Document:

<PAGE>

                                                                   EXHIBIT 10.32

Note: Portions of this exhibit indicated by "[*]" are subject to a confidential
      treatment request, and have been omitted from this exhibit. Complete,
      unredacted copies of this exhibit have been filed with the Securities and
      Exchange Commission as part of the Company's confidential treatment
      request.

                  NETWORK CREDITS PROGRAM SERVICES AGREEMENT

This Network Credits Program Services Agreement (the "Agreement") is entered
into and effective as of June 22, 1998 (the "Effective Date") by and between
Microsoft Corporation, a Washington corporation located at One Microsoft Way,
Redmond, WA 98052 ("Microsoft") and ISP, as described immediately below:
<TABLE>
<S>                              <C>
------------------------------------------------------------------------
          ISP Name & Address:    Encoding.com, Inc.
                                 1725 Westlake Ave. N.
                                 Suite 102
                                 Seattle, WA  98109
------------------------------------------------------------------------
              Attention:         Contact/Title:  Martin Tobias
                                 Phone: (206) 285-7205
                                 Fax: (206) 285-1128
                                 Email: martin@encoding.com

------------------------------------------------------------------------
         State of Incorp.:       Delaware
------------------------------------------------------------------------
        ISP Services Credit      $250,000
------------------------------------------------------------------------
</TABLE>

                                   Recitals

ISP is an Internet service provider capable of delivering Internet
infrastructure services for Internet Content Providers and corporate customers,
including the encoding, production, hosting and serving of live or on-demand ICP
content.

Microsoft is a developer of operating system technologies and tools for the
development and serving of high-performance, high-fidelity web and intranet
content, including interactive media content.

Microsoft is establishing a "Network Credits Program" whereby ICP's may utilize
Microsoft operating system technologies and ISP services to deliver ICP Content
to the ICP's users.

Microsoft wishes to engage ISP as, and ISP wishes to become, a supplier of
services to the Network Credits Program.

                                   Agreement
1.   Definitions

1    "ASF" means the proposed industry standard format referred to as the
     "Advanced Streaming Format," which as of the Effective Date is in
     comment/revision processes within industry standards bodies, and also any
     successors or replacements for such format that may be designated by such
     industry standards bodies.

2    "Confidential Information" means: (i) any source code of software provided
     by either party upon written request of the other party; (ii) any trade
     secrets and/or other proprietary information not generally known relating
     to either party's product plans, designs, costs, prices and names,
     finances, marketing plans, business opportunities, personnel, research,
     development, hardware configurations, customers or know-how; and (iii) the
     terms and conditions of this Agreement. "Confidential Information" shall
     not include information that: (i) is or becomes generally known or
     available by
<PAGE>

     publication, commercial use or otherwise through no fault of the receiving
     party; (ii) is known and has been reduced to tangible form by the receiving
     party at the time of disclosure and is not subject to restriction; (iii) is
     independently developed by the receiving party without any use of the
     Confidential Information of the disclosing party; (iv) is lawfully obtained
     from a third party that has the right to make such disclosure without
     breach of this Agreement by the receiving party; or (v) is made generally
     available by the disclosing party without restriction on disclosure.

3    "Content" means data, text, audio, video, graphics, photographs, artwork
     and other technology and materials.

4    "ICP Content" means the Streaming Media Content ICP and Microsoft wish to
     make available through the ISP Services.

5    "ICP Site" means the URL and/or intranet site from which ICP wishes to
     redirect its users to take advantage of the ISP Services.

6    "ICP" means a Microsoft-designated Network Credits Program participant,
     including Internet Content Providers and corporate/large entity customers
     using intranets.

7    "ISP Site" means ISP's main website located at www.encoding.com.

8    "ISP Services Credit" means the amount set forth in the table on page 1 of
     this Agreement.

9    "ISP Services Guidelines" means the guidelines and procedures by which ISP
     will engage an ICP, deliver ISP Services to the ICP, and charge/bill the
     ICP for services additional to the portion of the ISP Services Credit
     assigned to the ICP by Microsoft, as more fully described in Exhibit B.

10   "ISP Services" means the provision of development, production, encoding,
     hosting, serving and delivery of "live," "on-demand" and archived ICP
     Content, as more fully described in Exhibit A.

11   "Microsoft Media Player" means the version released in June 1998 of the
     upgrade to the Windows 95 and Windows 98 Microsoft Media Player client
     technology, including all Updates thereof during the Term, that displays
     ASF, other formats of Streaming Media, and other multimedia data-types.

12   "Microsoft Technologies" means NetShow and the Microsoft Media Player.

13   "NetShow" means Microsoft's Streaming Media server technology and services
     for Microsoft Windows NT, including all Updates during the Term, regardless
     of whether marketed by Microsoft under the name "NetShow."

14   "Streaming Media" means audio, video and other media Content that is
     transmitted and played or displayed incrementally, or in semi-real time,
     such that it can be heard, viewed or received by an end user without
     substantial download delays.

15   "Term" means the period commencing on the Effective Date and ending on June
     24, 1999; unless this Agreement is earlier terminated in accordance with
     Section

16   "Updates" means all public releases of Microsoft Technologies during the
     Term, including public maintenance releases, error corrections, upgrades,
     enhancements, additions, improvements, extensions, modifications and
     successor versions.

All other initially capitalized terms shall have the meanings assigned to them
in this Agreement.

2.   Microsoft Obligations.

2.1  Software.
     --------
<PAGE>

   (a)  Microsoft Technologies. Microsoft hereby grants to ISP a worldwide, non-
        exclusive, non-transferable, royalty-free license for the Term, to
        reproduce and use copies of Microsoft Technologies solely for purposes
        of (i) providing the ISP Services and (ii) developing and supporting
        Microsoft Technologies usage as part of ISP's business.

   (b)  Other Microsoft Software. Microsoft shall provide ISP with the Microsoft
        software ("Microsoft Software") set forth in Exhibit C.

   (c)  EULA. Except and solely to the extent otherwise provided in this Section
        2.1, all use of the Microsoft Technologies and Microsoft Software shall
        be in accordance with the end user license agreement ("EULA")
        accompanying such Microsoft Technologies.

   (d)  No Other Rights/Ownership. Except as expressly licensed in this Section
        2.1, ISP shall have no other rights in the Microsoft Technologies and
        Microsoft Software. Microsoft retains all right, title and interest in
        and to the Microsoft Technologies and Microsoft Software. Nothing in
        this Agreement shall be construed, by implication, estoppel or
        otherwise, as granting ISP any rights to any Microsoft software,
        technology or other intellectual property rights other than the express
        rights granted hereunder with respect to the Microsoft Technologies and
        Microsoft Software.

2.2  Early Releases.  During the Term, Microsoft will provide to ISP, at no
     --------------
     charge, an object code copy of each successive commercial release (and, at
     Microsoft's sole discretion, beta and pre-beta releases) of Microsoft
     Technologies. Any pre-release Microsoft Technologies may only be used by
     ISP in accordance with the license grant in Section 2.1. ISP understands
     that pre-release software is not intended for commercial use.

2.3  Consideration.  In consideration of ISP's obligations under this Agreement,
     -------------
     Microsoft will pay ISP (i) the ISP Services Credit upon execution of this
     Agreement and (ii) the monetary consideration, including the ISP
     Development/Infrastructure payment, specified in Exhibit C.

2.4  Promotional Efforts.  Microsoft will use reasonable commercial efforts to
     -------------------
     promote ISP and the ISP Services to top ICPs and to the public at large as
     detailed in Exhibit C, Section IV.

3.   ISP Obligations

3.1  ISP Services.
     ------------

     (a)  Development/Infrastructure Build Out Work.  ISP shall complete the
          development and infrastructure build out work outlined in Exhibit A.

     (b)  Services. ISP shall provide the ISP Services to ICPs in accordance
          with the ISP Services Guidelines and up to the ISP Services Credit.
          ISP shall deliver a description of all available ISP Services,
          including a schedule of fees for such services, so that Microsoft and
          any ICP may track usage of the ISP Services Credit when using ISP
          Services. Microsoft may reallocate the ISP Services Credit among ICPs
          in Microsoft's sole discretion upon reasonable notice to ISP.
          Microsoft may also use ISP Services for its own Streaming Media
          Content.
<PAGE>

          Any ISP Services Credit not allocated by Microsoft by the end of the
          Term may be used by Microsoft as mutually agreed upon with the ISP for
          non-streaming related services during the following six (6) month
          period. Any ISP Service Credit not allocated by Microsoft by the end
          of such six (6) month period shall be forfeit by Microsoft and
          Microsoft shall not be entitled to a refund for such unused ISP
          Service Credit.

     (c)  Other Services. Pursuant to a separate agreement between ISP and ICP,
          ISP may provide to the ICP services in addition to the ISP Services,
          or additional ISP Services beyond the amount of ISP Services Credit
          assigned to an ICP by Microsoft.

     (d)  Reporting. On a monthly basis or as otherwise mutually agreed upon,
          ISP shall report ISP services performed and ISP service credits
          actually used in relation to program.

3.2  Technology Adoption and Promotion.  During the Term, ISP shall use and
     ---------------------------------
     promote Microsoft Technologies as follows:

     (a) ISP shall complete the promotional obligations set forth in Exhibit C.

     (b) ISP shall make reasonable commercial efforts to place a "Powered by
         NetShow" logo on those ICP pages that contain Microsoft-funded ICP
         Content to the extent ISP designs, influences the design, or hosts such
         ICP pages on any ISP website which provides ISP Services. Such logo
         shall be used by ISP in accordance with Microsoft's logo guidelines in
         Exhibit D.

     (c) Microsoft shall be entitled to substitute a different sponsorship
         notice (and corresponding guidelines) in place of the "Powered by
         NetShow" notice for purposes of this Agreement upon reasonable advance
         written notice to ISP.

4.   Non-Exclusive

For purposes of clarification, nothing in this Agreement shall be deemed to
restrict either party's ability to license, develop, sub-license, manufacture,
deploy, support, promote, or distribute software, Content, Streaming Media or
any other technology.

5. Confidentiality.

5.1  Confidentiality Obligations.  Each party shall protect the other's
     ---------------------------
     Confidential Information disclosed hereunder from unauthorized
     dissemination and use with the same degree of care that such party uses to
     protect its own like information. Neither party will use the other's
     Confidential Information for purposes other than those necessary to
     directly further the purposes of this Agreement. Neither party will
     disclose to third parties the other's Confidential Information without the
     prior written consent of the other party. Except as expressly provided in
     this Agreement, no ownership or license rights are granted in any
     Confidential Information. The other provisions of this Agreement
     notwithstanding, either party will be permitted to disclose the
     Confidential Information to its outside legal and financial advisors; and
     to the extent required by applicable law, provided however that before
     making any such required filing or disclosure, the disclosing party shall
     first give written notice of the intended disclosure to the other party,
     within a reasonable time prior to the time when disclosure is to be made,
     and the disclosing party will exercise best efforts, in cooperation with
     and at the expense of the other party, consistent with reasonable time
     constraints, to obtain confidential treatment for all non-public and
     sensitive provisions of this Agreement, including without limitation dollar
     amounts and other numerical information. Each party agrees to notify the
     other in writing of any actual or suspected misuse, misappropriation or
     unauthorized disclosure of Confidential Information of the disclosing party
     which may come to the receiving party's attention.
<PAGE>

5.2  Limitations.  The parties' obligations of confidentiality under this
     -----------
     Agreement shall not be construed to limit either party's right to
     independently develop or acquire products without use of the other party's
     Confidential Information. Further, either party shall be free to use for
     any purpose the residuals resulting from access to or work with such
     Confidential Information, provided that such party shall maintain the
     confidentiality of the Confidential Information as provided herein. The
     term "residuals" means information in non-tangible form, which may be
     retained by persons who have had rightful and good faith access to the
     Confidential Information, including ideas, concepts, know-how or techniques
     contained therein. Neither party shall have any obligation to limit or
     restrict the assignment of such persons or to pay royalties for any work
     resulting from the use of residuals. However, the foregoing shall not be
     deemed to grant to either party a license under the other party's
     copyrights or patents.

6.   Warranties

6.1  ISP.  ISP warrants and covenants that: (i) it has the full power to enter
     ---
     into and perform according to the terms of this Agreement; and (ii) the ISP
     Services will be of high quality and performed in a manner commensurate
     with industry standards and practices.

6.2  Microsoft.  Microsoft warrants and covenants that it has the full power to
     ---------
     enter into and perform according to the terms of this Agreement.

6.3  Continuous Nature.  The representations and warranties contained in this
     -----------------
     Section 6 are continuous in nature and shall be deemed to have been given
     by the warrantor at execution of this Agreement and at each stage of
     performance hereunder.

7.   Disclaimer Of Further Warranties

EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6, ANY AND ALL SOFTWARE, CONTENT, OR
CONFIDENTIAL INFORMATION PROVIDED BY EITHER PARTY TO THE OTHER HEREUNDER IS
PROVIDED "AS IS," WITHOUT WARRANTY OF ANY KIND.  EACH PARTY DISCLAIMS ALL
WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND
NONINFRINGEMENT, WITH RESPECT TO ANY MATERIALS OR INFORMATION PROVIDED
HEREUNDER.

8.   Termination

8.1  Termination By Either Party.  Either party may suspend performance and/or
     ---------------------------
     terminate this Agreement:

     (a) Immediately upon written notice at any time, if the other party is in
         material breach of any material warranty, term, condition or covenant
         of this Agreement, other than those contained in Section 5, and fails
         to cure that breach within forty-five (45) days after written notice
         thereof; and

     (b) Immediately upon written notice at any time, if the other party is in
         material breach of Section 5.

8.2  Effect of Termination.
     ---------------------
<PAGE>

     (a)  Neither party shall be liable to the other for damages of any sort
          resulting solely from terminating this Agreement in accordance with
          its terms.

     (b)  Termination of this Agreement shall not affect any other agreement
          between the parties.

8.3  Survival.  In the event of termination or expiration of this Agreement
     --------
     for any reason: (i) Sections 1, 2.1(d), 3.1(b), 4, 5, 6, 7, 8, 9 and 10
     shall survive. Except for Microsoft's termination of this Agreement for
     ISP's material breach, licenses granted to ISP under Sections 2.1(a) and
     (b) shall survive any termination or expiration of the Term of this
     Agreement solely as set forth in the applicable EULA and solely with
     respect to the then current version of the Microsoft Technologies and
     Microsoft Software licensed to ISP.

9.   Limitation Of Liabilities

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT,
INCIDENTAL, PUNITIVE OR SPECIAL DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, LOSS OF DATA OR
BUSINESS INFORMATION, AND THE LIKE, ARISING OUT OF THIS AGREEMENT OR THE USE OF
OR INABILITY TO USE ANY MICROSOFT TECHNOLOGIES, MICROSOFT SOFTWARE OR EITHER
PARTY'S CONFIDENTIAL INFORMATION OR CONTENT, EVEN IF A PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.

THIS SECTION SHALL NOT APPLY TO SECTION 5.

10.  General Provisions

10.1 Notices.  All notices and requests in connection with this Agreement shall
     -------
     be deemed given as of the day they are received either by messenger,
     delivery service, or in the United States of America mails, postage
     prepaid, certified or registered, return receipt requested, and addressed
     as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
To ISP:  see box on page 1
--------------------------------------------------------------------------------------------------------
To Microsoft:                                           Copy to:
--------------------------------------------------------------------------------------------------------
<S>                                                     <C>
Microsoft Corporation                                   Microsoft Corporation
One Microsoft Way                                       One Microsoft Way
 Redmond, WA  98052-6399                                Redmond, WA  98052-6399
Attention: Director of Business Development, Personal   Attention:  Law & Corporate Affairs
 and Business Systems Division
--------------------------------------------------------------------------------------------------------
Phone:  (425) 882-8080                                  Phone:  (425) 882-8080
--------------------------------------------------------------------------------------------------------
Fax:  (425) 936-7329                                    Fax:  (425) 936-7409
--------------------------------------------------------------------------------------------------------
</TABLE>

or to such other address as a party may designate pursuant to this notice
provision.

10.2  Independent Parties.  Nothing in this Agreement shall be construed as
      -------------------
      creating an employer-employee relationship, a partnership, or a joint
      venture between the parties.

10.3  Governing Law.  This Agreement shall be governed by the laws of the State
      -------------
      of Washington. Any action or litigation concerning this Agreement shall
      take place in the federal or state courts in King County, Washington.
<PAGE>

10.4  Attorneys' Fees.  In any action or suit to enforce any right or remedy
      ---------------
      under this Agreement or to interpret any provision of this Agreement, the
      prevailing party shall be entitled to recover its costs, including
      reasonable attorneys' fees.

10.5  Assignment.  This Agreement shall be binding upon and inure to the benefit
      ----------
      of each party's respective successors and lawful assigns; provided,
      however, that neither party may assign its rights or delegate its duties
      under this Agreement, in whole or in part, to any third party without the
      prior written approval of the other party.

10.6  Force Majeure.  Neither party shall be liable to the other under this
      -------------
      Agreement for any delay or failure to perform its obligations under this
      Agreement if such delay or failure arises from any cause(s) beyond such
      party's reasonable control, including by way of example labor disputes,
      strikes, floods, fire, lightning, utility or communications failures,
      earthquakes, vandalism, war, acts of terrorism, riots, insurrections,
      embargoes, or laws, regulations or orders of any governmental entity.

10.7  Construction.  If for any reason a court of competent jurisdiction finds
      ------------
      any provision of this Agreement, or portion thereof, to be unenforceable,
      that provision of the Agreement will be enforced to the maximum extent
      permissible so as to effect the intent of the parties, and the remainder
      of this Agreement will continue in full force and effect. Failure by
      either party to enforce any provision of this Agreement will not be deemed
      a waiver of future enforcement of that or any other provision. This
      Agreement has been negotiated by the parties and their respective counsel
      and will be interpreted fairly in accordance with its terms and without
      any strict construction in favor of or against either party.

10.8  Entire Agreement.  This Agreement does not constitute an offer by
      ----------------
      Microsoft and it shall not be effective until signed by both parties. This
      Agreement constitutes the entire agreement between the parties with
      respect to the subject matter hereof and merges all prior and
      contemporaneous communications. It shall not be modified except by a
      written agreement dated subsequent to the date of this Agreement and
      signed on behalf of ISP and Microsoft by their respective duly authorized
      representatives.

IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
Effective Date written above.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
MICROSOFT                              ISP

-------------------------------------------------------------------------------
<S>                                    <C>

By: /s/ William Poole                  By: /s/ Martin Tobias

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

Name (print): William Poole            Name (print): Martin Tobias

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

Title: Sr. Director Bus. Dev.          Title: Minister of Reason
-------------------------------------------------------------------------------

Date: 6/25/98                          Date: June 22, 1998

-------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                   Exhibit A

                                  ISP Services

I.   Development/Infrastructure Build Out

     [* * *]

II.  ISP Services

     [* * *]

Definitions and Explanation

     [* * *]

[*] Confidential Treatment Request
<PAGE>

                                   Exhibit B

                            ISP Services Guidelines

[*] shall be used under this Agreement. [*] shall make reasonable efforts to [*]
for this program. [*] shall use reasonable efforts to ensure that [*]. [*] shall
[*].

Notwithstanding the foregoing, the relationship between [*] shall be [*]. [*]
shall be solely responsible for [*]. [*] shall [*], and [*] shall be entered
into in a timely manner, [*]. At [*], the [*] may be performed for [*] acting on
behalf of [*] and under the terms of this Agreement.

[*] shall use [*] to [*], including but not limited to [*].

[*] Confidential Treatment Request
<PAGE>

                                   Exhibit C

                                 Consideration

I.   Software Licenses Provided.

[*]

II.  Development/Infrastructure Consideration.

[*] shall pay [*] [*] to assist [*] with its development/infrastructure build
out as described in Exhibit A. The foregoing shall be paid to ISP within thirty
(30) days of the Effective Date.

III. ISP Services Credit.

[*]

IV.  Promotion.

[*]

[*]

[*] Confidential Treatment Request
<PAGE>

                                   Exhibit D

     Logo Program [* * *]

[*] Confidential Treatment Request<PAGE>

                                                                   EXHIBIT 10.39

                 FIRST AMENDMENT TO LEASE AGREEMENT AND RIDER

     THIS FIRST AMENDMENT TO LEASE AGREEMENT AND RIDER ("First Amendment") is
made and entered into this ___ day of ___, 2000, by and between MERCY CAPITAL
CENTER JOINT VENTURE, a California general partnership ("Landlord"), and
HOMEGROCER.COM, INC., a Delaware corporation ("Tenant").

                                   RECITALS:
                                   --------

     WHEREAS, Landlord and Tenant entered into that certain Lease Agreement and
Rider, dated January 25, 2000 (the "Lease"), for the use and occupancy of a
leased premises of approximately 115,816 square feet within Building 1, 4005
Newpoint Place, Lawrenceville, Georgia 30043; and

     WHEREAS, the actual square footage of the leased premises is 115,940 square
feet; and

     WHEREAS, Landlord and Tenant have agreed, and do hereby agree, to amend and
modify the Lease as hereinafter set forth to conform the terms of the Lease to
such actual square footage;

     NOW THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00), the mutual covenants, obligations and agreements set forth
herein and in the Lease, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Landlord and Tenant do hereby
agree to amend the Lease as follows:

     1.   Property.  Section 1.04 of the Lease shall be amended by deleting the
          number "115,816" and substituting in lieu thereof the number
          "115,940."

     2.   Exhibit B.  Exhibit "B" to the Lease is hereby deleted in its entirety
          and Exhibit "B" attached to this First Amendment is hereby substituted
          therefor.

     3.   Exhibit C.  Exhibit "C" to the Lease is hereby deleted in its entirety
          and Exhibit "C" attached to this First Amendment is hereby substituted
          therefor.

     4.   Exhibit D.  Attachment "1" to Exhibit "D" to the Lease is hereby
          deleted in its entirety and Attachment "1" attached to this First
          Amendment is hereby substituted therefore.
<PAGE>

     5.   Miscellaneous.
          -------------

          a.   Landlord and Tenant hereby acknowledge and confirm that the
               Lease, as amended hereby, is in full force and effect and, to the
               best of each such party's knowledge, the other party is not in
               default under the Lease.

          b.   This First Amendment shall inure to the benefit of and be binding
               upon the parties hereto and their respective, permitted
               successors and assigns.

          c.   This First Amendment shall be governed by and construed under the
               laws of the State of Georgia.

          d.   Whenever terms are used in this First Amendment, but are not
               defined, such terms shall have the same meaning as set forth in
               the Lease.

          e.   Except as modified by this First Amendment, Landlord and Tenant
               do hereby ratify and reaffirm each and every provision, term,
               covenant, agreement and condition of the Lease.

          f.   The lease, as modified by this First Amendment, sets forth the
               entire agreement between Landlord and Tenant and cancels all
               prior negotiations, arrangements, agreements and understandings,
               if any, between Landlord and Tenant regarding the subject matter
               of this First Amendment. In the event of any conflict between the
               terms of the Lease and the terms of this First Amendment, the
               terms of this First Amendment shall control.

          g.   Tenant and the persons executing this First Amendment on behalf
               of Tenant represent and warrant that Tenant is a Delaware
               corporation, duly qualified to do business in the State of
               Georgia, that they are authorized to execute and deliver this
               First Amendment on behalf of the corporation, and that all
               necessary approvals and consents have been obtained to bind
               Tenant under this First Amendment and the Lease in accordance
               with their terms.

                        (Signatures begin on next page)
<PAGE>

     IN WITNESS WHEREOF, the duly authorized officers of Landlord and Tenant
have signed and sealed this First Amendment the day and year respectively set
forth below.

                              TENANT:
                              ------

                              HOMEGROCER.COM, INC., a Delaware Corporation

                              By: /s/: Kristin H. Stred
                                  -----------------------------------------
                              Name: Kristin H. Stred
                                    ---------------------------------------
                              Title: Sr. Vice President and General Counsel
                                     --------------------------------------

                                                                (CORPORATE SEAL)
                              Date: 2/29/00
                                    -------

                       [Signatures continue on next page]
<PAGE>

                              LANDLORD:
                              --------

                              MERCY CAPITAL CENTER JOINT VENTURE, a California
                              general partnership

                                                                          (SEAL)

                              By: /s/ John E. Van Valkenburgh
                                  ----------------------------------------
                                  John E. Van Valkenburgh, General Partner

                              Date:
                                    --------------------------------------

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