Real
Property Taxes" shall include any form of assessment; real estate. general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal Income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Premises. The term "Real Property Taxes" shall not, however, Include
documentary transfer taxes paid in connection with the recording of a deed
transferring title to the Premises from any person(s) or entity(ies) to another
(or others).

     10.2

          (a)  Payment of Taxes.  Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b) and to lessor providing to Lessee, at least twenty (20) days prior to
any delinquency date, the original or a copy of the bill(s) or statement(S) for
such Real Property Taxes, all such payments shall be made at least ten (10) days
prior to any delinquency date: in the event that Lessor falls to timely provide
to Lessee bill(s) or statement(s), Lessee shall, nonetheless, pay the Real
Property Taxes as soon as reasonably possible after the receipt of the same.
Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes
have been paid. If any such taxes shall cover any period of time prior to or
after the expiration or termination of this Lease, Lessee's share of such taxes
shall be prorated to cover only that portion of the bill applicable

                                      -7-
<PAGE>

to the period that this Lease is in effect, and Lessor shall reimburse Lessee
for any required payment. If Lessee shall fail to pay any required Real Property
Taxes, Lessor shall have the right to pay the same, and Lessee shall reimburse
Lessor therefor upon demand.

          (b)  Advance Payment.  In the event Lessee incurs a late charge on any
Rent payment, Lessor may, at Lessor's option, estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either: (i) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require payment monthly
in advance, the monthly payment shall be an amount equal to the amount of the
estimated installment of taxes divided by the number of months remaining before
the month in which said Installment becomes delinquent. When the actual amount
of the applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes, If the amount collected by Lessor is insufficient to pay such
Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such
additional sums as are necessary to pay such obligations. All monies paid to
Lessor under this Paragraph may be intermingled with other monies of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any balance of funds paid to Lessor
under the provisions of this Paragraph may, at the option of Lessor, be treated
as an additional Security Deposit.

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

     10.4 Personal Property Taxes.  Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.

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

12.  Assignment and Subletting.

     12.1 Lessor's Consent Required.  See also Paragraph 71.

          (a)  Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.

          (b)  A change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of fifty percent (50%)
or more of the voting control of Lessee shall constitute a change in control for
this purpose.

          (c)  The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition, financing.
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee if, after such reduction, the
net worth of Lessee (including any successor or surviving entity/lee that is/are
liable under this Lease as Lessee) is not $500,000,000.00 or more, [deletion]
shall be considered an assignment of this Lease to which Lessor may withhold its
consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding any
guarantors) established under generally accepted accounting principles.

          (d)  An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved assignment or subletting as a noncurable Breach, Lessor
may either: (i) terminate this Lease, or (ii) upon thirty (30) days written
notice, increase the monthly Base Rent to one hundred ten percent (110%) of the
Base Rent then In effect. Further, in the event of such Breach and rental
adjustment, (I) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the price previously in effect, and (ii) all fixed and non-fixed
rental adjustments scheduled during the remainder of the Lease term shall be
increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent.

          (e)  Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

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

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

          (c)  Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

                                      -8-
<PAGE>

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

          (e)  Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor's determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $1,000
[deletion] as consideration for Lessor's considering and processing said
request. Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested.

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

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

          (a)  Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations,
Lessee may collect said Rent Lessor shall not, by reason of the foregoing or any
assignment of such sublease, nor by reason of the collection of Rent, be deemed
liable to the sublessee for any failure of Lessee to perform and comply with any
of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes
and directs any such sublessee, upon receipt of a written notice from Lessor
stating that a Breach exists in the performance of Lessee's obligations under
this Lease, to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to
Lessor without any obligation or right to inquire as to whether such Breach
exists, notwithstanding any claim from Lessee to the contrary.

          (b)  In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

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

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

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

13.  Default; Breach; Remedies,

     13.1 Default; Breach. A"Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or rules under
this Lease. A Breach is defined as the occurrence of one or more of the
following Defaults, and the failure of Lessee to cure such Default within any
applicable grace period:

          (a)  The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.

          (b)  The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) business days
following written notice to Lessee.

          (c)  The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (iii)
the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements),
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.

          (d)  A Default by. Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice:
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for Its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

          (e)  The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors; (ii)
becoming a "debtor" as defined in 11 U.S.C. (S) 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not

                                      -9-
<PAGE>

restored to Lessee within thirty (30) days: or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph 13.1 (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

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

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

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

          (a)  Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination: (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent (1%). Efforts by Lessor to mitigate
damages caused by Lessee's Breach of this Lease shall not waive Lessor's right
to recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

          (b)  Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.

          (c)  Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises. However, Lessor
shall, if and to the extent required by law, take commercially reasonable steps
to mitigate its damages.

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

     13.4 Late Charges.  Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late

                                      -10-
<PAGE>

charge is payable hereunder, whether or not collected, for three (3) consecutive
installments of Base Rent, then notwithstanding any provision of this Lease to
the contrary, Base Rent shall, at Lessor's option, become due and payable
quarterly in advance.

     13.5 Interest.  Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within thirty (30) days following the date on which it was due for non-
scheduled payment, shall bear interest from the date when due, as to scheduled
payments, or the thirty-fIrst (31st) day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be equal to the prime rate
reported in the Wall Street Journal as published closest prior to the date when
plus four percent (4%), but shall not exceed the maximum rate allowed by law.
Interest is payable in addition to the potential late charge provided for in
Paragraph 13.4.

     13.6 Breach by Lessor.

          (a)  Lessor shall not be deemed in breach of this Lease unless Lessor
fails within a reasonable time to perform an obligation required to be performed
by Lessor. For purposes of this Paragraph, a reasonable time shall in no event
be less than thirty (30) days after receipt by Lessor, and any Lender whose name
and address shall have been furnished Lessee in writing for such purpose, of
written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor's obligation is such
that more than thirty (30) days are reasonably required for its performance,
then Lessor shall not be in breach if performance is commenced within such
thirty (30) day period and thereafter diligently pursued to completion.

          (b)  [Deleted]

14.  Condemnation.  If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs.  If more than ten percent (10%) of any building portion of the
Premises, or more than twenty-five percent (25%) of the land area portion of the
Premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession.  If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph.  All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor.  In the event that his Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

15.  Broker's Fee.

     15.1 Additional Commission.  [Section deleted]

     15.2 Assumption of Obligations.  [Section deleted]

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

16.  Estoppel Certificates.  See Paragraph 58.1

          (a)  [deleted]

          (b)  [deleted]

          (c)  If Lesser desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lesser such financial statements as may be
reasonably required by such lender or purchaser, including, but net limited to,
Lessee's financial statements for the past three (3) years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth. See also
Paragraph 58.2.

17.  Definition of Lessor.  The term "Lesser" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, and
provided the successor Lessor has assumed in writing all obligations of Lessor
under this Lease, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be
performed by the Lesser. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon
the Lessor as hereinabove defined. Notwithstanding the above, and subject to the
previsions of Paragraph 20 below, the original Lessor under this Lease, and all
subsequent holders of the Lessor's interest in this Lease shall remain liable
and responsible with regard to the potential duties and liabilities of Lessor
pertaining to Hazardous Substances as outlined in Paragraph 6 above.

                                      -11-
<PAGE>

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

19.  Days.  Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.

20.  Limitation on Liability.  Subject to the previsions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises (as well as (i) funds drawn improperly on the Security Deposit,
LOG or LOG Security Deposit and (ii). to the extent used In violation of the
terms of this Lease. condemnation proceeds), and to no other assets of Lessor,
for the satisfaction of any liability of Lessor with respect to this Lease, and
shall not seek recourse against the individual partners of Lessor, or its or
their individual partners, directors, officers or shareholders, or any of their
personal assets for such satisfaction. See also Paragraph 59.

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

22.  No Prior or Other Agreements [deletion].  This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
[Deletion]

23.  Notices.  See Paragraph 60.  [Deleted]

24.  Waivers.  No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, convenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof.  Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this lease requiring such consent.  The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee.  Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.  No waiver by Lessee of any
default or breach of any term, covenant or condition hereof by Lessor, shall be
deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent default or breach by Lessor of the same or of any other term,
covenant or condition hereof. Any payment by Lessor may be accepted by Lessee on
account of moneys or damages due Lessee, notwithstanding any qualifying
statements or conditions made by Lessor In conjunction therewith, which such
statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessee at or before the time of deposit of
such payment.

25.  Recording.  See Paragraph 61. [Deleted]

26.  No Right To Holdover.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.

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

28.  [Deletion] Construction of Agreement.  [Deletion] In construing this Lease,
all headings and titles are for the convenience of the Parties only and shall
not be considered a part of this Lease. Whenever required by the context, the
singular shall include the plural and vice versa. This Lease shall not be
construed as if prepared by one of the Parties, but rather according to its fair
meaning as a whole, as if both Parties had prepared it.

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

30.  Subordination; Attornment; Non-Disturbance.

     30.1 Subordination.  This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lessor's Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lease. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.

     30.2 Attornment.  Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.

     30.3 Non-Disturbance.  With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and

                                      -12-
<PAGE>

this Lease, including any options to extend the term hereof, will not be
disturbed so long as Lessee is not in Breach hereof and attorns to the record
owner of the Premises. Further, within sixty (60) days after the execution of
this Lease, Lessor shall use its commercially reasonable efforts to obtain a
Non-Disturbance Agreement from the holder of any pre-existing Security Device
which is secured by the Premises. In the event that Lessor is unable to provide
the Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at
Lessee's option, directly contact Lessor's lender and attempt to negotiate for
the execution and delivery of a Non-Disturbance Agreement.

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

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

32.  Lessor's Access; Showing Premises; Repairs.  Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary:
provided, however, that Lessor shah make commercially reasonable efforts to
ensure that such repairs do not unreasonably Interfere with the operation of
Lessee's business or the occupancy or use of the Premises by Lessee. All such
activities shall be without abatement of rent or liability to Lessee. Lessor may
at any time place on the Premises any ordinary "For Sale" signs and Lessor may
during the last six (6) months of the term hereof place on the Premises any
ordinary "For Lease" signs. Lessee may at any time place on or about the
Premises any ordinary "For Sublease" sign.

33.  Auctions.  Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without Lessor's prior written consent. Lessor shall
not be obligated to exercise any standard of reasonableness in determining
whether to permit an auction.

34.  Signs.  [Deletion] Lessee shall not place any sign upon the Premises
without Lessor's prior written consent. All signs must comply with all
Applicable Requirements as well as Paragraph 62.

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

36.  Consents.  Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including, but not limited to, architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including, but not limited to,
consents to an assignment, a subletting or the presence or use of a Hazardous
Substance, shall be paid by Lessee upon receipt of an invoice and supporting
documentation therefor. Lessor's consent to any act, assignment or subletting
shall not constitute an acknowledgment that no Default or Breach by Lessee of
this Lease exists, nor shall such consent be deemed a waiver of any then
existing Default or Breach, except as may be otherwise specifically stated in
writing by Lessor at the time of such consent. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given. In the event that either Party disagrees with any determination made by
the other hereunder and reasonably requests the reasons for such determination,
the determining party shall furnish its reasons in writing and in reasonable
detail within ten (10) business days following such request.

37.  Guarantor.

     37.1 [Deleted]

     37.2 [Deleted]

38.  Quiet Possession.  Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.

39.  Options.

     39.1 Definition.  "Option" shall mean: the right to extend the term of this
Lease as set forth in Paragraph 68. [deletion]

     39.2 Options Personal To Original Lessee.  Each Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full

                                      -13-
<PAGE>

possession of the Premises and, if requested by Lessor, with Lessee certifying
that Lessee has no intention of thereafter assigning or subletting.

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

     39.4 Effect of Default on Options.

          (a)  Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default (so long as in fact,
there was such a Default) and continuing until said Default is cured, (ii)
during the period of time any Rent is unpaid (without regard to whether notice
thereof is given Lessee), (iii) during the time Lessee is in Breach of this
Lease, or (iv) in the event that Lessee has been given three (3) or more notices
of separate Default (so long as, in fact, such Defaults occurred), whether or
not the Defaults are cured, during the twelve (12) month period immediately
preceding the exercise of the Option.

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

          (c)  An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee
three (3) or more notices of separate Default (so long as, in fact, such
Defaults occurred) during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.

40.  Multiple Buildings.  If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.

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

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

43.  Performance Under Protest.  If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. The party holding the funds shall
return funds to the ether party within thirty (30) days after a final ruling by
a court of competent Jurisdiction that such funds were not owed by the other
party.

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

45.  [Deleted]

46.  Offer.  Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

47.  Amendments.  This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

48.  Multiple Parties.  If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

49.  [Deleted]

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

                                      -14-
<PAGE>

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1.   SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.   RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

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

Executed at: Glendale, California             Executed at:
            -----------------------------                 ----------------------
on: January 27, 2000                             on: January____, 2000
   --------------------------------------           ----------------------------
By LESSOR:                                       By: LESSEE:
WAPLES CORPORATION                               HOMEGROCER.COM, INC.,
-----------------------------------------        -------------------------------
a Delaware corporation                           a [deletion] corporation
-----------------------------------------        -------------------------------

By: /s/ Greg Blohstrand                          By: /s/ Mary Alice Taylor
   --------------------------------------           ----------------------------
Name Printed: GREG BLOHSTRAND                    Name Printed: MARY ALICE TAYLOR
             ----------------------------                     ------------------
Title: ASST. MANAGER                             Title: C.E.O.
      -----------------------------------              -------------------------

By:                                              By:
   --------------------------------------           ----------------------------
Name Printed:                                    Name Printed:
             ----------------------------                     ------------------
Title:                                           Title:
      -----------------------------------              -------------------------
Address: 700 North Brand Blvd., Suite 300        Address: 10230 NE Points Drive
        ---------------------------------                -----------------------
      Glendale, California 91203                      Kirkland, Washington 98033
      -----------------------------------             --------------------------
Telephone: (818) 545-3762; ext. 259              Telephone: (425) 201-7500
          -------------------------------                  ---------------------
Facsimile: (818) 545-8460                        Facsimile: (425) 201-7575
          -------------------------------                  ---------------------

NOTE:  These forms are often modified to meet the changing requirements of law
and industry needs. Always write or call to make sure you are utilizing the most
current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower
Street, Suite 800, Los Angeles, California 90017, (213) 687-8777, Fax No. (213)
687-8616

                                      -15-<PAGE>

                                                                   EXHIBIT 10.35

                              INDUSTRIAL LEASE
                              ----------------
                       (Single Tenant; Net; Stand-Alone)
                                    "AS-IS"
                                     -----

     THIS LEASE is made as of the 4th day of January 2000, by and between The
Irvine Company, hereafter called "Landlord," and HOMEGROCER.COM, INC., a
Delaware corporation hereinafter called "Tenant."

                       ARTICLE I. BASIC LEASE PROVISIONS

     Each reference in this Lease to the "Basic Lease Provisions" shall mean and
refer to the following collective terms, the application of which shall be
governed by the provisions in the remaining Articles of this Lease.

1.   Premises: The Premises are more particularly described in Section 2.1.

2.   Address of Building: 985 Almanor Avenue, Sunnyvale, CA 94086.

3.   Use of Premises: Warehousing, office, retail distribution and other legal
     related uses (including, without limitation, the retail distribution of
     alcoholic beverages to the extent permitted under applicable laws).

4.   Commencement Date: February 1, 2000

5.   Lease Term: The Term of this Lease shall expire at midnight on October 31,
     2005.

6.   Basic Rent: One Hundred Ten Thousand Nine Hundred Fifty-eight Dollars
     ($110,958.00) per month, based on $0.80 per rentable square foot.

     Basic Rent is subject to adjustment as follows:

     Commencing November 1, 2000, the Basic Rent shall be One Hundred Sixty-Six
     Thousand Four Hundred Thirty-Eight Dollars ($166,438.00) per month, based
     on $1.20 per rentable square foot.

     Commencing November 1, 2001, the Basic Rent shall be One Hundred Seventy
     Three Thousand Three Hundred Seventy-Three Dollars ($173,373.00) per month,
     based on $1.25 per rentable square foot.

     Commencing November 1, 2002, the Basic Rent shall be One Hundred Eighty
     Thousand Three Hundred Seven Dollars ($180,307.00) per month, based on
     $1.30 per rentable square foot.

     Commencing November 1, 2003, the Basic Rent shall be One Hundred Eighty
     Seven Thousand Two Hundred Forty-Two Dollars ($187,242.00) per month, based
     on $1.35 per rentable square foot.

     Commencing November 1, 2004, the Basic Rent shall be One Hundred Ninety
     Four Thousand One Hundred Seventy-Seven Dollars ($194,177.00) per month,
     based on $1.40 per rentable square foot.

7.   Guarantor(s): None

8.   Floor Area of Premises: approximately 138,698 rentable square feet

9.   Security Deposit: $213,595.00, plus Letter of Credit (see Section 4.4).

10.  Broker(s): Ernst & Young

11.  Additional Insureds: Insignia/ESG of California, Inc.

12.  Address for Payments and Notices:

     LANDLORD                                      TENANT

     INSIGNIA/ESG OF CALIFORNIA, INC.              HOMEGROCER.COM, INC.
     1 Ada, Suite 270                              985 Alamanor Avenue
     Irvine, CA 92618                              Sunnyvale, CA 94086

     With a copy of notices to:                    With a copy of notices to:

     IRVINE INDUSTRIAL COMPANY                     HomeGrocer.com
     P.O. Box 6370                                 Attn: Legal Department
     Newport Beach, CA 92658-6370                  10203 NE Points Drive
     Attn: Vice President, Industrial Operations   Kirkland, WA 98033
                                                   Phone: (425) 201-7500
                                                   Fax: (425) 201-7575

                                      -1-
<PAGE>

                                              HomeGrocer.com
                                              Attn: Vice President of Operations
                                              10203 NE Points Drive
                                              Kirkland, WA 98033
                                              Phone: (425) 201-7500
                                              Fax: (425) 201-7875

13.  Tenant's Liability Insurance Requirement: $2,000,000.00

14.  Vehicle Parking Spaces: All on-Site spaces

                                      -2-
<PAGE>

                             ARTICLE II.  PREMISES

     SECTION 2.1. LEASED PREMISES. Landlord leases to Tenant and Tenant leases
from Landlord the premises shown in EXHIBIT A (the "Premises"), including the
                                    ---------
building identified in Item 2 of the Basic Lease Provisions (which together with
the underlying real property, is called the "Building"), and containing
approximately the floor area set forth in Item 8 of the Basic Lease Provisions.
The Building is located on the site (the "Site") shown on EXHIBIT A-1 attached
                                                          -----------
hereto.

     SECTION 2.2. ACCEPTANCE OF PREMISES. Tenant acknowledges that neither
Landlord nor any representative of Landlord has made any representation or
warranty with respect to the Premises or the Building or the suitability or
fitness of either for any purpose, including without limitation any
representations or warranties regarding zoning or other land use matters, and
that neither Landlord nor any representative of Landlord has made any
representations or warranties regarding (i) what other tenants or uses may be
permitted or intended in the Building and the Project, or (ii) any exclusivity
of use by Tenant with respect to its permitted use of the Premises as set forth
in Item 3 of the Basic Lease Provisions. Tenant further acknowledges that
neither Landlord nor any representative of Landlord has agreed to undertake any
alterations or additions to the Premises except as expressly provided in this
Lease. It is further understood that Tenant shall take possession of the
Premises as of the Commencement Date of this Lease in an "as-is" condition
without further obligation on Landlord's part as to improvements whatsoever
except as expressly provided in Section 7.2 below.

     SECTION 2.3. BUILDING NAME AND ADDRESS. Tenant shall not utilize any name
selected by Landlord from time to time for the Building as any part of Tenant's
corporate or trade name. Landlord shall have the right to change the name,
address, number or designation of the Building without liability to Tenant.

                              ARTICLE III.  TERM

     SECTION 3.1. GENERAL. The Term shall be for the period shown in Item 5 of
the Basic Lease Provisions. The Term shall commence ("Commencement Date") on the
date set forth in Item 4 of the Basic Lease Provisions and shall expire on the
corresponding date (the "Expiration Date") of the expiration of the Term.

     SECTION 3.2. DELAY IN POSSESSION. If Landlord, for any reason whatsoever,
cannot deliver possession of the Premises to Tenant on or before the
Commencement Date, this Lease shall not be void or voidable nor shall Landlord
be liable to Tenant for any resulting loss or damage. However, Tenant shall not
be liable for any rent and the Commencement Date shall not occur until Landlord
delivers possession of the Premises and the Premises are in fact available for
Tenant's occupancy, except that if Landlord's failure to so deliver possession
on the Commencement Date is attributable to any action or inaction by Tenant,
then the Commencement Date shall not be advanced to the date on which possession
of the Premises is tendered to Tenant, and Landlord shall be entitled to full
performance by Tenant (including the payment of rent) from the date Landlord
would have been able to deliver the Premises to Tenant but for Tenant delay(s).

     SECTION 3.3. RIGHT TO EXTEND THIS LEASE. Provided that Tenant is not in
default under any provision of this Lease, either at the time of exercise of the
extension right granted herein or at the time of the commencement of such
extension, and provided further that Tenant is occupying the entire Premises and
has not assigned this Lease or sublet, in the aggregate, more than twenty-five
percent (25%) of the Premises (other than an assignment or subletting permitted
to be made without Landlord's consent pursuant to Section 9.4 below), Tenant may
extend the Term of this Lease for one (1) period of sixty (60) months. Tenant
shall exercise its right to extend the Term by and only by delivering to
Landlord, not less than six (6) months or more than nine (9) months prior to the
expiration date of the Term, Tenant's irrevocable written notice of its
commitment to extend (the "Commitment Notice"). The Basic Rent payable under the
Lease during any extension of the Term shall be determined as provided in the
following provisions.

     If Landlord and Tenant have not by then been able to agree upon the Basic
Rent for the extension of the Term, then within one hundred twenty (120) and
ninety (90) days prior to the expiration date of the Term, Landlord shall notify
Tenant in writing of the Basic Rent that would reflect the prevailing market
rental rate for a 60-month renewal of comparable space in the Project (together
with any increases thereof during the extension period) as of the commencement
of the extension period ("Landlord's Determination"). Should Tenant disagree
with the Landlord's Determination, then Tenant shall, not later than twenty (20)
days thereafter, notify Landlord in writing of Tenant's determination of those
rental terms ("Tenant's Determination"). In no event, however, shall Landlord's
Determination or Tenant's Determination be less than the Basic Rent payable by
Tenant during the final month of the initial Term. Within ten (10) days
following delivery of the Tenant's Determination, the parties shall attempt to
agree on an appraiser to determine the fair market rental. If the parties are
unable to agree in that time, then each party shall designate an appraiser
within ten (10) days thereafter. Should either party fail to so designate an
appraiser within that time, then the appraiser designated by the other party
shall determine the fair market rental. Should each of the parties timely
designate an appraiser, then the two appraisers so designated shall appoint a
third appraiser who shall, acting alone, determine the fair market rental for
the Premises. Any appraiser designated hereunder shall have an MAI certification
with not less than five (5) years experience in the valuation of commercial
industrial buildings in the vicinity of the Project.

     Within thirty (30) days following the selection of the appraiser and such
appraiser's receipt of the Landlord's Determination and the Tenant's
Determination, the appraiser shall determine whether the rental rate determined
by Landlord or by Tenant more accurately reflects the fair market rental rate
for the 60-month renewal of the Lease for the Premises, as reasonably
extrapolated to the commencement of the extension period.

                                      -3-
<PAGE>

Accordingly, either the Landlord's Determination or the Tenant's Determination
shall be selected by the appraiser as the fair market rental rate for the
extension period. In making such determination, the appraiser shall consider
rental comparables for the Project (provided that if there are an insufficient
number of comparables within the project, the appraiser shall consider rental
comparables for similarly improved space within the vicinity of the Project with
appropriate adjustment for location and quality of project), taking into account
any concessions (or lack thereof) or brokerage commissions obligations (or lack
thereof) in making its determination of the fair market rental rate. At any time
before the decision of the appraiser is rendered, either party may, by written
notice to the other party, accept the rental terms submitted by the other party,
in which event such terms shall be deemed adopted as the agreed fair market
rental. The fees of the appraiser(s) shall be borne entirely by the party whose
determination of the fair market rental rate was not accepted by the appraiser.

     Within twenty (20) days after the determination of the fair market rental,
Landlord shall prepare an appropriate amendment to this Lease setting forth the
Basic Rent payable by Tenant for the extension period (as determined pursuant to
the foregoing provisions), and Tenant shall execute and return same to Landlord
within twenty (20) days. Should the fair market rental not be established by the
commencement of the extension period, then Tenant shall continue paying rent at
the rate in effect during the last month of the initial Term, and a lump sum
adjustment shall be made promptly upon the determination of such new rental.

     If Tenant fails to timely comply with any of the provisions of this
paragraph, Tenant's right to extend the Term shall be extinguished and the Lease
shall automatically terminate as of the expiration date of the Term, without any
extension and without any liability to Landlord. Any attempt to assign or
transfer any right or interest created by this paragraph shall be void from its
inception (other than an assignment made in connection with an assignment of
this Lease permitted to be made without Landlord's consent pursuant to Section
9.4 below). Tenant shall have no other right to extend the Term beyond the
single sixty (60) month extension period created by this paragraph. Unless
agreed to in a writing signed by Landlord and Tenant, any extension of the Term,
whether created by an amendment to this Lease or by a holdover of the Premises
by Tenant, or otherwise, shall be deemed a part of, and not in addition to, any
duly exercised extension period permitted by this paragraph.

                   ARTICLE IV.  RENT AND OPERATING EXPENSES

     SECTION 4.1. BASIC RENT. From and after the Commencement Date, Tenant shall
pay to Landlord without deduction or offset, Basic Rent for the Premises in the
total amount shown (including subsequent adjustments, if any) in Item 6 of the
Basic Lease Provisions. Any rental adjustment shown in Item 6 shall be deemed to
occur on the specified monthly anniversary of the Commencement Date, whether or
not that date occurs at the end of a calendar month. The rent shall be due and
payable in advance commencing on the Commencement Date (as prorated for any
partial month) and continuing thereafter on the first day of each successive
calendar month of the Term. No demand, notice or invoice shall be required for
the payment of Basic Rent. An installment of rent in the amount of one (1) full
month's Basic Rent at the initial rate specified in Item 6 of the Basic Lease
Provisions shall be delivered to Landlord concurrently with Tenant's execution
of this Lease and shall be applied against the Basic Rent first due hereunder.

     SECTION 4.2. OPERATING EXPENSES.

          (a) Tenant shall pay to Landlord, as additional rent, "Building Costs"
and "Property Taxes," as those terms are defined below, incurred by Landlord in
the operation of the Building. For convenience of reference, Property Taxes and
Building Costs shall be referred to collectively as "Operating Expenses".

          (b) Commencing prior to the start of the first full "Expense Recovery
Period" (as defined below) of the Lease, and prior to the start of each full or
partial Expense Recovery Period thereafter, Landlord shall give Tenant a written
estimate of the amount of Operating Expenses for the Expense Recovery Period.
Tenant shall pay the estimated amounts to Landlord in equal monthly
installments, in advance, with Basic Rent. If Landlord has not furnished its
written estimate for any Expense Recovery Period by the time set forth above,
Tenant shall continue to pay cost reimbursements at the rates established for
the prior Expense Recovery Period, if any; provided that when the new estimate
is delivered to Tenant, Tenant shall, at the next monthly payment date, pay any
accrued cost reimbursements based upon the new estimate. For purposes hereof,
"Expense Recovery Period" shall mean every twelve month period during the Term
(or portion thereof for the first and last lease years) commencing July 1 and
ending June 30. Estimates of Operating Expenses payable by Tenant during each
Expense Recovery Period shall not be greater than one hundred ten percent (110%)
of actual Operating Expenses for the immediately preceding Expense Recovery
Period unless, in Landlord's reasonable estimation, it is expected that actual
Operating Expenses for the Expense Recovery Period in question will be greater
than one hundred ten percent (110%) of actual Operating Expenses for the
immediately preceding Expense Recovery Period. The foregoing limitation on
estimated payments of Operating Expenses shall in no way limit Tenant's
obligation to pay actual Operating Expenses as provided in this Section 4.2, it
being the intent of the parties that Tenant shall be fully responsible for
actual Operating Expenses (whether or not Tenant's estimated payments are mote
or less than actual Operating Expenses).

          (c) Within one hundred twenty (120) days after the end of each Expense
Recovery Period, Landlord shall furnish to Tenant a statement showing in
reasonable detail the actual or prorated Operating Expenses incurred by Landlord
during the period, and the parties shall within thirty (30) days thereafter make
any payment or allowance necessary to adjust Tenant's estimated payments, if
any, to Tenant's actual owed amounts as shown by the annual statement. Any delay
or failure by Landlord in delivering any statement hereunder shall not
constitute a waiver of Landlord's right to require Tenant to pay Operating
Expenses pursuant hereto. Any amount due Tenant

                                      -4-
<PAGE>

shall be credited against installments next coming due under this Section 4.2,
and any deficiency shall be paid by Tenant together with the next installment
coming due under this Section 42. If Tenant has not made estimated payments
during the Expense Recovery Period, any amount owing by Tenant pursuant to
subsection (a) above shall be paid to Landlord in accordance with Article XVI.
Should Tenant fail to object in writing to Landlord's determination of actual
Operating Expenses within sixty (60) days following delivery of Landlord's
expense statement, Landlord's determination of actual Operating Expenses for the
applicable Expense Recovery Period shall be conclusive and binding on the
parties and any future claims to the contrary shall be barred.

          Provided Tenant is not then in default under this Lease beyond any
applicable notice and cure periods, Tenant shall have the right to have an
independent certified public accountant audit Landlord's Operating Expenses,
subject to the terms and conditions hereof. In no event, however, shall such
auditor be compensated by Tenant on a "contingency" basis, or on any other basis
tied to the results of said audit. Tenant shall give written notice to Landlord
of Tenant's intent to audit Operating Expenses, if at all, within sixty (60)
days following delivery of Landlord's expense statement for the Expense Recovery
Period in question. Following at least ten (10) business days notice to
Landlord, such audit shall be conducted at a mutually agreeable time during
normal business hours at the office of Landlord or its management agent where
records are maintained in Santa Clara County, California. Landlord shall in good
faith cooperate with Tenant during any such audit. If Tenant's audit reveals
that actual Operating Expenses have been overstated by five percent (5%) or
more, then, subject to Landlord's right to review and/or contest the results of
the audit (as provided below), Landlord shall reimburse Tenant within thirty
(30) days after Tenant's demand therefor for Tenant's reasonable actual out-of-
pocket costs of such audit supported by bona-fide "paid" invoices therefor. All
information obtained by Tenant and/or its auditor in connection with any audit,
as well as any compromise, settlement or adjustment reached between Landlord and
Tenant as a result thereof, shall be held in strict confidence by Tenant and its
auditor and, except as may be required pursuant to any litigation or as may
otherwise be required by law, shall not be disclosed to any third party,
directly or indirectly, by Tenant or its auditor or any of their respective
officers, agents or employees. Landlord may require Tenant's auditor to execute
a separate confidentiality agreement affirming the foregoing as a condition
precedent to any audit. If, following Landlord's review of Tenant's audit,
Landlord disputes the same, Landlord shall have the right, upon written notice
to Tenant within a reasonable time following its receipt of the audit, to
contest such audit by demanding binding arbitration with JAMS Endispute in Santa
Clara County, California ("JAMS"). Tenant agrees to submit to such arbitration
upon such written notice from Landlord. Within ten (10) business days following
submission of the dispute by Landlord to JAMS, JAMS shall designate three (3)
arbitrators and each party may, within five (5) business days thereafter, veto
one (1) of the three (3) persons so designated. If two (2) different designated
arbitrators have been vetoed, the third arbitrator shall hear and decide the
matter. Any arbitration pursuant to this paragraph shall be decided within
thirty (30) days of submission to JAMS. The decision of the arbitrator shall be
final and binding on the parties. The award rendered by the arbitrator shall be
final, and judgment may be entered upon it in accordance with applicable law in
any court having jurisdiction thereof. Except by written consent of the person
or entity sought to be joined, no arbitration under this paragraph shall
include, by consolidation, joinder or in any other manner, any person or entity
not a party to this Lease unless (i) such person or entity is substantially
involved in a common question of fact or law, (ii) the presence of such person
or entity is required if complete relief is to be accorded in the arbitration,
or (iii) the interest or responsibility of such person or entity in the matter
in not insubstantial. All costs associated with the arbitration (excluding the
cost of the audit) shall be awarded to the prevailing party as determined by the
arbitrator. The foregoing agreement to arbitrate shall be specifically
enforceable under prevailing law. In the event that, based on Tenant's audit
(and, if the results thereof are contested by Landlord as provided above, the
award rendered by the arbitrator), it is determined that actual Operating
Expenses have been overstated by Landlord, then any overpayment of actual
Operating Expenses by Tenant revealed thereby (less any prior credits or rebates
given with respect thereto) shall be credited by Landlord against installments
next becoming due under this Section 4.2 (or, if the Lease has expired or
terminated at the time of such determination, such overpayment (less any prior
credits or rebates given with respect thereto) shall be rebated by Landlord to
Tenant within thirty (30) days following such determination). Conversely, in the
event that, based on Tenant's audit (and, if the results thereof are contested
by Landlord as provided above, the award rendered by the arbitrator), it is
determined that actual Operating Expenses have been understated by Landlord,
then any deficiencies in the payment of actual Operating Expenses by Tenant
revealed thereby (less any prior payments made by Tenant with respect thereto)
shall be paid by Tenant together with the next installment coming due under this
Section 4.2 (or, if the Lease has expired or terminated at the time of such
determination, such deficiency (less any prior payments made by Tenant with
respect thereto) shall be paid by Tenant upon notice from Landlord).

          (d) Even though the Lease has terminated and the Tenant has vacated
the Premises, when the final determination is made of Operating Expenses for the
Expense Recovery Period in which the Lease terminates, Tenant shall upon notice
pay the entire amount of actual Operating Expenses due over the estimated
expenses paid. Conversely, any overpayment made in the event actual Operating
Expenses due are less than the estimated expenses paid shall be rebated by
Landlord to Tenant within thirty (30) days after the final determination.

          (e) If, at any time during any Expense Recovery Period, any one or
more of the Operating Expenses are increased to a rate(s) or amount(s) in excess
of the rate(s) or amount(s) used in calculating the estimated expenses for the
year, then the estimate of Operating Expenses shall be increased for the month
in which such rate(s) or amount(s) becomes effective and for all succeeding
months by an amount equal to the increase. Landlord shall give Tenant written
notice of the amount or estimated amount of the increase, the month in which the
increase will become effective, and the month for which the payments are due.
Tenant shall pay the increase to Landlord as a part of Tenant's monthly payments
of estimated expenses as provided in paragraph (b) above, commencing with the
month in which effective.

                                      -5-
<PAGE>

          (f) The term "Building Costs" shall include all expenses of operation
and maintenance of the Building and all landscaping, walkways, parking areas and
lighting of the Site to the extent such expenses are not billed to and paid
directly by Tenant; and shall include the following charges by way of
illustration but not limitation: water and sewer charges; insurance premiums or
reasonable premium equivalents should Landlord elect to self-insure any risk
that Landlord is authorized to insure hereunder, license, permit, and inspection
fees; heat; light; power; air conditioning; supplies; materials; equipment;
tools; the cost of any environmental, insurance, tax or other consultant
utilized by Landlord in connection with the Building; costs incurred in
connection with compliance of any laws or changes in laws applicable to the
Building; the cost of any capital investments (other than tenant improvements
for specific tenants) to the extent of the amortized amount thereof over the
useful life of such capital investments calculated at a market cost of funds,
all as reasonably determined by Landlord, for each such year of useful life
during the Term; costs incurred in connection with the Ground Lease (as such
term is defined in Section 6.2(b)) or any renewals, amendments or replacements
of same, including but not limited to base rent, taxes and insurance premiums
payable thereunder, to the extent such costs relate to the Site; labor;
reasonably allocated wages and salaries, fringe benefits, and payroll taxes for
administrative and other personnel directly applicable to the Building,
including both Landlord's personnel and outside personnel; any expense incurred
pursuant to Sections 6.1, 6.2, 7.2, and 10.2; and a reasonable
overhead/management fee for the professional operation of the Building.
Notwithstanding anything to the contrary contained herein, the amount of such
overhead/management fee to be charged to Tenant shall be determined by
multiplying the actual fee charged (which from time to time may be with respect
to the Building only or the Building together with other properties owned by
Landlord and/or its affiliates) by a fraction, the numerator of which is the
floor area of the Premises (as set forth in Item No. 8 of the Basic Lease
Provisions) and the denominator of which is the total square footage of space
charged with such fee actually leased to tenants (including Tenant). It is
understood that Building Costs shall include competitive charges for direct
services provided by any subsidiary or division of Landlord, and may include the
Building's or the Site's proportionate share of the cost of maintenance or
repair contracts which cover the Building and/or the Site and other buildings
and/or projects in Landlord's portfolio, as reasonably allocated by Landlord.

          (g) The term "Property Taxes" as used herein shall include the
following: (i) all real estate taxes or personal property taxes, as such
property taxes may be reassessed from time to time; and (ii) other taxes,
charges and assessments which are levied with respect to this Lease, to the
Building or to the Site, and any improvements, fixtures and equipment and other
property of Landlord located in the Building or on the Site, except that general
net income and franchise taxes imposed against Landlord shall be excluded; and
(iii) all assessments and fees for public improvements, services, and facilities
and impacts thereon, including without limitation arising out of any Community
Facilities Districts, "Mello Roos" districts, similar assessment districts, and
any traffic impact mitigation assessments or fees; and (iv) any tax, surcharge
or assessment which shall be levied in addition to or in lieu of real estate or
personal property taxes, other than taxes covered by Article VIII; and (v) costs
and expenses incurred in contesting the amount or validity of any Property Tax
by appropriate proceedings. Landlord reserves the right at its election to at
any time contest the amount or validity of any Property Taxes by appropriate
proceedings. In the event that Landlord elects to so contest any Property Taxes,
Landlord shall provide Tenant with written notice thereof and, if such contest
relates to any alterations, additions or improvements made by Tenant, then
Landlord shall permit Tenant, at its election, to reasonably participate, at its
sole cost and expense, with Landlord in pursuing such tax contest to the extent
that it relates to any alterations, additions or improvements made by Tenant. In
addition, if Tenant reasonably believes that the amount or validity of any
increase in Property Taxes that is due to a change in ownership or any
alterations, additions or improvements made by Tenant is improper, Tenant may
notify Landlord in writing of Tenant's desire that such increase in Property
Taxes be contested by Landlord (which notice by Tenant shall include the basis
for Tenant's contention that such increase in Property Taxes is improper). Upon
Landlord's receipt of any such notice from Tenant and unless Landlord has
otherwise elected to contest the same, Landlord and Tenant shall promptly meet
to discuss the merits of contesting the Property Taxes in question. If,
following such discussion, Tenant desires that Landlord proceed with contesting
such increase in Property Taxes, then, following written notice thereof to
Landlord given within fifteen (15) days following such discussion, Landlord
shall pursue contesting such increase in Property Taxes by appropriate
proceedings (and Landlord shall keep Tenant informed of the status of any such
tax contest and permit Tenant, at its election, to reasonably participate, at
its sole cost and expense, with Landlord in pursuing such tax contest). If
Landlord is successful in contesting any Property Taxes and is entitled to
receive a refund for any overpayment of Property Taxes, Tenant shall be entitled
to a refund of any overpayment of the contested Property Taxes made by Tenant,
which refund shall be made by Landlord to Tenant within thirty (30) days
following Landlord's receipt of such refund from the applicable taxing
authority.

     SECTION 4.3. SECURITY DEPOSIT. Concurrently with Tenant's delivery of this
Lease, Tenant shall deposit with Landlord the sum, if any, stated in Item 9 of
the Basic Lease Provisions, to be held by Landlord as security for the full and
faithful performance of Tenant's obligations under this Lease (the "Security
Deposit"). Subject to the last sentence of this Section, the Security Deposit
shall be understood and agreed to be the property of Landlord upon Landlord's
receipt thereof. Upon any default by Tenant, including specifically Tenant's
failure to pay rent or to abide by its obligations under Sections 7.1 and 15.3
below and Tenant's failure to cure the same within any applicable cure period,
whether or not Landlord is informed of or has knowledge of the default, the
Security Deposit shall be deemed to be automatically and immediately applied,
without waiver of any rights Landlord may have under this Lease or at law or in
equity as a result of the default, as a setoff for full or partial compensation
for that default. If any portion of the Security Deposit is applied after a
default by Tenant, Tenant shall within five (5) days after written demand by
Landlord deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount. Landlord shall not be required to keep
this Security Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. If Tenant fully performs its
obligations under this Lease, the Security Deposit or any balance thereof shall
be returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest in this Lease) within thirty (30) days after the

                                      -6-
<PAGE>

expiration of the Term, provided that Landlord may retain the Security Deposit
to the extent and until such time as all amounts due from Tenant in accordance
with this Lease have been determined and paid in full.

     SECTION 4.4. LETTER OF CREDIT. In addition to the Security Deposit and as
additional security for the full and faithful performance of Tenant's
obligations under this Lease, Tenant shall deliver to landlord, concurrently
with Tenant's execution and delivery of this Lease, a letter of credit in the
amount of One Million Dollars ($1,000,000.00), which letter of credit shall be
in form and with the substance of Exhibit F attached hereto, and issued by a
                                  ---------
financial institution reasonably acceptable to Landlord. The letter of credit
shall provide for automatic yearly renewals throughout the Term of this Lease.
Upon (i) any default by Tenant, including specifically Tenant's failure to pay
rent or to abide by its obligations under Sections 7.1 and 15.3 below and
Tenant's failure to cure the same within any applicable cure period, and (ii)
Landlord's application of the entire Security Deposit, Landlord shall be
entitled to draw upon said letter of credit by the issuance of Landlord's sole
written demand to the issuing financial institution. Any such draw shall be
without waiver or any rights Landlord may have under this Lease or at law or in
equity as a result of the default, as a setoff for full or partial compensation
for the default. If any portion of the letter of credit is drawn after a default
by Tenant, Tenant shall within five (5) days after written demand by Landlord
restore the letter of credit. Upon the expiration of the twelfth (12th), twenty-
fourth (24th), thirty-sixth (36th), forty-eighth (48th) and sixty-ninth (69th)
Lease months during the Term, in the event Tenant has not been in monetary or
material non-monetary default under this Lease during the immediately preceding
twelve (12) month period ending on each such expiration date (or the immediately
preceding twenty-one (21) month period ending on the expiration of the sixty-
ninth (69th) Lease month with respect to the final reduction) (each period being
referred to herein as a "Reduction Period"), and provided further that Tenant
has not during the applicable Reduction Period been more than five (5) days late
more than twice with respect to any payments of rent due under this Lease, then
upon the written request of Tenant, Landlord shall authorize in writing a
reduction to the principal amount of the letter of credit in the amount of Two
Hundred Thousand Dollars ($200,000.00) with respect to the Reduction Period in
question. In the event Tenant has been in monetary or material non-monetary
default under this Lease during a particular Reduction Period or has during such
Reduction Period been more than five (5) days late more than twice with respect
to any payments of rent due under this Lease, then Tenant's right to a
$200,000.00 reduction for such Reduction Period shall be forever forfeited by
Tenant (notwithstanding the fact that Tenant may be entitled to a $200,000.00
reduction hereunder with respect to subsequent Reduction Period(s)).

                               ARTICLE V.  USES

     SECTION 5.1. USE. Tenant shall use the Premises only for the purposes
stated in Item 3 of the Basic Lease Provisions, all in accordance with
applicable laws and restrictions and pursuant to approvals to be obtained by
Tenant from all relevant and required governmental agencies and authorities. The
parties agree that any contrary use shall be deemed to cause material and
irreparable harm to Landlord and shall entitle Landlord to injunctive relief in
addition to any other available remedy. Tenant, at its expense, shall procure,
maintain and make available for Landlord's inspection throughout the Term, all
governmental approvals, licenses and permits required for the proper and lawful
conduct of Tenant's permitted use of the Premises. Tenant shall not use or allow
the Premises to be used for any unlawful purpose, nor shall Tenant permit any
nuisance or commit any waste in the Premises. Tenant shall not do or permit to
be done anything which will invalidate or increase the cost of any insurance
policy(ies) covering the Building or its contents (unless, with respect to any
such increase in such cost, Tenant shall promptly upon demand reimburse Landlord
for the increased cost), and shall comply with all applicable insurance
underwriters rules and the requirements of the Pacific Fire Rating Bureau or any
other organization performing a similar function. Tenant shall comply at its
expense with all present and future laws, ordinances, restrictions, regulations,
orders, rules and requirements of all governmental authorities that pertain to
Tenant or its use of the Premises, including without limitation all federal and
state occupational health and safety requirements, whether or not Tenant's
compliance will necessitate expenditures or interfere with its use and enjoyment
of the Premises. Tenant shall comply at its expense with all present and future
covenants, conditions, easements or restrictions now or hereafter affecting or
encumbering the Building, and any amendments or modifications thereto, including
without limitation the payment by Tenant of any periodic or special dues or
assessments charged against the Premises or Tenant which may be allocated to the
Premises or Tenant in accordance with the provisions thereof. Tenant shall
promptly upon demand reimburse Landlord for any additional insurance premium
charged by reason of Tenant's failure to comply with the provisions of this
Section, and shall indemnify Landlord from any liability and/or expense
resulting from Tenant's noncompliance.

     SECTION 5.2. SIGNS. Except as approved in writing by Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed, Tenant
shall have no right to maintain identification signs in any location in, on or
about the Premises or the Building and shall not place or erect any signs,
displays or other advertising materials that are visible from the exterior of
the Building. The size, design, graphics, material, style, color and other
physical aspects of any permitted sign shall be subject to Landlord's written
approval prior to installation (which approval may be withheld in Landlord's
discretion), any covenants, conditions or restrictions encumbering the Premises,
Landlord's signage program, if any, as in effect from time to time ("Signage
Criteria"), and any applicable municipal or other governmental permits and
approvals. Tenant acknowledges having received and reviewed a copy of the
current Signage Criteria, if applicable. Tenant shall be responsible for the
cost of any permitted sign, including the fabrication, installation, maintenance
and removal thereof. If Tenant fails to maintain its sign, or if Tenant fails to
remove same upon termination of this Lease and repair any damage caused by such
removal, Landlord may do so at Tenant's expense.

                                      -7-
<PAGE>

     SECTION 5.3. HAZARDOUS MATERIALS.

          (a) For purposes of this Lease, the term "Hazardous Materials"
includes (i) any "hazardous materials" as defined in Section 25501(n) of the
California Health and Safety Code, (ii) any other substance or matter which
results in liability to any person or entity from exposure to such substance or
matter under any statutory or common law theory, and (iii) any substance or
matter which is in excess of permitted levels set forth in any federal,
California or local law or regulation pertaining to any hazardous or toxic
substance, material or waste.

          (b) Tenant shall not cause or permit any Hazardous Materials to be
brought upon, stored, used, generated, released or disposed of on, under, from
or about the Premises or the Site (including without limitation the soil and
groundwater thereunder) without the prior written consent of Landlord.
Notwithstanding the foregoing, Tenant shall have the right, without obtaining
prior written consent of Landlord, to use, store, handle and dispose of within
the Premises (a) reasonable quantities of customary janitorial supplies that may
contain Hazardous Materials, (b) packaged products intended for resale to
consumers that may contain Hazardous Materials (including, without limitation,
hair spray, household cleaners, automotive products, antifreeze, dog food,
fertilizer), and (c) standard office products that may contain Hazardous
Materials (such as photocopy toner, "White Out", and the like), provided
                                                                --------
however, that (i) Tenant shall maintain such supplies and products in their
-------
original retail packaging, shall follow all instructions on such packaging with
respect to the use, storage, handling and disposal of such supplies and
products, and shall otherwise comply with all applicable laws with respect to
such supplies and products (including, without limitation, securing all required
governmental approvals relating to the lawful use, storage, handling and
disposal of such supplies and products), and (ii) all of the other terms and
provisions of this Section 5.3 shall apply with respect to Tenant's use,
storage, handling and disposal of all such supplies and products. Landlord may,
in its sole discretion, place such conditions as Landlord deems appropriate with
respect to any such Hazardous Materials, and may further require that Tenant
demonstrate that any such Hazardous Materials are necessary or useful to
Tenant's business and will be generated, stored, used and disposed of in a
manner that complies with all applicable laws and regulations pertaining thereto
and with good business practices. Tenant understands that Landlord may utilize
an environmental consultant to assist in determining conditions of approval in
connection with the storage, generation, release, disposal or use of Hazardous
Materials by Tenant on or about the Premises, and/or to conduct periodic
inspections of the storage, generation, use, release and/or disposal of such
Hazardous Materials by Tenant on and from the Premises, and Tenant agrees that
any costs incurred by Landlord in connection therewith shall be reimbursed by
Tenant to Landlord as additional rent hereunder upon demand.

          (c) Prior to the execution of this Lease, Tenant shall complete,
execute and deliver to Landlord an Environmental Questionnaire and Disclosure
Statement (the "Environmental Questionnaire") in the form of Exhibit B attached
                                                             ---------
hereto. The completed Environmental Questionnaire shall be deemed incorporated
into this Lease for all purposes, and Landlord shall be entitled to rely fully
on the information contained therein. On each anniversary of the Commencement
Date until the expiration or sooner termination of this Lease, Tenant shall
disclose to Landlord in writing the names and amounts of all Hazardous Materials
which were stored, generated, used, released and/or disposed of on, under or
about the Premises for the twelve-month period prior thereto, and which Tenant
desires to store, generate, use, release and/or dispose of on, under or about
the Premises for the succeeding twelve-month period. In addition, to the extent
Tenant is permitted to utilize Hazardous Materials upon the Premises, Tenant
shall promptly provide Landlord with complete and legible copies of all the
following environmental documents relating thereto: reports filed pursuant to
any self-reporting requirements; permit applications, permits, monitoring
reports, workplace exposure and community exposure warnings or notices and all
other reports, disclosures, plans or documents (even those which may be
characterized as confidential) relating to water discharges, air pollution,
waste generation or disposal, and underground storage tanks for Hazardous
Materials; orders, reports, notices, listings and correspondence (even those
which may be considered confidential) of or concerning the release,
investigation of, compliance, cleanup, remedial and corrective actions, and
abatement of Hazardous Materials; and all complaints, pleadings and other legal
documents filed by or against Tenant related to Tenant's use, handling, storage,
release and/or disposal of Hazardous Materials.

          (d) Landlord and its agents shall have the right, but not the
obligation, to inspect, sample and/or monitor the Premises, the Site and/or the
soil or groundwater thereunder at any time to determine whether Tenant is
complying with the terms of this Section 5.3, and in connection therewith Tenant
shall provide Landlord with full access to all relevant facilities, records and
personnel. If Tenant is not in compliance with any of the provisions of this
Section 5.3, or in the event of a release of any Hazardous Material on, under or
about the Premises and/or the Site caused or permitted by Tenant, its agents,
employees, contractors, licensees or invitees, Landlord and its agents shall
have the right, but not the obligation, without limitation upon any of
Landlord's other rights and remedies under this Lease, to immediately enter upon
the Premises and/or the Site without notice and to discharge Tenant's
obligations under this Section 5.3 at Tenant's expense, including without
limitation the taking of emergency or long-term remedial action. Landlord and
its agents shall endeavor to minimize interference with Tenant's business in
connection therewith, but shall not be liable for any such interference. In
addition, Landlord, at Tenant's expense, shall have the right, but not the
obligation, to join and participate in any legal proceedings or actions
initiated in connection with any claims arising out of the storage, generation,
use, release and/or disposal by Tenant or its agents, employees, contractors,
licensees or invitees of Hazardous Materials on, under, from or about the
Premises and/or the Site.

          (e) If the presence of any Hazardous Materials on, under, from or
about the Premises and/or the Site caused or permitted by Tenant or its agents,
employees, contractors, licensees or invitees results in (i) injury to any
person, (ii) injury to or any contamination of the Premises and/or the Site, or
(iii) injury to or contamination of any real or personal property wherever
situated, Tenant, at its expense, shall promptly take all actions necessary to
return the Premises, the Site and any other affected real or personal property
owned by Landlord to the condition

                                      -8-
<PAGE>

existing prior to the introduction of such Hazardous Materials and to remedy or
repair any such injury or contamination, including without limitation, any
cleanup, remediation, removal, disposal, neutralization or other treatment of
any such Hazardous Materials. Notwithstanding the foregoing, Tenant shall not,
without Landlord's prior written consent, take any remedial action in response
to the presence of any Hazardous Materials on, under or about the Premises, the
Site or any other affected real or personal property owned by Landlord or enter
into any similar agreement, consent, decree or other compromise with any
governmental agency with respect to any Hazardous Materials claims; provided
however, Landlord's prior written consent shall not be necessary in the event
that the presence of Hazardous Materials on, under or about the Premises, the
Site or any other affected real or personal property owned by Landlord (i)
imposes an immediate threat to the health, safety or welfare of any individual
or (ii) is of such a nature that an immediate remedial response is necessary and
it is not possible to obtain Landlord's consent before taking such action. To
the fullest extent permitted by law, Tenant shall indemnify, hold harmless,
protect and defend (with attorneys acceptable to Landlord) Landlord and any
successors to all or any portion of Landlord's interest in the Premises, the
Site and any other real or personal property owned by Landlord from and against
any and all liabilities, losses, damages, diminution in value, judgments, fines,
demands, claims, recoveries, deficiencies, costs and expenses (including without
limitation attorneys' fees, court costs and other professional expenses),
whether foreseeable or unforeseeable, arising directly or indirectly out of the
use, generation, storage, treatment, release, on- or off-site disposal or
transportation of Hazardous Materials on, into, from, under or about the
Premises, the Site and any other real or personal property owned by Landlord to
the extent that such use, generation, storage, treatment, release, on- or off-
site disposal and/or transportation is caused or permitted by Tenant, its
agents, employees, contractors, licensees or invitees, specifically including
without limitation the cost of any required or necessary repair, restoration,
cleanup or detoxification of the Premises, the Site and any other real or
personal property owned by Landlord, and the preparation of any closure or other
required plans, whether or not such action is required or necessary during the
Term or after the expiration of this Lease. If Landlord at any time discovers
that Tenant or its agents, employees, contractors, licensees or invitees may
have caused or permitted the release of a Hazardous Material on, under, from or
about the Premises, the Site or any other real or personal property owned by
Landlord, Tenant shall, at Landlord's request, immediately prepare and submit to
Landlord a comprehensive plan, subject to Landlord's approval, specifying the
actions to be taken by Tenant to return the Premises, the Site or any other real
or personal property owned by Landlord to the condition existing prior to the
introduction of such Hazardous Materials. Upon Landlord's approval of such
cleanup plan, Tenant shall, at its expense, and without limitation of any rights
and remedies of Landlord under this Lease or at law or in equity, immediately
implement such plan and proceed to cleanup such Hazardous Materials in
accordance with all applicable laws and as required by such plan and this Lease.
The provisions of this subsection (e) shall expressly survive the expiration or
sooner termination of this Lease.

          (f) Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, certain facts relating to Hazardous Materials at the Premises
and/or the Site known by Landlord to exist as of the date of this Lease, as more
particularly described in Exhibit C attached hereto. Tenant shall have no
                          ---------
liability or responsibility with respect to the Hazardous Materials facts
described in Exhibit C, nor with respect to any Hazardous Materials which Tenant
             ---------
proves were not caused or permitted by Tenant, its agents, employees,
contractors, licensees or invitees. Notwithstanding the preceding two sentences,
Tenant agrees to notify its agents, employees, contractors, licensees, and
invitees of any exposure or potential exposure to Hazardous Materials at the
Premises and/or the Site that Landlord brings to Tenant's attention in the form
of a written notice, setting forth with particularity the exposure or potential
exposure to which Landlord refers.

                             ARTICLE VI.  SERVICES

     SECTION 6.1. UTILITIES AND SERVICES. Tenant shall be responsible for and
shall pay promptly, directly to the appropriate supplier, all charges for water,
gas, electricity, sewer, heat, light, power, telephone, refuse pickup,
janitorial service, interior landscape maintenance and all other utilities,
materials and services furnished directly to Tenant or the Premises or used by
Tenant in, on or about the Premises during the Term, together with any taxes
thereon. Landlord shall not be liable for damages or otherwise for any failure
or interruption of any utility or other service furnished to the Premises, and
no such failure or interruption shall be deemed an eviction or entitle Tenant to
terminate this Lease or withhold or abate any rent due hereunder, provided,
however, if any such failure or interruption is due to the sole active
negligence or willful misconduct of Landlord, its employees or authorized agents
(a "Landlord-Caused Service Interruption") and is not restored by Landlord
within five (5) business days following written notice by Tenant of the
Landlord-Caused Service Interruption in question, then Tenant shall be entitled
to an abatement of Basic Rent reasonably allocable to that portion of the
Premises that Tenant is prevented from using by reason of such Landlord-Caused
Service Interruption, which abatement shall commence on the sixth (6th) business
day following Tenant's notice of the Landlord-Caused Service Interruption in
question and shall continue for the balance of the period during which Tenant is
so prevented from using the affected portion of the Premises. The foregoing
abatement provisions shall be the sole and exclusive remedy of Tenant with
respect to any Landlord-Caused Service Interruption. Landlord shall use
commercially reasonable efforts to restore any Landlord-Caused Service
Interruption as soon as reasonably possible following its receipt of notice of
the occurrence thereof. Landlord shall at all reasonable times have free access
to all electrical and mechanical installations of Landlord.

     SECTION 6.2. PARKING.

          (a) Tenant shall be entitled to Tenant's Share of the vehicle parking
spaces on those portions of the Common Areas designated by Landlord for parking,
on an unreserved and unassigned basis. Tenant shall not use more parking spaces
than such number. Tenant shall not permit or allow any vehicles that belong to
or are controlled by Tenant or Tenant's employees, suppliers, shippers,
customers or invitees to be loaded, unloaded or parked in areas other than those
designated by Landlord for such activities. If Tenant permits or allows any of
the

                                      -9-
<PAGE>

prohibited activities described above, then Landlord shall have the right,
without notice, in addition to such other rights and remedies that Landlord may
have, to remove or tow away the vehicle involved and charge the costs to Tenant.
Parking shall be limited to striped parking stalls, and no parking shall be
permitted in any driveways, access ways or in any similar area. Nothing
contained in this Lease shall be deemed to create liability upon Landlord for
any damage to motor vehicles of visitors or employees, for any loss of property
from within those motor vehicles, or for any injury to Tenant, its visitors or
employees, unless ultimately determined to be caused by the sole active
negligence or willful misconduct of Landlord, its employees or authorized
agents. Landlord shall have the right to establish, and from time to time amend,
and to enforce in a non-discriminatory manner against all users all reasonable
rules and regulations (including the designation of areas for employee parking)
that Landlord may deem necessary and advisable for the proper and efficient
operation and maintenance of parking. Landlord shall have the right to
construct, maintain and operate lighting facilities within the parking areas; to
change the area, level, location and arrangement of the parking areas and
improvements therein; and to do and perform such other acts in and to the
parking areas and improvements therein as, in the use of good business judgment,
Landlord shall determine to be advisable, except that Landlord shall not make
any material changes to the parking areas unless such changes are otherwise
required by law or are necessitated by any taking by any lawful authority by
exercise of the right of eminent domain (or sold to prevent a taking) (subject,
however, to Tenant's rights under Section 12.3 below) or any matters beyond the
reasonable control of Landlord. Parking areas shall be used only for parking
vehicles. Tenant shall be liable for any damage to the parking areas caused by
Tenant or Tenant's employees, suppliers, shippers, customers or invitees,
including without limitation damage from excess oil leakage. Except as otherwise
permitted pursuant to Section 7.3 below, Tenant shall have no right to install
any fixtures, equipment or personal property in the parking areas.

          (b) Tenant acknowledges that a portion of the Common Area ("Ground
Lease Premises") used for access to and parking for the Site is subject to that
certain Ground Lease dated March 8, 1999 between the City and County of San
Francisco ("Ground Lessor") and Landlord, a copy of which is attached hereto as
Exhibit G (as the same may be amended, the "Ground Lease"). Without limiting the
----------
requirements of Section 6.2(a) and except as set forth in Section 6.2(c) below,
Tenant shall be bound by and comply with all of the terms, covenants and
conditions applicable to Landlord under the Ground Lease with respect to the
Ground Lease Premises (including without limitation all waivers of claims given
by Landlord) and shall satisfy all applicable terms, covenants and conditions of
the Ground Lease relating to the Ground Lease Premises for the benefit of both
Landlord and Ground Lessor. Landlord shall provide Tenant with timely written
notice of all amendments to the Ground Lease.

          (c) Notwithstanding Section 6.2(b) above, (i) the responsibility for
maintenance and repair of the Ground Lease Premises shall be governed by Section
7.2 of this Lease; (ii) the responsibility for paying base rent, taxes and other
charges under Sections 5 and 6 of the Ground Lease shall be the responsibility
of Landlord (but the cost of which shall constitute Operating Expenses as
provided in Section 4.2(f)); (iii) the responsibility for procuring insurance
required under Section 18.1 of the Ground Lease shall be the responsibility of
Landlord (but the cost of which shall constitute an Operating Expense as
provided in Section 4.2(f)); (iv) Section 15 of the Ground Lease (assignment and
subletting) shall not be applicable to Tenant as Tenant does not have an
exclusive right to use the Ground Lease Premises; (v) Tenant shall have no
obligation to provide or right to receive an estoppel certificate under Section
20 of the Ground Lease; (vi) the responsibility for the condition of the Ground
Lease Premises upon the expiration or earlier termination of this Lease shall be
governed by Section 15.3 of this Lease; and (vii) Tenant shall have no
responsibility for paying the security deposit under Section 23 of the Ground
Lease except to the extent such deposit is depleted as a result of Tenant's
failure to comply with the terms, covenants and conditions of this Lease
(including this Section 6.2).

                    ARTICLE VII.  MAINTAINING THE PREMISES

     SECTION 7.1. TENANT'S MAINTENANCE AND REPAIR. Tenant at its sole expense
shall comply with all applicable laws and governmental regulations governing the
Premises and make all repairs necessary to keep the Premises in the condition as
existed on the Commencement Date (or on any later date that the improvements may
have been installed), excepting ordinary wear and tear and subject to Landlord's
obligations under Section 7.2 below, including without limitation the electrical
and mechanical systems, any air conditioning, ventilating or heating equipment
which serves the Premises, all walls (excluding exterior walls), glass, windows,
doors, door closures, hardware, fixtures, electrical, plumbing, fire
extinguisher equipment and other equipment. Any damage or deterioration of the
Premises shall not be deemed ordinary wear and tear if the same could have been
prevented by good maintenance practices by Tenant. As part of its maintenance
obligations hereunder, Tenant shall, at Landlord's request, provide Landlord
with copies of all maintenance schedules, reports and notices prepared by, for
or on behalf of Tenant. Tenant shall obtain preventive maintenance contracts
from a licensed heating and air conditioning contractor to provide for regular
inspection and maintenance of the heating, ventilating and air conditioning
systems servicing the Premises, all subject to Landlord's reasonable approval.
All repairs shall be at least equal in quality to the original work, shall be
made only by a licensed contractor approved in writing in advance by Landlord
and shall be made only at the time or times reasonably approved by Landlord. Any
contractor utilized by Tenant shall be subject to Landlord's standard
requirements for contractors, as modified from time to time. Landlord shall have
the right at all times, upon not less than twenty-four (24) hours written notice
to Tenant (which notice may be given by facsimile) (except in emergencies or any
suspected violation by Tenant of the provisions of Section 5.3 above, in which
case no notice shall be required), to inspect Tenant's maintenance of all
equipment (including without limitation air conditioning, ventilating and
heating equipment) provided Landlord uses commercially reasonably efforts to
minimize interference with Tenant's business operations with the Premises during
any such inspections, and may impose reasonable restrictions and requirements
with respect to repairs, as provided in Section 7.3 (provided any such
restrictions or requirements do not unreasonably limit or restrict Tenant's use
of the Premises for the purposes permitted under this Lease), and the provisions
of Section 7.4 shall

                                      -10-
<PAGE>

apply to all repairs. Alternatively, Landlord may elect to make any repair or
maintenance required hereunder on behalf of Tenant and at Tenant's expense, and
Tenant shall promptly reimburse Landlord for all costs incurred upon submission
of an invoice.

     SECTION 7.2. LANDLORD'S MAINTENANCE AND REPAIR. Subject to Section 7.1 and
Article XI, Landlord shall provide service, maintenance and repair with respect
to the roof (including roof membrane), foundations, interior load bearing walls,
and footings of the Building, all landscaping, walkways, parking areas, exterior
lighting of the Site, any latent defects in the construction of the Building,
and the exterior surfaces of the exterior walls of the Building, except that
Tenant at its expense shall make all repairs which Landlord deems reasonably
necessary as a result of the act or negligence of Tenant, its agents, employees,
invitees, subtenants or contractors. Landlord shall have the right to employ or
designate any reputable person or firm, including any employee or agent of
Landlord or any of Landlord's affiliates or divisions, to perform any service,
repair or maintenance function. Landlord need not make any other improvements or
repairs except as specifically required under this Lease, and nothing contained
in this Section shall limit Landlord's right to reimbursement from Tenant for
maintenance, repair costs and replacement costs as provided elsewhere in this
Lease. Tenant understands that it shall not make repairs at Landlord's expense
or by rental offset. Tenant further understands that Landlord shall not be
required to make any repairs under this Section 7.2 unless and until Tenant has
notified Landlord in writing of the need for such repair (or Landlord otherwise
has actual knowledge of the need for such repair) and Landlord shall have a
reasonable period of time thereafter to commence and complete said repair, if
warranted. All costs of any maintenance and repairs on the part of Landlord
provided hereunder shall be considered part of Building Costs.

     SECTION 7.3. ALTERATIONS. Tenant shall make no alterations, additions or
improvements to the Premises or the outside areas without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, Tenant shall be permitted, without Landlord's
prior consent (but otherwise subject to all other terms and conditions of this
Section 7.3), to make any alterations, additions or improvements to the Premises
which, in the aggregate, cost less than Two Dollars ($2.00) per square foot of
the improved portions of the Premises (excluding warehouse square footage) and
do not (i) affect the exterior of the Building or outside areas (or be visible
from adjoining sites), or (ii) affect or penetrate any of the structural
portions of the Building, including but not limited to the roof, or (iii)
require any material change to any mechanical systems of the Premises, or any
governmental permit as a prerequisite to the construction thereof, or (iv)
interfere in any manner with the proper functioning of or Landlord's access to
any mechanical, electrical, plumbing or HVAC systems, facilities or equipment
located in or serving the Building. Tenant shall provide Landlord with not less
than ten (10) days prior written notice of any alterations, additions or
improvements permitted to be made by Tenant without Landlord's prior consent
pursuant to the immediately preceding sentence. Landlord may impose, as a
condition to Tenant making any alterations, additions or improvements (whether
or not Landlord's consent thereto is required hereunder), any requirements that
Landlord in its reasonable discretion may deem reasonable or desirable,
including but not limited to a requirement that all work be covered by a lien
and completion bond satisfactory to Landlord and requirements as to the manner,
time, and contractor for performance of the work. Tenant shall obtain all
required permits for the work and shall perform the work in compliance with all
applicable laws, regulations and ordinances, all covenants, conditions and
restrictions affecting the Premises, and the Rules and Regulations (hereafter
defined). If any governmental entity requires, as a condition to any proposed
alterations, additions or improvements to the Premises by Tenant, that
improvements be made to the outside areas, and if Landlord consents to such
improvements to the outside areas (which consent shall not be unreasonably
withheld, conditioned or delayed), then Tenant shall, at Tenant's sole expense,
make such required improvements to the outside areas in such manner, utilizing
such materials, and with such contractors (including, if required by Landlord,
Landlord's contractors) as Landlord may require in its reasonable discretion.
Under no circumstances shall Tenant make any improvement which incorporates any
Hazardous Materials, including without limitation asbestos-containing
construction materials into the Premises. Any request for Landlord's consent
shall be made in writing and shall contain architectural plans describing the
work in detail reasonably satisfactory to Landlord (and Landlord shall respond
to Tenant's request for consent within ten (10) business days following
Landlord's receipt of such architectural plans). Unless Landlord otherwise
agrees in writing, all alterations, additions or improvements affixed to the
Premises or the outside areas (excluding moveable trade fixtures and furniture)
shall become the property of Landlord and shall be surrendered with the Premises
at the end of the Term, except that Landlord may, by written notice to Tenant,
require Tenant to remove by the Expiration Date, or sooner termination date of
this Lease, all or any alterations, decorations, fixtures, additions,
improvements and the like installed either by Tenant or by Landlord at Tenant's
request and to repair any damage to the Premises arising from that removal
(which notice may be given by Landlord at any time, except that, if at the time
Tenant requests Landlord's consent to any alterations, decorations, fixtures,
additions or improvements, Tenant specifically requests in writing that Landlord
make such election concurrently with its consent (with specific reference in
Tenant's written request to the requirements of this sentence), then Landlord
shall provide such notice, if at all, concurrently with its consent to the
alterations, decorations, fixtures, additions or improvements in question).
Except as otherwise provided in this Lease or in any Exhibit to this Lease,
should Landlord make any alteration or improvement to the Premises for Tenant,
Landlord shall be entitled to prompt reimbursement from Tenant for all costs
incurred.

     Landlord acknowledges that Tenant desires to install (a) antennas and
satellite dishes on the roof of the Building, (b) refrigeration equipment within
the Premises, and (c) supplemental heating, ventilation and air conditioning
equipment upon the roof of the Building. The planning, installation,
construction and removal of such improvements by Tenant shall be subject to and
made in accordance with the terms and conditions of this Lease, including,
without limitation, the terms and conditions of this Section 7.3 above (and, for
purposes of such application, the term "Premises" as used therein shall be
deemed to include the roof of the Building).

                                      -11-
<PAGE>

     SECTION 7.4. MECHANIC'S LIENS. Tenant shall keep the Premises free from any
liens arising out of any work performed, materials furnished, or obligations
incurred by or for Tenant. Upon request by Landlord, Tenant shall promptly cause
any such lien to be released by posting a bond in accordance with California
Civil Code Section 3143 or any successor statute. In the event that Tenant shall
not, within thirty (30) days following the imposition of any lien, cause the
lien to be released of record by payment or posting of a proper bond, Landlord
shall have, in addition to all other available remedies, the right to cause the
lien to be released by any means it deems proper, including payment of or
defense against the claim giving rise to the lien. All expenses so incurred by
Landlord, including Landlord's attorneys' fees, and any consequential or other
damages incurred by Landlord arising out of such lien, shall be reimbursed by
Tenant promptly following Landlord's demand, together with interest from the
date of payment by Landlord at the maximum rate permitted by law until paid.
Tenant shall give Landlord no less than twenty (20) days' prior notice in
writing before commencing construction of any kind on the Premises so that
Landlord may post and maintain notices of nonresponsibility on the Premises.

     SECTION 7.5. ENTRY AND INSPECTION. Landlord shall at all reasonable times,
upon not less than twenty-four (24) hours written notice to Tenant (which notice
may be given by facsimile) (except in emergencies or any suspected violation by
Tenant of the provisions of Section 5.3 above, in which case no notice shall be
required) have the right to enter the Premises to inspect them, to supply
services in accordance with this Lease, to protect the interests of Landlord in
the Premises, and to submit the Premises to prospective or actual ~ purchasers
or encumbrance holders (or, during the last one hundred and eighty (180) days of
the Term, to prospective tenants), all without being deemed to have caused an
eviction of Tenant and without abatement of rent except as provided elsewhere in
this Lease. Landlord shall have the right, if desired, to retain a key (or other
applicable means of providing access) which unlocks all of the doors in the
Premises, excluding Tenant's secured cages, vaults and safes, and Landlord shall
have the right to use any and all means which Landlord may deem proper to open
the doors in an emergency in order to obtain entry to the Premises, and any
entry to the Premises obtained by Landlord shall not under any circumstances be
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or any eviction of Tenant from the Premises. Landlord agrees to use commercially
reasonably efforts to minimize interference with Tenant's business operations
with the Premises during any such entries made by Landlord hereunder. With
respect to any entries by Landlord into any computer or communications rooms
within the Premises, Tenant shall, at its election, be permitted to have a
representative accompany Landlord during any such entries (provided, however,
any such entries by Landlord shall not be delayed due to the unavailability of
such representative at the time of Landlord's desired entry).

           ARTICLE VIII.  TAXES AND ASSESSMENTS ON TENANT'S PROPERTY

     Tenant shall be liable for and shall pay, at least ten (10) days before
delinquency, all taxes and assessments levied against all personal property of
Tenant located in the Premises, and against any alterations, additions or like
improvements made to the Premises by or on behalf of Tenant. When possible
Tenant shall cause its personal property and alterations to be assessed and
billed separately from the real property of which the Premises form a part. If
any taxes on Tenant's personal property and/or alterations are levied against
Landlord or Landlord's property and if Landlord pays the same, or if the
assessed value of Landlord's property is increased by the inclusion of a value
placed upon the personal property and/or alterations of Tenant and if Landlord
pays the taxes based upon the increased assessment, Tenant shall pay to Landlord
the taxes so levied against Landlord or the proportion of the taxes resulting
from the increase in the assessment. In calculating what portion of any tax bill
which is assessed against Landlord separately, or Landlord and Tenant jointly,
is attributable to Tenant's alterations and personal property, Landlord's
reasonable determination shall be conclusive.

                     ARTICLE IX. ASSIGNMENT AND SUBLETTING

     SECTION 9.1. RIGHTS OF PARTIES.

          (a) Notwithstanding any provision of this Lease to the contrary but
subject to Section 9.4 below, Tenant will not, either voluntarily or by
operation of law, assign, sublet, encumber, or otherwise transfer all or any
part of Tenant's interest in this lease, or permit the Premises to be occupied
by anyone other than Tenant, without Landlord's prior written consent, which
consent shall not unreasonably be withheld in accordance with the provisions of
Section 9.l(b). Except as otherwise provided in Section 9.4 below, no assignment
(whether voluntary, involuntary or by operation of law) and no subletting shall
be valid or effective without Landlord's prior written consent and, at
Landlord's election, any such assignment or subletting or attempted assignment
or subletting shall constitute a material default of this Lease. Landlord shall
not be deemed to have given its consent to any assignment or subletting by any
other course of action, including its acceptance of any name for listing in the
Building directory. To the extent not prohibited by provisions of the Bankruptcy
Code, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"), including Section
365(f)(1), Tenant on behalf of itself and its creditors, administrators and
assigns waives the applicability of Section 365(e) of the Bankruptcy Code unless
the proposed assignee of the Trustee for the estate of the bankrupt meets
Landlord's standard for consent as set forth in Section 9.1(b) of this Lease. If
this Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other considerations to be delivered in
connection with the assignment shall be delivered to Landlord, shall be and
remain the exclusive property of Landlord and shall not constitute property of
Tenant or of the estate of Tenant within the meaning of the Bankruptcy Code. Any
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed to have assumed all of the obligations
arising under this Lease on and after the date of the assignment, and shall upon
demand execute and deliver to Landlord an instrument confirming that assumption.

                                      -12-
<PAGE>

          (b) If Tenant desires to transfer an interest in this Lease, it shall
first notify Landlord of its desire and shall submit in writing to Landlord: (i)
the name and address of the proposed transferee; (ii) the nature of any proposed
subtenant's or assignee's business to be carried on in the Premises; (iii) the
terms and provisions of any proposed sublease or assignment, including a copy of
the proposed assignment or sublease form; (iv) evidence of insurance of the
proposed assignee or subtenant complying with the requirements of Exhibit D
                                                                  ---------
hereto; (v) a completed Environmental Questionnaire from the proposed assignee
or subtenant; and (vi) any other information reasonably and timely requested by
Landlord and reasonably related to the transfer. Except as provided in
Subsection (e) of this Section, Landlord shall not unreasonably withhold its
consent with respect to any transfer for which its consent is required
hereunder, provided: (1) the use of the Premises will be consistent with the
provisions of this Lease; (2) the proposed assignee or subtenant has not been
required by any prior landlord, lender or governmental authority to take
remedial action in connection with Hazardous Materials contaminating a property
arising out of the proposed assignee's or subtenant's actions or use of the
property in question and is not subject to any enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material; (3) at Landlord's election, insurance requirements shall be
brought into conformity with Landlord's then current leasing practice; (4) any
proposed subtenant or assignee demonstrates that it is financially responsible
by submission to Landlord of all reasonable information as Landlord may request
concerning the proposed subtenant or assignee, including, but not limited to, a
balance sheet of the proposed subtenant or assignee as of a date within ninety
(90) days of the request for Landlord's consent and statements of income or
profit and loss of the proposed subtenant or assignee for the two-year period
preceding the request for Landlord's consent, and/or a certification signed by
the proposed subtenant or assignee that it has not been evicted or been in
arrears in rent at any other leased premises for the 3-year period preceding the
request for Landlord's consent; (5) any proposed subtenant or assignee
demonstrates to Landlord's reasonable satisfaction a record of successful
experience in business; and (6) the proposed transfer will not impose additional
burdens or adverse tax effects on Landlord, If Tenant has any exterior sign
rights under this Lease, such rights are personal to Tenant and may not be
assigned or transferred to any assignee of this Lease or subtenant of the
Premises without Landlord's prior written consent (except in connection with an
assignment or subletting permitted to be made without Landlord's consent
pursuant to Section 9.4 below), which may be withheld in Landlord's sole and
absolute discretion.

          If Landlord consents to the proposed transfer, Tenant may within
ninety (90) days after the date of the consent effect the transfer upon the
terms described in the information furnished to Landlord; provided that any
material change in the terms shall be subject to Landlord's consent as set forth
in this Section. Landlord shall approve or disapprove any requested transfer
within fifteen (15) business days following receipt of Tenant's written request,
the information set forth above, and the fee set forth below.

          (c) Notwithstanding the provisions of Subsection (b) above, other than
with respect to a subletting for less than fifty percent (50%) of the Premises,
in lieu of consenting to a proposed assignment or subletting, Landlord may elect
to (i) sublease the Premises (or the portion proposed to be subleased), or take
an assignment of Tenant's interest in this Lease, upon the same terms as offered
to the proposed subtenant or assignee (excluding terms relating to the purchase
of personal property, the use of Tenant's name or the continuation of Tenant's
business), or (ii) terminate this Lease as to the portion of the Premises
proposed to be subleased or assigned with a proportionate abatement in the rent
payable under this Lease, effective on the date that the proposed sublease or
assignment would have become effective. Landlord may thereafter, at its option,
assign or re-let any space so recaptured to any third party, including without
limitation the proposed transferee of Tenant. The provisions of this Subsection
(c) shall not apply to any assignment of this Lease or subletting of the
Premises permitted to be made without Landlord's consent pursuant to Section 9.4
below.

          (d) Tenant agrees that fifty percent (50%) of any amounts paid by the
assignee or subtenant, however described, in excess of (i) the Basic Rent
payable by Tenant hereunder, or in the case of a sublease of a portion of the
Premises, in excess of the Basic Rent reasonably allocable to such portion, plus
(ii) Tenant's direct out-of-pocket costs which Tenant certifies to Landlord have
been paid to provide occupancy related services to such assignee or subtenant of
a nature commonly provided by landlords of similar space, shall be the property
of Landlord and such amounts shall be payable directly to Landlord by the
assignee or subtenant or, at Landlord's option, by Tenant. At Landlord's
request, a written agreement shall be entered into by and among Tenant, Landlord
and the proposed assignee or subtenant confirming the requirements of this
subsection.

          (e) Tenant shall pay to Landlord a fee of Five Hundred Dollars
($500.00) if and when any transfer hereunder is requested by Tenant, other than
with respect to any assignment of this Lease or subletting of the Premises
permitted to be made without Landlord's consent pursuant to Section 9.4 below.
Such fee is hereby acknowledged as a reasonable amount to reimburse Landlord for
its costs of review and evaluation of a proposed assignee/sublessee, and
Landlord shall not be obligated to commence such review and evaluation unless
and until such fee is paid.

     SECTION 9.2. EFFECT OF TRANSFER. Except as otherwise provided in Section
9.1(c) above, no subletting or assignment, even with the consent of Landlord,
shall relieve Tenant of its obligation to pay rent and to perform all its other
obligations under this Lease. Moreover, Tenant shall indemnify and hold Landlord
harmless, as provided in Section 10.3, for any act or omission by an assignee or
subtenant. Each assignee, other than Landlord, shall be deemed to assume all
obligations of Tenant under this Lease and shall be liable jointly and severally
with Tenant for the payment of all rent, and for the due performance of all of
Tenant's obligations, under this Lease. No transfer shall be binding on Landlord
unless any document memorializing the transfer is delivered to Landlord and,
other than with respect to any assignment of this Lease or subletting of the
Premises permitted to be made without Landlord's consent pursuant to Section 9.4
below, both the assignee/subtenant and Tenant deliver to Landlord an executed
consent to transfer instrument prepared by Landlord and consistent with the
requirements of this Article.

                                      -13-
<PAGE>

The acceptance by Landlord of any payment due under this Lease from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any transfer. Consent by Landlord to one or more
transfers shall not operate as a waiver or estoppel to the future enforcement by
Landlord of its rights under this Lease.

     SECTION 9.3.  SUBLEASE REQUIREMENTS. The following terms and conditions
shall apply to any subletting by Tenant of all or any part of the Premises and
shall be deemed included in each sublease:

          (a) Each and every provision contained in this Lease (other than with
respect to the payment of rent hereunder) is incorporated by reference into and
made a part of such sublease, with "Landlord" hereunder meaning the sublandlord
therein and "Tenant" hereunder meaning the subtenant therein.

          (b) Tenant hereby irrevocably assigns to Landlord all of Tenant's
interest in all rentals and income arising from any sublease of the Premises,
and Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default occurs in
the performance of Tenant's obligations under this Lease, Tenant shall have the
right to receive and collect the sublease rentals. Landlord shall not, by reason
of this assignment or the collection of sublease rentals, be deemed liable to
the subtenant for the performance of any of Tenant's obligations under the
sublease. Tenant hereby irrevocably authorizes and directs any subtenant, upon
receipt of a written notice from Landlord stating that an uncured default exists
in the performance of Tenant's obligations under this Lease, to pay to Landlord
all sums then and thereafter due under the sublease. Tenant agrees that the
subtenant may rely on that notice without any duty of further inquiry and
notwithstanding any notice or claim by Tenant to the contrary. Tenant shall have
no right or claim against the subtenant or Landlord for any rentals so paid to
Landlord.

          (c) In the event of the termination of this Lease, Landlord may, at
its sole option, take over Tenant's entire interest in any sublease and, upon
notice from Landlord, the subtenant shall attorn to Landlord. In no event,
however, shall Landlord be liable for any previous act or omission by Tenant
under the sublease or for the return of any advance rental payments or deposits.
under the sublease that have not been actually delivered to Landlord, nor shall
Landlord be bound by any sublease modification executed without Landlord's
consent or for any advance rental payment by the subtenant in excess of one
month's rent. The general provisions of this Lease, including without limitation
those pertaining to insurance and indemnification, shall be deemed incorporated
by reference into the sublease despite the termination of this Lease.

     SECTION 9.4.  CERTAIN TRANSFERS. The sale of all or substantially all of
Tenant's assets (other than bulk sales in the ordinary course of business) or,
if Tenant is a corporation, an unincorporated association, or a partnership, the
transfer, assignment or hypothecation of any stock or interest in such
corporation, association, or partnership in the aggregate of twenty-five percent
(25%) (except for publicly traded shares of stock constituting a transfer of
twenty-five percent (25%) or more in the aggregate) shall be deemed an
assignment within the meaning and provisions of this Article. Notwithstanding
the foregoing, Landlord's consent shall not be required for any of the following
transfers (each of which shall be a "Permitted Transfer"): (a) an assignment of
this Lease to any entity which controls, is controlled by or is under common
control with Tenant, (b) an assignment of this Lease to any successor entity
resulting from the merger or consolidation with Tenant, or (c) an assignment of
this Lease to any entity which acquires all or substantially all of the assets
or stock of Tenant, so long as, in each instance, (i) with respect to a
Permitted Transfer described in subsections (b) and/or (c) above, the net worth
of the assignee immediately following such assignment is at least equal to the
lesser of (A) the greater of the net worth of Tenant as of the execution of this
Lease by Landlord or the net worth of Tenant immediately prior to the date of
such assignment, or (B) One Hundred Million Dollars ($100,000,000), evidence of
which, reasonably satisfactory to Landlord, shall be presented to Landlord prior
to such assignment, (ii) Tenant shall provide to Landlord, prior to such
assignment, written notice of such assignment and such assignment documentation
and other information as Landlord may reasonably request in connection
therewith, and (iii) except as otherwise specifically provided in this Article,
all of the other terms and requirements of this Article shall apply with respect
to such assignment. In addition, Landlord's consent shall not be required for
the sublease of all or any portion of the Premises to any entity which controls,
is controlled by or is under common control with Tenant so long as (i) Tenant
shall provide to Landlord, prior to such sublease, written notice of such
sublease and such sublease documentation and other information as Landlord may
reasonably request in connection therewith, and (ii) except as otherwise
specifically provided in this Article, all of the other terms and requirements
of this Article shall apply with respect to such sublease. For purposes of this
Section 9.4, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management, affairs and policies
of the entity in question, whether through the ownership of voting securities,
by contract or otherwise.

                      ARTICLE X.  INSURANCE AND INDEMNITY

     SECTION 10.1. TENANT'S INSURANCE. Tenant, at its sole cost and expense,
shall provide and maintain in effect the insurance described in Exhibit D.
                                                                ---------
Evidence of that insurance must be delivered to Landlord prior to the
Commencement Date.

     SECTION 10.2. LANDLORD'S INSURANCE. Landlord may, at its election, provide
any or all of the following types of insurance, with or without deductible and
in amounts and coverages as may be determined by Landlord in its discretion
(provided, however, if deductibles are included with such insurance, the amount
of such deductibles shall be reasonable and comparable to those being carried
with respect to comparable projects in the area): "all risk" property insurance,
subject to standard exclusions, covering the Building, and such other risks as
Landlord or its mortgagees may from time to time deem appropriate, including
leasehold improvements made by

                                      -14-
<PAGE>

Landlord, and commercial general liability coverage. Landlord shall not be
required to carry insurance of any kind on Tenant's property, including
leasehold improvements, trade fixtures, furnishings, equipment, plate glass,
signs and all other items of personal property, and shall not be obligated to
repair or replace that property should damage occur. All proceeds of insurance
maintained by Landlord upon the Building shall be the property of Landlord,
whether or not Landlord is obligated to or elects to make any repairs. At
Landlord's option, Landlord may self-insure all or any portion of the risks for
which Landlord elects to provide insurance hereunder.

     SECTION 10.3. TENANT'S INDEMNITY. To the fullest extent permitted by law
and except for claims, liabilities, costs and expenses arising from the sole
active negligence or willful misconduct of Landlord, its employees or authorized
agents, Tenant shall defend, indemnify, protect, save and hold harmless
Landlord, its agents, and any and all affiliates of Landlord, including, without
limitation, any corporations or other entities controlling, controlled by or
under common control with Landlord, from and against any and all claims,
liabilities, costs or expenses arising either before or after the Commencement
Date from Tenant's use or occupancy of the Premises or the Building, or from the
conduct of its business, or from any activity, work, or thing done, permitted or
suffered by Tenant or its agents, employees, invitees or licensees in or about
the Premises or the Building, or from any default in the performance of any
obligation on Tenant's part to be performed under this Lease, or from any act or
negligence of Tenant or its agents, employees, visitors, patrons, guests,
invitees or licensees (including without limitation any act or omission which
gives rise to Landlord's obligation to indemnify Ground Lessor and certain other
parties under the Ground Lease described in Section 6.2(b)). Landlord may, at
its option, require Tenant to assume Landlord's defense in any action covered by
this Section through counsel satisfactory to Landlord. The provisions of this
Section shall expressly survive the expiration or sooner termination of this
Lease.

     SECTION 10.4. LANDLORD'S NONLIABILITY. Landlord shall not be liable to
Tenant, its employees, agents and invitees, and Tenant hereby waives all claims
against Landlord for loss of or damage to any property, or any injury to any
person, or loss or interruption of business or income, or any other loss, cost,
damage, injury or liability whatsoever (including without limitation any
consequential damages and lost profit or opportunity costs) resulting from, but
not limited to, Acts of God, acts of civil disobedience or insurrection, fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak or flow from or into any part of the Building or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning, electrical works or other fixtures in
the Building. it is understood that any such condition may require the temporary
evacuation or closure of all or a portion of the Building. Except as provided in
Sections 11.1 and 12.1 below, there shall be no abatement of rent and no
liability of Landlord by reason of any injury to or interference with Tenant's
business (including without limitation consequential damages and lost profit or
opportunity costs) arising from the making of any repairs, alterations or
improvements to any portion of the Building, including repairs to the Premises,
nor shall any related activity by Landlord constitute an actual or constructive
eviction; provided, however, that in making repairs, alterations or
improvements, Landlord shall interfere as little as reasonably practicable with
the conduct of Tenant's business in the Premises. Neither Landlord nor its
agents shall be liable for interference with light or other similar intangible
interests. Tenant shall immediately notify Landlord in case of fire or accident
in the Premises or the Building and of defects in any improvements or equipment.

     SECTION 10.5. WAIVER OF SUBROGATION. Landlord and Tenant each hereby waives
all rights of recovery against the other and the other's agents on account of
loss and damage occasioned to the property of such waiving party to the extent
only that such loss or damage is required to be insured against under any "all
risk" property insurance policies required by this Article X; provided however,
that (i) the foregoing waiver shall not apply to the extent of Tenant's
obligations to pay deductibles under any such policies and this Lease, and (ii)
if any loss is due to the act, omission or negligence or willful misconduct of
Tenant or its agents, employees, contractors, guests or invitees, Tenant's
liability insurance shall be primary and shall cover all losses and damages
prior to any other insurance hereunder. By this waiver it is the intent of the
parties that neither Landlord nor Tenant shall be liable to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage insured against under any "all-risk" property insurance policies
required by this Article, even though such loss or damage might be occasioned by
the negligence of such party, its agents, employees, contractors, guests or
invitees. The provisions of this Section shall not limit the indemnification
provisions elsewhere contained in this Lease.

                      ARTICLE XI.  DAMAGE OR DESTRUCTION

     SECTION 11.1. RESTORATION.

          (a) If the Building is damaged, Landlord shall repair that damage as
soon as reasonably possible, at its expense, unless: (i) Landlord reasonably
determines that the cost of repair is not covered by Landlord's fire and
extended coverage insurance plus such additional amounts Tenant elects, at its
option, to contribute, excluding however the deductible (for which Tenant shall
be responsible for Tenant's proportionate share); (ii) Landlord reasonably
determines that the Premises cannot, with reasonable diligence, be fully
repaired by Landlord (or cannot be safely repaired because of the presence of
hazardous factors, including without limitation Hazardous Materials, earthquake
faults, and other similar dangers) within two hundred seventy (270) days after
the date of the damage; (iii) an event of default by Tenant has occurred and is
continuing at the time of such damage; or (iv) the damage occurs during the
final twelve (12) months of the Term. Should Landlord elect not to repair the
damage for one of the preceding reasons, Landlord shall so notify Tenant in
writing within sixty (60) days after the damage occurs and this Lease shall
terminate as of the date of that notice.

          (b) Unless Landlord elects to terminate this Lease in accordance with
subsection (a) above, this Lease shall continue in effect for the remainder of
the Term; provided that so long as Tenant is not in default

                                      -15-
<PAGE>

under this Lease, if the damage is so extensive that Landlord reasonably
determines that the Premises cannot, with reasonable diligence, be repaired by
Landlord (or cannot be safely repaired because of the presence of hazardous
factors, earthquake faults, and other similar dangers) so as to allow Tenant's
substantial use and enjoyment of the Premises within two hundred seventy (270)
days after the date of damage, then Tenant may elect to terminate this Lease by
written notice to Landlord within the sixty (60) day period stated in subsection
(a).

          (c) Commencing on the date of any damage to the Building, and ending
on the sooner of the date the damage is repaired or the date this Lease is
terminated, the rental to be paid under this Lease shall be abated in the same
proportion that the floor area of the Building that is rendered unusable (as
reasonably determined by Tenant) by the damage from time to time bears to the
total floor area of the Building, but only to the extent that any business
interruption insurance proceeds are received by Landlord therefor from Tenant's
insurance described in Exhibit D.
                       ---------

          (d) Notwithstanding the provisions of subsections (a), (b) and (c) of
this Section, and subject to the provisions of Section 10.5 above, the cost of
any repairs shall be borne by Tenant, and Tenant shall not be entitled to rental
abatement or termination rights, if the damage is due to the fault or neglect of
Tenant or its employees, subtenants, invitees or representatives. In addition,
the provisions of this Section shall not be deemed to require Landlord to repair
any improvements or fixtures that Tenant is obligated to repair or insure
pursuant to any other provision of this Lease.

          (e) Tenant shall fully cooperate with Landlord in removing Tenant's
personal property and any debris from the Premises to facilitate all inspections
of the Premises and the making of any repairs. Notwithstanding anything to the
contrary contained in this Lease, if Landlord in good faith believes there is a
risk of injury to persons or damage to property from entry into the Building or
Premises following any damage or destruction thereto, Landlord may restrict
entry into the Building or the Premises by Tenant, its employees, agents and
contractors in a non-discriminatory manner, without being deemed to have
violated Tenant's rights of quiet enjoyment to, or made an unlawful detainer of,
or evicted Tenant from, the Premises. Upon request, Landlord shall consult with
Tenant to determine if there are safe methods of entry into the Building or the
Premises solely in order to allow Tenant to retrieve files, data in computers,
and necessary inventory, subject however to all indemnities and waivers of
liability from Tenant to Landlord contained in this Lease and any additional
indemnities and waivers of liability which Landlord may require.

     SECTION 11.2. LEASE GOVERNS. The parties agree that the provisions of this
Lease, including without limitation Section 11.1, shall govern any damage or
destruction and shall accordingly supersede any contrary statute or rule of law.

                         ARTICLE XII.  EMINENT DOMAIN

     SECTION 12.1. TOTAL OR PARTIAL TAKING. If all or a material portion of the
Premises (i.e., such portion of the Premises, as reasonably determined by
Tenant, without which Tenant cannot reasonably operate its business within the
Premises) is taken by any lawful authority by exercise of the right of eminent
domain, or sold to prevent a taking, either Tenant or Landlord may terminate
this Lease effective as of the date possession is required to be surrendered to
the authority. In the event title to a portion of the Premises is taken or sold
in lieu of taking, and if Landlord elects to restore the Premises in such a way
as to alter the Premises materially, either party may terminate this Lease, by
written notice to the other party, effective on the date of vesting of title. In
the event neither party has elected to terminate this Lease as provided above,
then Landlord shall promptly, after receipt of a sufficient condemnation award,
proceed to restore the Premises to substantially their condition prior to the
taking, and a proportionate allowance shall be made to Tenant for the rent
corresponding to the time during which, and to the part of the Premises of
which, Tenant is deprived on account of the taking and restoration. In the event
of a taking, Landlord shall be entitled to the entire amount of the condemnation
award without deduction for any estate or interest of Tenant; provided that
nothing in this Section shall be deemed to give Landlord any interest in, or
prevent Tenant from seeking any award against the taking authority for, the
taking of personal property and fixtures belonging to Tenant or for relocation
or business interruption expenses or for loss of goodwill recoverable from the
taking authority.

     SECTION 12.2. TEMPORARY TAKING. No temporary taking of the Premises shall
terminate this Lease or give Tenant any right to abatement of rent, and any
award specifically attributable to a temporary taking of the Premises shall
belong entirely to Tenant. A temporary taking shall be deemed to be a taking of
the use or occupancy of the Premises for a period of not to exceed one hundred
eighty (180) days.

     SECTION 12.3. TAKING OF PARKING AREA. In the event that (i) there is a
taking of (a) more than twenty percent (20%) of the vehicle parking spaces
located on the Site as of the Commencement Date, or (b)more than ten percent
(10%) percent of the area designated on Exhibit A-2 attached hereto as the
                                        -----------
"Fenced Area", and (ii) Landlord is unable to substitute reasonably equivalent
parking in a location reasonably close to the Building within thirty (30) days
following the taking, then Tenant may, at its option, terminate this Lease by
written notice to Landlord within fifteen (15) days following the expiration of
such thirty (30) day period. if this Lease is not so terminated by Tenant, there
shall be no abatement of rent and this Lease shall continue in effect.

         ARTICLE XIII. SUBORDINATION; ESTOPPEL CERTIFICATE; FINANCIALS

     SECTION 13.1. SUBORDINATION. At the option of Landlord, this Lease shall be
either superior or subordinate to all ground or underlying leases, mortgages and
deeds of trust, if any, which may hereafter affect the

                                      -16-
<PAGE>

Premises, and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, that so long as Tenant is not in default under
this Lease beyond any applicable cure period, this Lease shall not be terminated
or Tenant's quiet enjoyment of the Premises disturbed in the event of
termination of any such ground or underlying lease, or the foreclosure of any
such mortgage or deed of trust, to which Tenant has subordinated this Lease
pursuant to this Section. In the event of a termination or foreclosure, Tenant
shall become a tenant of and attorn to the successor-in-interest to Landlord
upon the same terms and conditions as are contained in this Lease, and shall
execute any instrument reasonably required by Landlord's successor for that
purpose. Tenant shall also, upon written request of Landlord, execute and
deliver all instruments as may be required from time to time to subordinate the
rights of Tenant under this Lease to any ground or underlying lease or to the
lien of any mortgage or deed of trust (provided that such instruments include
the nondisturbance and attornment provisions set forth above), or, if requested
by Landlord,, to subordinate, in whole or in part, any ground or underlying
lease or the lien of any mortgage or deed of trust to this Lease.

     SECTION 13.2. ESTOPPEL CERTIFICATE.

          (a) Tenant shall, at any time upon not less than ten (10) days prior
written notice from Landlord, execute, acknowledge and deliver to Landlord, in
any form that Landlord may reasonably require, a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect (or, if
modified, stating the nature of the modification and certifying that this Lease,
as modified, is in full force and effect) and the dates to which the rental,
additional rent and other charges have been paid in advance, if any, and (ii)
acknowledging that, to Tenant's knowledge, there are no uncured defaults on the
part of Landlord, or specifying each default if any are claimed, and (iii)
setting forth all further information that Landlord may reasonably require.
Tenant's statement may be relied upon by any prospective purchaser or
encumbrancer of the Premises.

          (b) Notwithstanding any other rights and remedies of Landlord,
Tenant's failure to deliver any estoppel statement within the provided time
shall be conclusive upon Tenant that (i) this Lease is in full force and effect,
without modification except as may be represented by Landlord, (ii) there are no
uncured defaults in Landlord's performance, and (iii) not more than one month's
rental has been paid in advance.

     SECTION 13.3. FINANCIALS.

          (a) Tenant shall deliver to Landlord, prior to the execution of this
Lease and thereafter at any time upon Landlord's request, Tenant's current
financial statements, certified true, accurate and complete by an officer of
Tenant, including a balance sheet and profit and loss statement for the most
recent prior year (collectively, the "Statements"), which Statements shall
accurately and completely reflect the financial condition of Tenant. Landlord
agrees that it will keep the Statements confidential, except that Landlord shall
have the right to deliver the same to any proposed purchaser or encumbrancer of
the Premises; provided, however, any such disclosure shall be strictly limited
to bona fide prospective purchasers and encumbrancers (and their respective
accountants, attorneys and financial advisers) and then shall only be permitted
to the extent that such bona fide prospective purchasers and encumbrancers (and
their respective accountants, attorneys and financial advisers to whom such
disclosures will be made) shall agree to preserve the confidentiality of the
substance and contents the Statements in question.

          (b) Tenant acknowledges that Landlord is relying on the Statements in
its determination to enter into this Lease, and Tenant represents to Landlord,
which representation shall be deemed made on the date of this Lease and again on
the Commencement Date, that no material change in the financial condition of
Tenant, as reflected in the Statements, has occurred since the date Tenant
delivered the Statements to Landlord, other than such changes as Tenant may
disclose to Landlord in writing prior to Landlord's execution of this Lease. The
Statements are represented and warranted by Tenant to be correct and to
accurately and fully reflect Tenant's true financial condition as of the date of
submission by any Statements to Landlord.

                      ARTICLE XIV. DEFAULTS AND REMEDIES

     SECTION 14.1. TENANT'S DEFAULTS. In addition to any other event of default
set forth in this Lease, the occurrence of any one or more of the following
events shall constitute a default by Tenant (and, for purposes of this Lease,
the term "default", as used in each context relating to Tenant, shall mean):

          (a) The failure by Tenant to make any payment of rent or additional
rent required to be made by Tenant, as and when due, where the failure continues
for a period of three (3) business days after written notice from Landlord to
Tenant; provided, however, that any such notice shall be in lieu of, and not in
addition to, any notice required under California Code of Civil Procedure
Section 1161 and 1161(a) as amended. For purposes of these default and remedies
provisions, the term "additional rent" shall be deemed to include all amounts of
any type whatsoever other than Basic Rent to be paid by Tenant pursuant to the
terms of this Lease.

          (b) Assignment, sublease, encumbrance or other transfer of the Lease
by Tenant, either voluntarily or by operation of law, whether by judgment,
execution, transfer by intestacy or testacy. or other means, without the prior
written consent of Landlord (other than an assignment of this Lease or a
subletting of the Premises permitted to be made without Landlord's consent
pursuant to Section 9.4 above).

          (c) The discovery by Landlord that any financial statement provided by
Tenant, or by any affiliate, successor or guarantor of Tenant, was materially
false.

                                      -17-
<PAGE>

          (d) The failure of Tenant to timely and fully provide any
subordination agreement, estoppel certificate or financial statements in
accordance with the requirements of Article XIII.

          (e) The failure or inability by Tenant to observe or perform any of
the express or implied covenants or provisions of this Lease to be observed or
performed by Tenant, other than as specified in any other subsection of this
Section, where the failure continues for a period of thirty (30) days after
written notice from Landlord to Tenant or such shorter period as is specified in
any other provision of this Lease; provided, however, that any such notice shall
be in lieu of, and not in addition to, any notice required under California Code
of Civil Procedure Section 1161 and 1161(a) as amended. However, if the nature
of the failure is such that more than thirty (30) days are reasonably required
for its cure, then Tenant shall not be deemed to be in default if Tenant
commences the cure within thirty (30) days, and thereafter diligently pursues
the cure to completion.

          (f) (i) The making by Tenant of any general assignment for the benefit
of creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a Chapter 7 debtor under the Bankruptcy Code or to have debts
discharged or a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
the same is dismissed within thirty (30) days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, if possession is
not restored to Tenant within thirty (30) days; (iv) the attachment, execution
or other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where the seizure is not
discharged within thirty (30) days; or (v) Tenant's convening of a meeting of
its creditors for the purpose of effecting a moratorium upon or composition of
its debts. Landlord shall not be deemed to have knowledge of any event described
in this subsection unless notification in writing is received by Landlord, nor
shall there be any presumption attributable to Landlord of Tenant's insolvency.
In the event that any provision of this subsection is contrary to applicable
law, the provision shall be of no force or effect

     SECTION 14.2. LANDLORD'S REMEDIES.

          (a) In the event of any default by Tenant, or in the event of the
abandonment of the Premises by Tenant, then in addition to any other remedies
available to Landlord, Landlord may exercise the following remedies:

              (i)  Landlord may terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. Such
termination shall not affect any accrued obligations of Tenant under this Lease.
Upon termination, Landlord shall have the right to reenter the Premises and
remove all persons and property. Landlord shall also be entitled to recover from
Tenant:

                   (1) The worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination;

                   (2) The worth at the time of award of the amount by which the
unpaid rent and additional rent which would have been earned after termination
until the time of award exceeds the amount of such loss that Tenant proves could
have been reasonably avoided;

                   (3) The worth at the time of award of the amount by which the
unpaid rent and additional rent for the balance of the Term after the time of
award exceeds the amount of such loss that Tenant proves could be reasonably
avoided;

                   (4) Any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result from Tenant's default, including, but not limited to, the cost of
recovering possession of the Premises, refurbishment of the Premises, marketing
costs, commissions and other expenses of reletting, including necessary repair,
the unamortized portion of any tenant improvements and brokerage commissions
funded by Landlord in connection with this Lease, reasonable attorneys' fees,
and any other reasonable costs; and

                   (5) At Landlord's election, all other amounts in addition to
or in lieu of the foregoing as may be permitted by law. The term "rent" as used
in this Lease shall be deemed to mean the Basic Rent and all other sums required
to be paid by Tenant to Landlord pursuant to the terms of this Lease. Any sum,
other than Basic Rent, shall be computed on the basis of the average monthly
amount accruing during the twenty-four (24) month period immediately prior to
default, except that if it becomes necessary to compute such rental before the
twenty-four (24) month period has occurred, then the computation shall be on the
basis of the average monthly amount during the shorter period. As used in
subparagraphs (1) and (2) above, the "worth at the time of award" shall be
computed by allowing interest at the rate of ten percent (10%) per annum. As
used in subparagraph (3) above, the "worth at the time of award" shall be
computed by discounting the amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).

              (ii) Landlord may elect not to terminate Tenant's right to
possession of the Premises, in which event Landlord may continue to enforce all
of its rights and remedies under this Lease, including the right to collect all
rent as it becomes due. Efforts by the Landlord to maintain, preserve or relet
the Premises, or the appointment of a receiver to protect the Landlord's
interests under this Lease, shall not constitute a termination of the Tenant's
right to possession of the Premises. In the event that Landlord elects to avail
itself of the remedy

                                      -18-
<PAGE>

provided by this subsection (ii), Landlord shall not unreasonably withhold its
consent to an assignment or subletting of the Premises subject to the reasonable
standards for Landlord's consent as are contained in this Lease.

          (b) Landlord shall be under no obligation to observe or perform any
covenant of this Lease on its part to be observed or performed which accrues
after the date of any default by Tenant unless and until the default is cured by
Tenant, it being understood and agreed that the performance by Landlord of its
obligations under this Lease are expressly conditioned upon Tenant's full and
timely performance of its obligations under this Lease. The various rights and
remedies reserved to Landlord in this Lease or otherwise shall be cumulative
and, except as otherwise provided by California law, Landlord may pursue any or
all of its rights and remedies at the same time.

          (c) No delay or omission of Landlord to exercise any right or remedy
shall be construed as a waiver of the right or remedy or of any default by
Tenant. The acceptance by Landlord of rent shall not be a (i) waiver of any
preceding breach or default by Tenant of any provision of this Lease, other than
the failure of Tenant to pay the particular rent accepted, regardless of
Landlord's knowledge of the preceding breach or default at the time of
acceptance of rent, or (ii) a waiver of Landlord's right to exercise any remedy
available to Landlord by virtue of the breach or default. The acceptance of any
payment from a debtor in possession, a trustee, a receiver or any other person
acting on behalf of Tenant or Tenant's estate shall not waive or cure a default
under Section 14.1. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent required by this Lease shall be deemed to be other than a
partial payment on account of the earliest due stipulated rent, nor shall any
endorsement or statement on any check or letter be deemed an accord and
satisfaction and Landlord shall accept the check or payment without prejudice to
Landlord's right to recover the balance of the rent or pursue any other remedy
available to it. No act or thing done by Landlord or Landlord's agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and signed by
Landlord. No employee of Landlord or of Landlord's agents shall have any power
to accept the keys to the Premises prior to the termination of this Lease, and
the delivery of the keys to any employee shall not operate as a termination of
the Lease or a surrender of the Premises.

     SECTION 14.3. LATE PAYMENTS.

          (a) Any rent due under this Lease that is not received by Landlord
within five (5) days of the date when due shall bear interest at the maximum
rate permitted by law from the date due until fully paid. The payment of
interest shall not cure any default by Tenant under this Lease. In addition,
Tenant acknowledges that the late payment by Tenant to Landlord of rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of which will be extremely difficult and impracticable to ascertain. Those costs
may include, but are not limited to, administrative, processing and accounting
charges, and late charges which may be imposed on Landlord by the terms of any
ground lease, mortgage or trust deed covering the Premises. Accordingly, if any
rent due from Tenant shall not be received by Landlord or Landlord's designee
within five (5) days after the date due, then Tenant shall pay to Landlord, in
addition to the interest provided above, a late charge in a sum equal to the
greater of five percent (5%) of the amount overdue or Two Hundred Fifty Dollars
($250.00) for each delinquent payment. Acceptance of a late charge by Landlord
shall not constitute a waiver of Tenant's default with respect to the overdue
amount, nor shall it prevent Landlord from exercising any of its other rights
and remedies.

          (b) Following each second consecutive installment of rent that is not
paid within five (5) days following notice of nonpayment from Landlord, Landlord
shall have the option to require that beginning with the first payment of rent
next due, rent shall no longer be paid in monthly installments but shall be
payable quarterly three (3) months in advance (provided, however, if Tenant
thereafter pays three (3) consecutive quarterly payments in a timely manner, the
payment of rent hereunder shall thereupon revert to monthly installments).
Should Tenant deliver to Landlord, at any time during the Term, two (2) or more
insufficient checks, the Landlord may require that all monies then and
thereafter due from Tenant be paid to Landlord by cashier's check.

     SECTION 14.4. RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to
be performed by Tenant under this Lease shall be performed at Tenant's sole cost
and expense and without any abatement of rent or right of set-off. If Tenant
fails to pay any sum of money, other than rent, or fails to perform any other
act on its part to be performed under this Lease, and the failure continues
beyond any applicable grace period set forth in Section 14.1, then, upon notice
to Tenant and in addition to any other available remedies, Landlord may, at its
election make the payment or perform the other act on Tenant's part. Landlord's
election to make the payment or perform the act on Tenant's part shall not give
rise to any responsibility of Landlord to continue making the same or similar
payments or performing the same or similar acts. Tenant shall, promptly upon
demand by Landlord, reimburse Landlord for all sums paid by Landlord and all
necessary incidental costs, together with interest at the maximum rate permitted
by law from the date of the payment by Landlord. Landlord shall have the same
rights and remedies if Tenant fails to pay those amounts as Landlord would have
in the event of a default by Tenant in the payment of rent.

     SECTION 14.5. DEFAULT BY LANDLORD. Landlord shall not be deemed to be in
default in the performance of any obligation under this Lease unless and until
it has failed to perform the obligation within thirty (30) days after written
notice by Tenant to Landlord specifying in reasonable detail the nature and
extent of the failure; provided, however, that if the nature of Landlord's
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be deemed to be in default if it commences
performance within the thirty (30) day period and thereafter diligently pursues
the cure to completion.

     SECTION 14.6. EXPENSES AND LEGAL FEES. All sums reasonably incurred by
Landlord in connection with any event of default by Tenant under this Lease or
holding over of possession by Tenant after the

                                      -19-
<PAGE>

expiration or earlier termination of this Lease, including without limitation
all costs, expenses and actual accountants, appraisers, attorneys and other
professional fees, and any collection agency or other collection charges, shall
be due and payable by Tenant to Landlord on demand, and shall bear interest at
the rate of ten percent (10%) per annum. Should either Landlord or Tenant bring
any action in connection with this Lease, the prevailing party shall be entitled
to recover as a part of the action its reasonable attorneys' fees, and all other
costs. The prevailing party for the purpose of this paragraph shall be
determined by the trier of the facts.

     SECTION 14.7. WAIVER OF JURY TRIAL. LANDLORD AND TENANT EACH ACKNOWLEDGES
THAT IT IS AWARE OF AND HAS HAD THE ADVICE OF COUNSEL OF ITS CHOICE WITH RESPECT
TO ITS RIGHTS TO TRIAL BY JURY, AND EACH PARTY DOES HEREBY EXPRESSLY AND
KNOWINGLY WAIVE AND RELEASE ALL SUCH RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST THE OTHER
(AND/OR AGAINST ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, OR SUBSIDIARY OR
AFFILIATED ENTITIES) ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS LEASE, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY
CLAIM OF INJURY OR DAMAGE.

     SECTION 14.8. SATISFACTION OF JUDGMENT. The obligations of Landlord do not
constitute the personal obligations of the individual partners, trustees,
directors, officers or shareholders of Landlord or its constituent partners.
Should Tenant recover a money judgment against Landlord, such judgment shall be
satisfied only out of the proceeds of sale received upon execution of such
judgment and levied thereon against the right, title and interest of Landlord in
the Building and out of the rent or other income from such property receivable
by Landlord or out of consideration received by Landlord from the sale or other
disposition of all or any part of Landlord's right, title or interest in the
Building (including from any Taking, in whole or in part, of the Site) or from
any insurance policies maintained by Landlord with respect to the Site, and no
action for any deficiency may be sought or obtained by Tenant.

     SECTION 14.9. LIMITATION OF ACTIONS AGAINST LANDLORD. Any claim, demand or
right of any kind by Tenant which is based upon or arises in connection with
this Lease shall be barred unless Tenant commences an action thereon within
twelve (12) months after the date that the act, omission, event or default upon
which the claim, demand or right arises, has occurred.

                           ARTICLE XV.  END OF TERM

     SECTION 15.1. HOLDING OVER. This Lease shall terminate without further
notice upon the expiration of the Term, and any holding over by Tenant after the
expiration shall not constitute a renewal or extension of this Lease, or give
Tenant any rights under this Lease, except when in writing signed by both
parties. If Tenant holds over for any period after the expiration (or earlier
termination) of the Term without the prior written consent of Landlord, such
possession shall constitute a tenancy at sufferance only; such holding over with
the prior written consent of Landlord shall constitute a month-to-month tenancy
commencing on the first (1st) day following the termination of this Lease. In
either of such events, possession shall be subject to all of the terms of this
Lease, except that the monthly Basic Rent shall be the greater of (a) two
hundred percent (200%) of the Basic Rent for the month immediately preceding the
date of termination or (b) the then currently scheduled Basic Rent for
comparable space in the Building. If Tenant fails to surrender the Premises upon
the expiration of this Lease despite demand to do so by Landlord, Tenant shall
indemnify and hold Landlord harmless from all loss or liability, including
without limitation, any claims made by any succeeding tenant relating to such
failure to surrender. Acceptance by Landlord of rent after the termination shall
not constitute a consent to a holdover or result in a renewal of this Lease. The
foregoing provisions of this Section are in addition to and do not affect
Landlord's right of re-entry or any other rights of Landlord under this Lease or
at law.

     SECTION 15.2. MERGER ON TERMINATION. The voluntary or other surrender of
this Lease by Tenant, or a mutual termination of this Lease, shall terminate any
or all existing subleases unless Landlord, at its option, elects in writing to
treat the surrender or termination as an assignment to it of any or all
subleases affecting the Premises.

     SECTION 15.3. SURRENDER OF PREMISES; REMOVAL OF PROPERTY. Upon the
Expiration Date or upon any earlier termination of this Lease, Tenant shall quit
and surrender possession of the Premises to Landlord in as good order, condition
and repair as when received or as hereafter may be improved by Landlord or
Tenant, reasonable wear and tear and repairs which are Landlord's obligation
excepted, and shall, without expense to Landlord, remove or cause to be removed
from the Premises all personal property and debris, except for any items that
Landlord may by written authorization allow to remain, and all alterations,
additions and improvements which Landlord, by written notice pursuant to Section
7.3 above, requires Tenant to remove. Tenant shall repair all damage to the
Premises resulting from the removal, which repair shall include the patching and
filling of holes and repair of structural damage, provided that Landlord may
instead elect to repair any structural damage at Tenant's expense. If Tenant
shall fail to comply with the provisions of this Section, Landlord may effect
the removal and/or make any repairs, and the cost to Landlord shall be
additional rent payable by Tenant upon demand. If Tenant fails to remove
Tenant's personal property from the Premises upon the expiration of the Term,
Landlord may remove, store, dispose of and/or retain such personal property, at
Landlord's option, in accordance with then applicable laws, all at the expense
of Tenant. If requested by Landlord, Tenant shall execute, acknowledge and
deliver to Landlord an instrument in writing releasing and quitclaiming to
Landlord all right, title and interest of Tenant in the Premises.

                                      -20-
<PAGE>

                      ARTICLE XVI.  PAYMENTS AND NOTICES

     All sums payable by Tenant to Landlord shall be paid, without deduction or
offset, in lawful money of the United States to Landlord at its address set
forth in Item 12 of the Basic Lease Provisions, or at any other place as
Landlord may designate in writing. Unless this Lease expressly provides
otherwise, as for example in the payment of rent pursuant to Section 4.1, all
payments shall be due and payable within five (5) days after demand. All
payments requiring proration shall be prorated on the basis of a thirty (30) day
month and a three hundred sixty (360) day year. Any notice, election, demand,
consent, approval or other communication to be given or other document to be
delivered by either patty to the other may be delivered in person or by courier
or overnight delivery service to the other party, or may be deposited in the
United States mail, duly registered or certified, postage prepaid, return
receipt requested, and addressed to the other party at the address set forth in
Item 12 of the Basic Lease Provisions (and notices to the Premises may be made
whether or not Tenant has departed from, abandoned or vacated the Premises), or
may be delivered by telegram, telex or telecopy, provided that receipt thereof
is telephonically confirmed. Either party may, by written notice to the other,
served in the manner provided in this Article, designate a different address. If
any notice or other document is sent by mail, it shall be deemed served or
delivered twenty-four (24) hours after mailing. If more than one person or
entity is named as Tenant under this Lease, service of any notice upon any one
of them shall be deemed as service upon all of them.

                     ARTICLE XVII.  RULES AND REGULATIONS

     Tenant agrees to observe faithfully and comply strictly with the Rules and
Regulations, attached as Exhibit E, and any reasonable and nondiscriminatory
                         ---------
amendments, modifications and/or additions as may be adopted and published by
written notice to tenants by Landlord for the safety, care, security, good
order, or cleanliness of the Premises. Landlord shall not be liable to Tenant
for any violation of the Rules and Regulations or the breach of any covenant or
condition in any lease by any other tenant or such tenant's agents, employees,
contractors, quests or invitees. One or more waivers by Landlord of any breach
of the Rules and Regulations by Tenant or by any other tenant(s) shall not be a
waiver of any subsequent breach of that rule or any other. Tenant's failure to
keep and observe the Rules and Regulations shall constitute a default under this
Lease. In the case of any conflict between the Rules and Regulations and this
Lease, this Lease shall be controlling.

                      ARTICLE XVIII.  BROKER'S COMMISSION

     The parties recognize as the broker(s) who negotiated this Lease the
firm(s), if any, whose name(s) is (are) stated in Item 10 of the Basic Lease
Provisions, and agree that Landlord shall be responsible for the payment of
brokerage commissions to those broker(s) unless otherwise provided in this
Lease. Tenant warrants that it has had no dealings with any other real estate
broker or agent in connection with the negotiation of this Lease, and Tenant
agrees to indemnify and hold Landlord harmless from any cost, expense or
liability (including reasonable attorneys' fees) for any compensation,
commissions or charges claimed by any other real estate broker or agent employed
or claiming to represent or to have been employed by Tenant in connection with
the negotiation of this Lease. The foregoing agreement shall survive the
termination of this Lease. If this Lease terminates prior to the Expiration Date
as the result of any default by Tenant, Landlord shall be entitled to recover
from Tenant the unamortized portion of any brokerage commission funded by
Landlord in addition to any other damages to which Landlord may be entitled.
Landlord warrants that it has had no dealings with any other real estate broker
or agent in connection with the negotiation of this Lease, and Landlord agrees
to indemnify and hold Tenant harmless from any cost, expense or liability
(including reasonable attorneys' fees) for any compensation, commissions or
charges claimed by any other real estate broker or agent employed or claiming to
represent or to have been employed by Landlord in connection with the
negotiation of this Lease. The foregoing agreement shall survive the termination
of this Lease.

                 ARTICLE XIX.  TRANSFER OF LANDLORD'S INTEREST

     In the event of any transfer of Landlord's fee interest in the Premises,
the transferor shall be automatically relieved of all obligations on the part of
Landlord accruing under this Lease from and after the date of the transfer,
provided that any funds held by the transferor in which Tenant has an interest
shall be turned over, subject to that interest, to the transferee and provided
the transferee assumes in writing all of the transferor's obligations under this
Lease accruing from and after the date of the transfer and Tenant is notified of
the transfer as required by law. No holder of a mortgage and/or deed of trust to
which this Lease is or may be subordinate, and no landlord under a so-called
sale-leaseback, shall be responsible in connection with the Security Deposit,
unless the mortgagee or holder of the deed of trust or the landlord actually
receives the Security Deposit. It is intended that the covenants and obligations
contained in this Lease on the part of Landlord shall, subject to the foregoing,
be binding on Landlord, its successors and assigns, only during and in respect
to their respective successive periods of ownership.

                          ARTICLE XX.  INTERPRETATION

     SECTION 20.1. GENDER AND NUMBER. Whenever the context of this Lease
requires, the words "Landlord" and "Tenant" shall include the plural as well as
the singular, and words used in neuter, masculine or feminine genders shall
include the others.

     SECTION 20.2. HEADINGS. The captions and headings of the articles and
sections of this Lease are for convenience only, are not a part of this Lease
and shall have no effect upon its construction or interpretation.

     SECTION 20.3. JOINT AND SEVERAL LIABILITY. If more than one person or
entity is named as Tenant, the obligations imposed upon each shall be joint and
several and the act of or notice from, or notice or

                                      -21-
<PAGE>

refund to, or the signature of, any one or more of them shall be binding on all
of them with respect to the tenancy of this Lease, including, but not limited
to, any renewal, extension, termination or modification of this Lease.

     SECTION 20.4. SUCCESSORS. Subject to Articles IX and XIX, all rights and
liabilities given to or imposed upon Landlord and Tenant shall extend to and
bind their respective heirs, executors, administrators, successors and assigns.
Nothing contained in this Section is intended, or shall be construed, to grant
to any person other than Landlord and Tenant and their successors and assigns
any rights or remedies under this Lease.

     SECTION 20.5. TIME OF ESSENCE. Time is of the essence with respect to the
performance of every provision of this Lease.

     SECTION 20.6. CONTROLLING LAW. This Lease shall be governed by and
interpreted in accordance with the laws of the State of California.

     SECTION 20.7. SEVERABILITY. If any term or provision of this Lease, the
deletion of which would not adversely affect the receipt of any material benefit
by either party or the deletion of which is consented to by the party adversely
affected, shall be held invalid or unenforceable to any extent, the remainder of
this Lease shall not be affected and each term and provision of this Lease shall
be valid and enforceable to the fullest extent permitted by law.

     SECTION 20.8. WAIVER AND CUMULATIVE REMEDIES. One or more waivers by
Landlord or Tenant of any breach of any term, covenant or condition contained in
this Lease shall not be a waiver of any subsequent breach of the same or any
other term, covenant or condition. Consent to any act by one of the parties
shall not be deemed to render unnecessary the obtaining of that party's consent
to any subsequent act. No breach by Tenant of this Lease shall be deemed to have
been waived by Landlord unless the waiver is in a writing signed by Landlord.
The rights and remedies of Landlord under this Lease shall be cumulative and in
addition to any and all other rights and remedies which Landlord may have.

     SECTION 20.9. INABILITY TO PERFORM. In the event that either party shall be
delayed or hindered in or prevented from the performance of any work or in
performing any act required under this Lease by reason of any cause beyond the
reasonable control of that party, then the performance of the work or the doing
of the act shall be excused for the period of the delay and the time for
performance shall be extended for a period equivalent to the period of the
delay. The provisions of this Section shall not operate to excuse Tenant from
the prompt payment of rent or from the timely performance of any other
obligation under this Lease within Tenant's reasonable control.

     SECTION 20.10. ENTIRE AGREEMENT. This Lease and its exhibits and other
attachments cover in full each and every agreement of every kind between the
parties concerning the Premises and the Building, and all preliminary
negotiations, oral agreements, understandings and/or practices, except those
contained in this Lease, are superseded and of no further effect. Tenant waives
its rights to rely on any representations or promises made by Landlord or others
which are not contained in this Lease. No verbal agreement or implied covenant
shall be held to modify the provisions of this Lease, any statute, law, or
custom to the contrary notwithstanding.

     SECTION 20.11. QUIET ENJOYMENT. Upon the observance and performance of all
the covenants, terms and conditions on Tenant's part to be observed and
performed, and subject to the other provisions of this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises for the Term without hindrance
or interruption by Landlord or any other person claiming by or through Landlord.

     SECTION 20.12. SURVIVAL. All covenants of Landlord or Tenant which
reasonably would be intended to survive the expiration or sooner termination of
this Lease, including without limitation any warranty or indemnity hereunder,
shall so survive and continue to be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

                     ARTICLE XXI.  EXECUTION AND RECORDING

     SECTION 21.1.  COUNTERPARTS. This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

     SECTION 21.2.  CORPORATE AND PARTNERSHIP AUTHORITY. Each individual
executing this Lease on behalf of the corporation or partnership represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of the corporation or partnership, and that this Lease is binding upon
the corporation or partnership in accordance with its terms. Each party, upon
the request of the other party, shall deliver a certified copy of its board of
directors resolution or partnership agreement or certificate authorizing or
evidencing the execution of this Lease.

     SECTION 21.3. EXECUTION OF LEASE; NO OPTION OR OFFER. The submission of
this Lease to Tenant shall be for examination purposes only, and shall not
constitute an offer to or option for Tenant to lease the Premises. Execution of
this Lease by Tenant and its return to Landlord shall not be binding upon
Landlord, notwithstanding any time interval, until Landlord has in fact executed
and delivered this Lease to Tenant, it being intended that this Lease shall only
become effective upon execution by Landlord and delivery of a fully executed
counterpart to Tenant.

                                      -22-
<PAGE>

     SECTION 21.4. RECORDING. Tenant shall not record this Lease without the
prior written consent of Landlord. Tenant, upon the request of Landlord, shall
execute and acknowledge a "short form" memorandum of this Lease for recording
purposes.

     SECTION 21.5. AMENDMENTS. No amendment or termination of this Lease shall
be effective unless in writing signed by authorized signatories of Tenant and
Landlord, or by their respective successors in interest. No actions, policies,
oral or informal arrangements, business dealings or other course of conduct by
or between the parties shall be deemed to modify this Lease in any respect.

     SECTION 21.6. EXECUTED COPY. Any fully executed photocopy or similar
reproduction of this Lease shall be deemed an original for all purposes.

     SECTION 21.7. ATTACHMENTS. All exhibits, amendments, riders and addenda
attached to this Lease are hereby incorporated into and made a part of this
Lease.

                         ARTICLE XXII.  MISCELLANEOUS

     SECTION 22.1. [Intentionally deleted].

     SECTION 22.2. [Intentionally deleted].

     SECTION 22.3. CHANGES REQUESTED BY LENDER. If, in connection with obtaining
financing for the Building, the lender shall request reasonable modifications in
this Lease as a condition to the financing, Tenant will not unreasonably
withhold or delay its consent, provided that the modifications do not materially
increase the obligations of Tenant or materially and adversely affect the
leasehold interest created by this Lease.

     SECTION 22.4. MORTGAGEE PROTECTION. No act or failure to act on the part of
Landlord which would otherwise entitle Tenant to be relieved of its obligations
hereunder or to terminate this Lease shall result in such a release or
termination unless (a) Tenant has given notice by registered or certified mail
to any beneficiary of a deed of trust or mortgage covering the Premises whose
address has been furnished to Tenant and (b) such beneficiary is afforded a
reasonable opportunity to cure the default by Landlord (which in no event shall
be less than sixty (60) days). including, if necessary to effect the cure, time
to obtain possession of the Premises by power of sale or judicial foreclosure
provided that such foreclosure remedy is diligently pursued. Tenant agrees that
each beneficiary of a deed of trust or mortgage covering the Premises is an
express third party beneficiary hereof, Tenant shall have no right or claim for
the collection of any deposit from such beneficiary or from any purchaser at a
foreclosure sale unless such beneficiary or purchaser shall have actually
received and not refunded the deposit, and Tenant shall comply with any written
directions by any beneficiary to pay rent due hereunder directly to such
beneficiary without determining whether an event of default exists under such
beneficiary's deed of trust, and Landlord hereby consents to any such compliance
made in good faith by Tenant.

     SECTION 22.5. COVENANTS AND CONDITIONS. All of the provisions of this Lease
shall be construed to be conditions as well as covenants as though the words
specifically expressing or imparting covenants and conditions were used in each
separate provision.

     SECTION 22.6. SECURITY MEASURES. Tenant hereby acknowledges that Landlord
shall have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises. Tenant assumes all responsibility for
the protection of Tenant, its agents, invitees and property from acts of third
parties. Nothing herein contained shall prevent Landlord, at its sole option,
from providing security protection for the Premises or any part thereof, in
which event the reasonable cost thereof shall be included within the definition
of Building Costs.

     SECTION 22.7. CONDITION TO LEASE. Tenant acknowledges that the Premises are
presently being leased to Silicon Graphics, Inc. ("SGI") pursuant to a certain
lease agreement dated June 30, 1995 (as amended, the "Existing SGI Lease"). This
Lease is expressly conditioned on the full execution of a lease termination
agreement on or before January 31, 2000, by and between Landlord and SGI, in a
form acceptable to Landlord in its sole discretion, pursuant to which Landlord
and SGI agree to an early termination of the Existing SGI Lease ("Condition to
Lease"). Landlord makes no representation or warranty to Tenant of any kind that
the Condition to Lease will be satisfied-on or before January 31, 2000 or any
other date. If for any reason the Condition to Lease is not satisfied on or
before January 31, 2000, this Lease shall automatically become null and void,
and shall be of no further force or effect. Tenant acknowledges and agrees that
Landlord shall have no obligation whatsoever to satisfy the Condition to Lease.

                                      -23-
<PAGE>

LANDLORD:                                    TENANT:

THE IRVINE COMPANY                           HOMEGROCER.COM, INC.,
                                             a Delaware corporation

By /s/ Richard G. Sim                        By /s/ Terry Drayton
   ------------------------------------         --------------------------------
   Richard G. Sim, Executive Vice               Name:  Terry Drayton
   President of The Irvine Company              Title: President

By /s/ Robert E. Williams, Jr.               By /s/ Kristin H. Stred
   ------------------------------------         --------------------------------
   Robert E. Williams, Jr., President           Name:  Kristin H. Stred
   Irvine Industrial Company,                   Title: Corporate Secretary
   A division of The Irvine Company

                                      -24-

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