AT HOME CORP
TRIPLE NET BUILDING LEASE (BUILDING 7)
<DOCUMENT>
<TYPE>EX-10.04
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>TRIPLE NET BUILDING LEASE (BUILDING 7)
<TEXT>

<PAGE>

                                                                   Exhibit 10.04

                           TRIPLE NET BUILDING LEASE



                                    Between

                          PACIFIC SHORES CENTER LLC,
                                      as
                                    LESSOR


                                      and


                              AT HOME CORPORATION
                    a Delaware corporation dba Excite@Home
                                      as
                                    LESSEE


                                      for


                                   PREMISES
                                      at
                             Pacific Shores Center
                                  Building 7
                           Redwood City, California


<PAGE>

                                   ARTICLE I
                                   ---------
                                    PARTIES
                                    -------

     Section 1.01.  Parties.     This Lease, dated for reference purposes, and
     ----------------------
effective as of February  25, 2000, is made by and between PACIFIC SHORES CENTER
LLC, or assignee, ("Lessor") and AT HOME CORPORATION, a Delaware corporation,
dba Excite@Home ("Lessee").


                                  ARTICLE II
                                  ----------
                                   PREMISES
                                   --------

     Section 2.01. Demise of Premises.     Lessor hereby leases to Lessee and
     --------------------------------
Lessee leases from Lessor for the term, at the rental, and upon all of the terms
and conditions set forth herein, Premises consisting of one building
("Building") of ten free standing, office and research and development buildings
("Buildings") to be constructed by Lessor on real property situated in Redwood
City, County of San Mateo, State of California and commonly known as Pacific
Shores Center which Lessor is in the process of acquiring (the "Property").
The Building will be three stories tall and will consist of approximately ninety
three thousand one hundred eighty three (93,183) rentable square feet, as more
particularly described and depicted herein in Exhibit "A."  The actual rentable
square footage of the Building (the "Rentable Area") will be determined and
certified by Lessor's architect by a method described as "dripline," whereby the
measurement encompasses the outermost perimeter of the constructed building,
including every projection thereof and all area beneath each such projection,
whether or not enclosed, with no deduction for any inward deviation of structure
and with the measurement being made floor by floor, but beginning from the top
of the Building provided that, Lessee shall have the right, to be exercised
prior to Commencement Date, to measure the "as-built" Building to confirm that
the aforesaid dripline methodology was accurately utilized by Lessor's
architect.  The Building and appurtenances described herein, the Property, and
all other improvements to be built on the Property are together designated as
the "Project."  The Building leased hereunder, commonly known as Building 7 -
Pacific Shores Center, Redwood City, California, and its appurtenances described
herein are herein designated as the "Premises."

     Section 2.02. Common Area.   During the Lease Term, Lessee shall have the
     -------------------------
non-exclusive right to use the Common Area defined herein. Lessor reserves the
right to modify the Common Area, including reducing the size or changing the
use, configuration and elements thereof in its sole discretion and to close or
restrict access from time to time for repair, maintenance or to prevent a
dedication thereof, provided that Lessee nonetheless shall have access to
parking and the Premises during such activities.  Lessor further reserves the
right to establish, repeal and amend from time to time rules and regulations for
the use of the Common Area and to grant reciprocal easements or other rights to
use the Common Area to owners of other property provided that no amendment to
the rules and regulations shall unreasonably interfere with Lessee's use of the
Premises or unreasonably increase Lessee's share of Operating Expenses and
provided further, to the extent of any conflict between this Lease and such
amended Common Area rules and regulations, this Lease controls. .  "Common Area"
includes, without limitation, all portions of the Property other than the
Building, including landscaping, sidewalks, walkways, driveways, curbs, parking
lots (including striping), roadways within the

                                       2
<PAGE>

Project, sprinkler systems, lighting, surface water drainage systems, an
amenities/athletic facility to be available for use by Lessee's employees (the
"Amenities/Athletic Facility"), as well as baseball and soccer fields, a water
front park, and a perimeter walking/biking trial, and, to the extent required by
government authorities having jurisdiction over Lessor's development of the
Project, amphitheater, marine life resource center, retreat and conference
center, child care center and such further portions of the Project or additional
or different facilities as Lessor may from time to time designate or install or
make available for the use by Lessee in common with others.

     Section 2.03.  Parking.     Lessor shall provide Lessee with parking spaces
     ----------------------
within the Common Area in the ratio to space within the Building as required by
law, which is three (3) spaces per one thousand (1,000) square feet of interior
space within the Building.   In the event Lessor elects or is required by any
law to limit or control parking at the Premises, whether by validation of
parking tickets or any other method of assessment, Lessee agrees to participate
in such validation or assessment program under such reasonable rules and
regulations as are from time to time established by Lessor.  Lessor agrees that
Lessee's access to parking shall not be unreasonably limited beyond any
requirement of law by any such rules and regulations and the burden of any such
limitation or control imposed by law on the Project as a whole shall not be
allocated to Lessee to an extent greater than required by such law. Said parking
shall be provided at no additional cost except as expressly provided herein in
Article VI for reimbursement of repair, replacement and maintenance costs and
expenses, and in Article IX for payment or reimbursement of any real property
taxes including governmental or public authority charges, fees or impositions of
any nature hereafter imposed.

     Section 2.04.  Construction.
     ---------------------------

     (a)    Government Approvals.     Lessor shall diligently pursue obtaining
            --------------------
governmental approval of a Site Plan and Building design and elevations with
respect to the development of the Premises, copies of which are attached hereto
as Exhibit "A."  The parties acknowledge and agree that the final footprint and
elevations of the Building may vary from those attached as Exhibit "A" because
the plans and specifications will undergo a plancheck process with the City of
Redwood City and Lessor will make such revisions as are required or are
otherwise deemed necessary or appropriate by Lessor, provided however, that
nothing herein shall be deemed to relieve Lessor from the duty to develop the
Building substantially in compliance with Exhibit "A."

     (b)  Construction of Shell Building. Lessor, utilizing Rudolph & Sletten
          ------------------------------

(or such alternate as Lessor in its sole discretion may select) as general
contractor ("General Contractor"), shall construct the "Building Shell" (as
defined in the attached Exhibit "D") substantially in accordance with (i) plans
and specifications to be attached as Exhibit "B" and (ii) all existing
applicable municipal, local, state and federal laws, statutes, rules,
regulations and ordinances.  Lessor shall pay all costs of constructing the
Building Shell.

     (c)     Construction of Tenant Improvements.  All improvements not included
             -----------------------------------
within the scope of the Building Shell shall be deemed "Tenant Improvements."
Lessor, using the General Contractor, shall construct the Tenant Improvements
and shall contribute the Tenant Improvement Allowance towards the payment of
same and Lessee shall pay all costs associated with same in excess of the Tenant
Improvement Allowance

                                       3
<PAGE>

     (d)      Tenant Improvement Plans and Cost Estimate.  Lessee shall work
              ------------------------------------------
with Lessor's architect to develop interior schematic drawings and Lessee shall
approve final interior schematic drawings for the Tenant Improvement no later
than July 1, 2000.  Lessee shall work with Lessor's architect to develop working
drawings outlining, among other things, Lessee's wall layout, detailed
electrical and air conditioning requirements and finishes ("Working Drawings")
and Lessee shall approve final Working Drawings on or before September 1, 2000.
The cost of the interior schematic drawings and Working Drawings shall be a
Tenant Improvement cost.  Based on this information, Landlord shall cause the
General Contractor to prepare and deliver to Lessee a budget for the Tenant
Improvements ("Budget").  Lessee shall approve the Budget (or modify the same
with Lessor's consent), in writing, within fourteen (14) days thereafter.  The
Working Drawings and Budget must be approved by Lessor in writing and be of
quality equal to or greater than the Interior Specifications Standards set forth
in Exhibit "C" and must encompass the build-out of the entire Premises.  Once
the Budget is approved, Lessor shall enter into a guaranteed maximum price
contract with the General Contractor for the construction of the Tenant
Improvements, which maximum price shall not exceed the approved Budget.

     (e) Cost Responsibilities.   Attached as Exhibit "C" to this Lease is a
         ---------------------
Work Letter Agreement for Tenant Improvements, and Exhibit "D," Cost
Responsibilities of Lessor and Lessee, which together with this Section 2.04,
describe the planning and payment responsibilities of the Lessor and Lessee with
respect to the construction of the Shell Building and Tenant Improvements at the
Premises.  All approved Tenant Improvements shall be constructed in accordance
with a construction schedule approved by Lessor and no portion of the Building
interior shall remain unimproved.

     (f) Tenant Improvement Allowance.     Lessor shall provide to Lessee semi-
         ----------------------------
improved "cold" shell facilities as described in Exhibit "D" attached and a
Tenant Improvement Allowance of $25.00 per square foot to be used for the Tenant
Improvements outlined in Exhibit "D," all as outlined in the Tenant Improvement
Work Letter attached as Exhibit "C."  Subcontracts for all Tenant Improvement
Work shall be obtained by a sealed competitive bid process (involving at least
two qualified bidders) wherever practical and as to work done without such
process, Lessor or the General Contractor shall provide reasonable assurance to
Lessee that the cost and expense of same is competitive in the industry for
first-class workmanship and materials.

     (g)  Payment for Tenant Improvements.  Within two (2) business days after
          -------------------------------
the Budget is approved by Lessor and Lessee, Lessee shall deposit Lessee's share
of the amount budgeted for the entire Tenant Improvement construction schedule
(together with the cost of any Tenant Improvements already made) with Lessor's
construction lender to be held in an escrow account. Lessee's share is the
portion of the budgeted amount not paid from the Tenant Improvement Allowance as
described in the following sentence. Said construction lender shall issue
payments from said account pursuant to the construction contract for the Tenant
Improvements with a portion of each payment being taken from the Tenant
Improvement Allowance (in the same ratio as the Tenant Improvement Allowance
bears to the entire Budget total) and the balance being paid from Lessee's
deposit, until the Tenant Improvement Allowance is exhausted, whereupon any
remaining payments shall be made 100% by Lessee. Lessor shall manage the
construction of the Tenant Improvements for a supervision fee of 4% of the
Budget

                                       4
<PAGE>

(as the same may change by agreement of the parties) due and payable in
nine equal monthly installments beginning on the first day of the calendar month
following the calendar month in which the Budget is first approved.

     (h) Lessee's Fixturing Period.     By advance written notice, Lessor shall
         -------------------------
provide Lessee access to the Premises during the thirty (30) day period prior to
the Commencement Date ("Lessee's Fixturing Period") for the purpose of
installing furnishings and equipment, e.g. security system, furniture system and
phone and data system, provided, that Lessee and  Lessee's employees and
contractors shall at all times avoid interfering with Lessor's ongoing work to
bring the Premises to a substantially completed condition.  Except for payment
of Base Rent, all terms and provisions of this Lease shall apply during Lessee's
Fixturing Period, including, without limitation, Lessee's indemnity and other
obligations set forth in Sections 7.07., 7.08. and 17.22. hereof and payment of
Additional Rent pursuant to Section 4.05 hereof.

                                 ARTICLE III
                                 -----------
                                    TERM
                                    ----

     Section 3.01.  Lease Term.
     -------------------------

     (a)    Commencement Date.  The term of this Lease ("Lease Term") shall be
            -----------------
for twelve (12) years beginning on the earlier of (i) the date a Certificate of
Occupancy (which means for purposes of this Lease, either a Certificate of
Occupancy or its equivalent which allows legal occupancy and including, without
limitation, a Notice of Substantial Completion) first is issued affecting the
Building, or (ii) the date on which Lessee first occupies or conducts business
at the Premises (the "Commencement Date") provided that, (i) for each day of
delay by Lessee in failing to approve the interior schematic drawings or the
Working Drawings when required under Section 2.04(d), or (ii) for each day of
delay by Lessee in failing to approve the Budget, in writing, within fourteen
(14) days after delivery by the General Contractor as provided in Section
2.04(d), or (iii) for each day of delay caused by any changes to the approved
Working Drawings requested by Lessee, or (iv) for each day that any other act or
omission by Lessee causes the construction schedule for Tenant Improvements to
be delayed (collectively "Lessee Delay"), the Commencement Date shall occur one
(1) day in advance of the date of the Certificate of Occupancy for each such day
of delay.  For example, if seven (7) days of Lessee Delay causes the date of
issuance of the Certificate of Occupancy to occur on July 8, 2001 rather than
July 1, 2001, the Commencement Date shall be July 1, 2001 for all purposes,
including payment of Base Rent and Additional Rent.  The Lease Term shall
expire, unless sooner terminated or extended as provided herein, on the date
which completes twelve (12) years after the Commencement Date occurs or is
deemed to have occurred, e.g. if the date on which the Certificate of Occupancy
is issued or deemed to be issued for the Building is July 1, 2001, the Lease
Term shall expire on June 30, 2013 and if that date is July 3, 2001, the Lease
Term shall expire on July 2, 2013 ("Expiration Date").   The parties shall
execute a "Memorandum of Commencement of Lease Term" when the Commencement Date
becomes known, which shall include a certification of the actual Rentable Area
of the Building determined by the methodology described in Section 2.01. and the
actual monthly installments of Base Rent to be paid pursuant to Section 4.01.,
and shall be substantially in the form attached hereto as Exhibit "E."
Notwithstanding the foregoing, in no event shall Lessee Delay be used to advance
the Commencement Date to a date earlier than the Scheduled Commencement Date.

                                       5
<PAGE>

     (b)       Scheduled Commencement Date.     Lessor shall use commercially
               ---------------------------
reasonable efforts to cause the Certificate of Occupancy for the Building to be
issued no later than July 1, 2001 ("Scheduled Commencement Date").  If a
Certificate of Occupancy is not issued for the Building on or before the
Scheduled Commencement Date, this failure shall not affect the validity of this
Lease or the obligations of Lessee under it.  If the Commencement Date is
adjusted for delay from any cause, the Expiration Date shall be likewise
adjusted for a like period.

     (c)    Termination in Event of Delay.    If for any reason Lessor is unable
            -----------------------------
to cause the issuance of a Certificate of Occupancy for the Building, on or
before the date which is one hundred eighty (180) days after the Scheduled
Commencement Date (for a reason other than Lessee Delay or Force Majeure delay
excused under Section 17.21.), Lessee, at its sole election, may terminate this
Lease upon giving notice within ten (10) business days thereafter. Failure to
give such notice within said time period constitutes an irrevocable waiver of
the foregoing right to terminate under this Section 3.01(c).

     (d) Lessee Termination Rights.  In the event that either (i) Lessor is not
         -------------------------
the fee owner of the Property on or before May 1, 2000, or (ii) Lessor has not
presented Lessee with reasonable evidence on or before July 15, 2000, that it
has obtained a commitment letter for financing in an amount sufficient to
complete the construction of the Building Shell and fund the Tenant Improvement
Allowance, then Lessee shall have the right to terminate this Lease upon written
notice to Lessor within sixty (60) days after either May 1, 2000 or July 15,
2000, as applicable.  If Lessee terminates this Lease in accordance with this
paragraph, neither party shall have any further  rights or obligations
hereunder.

     Section 3.02.  Option to Extend.
     -------------------------------

     (a)     Exercise.     Lessee is given one (1) option to extend the Lease
             --------
Term ("Option to Extend") for a five (5) year period ("Extended Term") following
the date on which the initial Lease Term would otherwise expire, which option
may be exercised only by written notice ("Option Notice") from Lessee to Lessor
given not less than twelve (12) months prior to the end of the initial Lease
Term ("Option Exercise Date"); provided, however, if Lessee is in material
default under this Lease (beyond the expiration of any applicable notice period)
on the Option Exercise Date or on any day thereafter on or before the last day
of the initial Lease Term, the Option Notice shall be totally ineffective, and
this Lease shall expire on the last day of the initial Lease Term, if not sooner
terminated.  The right of Lessee to exercise an Option to Extend shall not be
affected by any sublease or assignment of this Lease previously entered into by
Lessee pursuant to the provisions of this Lease.

     (b)     Extended Term Rent.     In the event Lessee exercises its Option to
             ------------------
Extend set forth herein, all the terms and conditions of this Lease shall
continue to apply except that the Base Rent payable by Lessee during each Option
Term shall be equal to one hundred percent (100%) of Fair Market Rent (defined
below), as determined under subparagraph (c) below.  "Fair Market Rent" shall
mean the effective rate being charged (including periodic adjustments thereto as
applicable during the period of the Extended Term), for comparable space in
similar buildings in

                                       6
<PAGE>

the vicinity, i.e. of a similar age and quality considering any recent
renovations or modernization, and floor plate size or, if such comparable space
is not available, adjustments shall be made in the determination of Fair Market
Rent to reflect the age and quality of the Building and Premises as contrasted
to other buildings used for comparison purposes, with similar amenities, taking
into consideration: size, location, floor level, leasehold improvements or
allowances provided or to be provided, term of the lease, extent of services to
be provided, the time that the particular rate under consideration became or is
to become effective, and any other relevant terms or conditions applicable to
both new and renewing tenants.


       (c)  Determination of Fair Market Rent.
            ---------------------------------

          (i)     Negotiation.     If Lessee so exercises its Option to Extend
                  -----------
in a timely manner, the parties shall then meet in good faith to negotiate the
Base Rent for the Premises for the Extended Term, during the first thirty (30)
days after the date of the delivery by Lessee of the Option Notice (the
"Negotiation Period").  If, during the Negotiation Period, the parties agree on
the Base Rent applicable to the Premises for the Extended Term, then such agreed
amount shall be the Base Rent payable by Lessee during the Extended Term.

          (ii)     Arbitration.     In the event that the parties are unable to
                   -----------
agree on the Base Rent for the Premises within the Negotiation Period, then
within ten (10) days after the expiration of the Negotiation Period, each party
shall separately designate to the other in writing an appraiser to make this
determination.  Each appraiser designated shall be a member of MAI and shall
have at least ten (10) years experience in appraising commercial real property,
of similar quality and use as the Premises, in San Mateo County.  The failure of
either party to appoint an appraiser within the time allowed shall be deemed
equivalent to appointing the appraiser appointed by the other party, who shall
then determine the Fair Market Rent for the Premises for the Extended Term.
Within five (5) business days of their appointment, the two designated
appraisers shall jointly designate a third similarly qualified appraiser.
Within thirty (30) days after their appointment, each of the two appointed
appraisers shall submit to the third appraiser a sealed envelope containing such
appointed appraiser's good faith determination of the Fair Market Rent for the
Premises for the Extended Term; concurrently with such delivery, each such
appraiser shall deliver a copy of his or her determination to the other
appraiser.  The third appraiser shall within ten (10) days following receipt of
such submissions, then determine which of the two appraisers' determinations
most closely reflects Fair Market Rent as defined above.  The determination most
closely reflecting the third appraiser's determination shall be deemed to be the
Fair Market Rent for the Premises during the Extended Term; the third appraiser
shall have no rights to adjust, amend or otherwise alter the determinations made
by the appraiser selected by the parties, but must select one or the other of
such appraisers' submissions.  The determination by such third appraiser shall
be final and binding upon the parties.  Said third appraiser shall, upon
selecting the determination which most closely resembles Fair Market Rent,
concurrently notify both parties hereto.  The Base Rent for the Extended Term
shall be the determination so selected.  The parties shall share the appraisal
expenses equally.  If the Extended Term begins prior to the determination of
Fair Market Rent, Lessee shall pay monthly installments of Base Rent equal to
one hundred ten percent (110%) of the monthly installment of Base Rent in effect
for the last year of the initial Lease Term (in lieu of "holdover rent" payable
under Section 17.09(b)).  Once a determination is made, any over payment or
under payment

                                       7
<PAGE>

shall be reimbursed as a credit against, or paid by adding to, the monthly
installment of Base Rent next falling due.

                                  ARTICLE IV
                                  ----------
                            RENT: TRIPLE NET LEASE
                            ----------------------

     Section 4.01.  Base Rent.  Lessee shall pay to Lessor as Base Rent an
     ------------------------
initial monthly installment of Three Dollars and Fifty Cents ($3.50) per square
foot of Rentable Area as determined under Section 2.01., in advance, on the
first day of each calendar month of the Lease Term, commencing on the
Commencement Date, subject to the advance payment of estimated first month of
Base Rent pursuant to Section 4.03.  Base Rent for any period during the Lease
Term which is for less than one month shall be a pro rata portion of the monthly
installment (based on the actual days in that month).

     Section 4.02.  Rent Adjustment.     The Base Rent set forth in Section
     ------------------------------
4.01. above shall be adjusted upward by an annual compounded increase of three
and five tenths percent (3.5%), as of the first day of the thirteenth (13th)
full calendar month following the Commencement Date and as of each anniversary
of that date thereafter during the Lease Term, as shown on Exhibit "E" attached
hereto.

     Section 4.03.  First Payment of Base Rent.    Lessee shall pay in advance
     -----------------------------------------
the first payment of Base Rent in the estimated amount of Three Hundred Twenty
Six Thousand, One Hundred Forty Dollars and Fifty Cents ($326,140.50) within
five (5) days after Lessee's execution of this Lease.  Base Rent payments shall
resume on the first day of the calendar month immediately succeeding the
Commencement Date.  If the Commencement Date is other than the first day of a
calendar month, the first payment of Base Rent subsequent to the Commencement
Date, but only that payment of Base Rent, shall be reduced by any excess of the
first Base Rent installment paid in advance over the prorated amount actually
due for such partial first month of the Lease Term.

     Section 4.04.  Absolute Triple Net Lease.     This Lease is what is
     ----------------------------------------
commonly called a "Absolute Triple Net Lease," it being understood that Lessor
shall receive the Base Rent set forth in Section 4.01. free and clear of any and
all expenses, costs, impositions, taxes, assessments, liens or charges of any
nature whatsoever.  Lessee shall pay all rent in lawful money of the United
States of America to Lessor at the notice address stated herein or to such other
persons or at such other places as Lessor may designate in writing on or before
the due date specified for same without prior demand, set-off or deduction of
any nature whatsoever.   It is the intention of the parties hereto that this
Lease shall not be terminable for any reason by Lessee, and that except as
herein expressly provided in Articles III, VIII and XIII, concerning delay,
destruction and condemnation, Lessee shall in no event be entitled to any
abatement of or reduction in rent payable under this Lease.  Any present or
future law to the contrary shall not alter this agreement of the parties.

     Section 4.05. Additional Rent.
     -----------------------------

     (a)   In addition to the Base Rent reserved by Section 4.01., Lessee shall
pay, as Additional Rent (i) 100% as to amounts applicable solely to the Premises
or Property and

                                       8
<PAGE>

Lessee's Share is to amounts applicable to the Project or Common Area of all
taxes, assessments, fees and other impositions payable by Lessee in accordance
with the provisions of Article IX, and insurance premiums in accordance with the
provisions of Article VII, (ii) Lessee's Share of Operating Expenses defined
below provided that notwithstanding the foregoing, prior to January 1, 2002,
during the construction phase of the Project, Lessee shall pay 100% of Operating
Expenses applicable to the Property or Premises in lieu of paying Lessee's Share
of the specific items being billed, and (iii) any other charges, costs and
expenses (including appropriate reserves therefor) which are contemplated or
which may arise under any provision of this Lease during the Lease Term, plus a
Management Fee to Lessor equal to 3% of the Base Rent. The Management Fee is due
and payable, in advance, with each installment of Base Rent. All of such
charges, costs, expenses, Management Fee and all other amounts payable by Lessee
hereunder, shall constitute Additional Rent, and upon the failure of Lessee to
pay any of such charges, costs or expenses, Lessor shall have the same rights
and remedies as otherwise provided in this Lease for the failure of Lessee to
pay Base Rent.

     (b)  To the extent not paid pursuant to other provisions of this Lease, and
at Lessor's sole election, Lessor may submit invoices and Lessee shall pay
Lessee's share of Additional Rent in monthly installments on the first day of
each month in advance in an amount to be estimated by lessor, based on Lessor's
experience in managing office/research and development projects.  Within ninety
(90) days following the end of the period used by Lessor in estimating
Additional Rent, Lessor shall furnish to Lessee a statement (hereinafter
referred to as "Lessor's Statement") of the actual amount of Lessee's
proportionate share of such Additional Rent, or Lessor shall remit or credit to
Lessee, as the case may be, the difference between the estimated amounts paid by
Lessee and the actual amount of Lessee's Additional Rent for such period as
shown by such statement.  Monthly installments for the ensuing year shall be
adjusted upward or downward as set forth in Lessor's Statement.

     Section 4.06.  Security Deposit.    Upon the date this Lease is executed by
     -------------------------------
Lessee, Lessee shall deposit with Lessor a Security Deposit equal to twelve (12)
month's estimated Base Rent in the amount of Three Million, Nine Hundred
Thirteen Thousand, Six Hundred Eighty Six and no cents ($3,913,686.00) in the
form of cash or an unconditional, irrevocable letter of credit without
documents, with Lessor as beneficiary, in whole or in part, and providing for
payment in San Francisco on presentation of Lessee's drafts on site, drawable
and otherwise from a bank and in a form acceptable to Lessor (the "Security
Deposit").  The Security Deposit shall be held by Lessor as security for the
faithful performance by Lessee of all of the terms, covenants, and conditions of
this Lease applicable to Lessee.  If Lessee defaults with respect to any
provision of this Lease, including but not limited to the provisions relating to
the condition of the Premises upon Lease Termination, Lessor may (but shall not
be required to) use, apply or retain all or any part of the Security Deposit for
the payment of any amount which Lessor may spend by reason of Lessee's default
or to compensate Lessor for any loss or damage which Lessor may suffer by reason
of Lessee's default.  If any portion of the Security Deposit is so used or
applied, Lessee shall, within ten days after written demand therefor, deposit
cash with Lessor in an amount sufficient to restore the Security Deposit to its
original amount.  Lessee's failure to do so shall be a Default by Lessee.  The
rights of Lessor pursuant to this Section 4.06. are in addition to any rights
which Lessor may have pursuant to Article 12 below.  If Lessee fully and
faithfully performs every provision of this Lease to be performed by it, the
Security Deposit or any balance thereof shall be returned (without interest) to
Lessee (or, at Lessor's option, to the last assignee of Lessee's

                                       9
<PAGE>

interests hereunder) at Lease expiration or termination and after Lessee has
vacated the Premises. Lessor shall not be required to keep the Security Deposit
separate from Lessor's general funds or be deemed a trustee of same. Subject to
the prior written approval of Lessor and Lessor's lender(s), the letter of
credit may be reduced to an amount not less than the total of three (3) months
of Base Rent at the then current rate, if Lessee establishes through financial
statements prepared in accordance with generally accepted accounting principles
and in a form acceptable to Lessor that Lessee has achieved annual revenue for a
period of at least one (1) fiscal year of at least Seven Hundred Fifty Million
Dollars ($750,000,000) and has further achieved quarterly operating profit of at
least One Hundred Million Dollars ($100,000,000) for not less than four (4)
consecutive calendar quarters. If the Security Deposit is in whole or in part in
the form of a Letter of Credit, failure of Lessee to deliver a replacement
Letter of Credit to Lessor at least forty-five (45) business days prior to the
expiration date of any current Letter of Credit shall constitute a separate
default entitling Lessor to draw down immediately and entirely on the current
Letter of Credit and the proceeds shall constitute a cash Security Deposit.

    Section 4.07.  Lessee's Right to Review Supporting Data.
    --------------------------------------------------------

          (a)  Exercise of Right by Lessee.  Provided that Lessee is not in
               ---------------------------
default under this Lease and provided further that Lessee strictly complies with
the provisions of this Section, Lessee shall have the right to reasonably review
supporting data for any portion of a Lessor's statement that Lessee claims is
incorrect.  In order for Lessee to exercise its right under this Section, Lessee
shall, within thirty (30) days after any such Lessor's statement is sent,
deliver a written notice to Lessor specifying the portions of the Lessor's
statement that are claimed to be incorrect, and Lessee shall simultaneously pay
to Lessor all amounts due from Lessee to Lessor as specified in the Lessor's
statement.  Except as expressly set forth in subparagraph (c) below, in no event
shall Lessee be entitled to withhold, deduct, or offset any monetary obligation
of Lessee to Lessor under the Lease including, without limitation, Lessee's
obligation to make all Base Rent payments and all payments for Additional Rent
pending the completion of, and regardless of the results of, any review under
this Section.  The right to review granted to Lessee under this Section may only
be exercised once for any Lessor's statement, and if Lessee fails to meet any of
the above conditions as a prerequisite to the exercise of such right, the right
of Lessee under this Section for a particular Lessor's statement shall be deemed
waived.

          (b)  Procedures for Review.  Lessee acknowledges that Lessor maintains
               ---------------------
its records for the Building and Project at its offices in San Francisco, and
Lessee therefore agrees that any review of supporting data under this Section
shall occur at such location. Any review to be conducted under this Section
shall be at the sole expense of Lessee and shall be conducted by an independent
(i.e. not then engaged by lessee for any other purposes) firm of certified
public accountants of national standing. Lessee acknowledges and agrees that any
supporting data reviewed under this Section constitute confidential information
of Lessor, which shall not be disclosed to anyone other than the accountants
performing the review and the principals of Lessee who receive the results of
the review. The disclosure of such information to any other person, whether or
not caused by the conduct of Lessee, shall constitute a material breach of this
Lease and a forfeiture of all rights under this Section 4.07, including, without
limitation, the right to any credit otherwise due.

          (c)  Finding of Error. Any errors disclosed by the review of
               ----------------
supporting data

                                       10
<PAGE>

under this Section shall be promptly corrected, provided that Lessor shall have
the right to cause another review of the supporting data to be made by an
independent (i.e. not then engaged by Lessor for any other purposes) firm of
certified public accountants of national standing.  In the event of a
disagreement between the two accounting firms, the review that discloses the
least amount of deviation from the Lessor's statement shall be deemed to be
correct and its review shall be final and binding on both Lessor and Lessee.  If
the results of the review of supporting data taking into account, if applicable,
the results of any additional review caused by Lessor reveal that Lessee has
overpaid obligations for a preceding period, the amount of such overpayment
shall be credit against Lessee's subsequent installment obligations to pay its
share of Additional Rent.  In the event that such results show that Lessee has
underpaid its obligations for a preceding period, the amount of such
underpayment shall be paid by Lessee to Lessor with the next succeeding
installment obligation of Additional Rent or, if the Lease has terminated, in
cash within thirty (30) days after the determination of underpayment is
delivered to Lessee.  Each party shall pay the cost and expense of its chosen
accounting firm.

          (4)  Effect of Lessee's Default.  In the event that Lessee becomes in
               --------------------------
default of its obligations under this Lease at any time during the pendency of a
review of records under this Section, said right to review shall immediately
cease and the matters originally set forth in the Lessor's statement shall be
deemed to be correct.

           Section 4.08.  Operating Expenses.
           ---------------------------------

     (a) Definition. "Operating Expenses" shall mean and include, to the extent
not billed as a cost or expense of the Premises or pursuant to Articles VI, VII
or IX, all costs and expenses of every kind and nature paid or incurred by
Lessor (whether obligated to do so or undertaken at Lessor's discretion) in the
operation, maintenance and replacement of the Common Areas, including Common
Area buildings and improvements located within the Project and including Common
Areas located on the Property.  Such cost and expenses shall include, but not be
limited to, costs of management; cleaning; lighting; the costs of maintaining,
repairing and replacing all Common Area improvements (replacing shall be deemed
to include but not be limited to the replacement of light poles and fixtures,
storm and sanitary sewers, parking lots, driveways and roads), repairs to and
maintenance of the structural and non-structural portions of the
amenity/athletic facility; supplies, tools, equipment and materials used in the
operation and maintenance of the Project; snow removal; parking lot striping;
removal of trash, rubbish, garbage and other refuse; painting; removal of
graffiti; painting of exterior walls; landscaping; providing security to the
extent Lessor determines in its sole discretion to do so (including security
systems and/or systems designed to safeguard life or property against acts of
God and/or criminal and/or negligent acts, and the costs of maintaining of
same); public liability, property damage, fire insurance, earthquake and flood
coverage, all risk or special form insurance coverage, rent interruption
insurance coverage, the costs of excess award above insurance aggregate, total
compensation and benefits (including premiums for workers' compensation and
other insurance) paid to or on behalf of employees, including but not limited to
full or part time on-site management or maintenance personnel; personal property
taxes; fire protection and fire hydrant charges (including fire protection
system signaling devices, now or hereafter required, and the costs of
maintaining of same); water and sewer charges; utility charges; license and
permit fees necessary to operate and maintain the initial cost of or the
reasonable depreciation of equipment used in operating and maintaining the
Common Areas and rent paid for leasing any

                                       11
<PAGE>

such equipment; reasonable cost of on or off site storage space of any and all
items used in conjunction with the operation, maintenance and management of the
Project, including but not limited to tools, machinery, records, decorations,
tables, benches, supplies and meters; the cost of and installation cost of any
and all items which are installed for the purpose of reducing Operating
Expenses, increasing building or public safety or which may be then required by
governmental authority, laws, statutes, ordinances and/or regulations, a use
privilege consisting of Base Rent and Operating Expenses allocated to the
Amenities/Athletic Facility and all costs and expenses arising from the
operation of same. Lessor shall apply all of the following amounts received by
Lessor to reduce Operating Expenses; (1) fees paid by any user other than
tenants of the Project (including, without limitation, the public and Lessee's
employees) for use of the Amenities/Athletic Facility and any of the other
Common Areas; (2) base rent and additional rent paid by the operators of the
Amenities/Athletic Facility and any of the other Common Areas.

     (b)  Payment.  Lessee shall pay Lessee's Share of Additional Rent in
          -------
monthly installments on the first day of each month in an amount set forth in a
written estimate by Lessor.  Lessor agrees that it will base its estimate on
Lessor's experience in managing office/research and development projects and in
a reasonable manner.  Within ninety (90) days following the end of the period
used by Lessor in estimating Lessor's cost, Lessor shall furnish to Lessee a
statement (hereinafter referred to as "Lessor's Statement") of the actual amount
of Lessee's Share of such Additional Rent for such period.  Within thirty (30)
days thereafter, Lessee shall pay to Lessor, as Additional Rent, or Lessor shall
remit to Lessee, as the case may be, the difference between the estimated
amounts paid by Lessee and the actual amount of Lessee's  Share of Additional
Rent for such period as shown by such Statement.  Lessee's Share of Additional
Rent for the ensuing estimation period shall be adjusted upward or downward
based upon Lessor's Statement.

     (c)     Lessee's Share.  For purposes hereof, "Lessee's Share" shall mean
             --------------
the rentable square footage of the Building subject to this Lease (at the time
in question) divided by a number equal to the number of rentable square feet
which is then constructed at the Project, in each case measured on a dripline
basis.

     (d)     Exclusions.  For purposes of this Lease, the term Operating
             ----------
Expenses shall not include (and Lessee shall have no liability for) any of the
following: initial construction of any Common Area improvements; legal fees,
permit fees, architectural and engineering fees related to the initial
development and construction of the Project; marketing costs, costs of leasing
commissions, attorneys' fees and other costs and expenses incurred in connection
with negotiations or disputes with prospective tenants or other occupants of the
Project; costs (including permit, license and inspection costs) incurred in
renovating or otherwise improving, decorating or redecorating rentable space for
prospective tenants or vacant rentable space; legal fees, space planner's fees
and brokerage fees incurred in connection with the original development or
original or future leasing of the Project; any bad debt loss, rent loss, or
reserves for bad debts or rent loss; interest, charges and fees incurred on
debt, payments on mortgages and amounts paid as ground rental for the real
property underlying the Project by the Lessor; any costs covered by any
warranty, rebate, guarantee or service contract which are actually collected by
Lessor (which shall not prohibit Lessor from passing through the costs of any
such service contract if otherwise includable in Operating Expenses); interest,
late charges and tax penalties incurred as a result of Lessor's gross negligence
or unwillingness to make payments or file

                                       12
<PAGE>

returns when due; any costs representing an amount paid to a person, firm,
corporation or other entity related to Lessor which is in excess of the amount
which would have been paid in the absence of such relationship; capital costs
incurred to bring the Premises into compliance as of the Commencement Date with
any use permit or design permit or laws applicable to the Premises, the Building
or the Project. Nothing contained in this Section shall prohibit or limit Lessor
from passing through, in Article IX, any one or more specified items as part of
the Community Facility District Bond.

                                 ARTICLE V
                                 ---------
                                    USE
                                    ---

     Section 5.01.  Permitted Use and Limitations on Use.     The Premises shall
     ---------------------------------------------------
be used and occupied only for office, research and development, together with
such ancillary uses which do not cause excessive wear of the Premises or
increase the potential liability of Lessor, and for no other use, without
Lessor's prior written consent which shall not be unreasonably withheld,
conditioned or delayed so long as such use is lawful and does not conflict with
any other provision of this Lease including without limitation the restrictions
set forth in the following provisions of this Section.  Lessee shall not use,
suffer or permit the use of the Premises in any manner that will tend to create
or constitute waste, nuisance or unlawful acts.  In no event shall it be
unreasonable for Lessor to withhold its consent as to uses which it determines
would tend to increase materially the wear of the Premises or any part thereof
or increase the potential liability of Lessor or decrease the marketability,
financability, leasability or value of the Premises or Project.  Lessee shall
not do anything in or about the Premises which will (i) cause structural injury
to the Building or Premises, or (ii) cause damage to any part of the Building or
Premises except to the extent reasonably necessary for the installation of
Lessee's trade fixtures and Lessee's Alterations, and then only in a manner
which has been first approved by Lessor in writing.  Lessee shall not operate
any equipment within the Building or Premises which will (i) materially damage
the Building or the Common Area, (ii) overload existing electrical systems or
other mechanical equipment servicing the Building, (iii) impair the efficient
operation of the sprinkler system or the heating, ventilating or air
conditioning ("HVAC") equipment within or servicing the Building, (iv) damage,
overload or corrode the sanitary sewer system, or (v) damage the Common Area or
any other part of the Project.  Lessee shall not attach, hang or suspend
anything from the ceiling, roof, walls or columns of the Building or set any
load on the floor in excess of the load limits for which such items are designed
nor operate hard wheel forklifts within the Premises.  Any dust, fumes, or waste
products generated by Lessee's use of the Premises shall be contained and
disposed so that they do not (i) create an unreasonable fire or health hazard,
(ii) damage the Premises, or (iii) result in the violation of any law.  Except
as approved by Lessor, Lessee shall not change the exterior of the Building, or
the outside area of the Premises, or install any equipment or antennas on or
make any penetrations of the exterior or roof of the Building.  Lessee shall not
conduct on any portion of the Premises any sale of any kind, including any
public or private auction, fire sale, going-out-of-business sale, distress sale
or other liquidation sale.  No materials, supplies, tanks or containers,
equipment, finished products or semifinished products, raw materials, inoperable
vehicles or articles of any nature shall be stored upon or permitted to remain
within the outside areas of the Premises except in fully fenced and screened
areas outside the Building which have been designed for such purpose and have
been approved in writing by Lessor for such use by Lessee.

                                      13
<PAGE>

     Section 5.02.  Compliance with Law.
     ----------------------------------

     (a)     Lessor shall deliver the Premises to Lessee on the Commencement
Date (without regard to the use for which Lessee will use the Premises) free of
violations of any covenants or restrictions of record, or any applicable law,
building code, regulation or ordinance in effect on such Commencement Date,
including without limitation, the Americans with Disability Act, and free of
Year Two Thousand computer programming defects.

     (b)     Except as provided in paragraph 5.02.(a), Lessee shall, at Lessee's
cost and expense, comply promptly with all statutes, ordinances, codes, rules,
regulations, orders, covenants and restrictions of record, and requirements
applicable to the Premises and Lessee's use and occupancy of same in effect
during any part of the Lease Term, whether the same are presently foreseeable or
not, and without regard to the cost or expense of compliance.

     (c)     By executing this Lease, Lessee acknowledges that it has reviewed
and satisfied itself as to its compliance, or intended compliance with the
applicable zoning and permit laws, hazardous materials and waste requirements,
and all other statutes, laws, or ordinances relevant to the uses stated in
Section 5.01., above.

     Section 5.03. Condition of Premises at Commencement Date.     Subject to
     --------------------------------------------------------
all of the terms of this Lease for the construction of Tenant Improvements,
Lessor shall deliver the Building to Lessee on the Commencement Date with the
Building plumbing, lighting, heating,  ventilating, air conditioning, gas,
electrical, and sprinkler systems and loading doors as set forth in Exhibit "D"
in proper operating condition and built substantially in accordance with the
approved plans therefor, and in a workmanlike manner.  Except as otherwise
provided in this Lease, Lessee hereby accepts the Premises in their condition
existing as of the Commencement Date, subject to all applicable zoning,
municipal, county and state laws, ordinances and regulations governing and
regulating the use and condition of the Premises, and any covenants or
restrictions, liens, encumbrances and title exceptions of record, and accepts
this Lease subject thereto and to all matters disclosed thereby and by any
exhibits attached hereto.  Lessee acknowledges that neither Lessor nor any agent
of Lessor has made any representation or warranty as to the present or future
suitability of the Premises for the conduct of Lessee's business.

     Section 5.04.  Defective Condition at Commencement Date.     In the event
     -------------------------------------------------------
that it is determined, and Lessee notifies Lessor in writing within one year
after the Commencement Date, that any of the obligations of Lessor set forth in
Section 2.04.(b),  Section 5.02.(a) or Section 5.03. were not performed, then it
shall be the obligation of Lessor, and the sole right and remedy of Lessee,
after receipt of written notice from Lessee setting forth with specificity the
nature of the failed performance, to promptly, within a reasonable time and at
Lessor's sole cost, correct same.  Except as to certain defects which remain
Lessor's responsibility under Section 6.01(b) Lessee's failure to give such
written notice to Lessor within one year after the Commencement Date shall
constitute a conclusive presumption that Lessor has complied with all of
Lessor's obligations under the foregoing sections 2.04.(b), 5.02.(a) and 5.03.,
and any required correction after that date shall be performed by Lessee, at its
sole cost and expense.  At the end of the first year of the Lease Term, Lessor
shall promptly assign to Lessee all of Lessor's contractor's,

                                      14
<PAGE>

and/or manufacturer's guarantees, warranties, and causes of action which do not
relate to Lessor's obligations under Section 6.01(b).

     Section 5.05.  Building Security.     Lessee acknowledges and agrees that
     --------------------------------
it assumes sole responsibility for security at the Premises for its agents,
employees, invitees, licensees, contractors, guests and visitors and will
provide such systems and personnel for same including, without limitation, the
Common Area as it deems necessary or appropriate and at its sole cost and
expense.  Lessee acknowledges and agrees that Lessor does not intend to provide
any security system or security personnel at the Premises or Project, including,
without limitation, at the Common Areas, provided, however, that nothing herein
shall be deemed to prevent Lessor from providing such system or personnel in the
future, the cost of which will be included in those items for which Lessee pays
additional rent.

     Section 5.06.  Rules and Regulations.  Lessor may from time to time
     -------------------------------------
promulgate reasonable and nondiscriminatory rules and regulations applicable for
the care and orderly management of the Premises, the Project and/or its Common
Area.  Such rules and regulations shall be binding upon Lessor upon delivery of
a copy thereof to Lessor, and Lessor agrees to abide by such rules and
regulations.  A copy of the initial Rules and Regulations is attached hereto as
Exhibit "L."  If there is a conflict between the rules and regulations and any
of the provisions of this Lease, the provisions of this Lease shall prevail.
Lessor shall not be responsible for the violation of any such rules and
regulations by any person, including, without limitation, Lessee or its
employees, agents, invitees, licensees, guests, visitors or contractors.

                                  ARTICLE VI
                                  ----------
                     MAINTENANCE, REPAIRS AND ALTERATIONS
                     ------------------------------------

     Section 6.01.  Maintenance of Premises.
     --------------------------------------

     (a)     Throughout the Lease Term, Lessee, at its sole cost and expense,
shall keep, maintain, repair and replace the Premises (except as provided in
6.01.(b) and also except for  uninsured maintenance, repairs or replacement
costs caused solely by an act of gross negligence or intentional misconduct by
Lessor during the Lease Term) and all improvements and appurtenances in or
serving the Premises, including, without limitation, all interior and exterior
walls, all doors and windows, the roof membrane, all elevators and stairways,
all wall surfaces and floor coverings, all Tenant Improvements and alterations,
additions and improvements installed during the Lease Term, all sewer, plumbing,
electrical, lighting, heating, ventilation and cooling systems, fire sprinklers,
fire safety and security systems, fixture and appliances and all wiring and
glazing, in the same good order, condition and repair as they are in on the
Commencement Date, or may be put in during the Lease Term, reasonable wear
excepted, provided that wear which could be prevented by first class maintenance
shall not be deemed reasonable.

     (b)     Lessor, at its sole cost and expense, (and in addition to its
obligations set forth in Section 5.04) shall repair defects in the exterior
walls (including all exterior glass which is damaged by structural defects in
such exterior walls), supporting pillars, structural walls, roof structure and
foundations of the Building and sewer and plumbing systems outside the Building,
provided that the need for repair is not caused by Lessee, in which event Lessor
shall, at Lessee's


                                      15
<PAGE>

sole cost and expense, repair same.  Lessor shall replace the
roof membrane of the Building, the parking lot surface, landscaping, drainage,
irrigation, sprinkler and sewer and plumbing systems outside the Building
systems when the useful life of each has expired, and Lessee shall pay the cost
of each replacement (which shall be amortized over the useful life of each such
replacement), together with annual interest at the Agreed Rate in equal monthly
installments due and payable with installments of Base Rent provided that as to
repairs and replacements within the Common Area, Lessee shall pay its
proportionate share as described in Section 4.05.   Lessee shall give Lessor
written notice of any need of repairs which are the obligation of Lessor
hereunder and Lessor shall have a reasonable time to perform same.  Should
Lessor default as provided in Section 12.03 with respect to its obligation to
make any of the repairs assumed by it hereunder with respect to the Building,
Lessee shall have the right to perform such repairs and Lessor agrees that
within thirty (30) days after written demand accompanied by detailed invoice(s),
it shall pay to Lessee the cost of any such repairs together with accrued
interest from the date of Lessee's payment at the Agreed Rate.  Lessor shall not
be liable to Lessee, its employees, invitees, or licensees for any damage to
person or property, and Lessee's sole right and remedy shall be the performance
of said repairs by Lessee with right of reimbursement from Lessor of the
reasonable fair market cost of said repairs, not exceeding the sum actually
expended by Lessee, together with accrued interest from the date of Lessee's
payment at the Agreed Rate, provided that nothing herein shall be deemed to
create a right of setoff or withholding by Lessee of Base Rent or Additional
Rent or any other amounts due herein.   Lessee hereby expressly waives all
rights under and benefits of Sections 1941 and 1942 of the California Civil Code
or under any similar law, statute or ordinance now or hereafter in effect to
make repairs and offset the cost of same against rent or to withhold or delay
any payment of rent or any other of its obligations hereunder as a result of any
default by Lessor under this Section 6.01.(b).

     (c)     Lessee agrees to keep the Premises, both inside and out, clean and
in sanitary condition as required by the health, sanitary and police ordinances
and regulations of any political subdivision having jurisdiction and to remove
all trash and debris which may be found in or around the Premises.  Lessee
further agrees to keep the interior surfaces of the Premises, including, without
limitation, windows, floors, walls, doors, showcases and fixtures clean and neat
in appearance.

     (d)     If Lessee refused or neglects to commence such repairs and/or
maintenance for which Lessee is responsible under this Article VI within a
thirty (30) day period (or as soon as practical and in no event later than five
(5) days, if the failure to initiate the repair threatens to cause further
damage to the Premises) after written notice from Lessor and thereafter
diligently prosecute the same to completion, then Lessor may (i) enter the
Premises (except in an emergency, upon at least 24 hours advanced written
notice) during Lessor's business hours and cause such repairs and/or maintenance
to be made and shall not be responsible to Lessee for any loss or damage
occasioned thereby and Lessee agrees that upon demand, it shall pay to Lessor
the reasonable cost of any such repairs, not exceeding the sum actually expended
by Lessor, together with accrued interest from the date of Lessor's payment at
the Agreed Rate and (ii) elect to enter into a maintenance contract at a market
rate for first-rate maintenance with a third party for the performance of all or
a part of Lessee's maintenance obligations, whereupon, Lessee shall be relieved
from its obligations to perform only those maintenance obligations covered by
such maintenance contract, and Lessee shall bear the entire cost of such
maintenance contract which

                                       16
<PAGE>

shall be paid in advance, as Additional Rent, on a monthly basis with Lessee's
Base Rent payments.

     Section 6.02.  Maintenance of Common Areas. Subject to 6.01.(c) and subject
     ------------------------------------------
to Lessee paying Lessee's Share of the cost and expense for same pursuant to
Section 4.05 Lessor shall maintain, repair and replace all landscape, hardscape
and other improvements within the Common Areas and shall operate and manage the
Amenities/Athletic Facility and other Common Area features and facilities
described in Section 2.02 including without limitation, all landscape, hardscape
and other improvements within the outside areas of the Premises located on the
Property, including without limitation, landscaping, curbs, walkways, driveways,
parking areas and lighting and sprinkler systems.

     Section 6.03. Alterations,  Additions and Improvements.     No alterations,
     ------------------------------------------------------
additions, or improvements ("Alterations") shall be made to the Premises by
Lessee without the prior written consent of Lessor which Lessor will not
unreasonably withhold, provided, however, that Lessee may make Alterations which
do not affect the Building systems, exterior appearance, structural components
or structural integrity and which do not exceed collectively One Hundred
Thousand Dollars ($100,000) in cost within any twelve (12) month period, without
Lessor's prior written consent.   As a condition to Lessor's obligation to
consider any request for consent hereunder, Lessee shall pay Lessor upon demand
for the reasonable costs and expenses of consultants, engineers, architects and
others for reviewing plans and specifications and for monitoring the
construction of any proposed Alterations.  Lessor may require Lessee to remove
any such Alterations at the expiration or termination of the Lease Term and to
restore the Premises to their prior condition by written notice given on or
before the earlier of (i) the expiration of the Lease Term or (ii) thirty (30)
days after termination of the Lease or (iii) thirty (30) days after a written
request from Lessee for such notice from Lessor provided, that, if Lessee
requests same from Lessor, Lessor will notify Lessee within five (5) business
days after receipt of Lessee's request and a copy of all plans and
specifications for the proposed Alteration whether it will require removal.  All
Alterations to be made to the Premises shall be made under the supervision of a
competent, California licensed architect and/or competent California licensed
structural engineer (each of whom has been approved by Lessor) and shall be made
in accordance with plans and specifications which have been furnished to and
approved by Lessor in writing prior to commencement of work.  All Alterations
shall be designed, constructed and installed at the sole cost and expense of
Lessee by California licensed architects, engineers, and contractors approved by
Lessor, in compliance with all applicable law, and in good and workmanlike
manner.  Any Alteration except furniture and trade fixtures, shall become the
property of Lessor at the expiration, or sooner termination of the Lease, unless
Lessor directs otherwise, provided that  Lessee shall retain title to all
furniture and trade fixtures placed on the Premises.  All heating, lighting,
electrical, air conditioning, full height partitioning (but not moveable, free
standing cubicle-type partitions which do not extend to the ceiling or connect
to Building walls), drapery and carpeting installations made by Lessee together
with all property that has become an integral part of the Premises, shall be and
become the property of Lessor upon the expiration, or sooner termination of the
Lease, and shall not be deemed trade fixtures.  Within thirty (30) days after
completion of any Alteration, Lessee, Lessee shall provide Lessor with a
complete set of "as built" plans for same.

                                       17
<PAGE>

     Section 6.04.  Covenant Against Liens.    Lessee shall not allow any liens
     -------------------------------------
arising from any act or omission of Lessee to exist, attach to, be placed on, or
encumber Lessor's or Lessee's interest in the Premises or Project, or any
portion of either, by operation of law or otherwise.  Lessee shall not suffer or
permit any lien of mechanics, material suppliers, or others to be placed against
the Premises or Project, or any portion of either, with respect to work or
services performed or claimed to have been performed for Lessee or materials
furnished or claimed to have been furnished to Lessee or the Premises.  Lessor
has the right at all times to post and keep posted on the Premises any notice
that it considers necessary for protection from such liens.  At least seven (7)
days before beginning construction of any Alteration, Lessee shall give Lessor
written notice of the expected commencement date of that construction to permit
Lessor to post and record a notice of nonresponsibility.  If any such lien
attaches or Lessee received notice of any such lien, Lessee shall cause the lien
to be immediately released and removed of record.  Despite any other provision
of this Lease, if the lien is not released and removed within twenty (20) days
after Lessor delivers notice of the lien to Lessee, Lessor may immediately take
all action necessary to release and remove the lien, without any duty to
investigate the validity of it.  All expenses (including reasonable attorney
fees and the cost of any bond) incurred by Lessor in connection with a lien
incurred by Lessee or its removal shall be considered Additional Rent under this
Lease and be immediately due and payable by Lessee.

     Section 6.05  Reimbursable Capital Expenditures.    Except for items of
     -------------------------------------------------
capital expenditures which are to be made at Lessor's sole cost and expense
pursuant to the first sentence of Section 6.01(b) above, capital expenditures,
together with interest thereon at the Agreed Rate, for any replacement item at
the Premises made by Lessor in excess of Ten Thousand Dollars ($10,000.00)
during the Lease Term shall be amortized over the remaining Lease Term for the
useful life of such replacement item within the numerator being the number of
months remaining in the Lease Term and the denominator being the number of
months of the "useful life" of the improvements. Lessee shall be obligated for
such amortized portion of any such expenditure in equal monthly installments due
and payable with each installment of Base Rent.



                                  ARTICLE VII
                                   INSURANCE

     Section 7.01.  Property/Rental Insurance for Premises: At all times during
     -----------------------------------------------------
the Lease Term, Lessor shall keep the Premises and Project insured against loss
or damage by fire and those risks normally included in the term "all risk,"
including, without limitation, coverage for (i) earthquake and earthquake
sprinkler leakage, (ii) flood, (iii) loss of rents and extra expense for
eighteen (18) months, including scheduled rent increases, (iv) boiler and
machinery, (v) Tenant Improvements and (vi) fire damage legal liability form,
including waiver of subrogation.  Any deductibles shall be paid by Lessee.  The
amount of such insurance shall not be less than 100% of replacement cost.
Insurance shall include a Building Ordinance and Increased Cost of Construction
Endorsement insuring the increased cost of reconstructing the Premises incurred
due to the need to comply with applicable statutes, ordinances and requirements
of all municipal, state and federal authorities now in force, which or may be in
force hereafter.  Any recovery

                                       18
<PAGE>

received from said insurance policy shall be paid to Lessor and thereafter
applied by Lessor to the reconstruction of the Premises in accordance with the
provisions of Article VIII below. Lessee, in addition to the rent and other
charges provided herein, shall reimburse Lessor for the cost of the premiums for
all such insurance covering the Premises in accordance with Article IV. Such
reimbursement and shall be made within (15) days of Lessee's receipt of a copy
of Lessor's statement therefor. Lessee shall pay to Lessor any deductible
(subject to the above conditions) owing within fifteen (15) days after receipt
of notice from Lessor of the amount owing. To the extent commercially available,
Lessor's insurance shall have a deductible not greater than fifteen percent
(15%) for earthquake and ten percent (10%) for the basic "all risk" coverage.
Lessor shall use commercially reasonable efforts to obtain competitive rates,
while maintaining its discretion as a prudent project manager to select insurers
and coverage Lessor believes to be appropriate.

     Section 7.02.  Property Insurance for Fixtures and Inventory.     At all
     -------------------------------------------------------------
times during the Lease Term, Lessee shall, at its sole expense, maintain
insurance with "all risk" coverage on any fixtures, furnishings, merchandise
equipment or personal property in or on the Premises, whether in place as of the
date hereof or installed hereafter. The amount of such insurance shall not be
less than one hundred percent (100%) of the replacement cost thereof, and Lessor
shall not have any responsibility nor pay any cost for maintaining any types of
such insurance. Lessee shall pay all deductibles.

     Section 7.03.  Lessor's Liability Insurance.   During the Lease Term,
     --------------------------------------------
Lessor shall maintain a policy or policies of comprehensive general liability
insurance naming Lessor (and such others as designated by Lessor) against claims
and liability for bodily injury, property damage on our about the Premises, with
combined single limit coverage in an amount determined by Lessor in its sole
discretion (which amount is currently Fifty Million Dollars ($50,000,000.00));
provided that if such policy is a blanket policy that covers properties (other
than the Project) owned by Lessor, only that portion allocable to the Project
shall be payable hereunder.  Lessee, in addition to the rent and other charges
provided herein, agrees to pay Lessee's Share of the premiums for all such
insurance in accordance with Article IV.

     Section 7.04.  Liability Insurance Carried by Lessee.  At all times during
     ----------------------------------------------------
the Lease Term (and any holdover period) Lessee shall obtain and keep in force a
commercial general liability policy of insurance protecting Lessee, Lessor and
any Lender(s) whose names are provided to Lessee as Additional Insureds against
claims and liability for bodily injury, personal injury and property damage
based upon involving or arising out of ownership, use, occupancy or maintenance
of the Premises and all areas appurtenant thereto.  Such insurance shall be on
an occurrence basis providing a single limit coverage in amount of not less than
Ten Million Dollars ($10,000,000) per occurrence with an Additional Lessors or
Premises Endorsements and containing an "Amendment of the Pollution Exclusion
Endorsement" for damage caused by heat, smoke, fumes from a hostile fire.  The
limits of said insurance required by this Lease as carried by Lessee shall not,
however limit the liability of Lessee nor relieve Lessee of any obligation
hereunder.  All insurance to be carried by the Lessee shall be primary to and
not contributory with, any similar insurance carried by Lessor whose insurance
shall be considered excess insurance only.

                                       19
<PAGE>

     Section 7.05. Lessee to Furnish Proof of Insurance.    Lessee shall furnish
     ---------------------------------------------------
to Lessor prior to the Commencement Date, and at least thirty (30) days prior to
the expiration date of any policy, certificates indicating that the property
insurance and liability insurance required to be maintained by Lessee is in full
force and effect for the twelve (12) month period following such expiration
date; that Lessor has been named as an additional insured to the extent of
contractual liability assumed in Section 7.07. "indemnification" and Section
7.08. "Lessor as Party Defendant"; and that all such policies will not be
canceled unless thirty (30) days' prior written notice of the proposed
cancellation has been given to Lessor.  The insurance shall be with insurers
approved by Lessor, provided, however, that such approval shall not be
unreasonably withheld so long as Lessee's insurance carrier has a Best's
Insurance Guide rating not less than A+ VIII.

     Section 7.06.  Mutual Waiver of Claims and Subrogation Rights.    Lessor
     -------------------------------------------------------------
and Lessee hereby release and relieve the other, and waive their entire claim of
recovery for loss or damage to property arising out of or incident to fire,
lightning, and the other perils included in a standard "all risk" insurance
policy of a type described in Sections 7.01 and 7.02 above, when such property
constitutes the Premises, or is in, on or about the Premises, whether or not
such loss or damage is due to the negligence of Lessor or Lessee, or their
respective agents, employees, guests, licensees, invitees, or contractors.
Lessee and Lessor waive all rights of subrogation against each other on behalf
of, and shall obtain a waiver of all subrogation rights from, all property and
casualty insurers referenced above.

     Section 7.07.  Indemnification and Exculpation.
     ----------------------------------------------

     (a)     Except as otherwise provided in Section 7.07.(b), Lessee shall
indemnify and hold Lessor free and harmless from any and all liability, claims,
loss, damages, causes of action (whether in tort or contract, law or equity, or
otherwise), expenses, charges, assessments, fines, and penalties of any kind,
including without limitation, reasonable attorney fees, expert witness fees and
costs, arising by reason of the death or injury of any person, including any
person who is an employee, agent, invitee, licensee, permittee, visitor, guest
or contractor of Lessee, or by reason of damage to or destruction of any
property, including property owned by Lessee or any person who is an employee,
agent, invitee, permitee, visitor, or contractor of Lessee, caused or allegedly
caused (1) while that person or property is in or about the Premises; (2) by
some condition of the Premises; (3) by some act or omission by Lessee or its
agent, employee, licensee, invitee, guest, visitor or contractor or any person
in, adjacent, on, or about the Premises with the permission, consent or
sufferance of Lessee; (4) by any matter connected to or arising out of Lessee's
occupation and use of the Premises, or any breach or default in timely
observance or performance of any obligation on Lessee's part to be observed or
performed under this Lease.

     (b)     Notwithstanding the provisions of Section 7.07.(a) of this Lease,
Lessee's duty to indemnify and hold Lessor harmless shall not apply to any
liability, claims, loss or damages arising solely from Lessor's active
negligence, willful acts of misconduct or default under this Lease of its
obligations under Section 5.04.

     (c)     Lessee hereby waives all claims against Lessor for damages to
goods, wares and merchandise and all other personal property in, on or about the
Premises and for injury or death

                                       20
<PAGE>

to persons in, on or about the Premises from any cause arising at any time to
the fullest extent permitted by law. In no event shall Lessor be liable (i) for
lost profits or other consequential damages arising from any cause or (ii) for
any damage which is or could be covered by the insurance Lessee is required to
carry under this Lease.

     Section 7.08.  Lessor as Party Defendant.    If by reason of an act or
     ----------------------------------------
omission of Lessee or any of its employees, agents, invitees, licensee,
visitors, guests or contractors, Lessor is made a party defendant or a cross-
defendant to any action involving the Premises or this Lease, Lessee shall hold
harmless and indemnify Lessor from all liability or claims of liability,
including all damages, attorney fees and costs of suit.

                                 ARTICLE VIII
                                 ------------
                             DAMAGE OR DESTRUCTION
                             ---------------------

     Section 8.01.  Destruction of the Premises.
     ------------------------------------------

     (a) In the event of a partial destruction of the Premises (i.e., less than
fifty percent (50%) of its Rentable Area) during the Lease Term from any cause,
Lessor, upon receipt of, and to the extent of, insurance proceeds paid in
connection with such casualty, shall forthwith repair the same, provided the
repairs can be made within a reasonable time under state, federal, county and
municipal applicable law, but such partial destruction shall in no way annul or
void this Lease, (except as provided in Section 8.01.(b) below) provided that
Lessee shall be entitled to a proportionate credit for rent equal to rental
income insurance proceeds received by Lessor, provided that if Lessor failed to
carry such insurance as required by Article VII hereof, Lessee shall nonetheless
be entitled to an abatement of rent to the same extent as if Lessor had carried
such insurance from such insurance as is required under Section 7.01.  Lessor
shall use diligence in making such repairs within a reasonable time period,
subject to the Force Majeure provisions of Section 17.21, in which instance the
time period shall be extended accordingly, and this Lease shall remain in full
force and effect, with the rent to be proportionately reduced as provided in
this Section.  If the Premises are damaged by any peril within twelve (12)
months prior to the last day of the Lease Term and, in the reasonable opinion of
the Lessor's architect or construction consultant, the restoration of the
Premises cannot be substantially completed within ninety (90) days after the
date of such damage and such damage renders unusable more than thirty percent
(30%) of the Premises, Lessor may terminate this Lease on sixty (60) days
written notice to Lessee.

     (b)     If the Building is damaged or destroyed by any cause to the extent
of more than fifty percent (50%) of its total Rentable Area during the Lease
Term, Lessor shall notify Lessee within sixty (60) days after such damage or
destruction whether it will repair the same within nine months (9) (subject to
the Force Majeure provision of Section 17.21) from the date of such notice and
if Lessor states that it will not repair within said nine months (9) (subject to
force majeure) this Lease shall terminate ten (10) business days after Lessor
gives its notice.  In the event of termination, Lessee shall pay to Lessor all
insurance proceeds, if any, received by Lessee as a result of the damage or
destruction to the extent allocable to the Building for unamortized Tenant
Improvements or other Alterations installed therein at Lessee's sole cost and
expense.



                                       21
<PAGE>

     Section 8.02.  Waiver of Civil Code Remedies.  Lessee hereby expressly
     --------------------------------------------
waives any rights to terminate this Lease upon damage or destruction to the
Premises, including without limitation any rights pursuant to the provisions of
Section 1932, Subdivisions 1 and 2 and Section 1933, Subdivision 4, of the
California Civil Code, as amended from time-to-time, and the provisions of any
similar law hereinafter enacted.

     Section 8.03.  No Abatement of Rentals.  The Base Rent, Additional Rent and
     --------------------------------------
other charges due under this Lease shall not be reduced or abated by reason of
any damage or destruction to the Premises (except as provided in Section
8.01.(a) above with respect to rental loss insurance), and Lessor shall be
entitled to all proceeds of the insurance maintained pursuant to Section 7.01.
above during the period of rebuilding pursuant to Section 8.01. above, or if the
Lease is terminated pursuant to Section 8.01. above.  Lessee shall have no claim
against Lessor, including, without limitation, for compensation for
inconvenience or loss of business, profits or goodwill during any period of
repair or reconstruction.

     Section 8.04.  Liability for Personal Property.  In no event shall Lessor
     ----------------------------------------------
have any liability for, nor shall it be required to repair or restore, any
injury or damage to Lessee's personal property or to any other personal property
or to Alterations in or upon the Premises by Lessee.

                                  ARTICLE IX
                                  ----------
                              REAL PROPERTY TAXES
                              -------------------

     Section 9.01.  Payment of Taxes.  Subject to Lessee timely paying Lessor
     -------------------------------
the same in advance as provided below, Lessor shall pay all real property taxes,
including any escaped or supplemental tax and any form of real estate tax or
assessment, general, special, ordinary or extraordinary, and any license, fee,
charge, excise or imposition ("real property tax"), imposed, assessed or levied
on or with respect to the Project by any Federal, State, County, City or other
political subdivision or public authority having the direct or indirect power to
tax, including, without limitation, any improvement district or any community
facilities district (including with respect to a district established for
purposes of constructing the Seaport Boulevard improvements and other
improvements as required in the Development Agreement or by the City of Redwood
City ("Community Facility District Bond"), as against any legal or equitable
interest of Lessor in the Project or against the Project or any part thereof
applicable to the Project for all periods of time included within the Lease Term
(as the same may be extended and during any holdover period), as well as any
government or private cost sharing agreement assessments made for the purpose of
augmenting or improving the quality of services and amenities normally provided
by government agencies.  All such payments shall be made by Lessee directly
pursuant to Section 4.05 hereof no later than ten (10) days after Lessor's
delivery to Lessee of a statement of the real property tax due, together with a
copy of the applicable tax bill.  Notwithstanding the foregoing, Lessee shall
not be required to pay any net income taxes, franchise taxes, or any succession
or inheritance taxes of Lessor.  If at anytime during the Lease Term, the State
of California or any political subdivision of the state, including any county,
city, city and county, public corporation, district, or any other political
entity or public corporation of this state, levies or assesses against Lessor a
tax, fee, charge, imposition or excise on rents under the Lease, the square
footage of the Premises or Project, the act of entering into this Lease, or the
occupancy of Lessee, or levies or assesses against Lessor any other tax, fee, or
excise, however described, including, without

                                       22
<PAGE>

limitation, a so-called value added, business license, transit, commuter,
environmental or energy tax fee, charge or excise or imposition related to the
Project as a direct substitution in whole or in part for, or in addition to, any
real property taxes on the Project the same shall be included n real property
taxes and Lessee shall pay ten (10) days before delinquency or ten (10) days
after receipt of the tax bill, whichever is later, that tax, fee, charge, excise
or imposition except to the extent estimated real property taxes are billed and
paid monthly. Real property taxes payable by Lessee hereunder shall not include
real property taxes applicable to other office/research and development
buildings or the legal parcels on which such buildings are located, but Lessee
shall pay one hundred percent (100%) of real property taxes applicable to the
Property.

     Section 9.02.  Pro Ration for Partial Years.  If any such taxes paid by
     -------------------------------------------
Lessee shall cover any period prior to the Commencement Date or after the
Expiration Date of the Lease Term, Lessee's share of such taxes shall be
equitably prorated to cover only the period of time within the tax fiscal year
during which this Lease shall be in effect, and Lessor shall reimburse Lessee to
any extent required.  If Lessee shall fail to pay any such taxes, Lessor shall
have the right to pay the same in which case Lessee shall repay such amount to
Lessor within ten (10) days after written demand, together with interest at the
Agreed Rate.

     Section 9.03.  Personal Property Taxes.
     --------------------------------------

     (a)  Lessee shall pay prior to delinquency all taxes imposed, assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere.  When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real
property of Lessor.

     (b)  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
within ten (10) days after receipt of a written statement setting forth the
taxes applicable to Lessee's property.

     (c)  If Lessee shall fail to pay any such taxes, Lessor shall have the
right to pay the same, in which case Lessee shall repay such amount to Lessor
with Lessee's next rent installment together with interest at the Agreed Rate.

                                   ARTICLE X
                                   ---------
                                   UTILITIES
                                   ---------

     Section 10.01. Lessee to Pay.  Lessee shall pay prior to delinquency and
     ----------------------------
throughout the Lease Term, all charges for water, gas, heating, cooling, sewer,
telephone, electricity, garbage, air conditioning and ventilation, janitorial
service, landscaping and all other materials and utilities supplied to the
Premises.  The disruption, failure, lack or shortage of any service or utility
due to any cause whatsoever shall not affect any obligation of Lessee hereunder,
and Lessee shall faithfully keep and observe all the terms, conditions and
covenants of this Lease and pay all rent due hereunder, all without diminution,
credit or deduction.

                                  ARTICLE XI
                                  ----------
                           ASSIGNMENT AND SUBLETTING
                           -------------------------

                                       23
<PAGE>

     Section 11.01.  Lessor's Consent Required.  Except as provided in
     -----------------------------------------
Section 11.02, Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage, sublet, license or otherwise transfer or encumber all or any
part of Lessee's interest in this Lease or in the Premises or any part thereof,
without Lessor's prior written consent which Lessor shall not unreasonably
withhold or delay.  Lessor shall respond in writing to Lessee's request for
consent hereunder in a timely manner and any attempted assignment, transfer,
mortgage, encumbrance, subletting or licensing without such consent shall be
void, and shall constitute a breach of this Lease.  By way of example, but not
limitation, reasonable grounds for denying consent include: (i) poor credit
history or insufficient financial strength of transferee, (ii) transferee's
intended use of the Premises is inconsistent with the permitted use or will
materially and adversely affect Lessor's interest.  Lessee shall reimburse
Lessor upon demand for Lessor's reasonable costs and expenses (including
attorneys' fees, architect fees and engineering fees) involved in renewing any
request for consent whether or not consent is granted, provided that Lessee's
obligation for attorneys' fees shall not exceed One Thousand Dollars ($1,000)
unless any of the documents involved in the transaction become the subject of
negotiation.

     Section 11.02.  Lessee Affiliates.  Lessee may assign or sublet the
     ---------------------------------
Premises, or any portion thereof, to any corporation which controls, is
controlled by, or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all of Lessee's stock or all, or substantially all of the
assets of Lessee as a going concern of the business that is being conducted on
the Premises ("Affiliate"), provided that said assignee or sublessee assumes, in
full, the obligations of Lessee under this Lease and provided further that the
use to which the Premises will be put does not materially change.  Any such
assignment shall not, in any way, affect or limit the liability of Lessee under
the terms of this Lease.

     Section 11.03.  No Release of Lessee.  Regardless of Lessor's consent,
     ------------------------------------
no subletting or assignment shall release Lessee of Lessee's obligation or alter
the primary liability of Lessee to pay the rent and to perform all other
obligations to be performed by Lessee hereunder.  The acceptance of rent by
Lessor from any other person shall not be deemed consent to any subsequent
assignment or subletting.  In the event of default by any assignee of Lessee or
any successor of Lessee, in the performance of any of the terms hereof, Lessor
may proceed directly against Lessee without the necessity of exhausting remedies
against said assignee.

     Section 11.04.  Excess Rent.  In the event Lessor shall consent to a
     ---------------------------
sublease or an assignment, Lessee shall pay to Lessor with its regularly
scheduled Base Rent payments, fifty percent (50%) of all sums and the fair
market value of all consideration collected or received by Lessee from a
sublessee or assignee which are in excess of the Base Rent and Additional Rent
due and payable with respect to the subject space  pursuant to Article IV for
the time period encompassed by the sublease or assignment term, after first
deducting (i) reasonable leasing commissions paid by Lessee with respect to such
sublease or assignment, and (ii) that portion of the cost of Tenant Improvements
paid by Lessee (up to $30.00 per square foot) which remains unamortized (using
an amortization schedule of the first sixty (60) months of the Lease Term)
during any portion of the sublease or assignment term.

                                       24
<PAGE>

     Section 11.05.  No Impairment of Security.  Lessee's written request to
     -----------------------------------------
Lessor for consent to an assignment or subletting or other form of transfer
shall be accompanied by (a) the name and legal composition of the proposed
transferee; (b) the nature of the proposed transferee's business to be carried
on in the Premises; (c) the terms and provisions of the proposed transfer
agreement; and (d) such financial and other reasonable information as Lessor may
request concerning the proposed transferee.

     Section 11.06.  Lessor's Recapture Rights.
     -----------------------------------------

     (a)  Lessor's Recapture Rights.  Notwithstanding any other provision of
          -------------------------
this Article 11, in the event that Lessee proposes to sublease or assign or
otherwise transfer any interest in this Lease or the Premises or any part
thereof affecting (collectively with all other such subleases, assignments, or
transfers then in effect) more than fifty percent (50%) of the square footage of
the Rentable Area of the Building (Recapture Space) for more than fifty percent
(50%) of the then remaining Lease Term, then Lessor shall have the option to
recapture the Recapture Space by written notice to Lessee (Recapture Notice)
given within ten (10) business days after Lessor receives any notice of such
proposed assignment or sublease or other transfer ("Transfer Notice").  A timely
Recapture Notice terminates this Lease for the Recapture Space, effective as of
the date specified in the Transfer Notice.  If Lessor declines or fails timely
to deliver a Recapture Notice, Lessor shall have no further right under this
Section 11.06 to the Recapture Space unless it becomes available again after
transfer by Lessee.

     (b)  Consequences of Recapture.  To determine the new Base Rent under
          -------------------------
this Lease if Lessor recaptures the Recapture Space, the then current Base Rent
(immediately before Lessor's recapture) under the Lease shall be multiplied by a
fraction, numerator of which is the square feet of the Rentable Area retained by
Lessee after Lessor's recapture and the denominator of which is the total square
feet of the Rentable Area before Lessor's recapture.  The Additional Rent, to
the extent that it is calculated on the basis of the square feet within the
Building, shall be reduced to reflect Lessee's proportionate share based on the
square feet of the Building retained by Lessee after Lessor's recapture.  This
Lease as so amended shall continue thereafter in full force and effect.  Either
party may require written confirmation of the amendments to this Lease
necessitated by Lessor's recapture of the Recapture Space.  If Lessor recaptures
the Recapture Space, Lessor shall, at Lessor's sole expense, construct, paint,
and furnish any partitions required to segregate the Recapture Space from the
remaining Premises retained by Lessee as well as arrange separate metering of
utilities.

                                  ARTICLE XII
                                  -----------
                              DEFAULTS; REMEDIES
                              ------------------

     Section 12.01.  Defaults.  The occurrence of any one or more of the
     ------------------------
following events shall constitute a material default and breach of this Lease by
Lessee:

     (a)  The abandonment of the Premises by Lessee or the commission of waste
at the Premises or the making of an assignment or subletting in violation of
Article XI, provided however, abandonment shall be considered to not occur if
the Premises are maintained and occupied to the extent necessary to maintain the
insurance on each and every portion of the Premises;

                                       25
<PAGE>

     (b)  The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, if such failure
continues for a period of five (5) business days after written notice thereof
from Lessor to Lessee.  In the event that Lessor serves Lessee with a Notice to
Pay Rent or Quit in the form required by applicable Unlawful Detainer statutes
such Notice shall constitute the notice required by this paragraph, provided
that the cure period stated in the Notice shall be five (5) business days rather
than the statutory three (3) days;

     (c)  Lessee's failure to provide (i) any instrument or assurance as
required by Section 7.05 or (ii) estoppel certificate as required by Section
15.01 or (iii) any document subordinating this Lease to a Lender's deed of trust
if such failure continues for five (5) business days after written notice of the
failure. In the event Lessor serves Lessee with a Notice to Perform Covenant or
Quit in the form required by applicable Unlawful Detainer Statutes, such Notice
shall constitute the notice required by this paragraph, provided that the cure
period stated in the Notice shall be five (5) business days rather than the
statutory three (3) days;

     (d)  The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (a) (b) or (c) above, if such failure
continues for a period of ten (10) days after written notice thereof from Lessor
to Lessee; provided, however, that if the nature of Lessee's default is such
that more than ten (10) days are reasonably required for its cure, then Lessee
shall not be deemed to be in default if Lessee commences such cure within said
ten (10) day period and thereafter diligently prosecutes such cure to
completion;

     (e)  (i) The making by Lessee of any general arrangement or assignment for
the benefit of creditors; (ii) the filing by Lessee of a voluntary petition in
bankruptcy under Title 11 U.S.C. or the filing of an involuntary petition
against Lessee which remains uncontested for a period of sixty 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;
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, provided, however, in the event that any provisions of this Section
12.01(e) is contrary to any applicable law, such provision shall be of no force
or effect;

     (f)  The discovery by Lessor that any financial statement given to Lessor
by Lessee, or any guarantor of Lessee's obligations hereunder, was materially
false.

     (g)  The occurrence of a material default and breach by Lessee under any
other Lease between Lessee and Lessor (or any affiliate of Lessor) for Premises
in Pacific Shores Center.

     Section 12.02.  Remedies.  In the event of any such material default and
     ------------------------
breach by Lessee, Lessor may at any time thereafter, and without limiting Lessor
in the exercise of any right or remedy which Lessor may have by reason of such
default and breach:

     (a)  Terminate Lessee's right to possession of the Premises by any lawful
means including by way of unlawful detainer (and without any further notice if a
notice in compliance

                                       26
<PAGE>

with the unlawful detainer statutes and in compliance with paragraphs (b), (c)
and (d) of Section 12.01 above has already been given), in which case this Lease
shall terminate and Lessee shall immediately surrender possession of the
Premises to Lessor. In such event Lessor shall be entitled to recover from
Lessee all damages incurred by Lessor by reason of Lessee's default including,
but not limited to, (i) the cost of recovering possession of the Premises
including reasonable attorney's fees related thereto; (ii) the worth at the time
of the award of any unpaid rent that had been earned at the time of the
termination, to be computed by allowing interest at the Agreed Rate but in no
case greater than the maximum amount of interest permitted by law, (iii) the
worth at the time at the time of the award of the amount by which the unpaid
rent that would have been earned between the time of the termination and the
time of the award exceeds the amount of unpaid rent that Lessee proves could
reasonably have been avoided, to be computed by allowing interest at the Agreed
Rate but in no case greater than the maximum amount of interest permitted by
law, (iv) the worth at the time of the award of the amount by which the unpaid
rent for the balance of the Lease Term after the time of the award exceeds the
amount of unpaid rent that Lessee proves could reasonably have been avoided, to
be computed by discounting that amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award plus one per cent (1%),
(v) any other amount necessary to compensate Lessor for all the detriment
proximately caused by Lessee's failure to perform obligations under this Lease,
including brokerage commissions and advertising expenses, expenses of remodeling
the Premises for a new tenant (whether for the same or a different use), and any
special concessions made to obtain a new tenant, and (vi) any other amounts, in
addition to or in lieu of those listed above, that may be permitted by
applicable law.

     (b)  Maintain Lessee's right to possession as provided in Civil Code
Section 1951.4 in which case this Lease shall continue in effect whether or not
Lessee shall have abandoned the Premises. In such event Lessor shall be entitled
to enforce all of Lessor's rights and remedies under this Lease, including the
right to recover the rent as it becomes due hereunder.

     (c)  Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the state of California. Unpaid amounts of rent
and other unpaid monetary obligations of Lessee under the terms of this Lease
shall bear interest from the date due at the Agreed Rate.

     Section 12.03. Default by Lessor.  Lessor shall not be in default under
     --------------------------------
this Lease unless Lessor fails to perform obligations required of Lessor within
a reasonable time, but in no event later than thirty (30) days after written
notice by Lessee to Lessor and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying that Lessor has failed to perform
such obligation; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days are reasonably required for performance
then Lessor shall not be in default if Lessor commences performance within such
thirty day period and thereafter diligently prosecutes the same to completion.
In the event Lessor does not commence performance within the thirty (30) day
period provided herein, Lessee may perform such obligation and will be
reimbursed for its expenses by Lessor together with interest thereon at the
Agreed Rate.  Lessee waives any right to terminate this Lease or to vacate the
Premises on Lessor's default under this Lease.  Lessee's sole remedy on Lessor's
default is an action for damages or injunctive or declaratory relief.
Notwithstanding the foregoing, nothing herein shall be deemed applicable in the
event of Lessor's

                                       27
<PAGE>

delay in delivery of the Premises. In that situation, all rights and remedies
shall be determined under Section 3.01 above.

     Section 12.04.  Late Charges.  Lessee hereby acknowledges that late
     ----------------------------
payment by Lessee to Lessor of rent and other sums due hereunder 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 on Lessor by the terms of any mortgage or trust deed covering the
Premises. Accordingly, if any installment of rent or any other sum due from
Lessee shall not be received by Lessor or Lessor's designated agent within five
(5) days after such amount is due and owing, Lessee shall pay to Lessor a late
charge equal to five percent (5%) of 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 late payment by Lessee. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's default
with respect to such overdue amount, nor prevent Lessor from exercising any of
the other rights and remedies granted hereunder. In the event that a late charge
is payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding Section 4.01 or any
other provision of this Lease to the contrary.

                                 ARTICLE XIII
                                 ------------
                           CONDEMNATION OF PREMISES.
                           -------------------------

     Section 13.01.  Total Condemnation.  If the entire Premises, whether by
     ----------------------------------
exercise of governmental power or the sale or transfer by Lessor to any
condemnor under threat of condemnation or while proceedings for condemnation are
pending, at any time during the Lease Term, shall be taken by condemnation such
that there does not remain a portion suitable for occupation, this Lease shall
then terminate as of the date transfer of possession is required. Upon such
condemnation, all rent shall be paid up to the date transfer of possession is
required, and Lessee shall have no claim against Lessor or the award for the
value of the unexpired portion of this Lease Term.

     Section 13.02.  Partial Condemnation.  If any portion of the Premises is
     ------------------------------------
taken by condemnation during the Lease Term, whether by exercise of governmental
power or the sale for transfer by Lessor to an condemnor under threat of
condemnation or while proceedings for condemnation are pending, this Lease shall
remain in full force and effect except that in the event a partial taking leaves
the Premises unfit for the conduct of the business of Lessee, then Lessee shall
have the right to terminate this Lease effective upon the date transfer of
possession is required. Moreover, Lessor shall have the right to terminate this
Lease effective on the date transfer of possession is required if more than
thirty-three percent (33%) of the total square footage of the Premises is taken
by condemnation. Lessee and Lessor may elect to exercise their respective rights
to terminate this Lease pursuant to this Section by serving written notice to
the other within thirty (30) days after receipt of notice of condemnation. All
rent shall be paid up to the date of termination, and Lessee shall have no claim
against Lessor for the value of any unexpired portion of the Lease Term. If this
Lease shall not be canceled, the rent after such partial taking shall be that
percentage of the adjusted base rent specified herein, equal to the

                                       28
<PAGE>

percentage which the square footage of the untaken part of the Premises,
immediately after the taking, bears to the square footage of the entire Premises
immediately before the taking. If Lessee's continued use of the Premises
requires alterations and repair by reason of a partial taking, all such
alterations and repair shall be made by Lessee at Lessee's expense. Lessee
waives all rights it may have under California Code of Civil Procedure Section
1265.130 or otherwise, to terminate this Lease based on partial condemnation.

     Section 13.03. Award to Lessee.  In the event of any condemnation,
     ------------------------------
whether total or partial, Lessee shall have the right to claim and recover from
the condemning authority such compensation as may be separately awarded or
recoverable by Lessee for loss of its business fixtures, or equipment belonging
to Lessee immediately prior to the condemnation.  The balance of any
condemnation award shall belong to Lessor (including, without limitation, any
amount attributable to any excess of the market value of the Premises for the
remainder of the Lease Term over the then present value of the rent payable for
the remainder of the Lease Term) and Lessee shall have no further right to
recover from Lessor or the condemning authority for any claims arising out of
such taking, provided that Lessee shall have the right to make a separate claim
in the condemnation proceeding, as long as the award payable to Lessor is not
reduced thereby, for the taking of the unamortized (using the first sixty (60)
months of the initial Lease Term as the amortization period) value of any Tenant
Improvements paid for by Lessee which are not removed by Lessee.

                                  ARTICLE XIV
                                  -----------
                                ENTRY BY LESSOR
                                ---------------

     Section 14.01.  Entry by Lessor Permitted.  Lessee shall permit Lessor
     -----------------------------------------
and its employees, agents and contractors to enter the Premises and all parts
thereof (i) upon twenty-four (24) hours notice (or without notice in an
emergency), including without limitation, the Building and all parts thereof at
all reasonable times for any of the following purposes:  to inspect the
Premises; to maintain the Premises; to make such repairs to the Premises as
Lessor is obligated or may elect to make; to make repairs, alterations or
additions to any other portion of the Premises and (ii) upon twenty-four (24)
hours notice to show the Premises and post "To Lease" signs for the purposes of
reletting during the last twelve (12) months of the Lease Term (provided that
Lessee has failed to exercise its option to extend) or extended Lease Term to
show the Premises as part of a prospective sale by Lessor or to post notices of
nonresponsibility.  Lessor shall have such right of entry without any rebate of
rent to Lessee for any loss of occupancy or quiet enjoyment of the Premises
hereby occasioned.

                                  ARTICLE XV
                                  ----------
                             ESTOPPEL CERTIFICATE
                             --------------------

     Section 15.01.  Estoppel Certificate.
     ------------------------------------

     (a) Lessee shall at any time upon not less than fifteen (15) days' prior
written notice from Lessor execute, acknowledge and deliver to Lessor a
statement in writing (i) certifying, if true, that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying, if true, that this Lease, as so modified, is in
full force and effect) and the date to which the rent and other charges are paid
in advance, if any, and (ii)

                                       29
<PAGE>

acknowledging, if true, that there are not, to Lessee's knowledge, any uncured
defaults on the part of Lessor hereunder, or specifying such defaults if any are
claimed and (iii) certifying or acknowledging such other matters as are
requested by any prospective lender or buyer which are reasonably related to the
loan or sale transaction. Any such statement may be conclusively relied upon by
any prospective purchaser or encumbrancer of the Premises.

     (b)  Lessee's failure to deliver such statement within such time shall be
conclusive upon Lessee (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there are no
uncured defaults in Lessor's performance, and (iii) that not more than one
month's rent has been paid in advance.

                                  ARTICLE XVI
                                 -------------
                              LESSOR'S LIABILITY
                              ------------------

     Section 16.01.  Limitations on Lessor's Liability.  The term "Lessor" as
     -------------------------------------------------
used herein shall mean only the owner or owners at the time in question of the
fee title of the Premises.  In the event of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers then the
grantor) shall be relieved from and after the date of such transfer of all
liability as respects Lessor's obligations thereafter to be performed, provided
that any funds in the hands of Lessor or the then grantor at the time of such
transfer, in which Lessee has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Lessor shall, subject
as aforesaid, be binding on Lessor's successors and assigns, only during their
respective periods of ownership.  For any breach of this Lease by Lessor, the
liability of Lessor (including all persons and entities that comprise Lessor,
and any successor Lessor) and any recourse by Lessee against Lessor shall be
limited to the interest of Lessor, and Lessor's successors in interest, in and
to the Premises.  On behalf of itself and all persons claiming by, through, or
under Lessee, Lessee expressly waives and releases Lessor and each member, agent
and employee of Lessor from any personal liability for breach of this Lease.

                                 ARTICLE XVII
                                 ------------
                              GENERAL PROVISIONS
                              ------------------

     Section 17.01.  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.

     Section 17.02.  Agreed Rate Interest on Past-Due Obligations.  Except as
     ------------------------------------------------------------
expressly herein provided, any amount due to either party not paid when due
shall bear interest at the Bank of America prime rate plus one percent (1%)
("Agreed Rate").  Payment of such interest shall not excuse or cure any default
by Lessee under this Lease. Despite any other provision of this Lease, the total
liability for interest payments shall not exceed the limits, if any, imposed by
the usury laws of the State of California.  Any interest paid in excess of those
limits shall be refunded to the payor by application of the amount of excess
interest paid against any sums outstanding in any order that payee requires.  If
the amount of excess interest paid exceeds the sums outstanding, the portion
exceeding those sums shall be refunded in cash to the payor by the payee.  To
ascertain whether any interest payable exceeds the limits imposed, any
nonprincipal

                                       30
<PAGE>

payment (including late charges) shall be considered to the extent permitted by
law to be an expense or a fee, premium, or penalty rather than interest.

     Section 17.03.  Time of Essence.  Time is of the essence in the
     -------------------------------
performance of all obligations under this Lease.

     Section 17.04.  Additional Rent.  Any monetary obligations of Lessee to
     -------------------------------
Lessor under the terms of this Lease shall be deemed to be Additional Rent and
Lessor shall have all the rights and remedies for the nonpayment of same as it
would have for nonpayment of Base Rent, except that the one year requirement of
Code of Civil Procedure Section 1161(2) shall apply only to scheduled
installments of Base Rent and not to any Additional Rent.  All references to
"rent" (except specific references to either Base Rent or Additional Rent) shall
mean Base Rent and Additional Rent.

     Section 17.05.  Incorporation of Prior Agreements, Amendments and Exhibits.
     --------------------------------------------------------------------------
This Lease (including Exhibits A, B, C, D, E, F, G, H, I, J, K and L) contains
all agreements of the parties with respect to any matter mentioned herein.  No
prior agreement or understanding pertaining to any such matter shall be
effective.  This Lease may be modified in writing only, signed by the parties in
interest at the time of the modification. Except as otherwise stated in this
Lease, Lessee hereby acknowledges that neither the Lessor nor any employees or
agents of the Lessor has made any oral or written warranties or representations
to Lessee relative to the condition or use by Lessee of said Premises and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during the
Lease Term except as otherwise specifically stated in this Lease. Neither party
has been induced to enter into this Lease by, and neither party is relying on,
any representation or warranty outside those expressly set forth in this Lease.

     Section 17.06.  Notices.
     -----------------------

     (a) Written Notice.  Any notice required or permitted to be given
         --------------
hereunder shall be in writing and shall be given by a method described in
paragraph (b) below and shall be addressed to Lessee or to Lessor at the
addresses noted below, next to the signature of the respective parties, as the
case may be. Either party may by notice to the other specify a different address
for notice purposes. A copy of all notices required or permitted to be given to
Lessor hereunder shall be concurrently transmitted to such party or parties at
such addresses as Lessor may from time to time hereafter designate by notice to
Lessee, but delay or failure of delivery to such person shall not affect the
validity of the delivery to Lessor or Lessee.

     (b)  Methods of Delivery:
          -------------------

          (i)   When personally delivered to the recipient, notice is effective
on delivery. Delivery to the person apparently designated to receive deliveries
at the subject address is personally delivered if made during business hours
(e.g. receptionist).

          (ii)  When mailed by certified mail with return receipt requested,
notice is effective on receipt if delivery is confirmed by a return receipt.

                                       31
<PAGE>

          (iii) When delivery by overnight delivery Federal
Express/Airborne/United Parcel Service/DHL WorldWide Express with charges
prepaid or charged to the sender's account, notice is effective on delivery if
delivery is confirmed by the delivery service.

     (c)  Refused, Unclaimed or Undeliverable Notices.  Any correctly
          -------------------------------------------
addressed notice that is refused, unclaimed, or undeliverable because of an act
or omission of the party to be notified shall be considered to be effective as
of the first date that the notice was refused, unclaimed, or considered
undeliverable by the  postal authorities, messenger, or overnight delivery
service.

     Section 17.07.  Waivers.  No waiver of any provision hereof shall be
     -----------------------
deemed a waiver of any other provision hereof or of any subsequent breach of the
same or any other provisions.  Any consent to, or approval of, any act shall not
be deemed to render unnecessary the obtaining of consent to or approval of any
subsequent act.  The acceptance of rent hereunder by Lessor shall not be a
waiver of any preceding breach by Lessee of any provision hereof, other than the
failure of Lessee to pay the particular rent so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.

     Section 17.08.  Recording.  Either Lessor or Lessee shall, upon request
     -------------------------
of the other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes, provided that Lessee shall also
simultaneously execute in recordable form and delivering to Lessor a Quit Claim
Deed as to its leasehold and any other interest in the Premises and hereby
authorizes Lessor to date and record the same only upon the expiration or sooner
termination of this Lease.

     Section 17.09.  Surrender of Possession; Holding Over.
     -----------------------------------------------------

     (a) At the expiration of the Lease, Lessee agrees to deliver up and
surrender to Lessor possession of the Premises and all improvements thereon
broom clean and, in as good order and condition as when possession was taken by
Lessee, excepting only ordinary wear and tear (wear and tear which could have
been avoided by first class maintenance practices and in accordance with
industry standards shall not be deemed "ordinary").  Upon expiration or sooner
termination of this Lease, Lessor may reenter the Premises and remove all
persons and property therefrom.  If Lessee shall fail to remove any personal
property which it is entitled or obligated to remove from the Premises upon the
expiration or sooner termination of this Lease, for any cause whatsoever,
Lessor, at its option, may remove the same and store or dispose of them, and
Lessee agrees to pay to Lessor on demand any and all expenses incurred in such
removal and in making the Premises free from all dirt, litter, debris and
obstruction, including all storage and insurance charges.  If the Premises are
not surrendered at the end of the Lease Term, Lessee shall indemnify Lessor
against loss or liability resulting from delay by Lessee in so surrendering the
Premises, including, without limitation, actual damages for lost rent and with
respect to any claims of a successor occupant.

     (b)  If Lessee, with Lessor's prior written consent, remains in possession
of the Premises after expiration of the Lease Term and if Lessor and Lessee have
not executed an

                                       32
<PAGE>

express written agreement as to such holding over, then such occupancy shall be
a tenancy from month to month at a monthly Base Rent equivalent to one hundred
fifty percent (150%) of the monthly rental in effect immediately prior to such
expiration, such payments to be made as herein provided for Base Rent. In the
event of such holding over, all of the terms of this Lease, including the
payment of Additional Rent all charges owing hereunder other than rent shall
remain in force and effect on said month to month basis.

     Section 17.10.  Cumulative Remedies.  No remedy or election hereunder by
     -----------------------------------
Lessor shall be deemed exclusive but shall, wherever possible, be cumulative
with all other remedies at law or in equity, provided that notice and cure
periods set forth in Article XII are intended to extend and modify statutory
notice provisions to the extent expressly stated in Section 12.01.

     Section 17.11.  Covenants and Conditions.  Each provision of this Lease
     -----------------------------------------
to be observed or performed by Lessee shall be deemed both a covenant and a
condition.

     Section 17.12.  Binding Effect; Choice of Law.  Subject to any
     ---------------------------------------------
provisions hereof restricting assignment or subletting by Lessee and subject to
the provisions of Article XVI, this Lease shall bind the parties, their personal
representatives, successors and assigns.  This Lease shall be governed by the
laws of the State of California and any legal or equitable action or proceeding
brought with respect to the Lease or the Premises shall be brought in Santa
Clara County, California.

     Section 17.13.  Lease to be Subordinate.  Lessee agrees that this Lease
     ----------------------------------------
is and shall be, at all times, subject and subordinate to the lien of any
mortgage or other encumbrances which Lessor may create against the Premises
including all renewals, replacements and extensions thereof provided, however,
that regardless of any default under any such mortgage or encumbrance or any
sale of the Premises under such mortgage, so long as Lessee timely performs all
covenants and conditions of this Lease and continues to make all timely payments
hereunder, this Lease and Lessee's possession and rights hereunder shall not be
disturbed by the mortgagee or anyone claiming under or through such mortgagee.
Lessee shall execute any documents subordinating this Lease within ten (10) days
after delivery of same by Lessor so long as the Lender agrees therein that this
Lease will not be terminated if Lessee is not in default following a
foreclosure, including, without limitation, any Subordination Non-Distribution
and Attornment Agreement ("SNDA") which is substantially in the form attached
hereto as Exhibit "F."

     Section 17.14.  Attorneys' Fees.  If either party herein brings an
     -------------------------------
action to enforce the terms hereof or to declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled to
recover its reasonable attorney's fees, expert witness fees and costs as fixed
by the Court.

     Section 17.15.  Signs.  Lessee shall not place any sign upon the
     ---------------------
exterior of the Building without Lessor's prior written consent, which consent
shall not be unreasonably withheld and subject to approval by the City of
Redwood.  Lessee, at its sole cost and expense,  after obtaining Lessor's prior
written consent, shall install, maintain and remove prior to expiration of this
Lease (or within ten (10) days after any earlier termination of this Lease) all
signage in full compliance with (i) all applicable law, statutes, ordinances and
regulations and (ii) all provisions of this Lease concerning alterations.

                                       33
<PAGE>

     Section 17.16.  Merger.  The voluntary or other surrender of this Lease
     ----------------------
by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall
not work a merger, and shall, at the option of Lessor, terminate all or any
existing subtenancies or may, at the option of Lessor, operate as an assignment
to Lessor of any or all of such subtenancies.

     Section 17.17.  Guarantor.  [Intentionally Omitted]
     -------------------------

     Section 17.18.  Quiet Possession.  Upon Lessee timely paying the rent
     --------------------------------
for the Premises and timely observing and performing all of the covenants,
conditions  and provisions on Lessee's part to be observed and performed
hereunder, Lessee shall have quiet possession of the Premises for the entire
Lease Term, subject to all of the provisions of this Lease.

     Section 17.19.  Easements.  Lessor reserves to itself the right, from
     -------------------------
time to time, to grant such easements, rights and dedications that Lessor deems
necessary or desirable, and to cause the recordation of Parcel Maps and
conditions, covenants and restrictions, so long as such easements, rights,
dedications, Maps and conditions, covenants and restrictions do not unreasonably
interfere with the use of the Premises by Lessee.  Lessee shall sign any of the
aforementioned or other documents, and take such other actions, which are
reasonably necessary or appropriate to accomplish such granting recordation and
subordination of the Lease to same, upon request of Lessor, and failure to do so
within ten (10) business days of a written request to do so shall constitute a
material breach of this Lease.

     Section 17.20.  Authority.  Each individual executing this Lease on
     -------------------------
behalf of a corporation, limited liability company or partnership represents and
warrants that he or she is duly authorized to execute and deliver this Lease on
behalf of such entity in accordance with a duly adopted resolution of the
governing group of the entity empowered to grant such authority, and that this
Lease is binding upon said entity in accordance with its terms.  Each party
shall provide the other with a certified copy of its resolution within ten (10)
days after execution hereof, but failure to do so shall in no manner (i) be
evidence of the absence of authority or (ii) affect the representation or
warranty.

     Section 17.21.  Force Majeure Delays.  In any case where either party
     ------------------------------------
hereto is required to do any act (other than the payment of money), delays
caused by or resulting from Acts of God or Nature, war, civil commotion, fire,
flood or other casualty, labor difficulties, shortages of labor or materials or
equipment, government regulations, delay by government or regulatory agencies
with respect to approval or permit process, unusually severe weather, or other
causes beyond such party's reasonable control the time during which act shall be
completed, shall be deemed to be extended by the period of such delay, whether
such time be designated by a fixed date, a fixed time or "a reasonable time."

     Section 17.22.   Hazardous Materials.
     ------------------------------------

     (a)  Definition of Hazardous Materials and Environmental Laws.  "Hazardous
          --------------------------------------------------------
Materials" means any (a) substance, product, waste or other material of any
nature whatsoever which is or becomes listed  regulated or addressed pursuant to
the Comprehensive Environmental

                                       34
<PAGE>

Response, Compensation and Liability Act, 42 U.S.C. sections 9601, et seq.
("CERCLA"); the Hazardous Materials Transportation Act ("HMTA") 49 U.S.C.
section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
section 6901, et seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C.
sections 2601, et seq. ("TSCA"); the Clean Water Act, 33 U.S.C. sections 1251,
et seq.; the California Hazardous Waste Control Act, Health and Safety Code
sections 25100, et seq.; the California Hazardous Substances Account Act, Health
and Safety Code sections 26300, et seq.; the California Safe Drinking Water and
Toxic Enforcement Act, Health and Safety Code sections 25249.5, et seq.;
California Health and Safety Code sections 25280, et seq.; (Underground Storage
of Hazardous Substances); the California Hazardous Waste Management Act, Health
and Safety Code sections 25170.1, et seq.; California Health and Safety Code
sections 25501. et seq. (Hazardous Materials Response Plans and Inventory); or
the Porter-Cologne Water Quality Control Act, California Water Code sections
13000, et seq., all as amended, or any other federal, state or local statute,
law, ordinance, resolution, code, rule, regulation, order or decree regulating,
relating to or imposing liability (including, but not limited to, response,
removal and remediation costs) or standards of conduct or performance concerning
any hazardous, toxic or dangerous waste, substance or material, as now or at any
time hereafter may be in effect (collectively, "Environmental Laws"); (b) any
substance, product, waste or other material of any nature whatsoever whose
presence in and of itself may give rise to liability under any of the above
statutes or under any statutory or common law theory based on negligence,
trespass, intentional tort, nuisance, strict or absolute liability or under any
reported decisions of a state or federal court, (c) petroleum or crude oil,
including but not limited to petroleum and petroleum products contained within
regularly operated motor vehicles and (d) asbestos.

     (b)  Lessor's Representations and  Disclosures.  Lessor represents that it
          -----------------------------------------
has provided Lessee with a description of the Hazardous Materials on or beneath
the Property as of the date  hereof, attached hereto as Exhibit I and
incorporated herein by reference and that except as described in the documents
identified in Exhibit "I," Lessor has no actual knowledge of any Hazardous
Materials at the Property.  Lessee acknowledges that in providing the attached
Exhibit I, Lessor has satisfied its obligations of disclosure pursuant to
California Health & Safety Code Section 25359.7 which requires:

          "Any owner of nonresidential real property who knows, or has
reasonable  cause to believe,  that any release  of hazardous  substances  has
come  to be  located  on  or   beneath  that  real property shall,  prior to the
sale, lease or rental of the real property by that owner, give written notice of
that condition to the buyer, lessee or renter of the real property."

     (c)  Use of Hazardous Materials. Lessee shall not cause or permit any
          --------------------------
Hazardous Materials to be brought upon, kept or used in, on or about the Project
by Lessee, its agents, employees, contractors, licensee, guests, visitors  or
invitees  without the prior  written  consent  of Lessor.   Lessor shall not
unreasonably withhold such consent so long  as  Lessee demonstrates to Lessor's
reasonable  satisfaction that such Hazardous Materials are necessary or useful
to Lessee's business and will be used,  kept and stored in a manner that
complies with all applicable Environmental Laws.  Lessee shall, at all times,
use, keep, store, handle, transport, treat or dispose all such Hazardous
Materials in or about the Property in compliance with all applicable
Environmental Laws.  Lessee shall remove all Hazardous Materials used or brought
onto the

                                       35
<PAGE>

Property during the Lease Term from the Project prior to the expiration or
earlier termination of the Lease.

     (d)  Lessee's Environmental Indemnity.  Lessee agrees to indemnify and hold
          --------------------------------
Lessor harmless from any liabilities, losses, claims, damages, penalties, fines,
attorney fees, expert fees, court costs, remediation costs, investigation costs,
or other expenses resulting from or arising out of the use, storage, treatment,
transportation, release, presence, generation, or disposal of Hazardous
Materials on, from or about the Project, and/or subsurface or ground water,
after the Commencement Date from an act or omission of Lessee (or Lessee's
successor), its agents, employees, invitees, vendors, contractors, guests or
visitors.

     (e)  Lessee's Obligation to Promptly Remediate.  If the presence of
          -----------------------------------------
Hazardous Materials on the Premises after the Commencement Date results from an
act or omission of Lessee (or Lessee's successors), its agents, employees,
invitees, vendors, contractors, guests, or visitors results in contamination or
deterioration of the Property or any water or soil beneath the Property, Lessee
shall promptly take all action necessary or appropriate to investigate and
remedy that contamination, at its sole cost and expense, provided that Lessor's
consent to such action shall first be obtained, which consent shall not be
unreasonably withheld.  In no event shall Lessee be responsible for, and Lessor
shall indemnify and hold Lessee harmless with respect to, remediation of
Hazardous Materials identified in Exhibit "I" which are at the Premises prior to
the Commencement Date.

     (f)  Notification.  Lessor and Lessee each agree to promptly notify the
          ------------
other of any communication received from any governmental entity concerning
Hazardous Materials or the violation of Environmental Laws that relate to the
Property.

     Section 17.23. Modifications Required by Lessor's Lender.  If any lender
     ---------------------------------------------------------
of Lessor requires a modification of this Lease that will not increase Lessee's
cost or expense or materially and adversely change Lessee's rights and
obligations, this Lease shall be so modified and Lessee shall execute whatever
documents are required by such lender and deliver them to Lessor within ten (10)
days after the request.

     Section 17.24.  Brokers.  Lessor and Lessee each represents to the other
     -----------------------
that it has had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, except for the real estate brokers or agents
identified on the signature page hereof ("Brokers") and that they know of no
other real estate broker or agent who is entitled to a commission or finder's
fee in connection with this Lease.  Each party shall indemnify, protect, defend,
and hold harmless the other party against all claims, demands, losses,
liabilities, lawsuits, judgments, and costs and expenses (including reasonable
attorney fees) for any leasing commission, finder's fee, or equivalent
compensation alleged to be owning on account of the indemnifying party's
dealings with any real estate broker or agent other than the Brokers.  The terms
of this Section 17.24 shall survive the expiration or earlier termination of the
Lease Term.

     Section 17.25.   [Intentionally Omitted]
     -------------

                                       36
<PAGE>

     Section 17.26.  Acknowledgment of Notices.  Lessor has provided and
     -----------------------------------------
Lessee hereby acknowledges receipt of the Notices attached as Exhibits J and K
hereto, concerning the presence of certain uses and operations of neighboring
parcels of land.

                                       37
<PAGE>

     Section 17.27.  List of Exhibits.
     ---------------------------------


EXHIBIT A:     Real Property Legal Description,
                    Site Plan, and Building Elevations (Omitted)

EXHIBIT B:     Plans and Specifications for Shell Building (Omitted)

EXHIBIT C:     Work Letter Agreement for Tenant
                    Improvements and Interior Specification Standards (Omitted)

EXHIBIT D:     Cost Responsibilities of Lessor and Lessee

EXHIBIT E:     Memorandum of Commencement of Lease
                    Term and Schedule of Base Rent

EXHIBIT F:     SNDA (Omitted)

EXHIBIT G:     Signage Exhibit (Omitted)

EXHIBIT H:     Guaranty of Lease [Intentionally Omitted]

EXHIBIT I:     Hazardous Materials Disclosure (Omitted)

EXHIBIT J:     Notice to Tenants (Omitted)

EXHIBIT K:     Notice to Tenants (Omitted)

EXHIBIT L:     Rules and Regulations (Omitted)

                                       38
<PAGE>

LESSOR AND LESSEE EACH HAS CAREFULLY READ AND HAS REVIEWED THIS LEASE AND BEEN
ADVISED BY LEGAL COUNSEL OF ITS OWN CHOOSING AS TO EACH TERM AND PROVISION
CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOWS ITS INFORMED AND
VOLUNTARY CONSENT THERETO.  EACH PARTY HEREBY AGREE THAT, AT THE TIME THIS LEASE
IS EXECUTED, THE TERMS AND CONDITIONS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

     Executed at San Jose, California, as of the reference date.

LESSOR:                             ADDRESS:

Pacific Shores Center, LLC          c/o Jay Paul Company
____________________________        353 Sacramento Street, Suite 1740
                                    San Francisco, California 94111
By:  /s/  Jay Paul
   -------------------------
     Jay Paul, President
                                    With a copy to:

                                    Thomas G. Perkins, Esq.
                                    99 Almaden Blvd., 8th Floor
                                    San Jose, CA 95113
                                    Telephone: 408- 993-9911
                                    Facsimile:   408-286-3312


LESSEE:                             ADDRESS:

AT HOME CORPORATION
a Delaware corporation              _______________________
                                    _______________________
By:  /s/ Ken Goldman                     (Before Commencement Date)
   -------------------------
                                    Pacific Shores Center
     (Type or print name)           Building 7
Its:     CFO                        Redwood City, CA
    ------------------------        (After Commencement Date)

                                       39
<PAGE>

                                BROKER EXECUTION
                               ----------------

     By signing below, the indicated real estate broker or agent is not being
made a party hereto, but is signifying its agreement with the provisions hereof
concerning brokerage.

BROKER FOR LESSEE:

BT Commercial Real Estate

By:     /s/ Mike Connor
   --------------------------
       Mike Connor
     (Type or print name)

                                       40
<PAGE>

                                   EXHIBIT D
                                       TO
                           PACIFIC SHORES CENTER LLC
                                     LEASE
                                       TO
                                  EXCITE@HOME
                                      FOR
                             Pacific Shores Center
                                   Building 7
                            Redwood City, California
                            ------------------------




                  COST RESPONSIBILITIES OF LESSOR AND LESSEE
                         FOR SHELL TENANT IMPROVEMENTS
                         -----------------------------

     A.  Lessor is responsible for the construction of the building shell
improvements which shall include the following items:

          Soils Engineer
          Civil Engineer
          Architectural and Structural Engineer
          Landscaping
               Empty Electrical Conduits will be provided from the street to the
               future electrical room for a 2500 Amp. Service 277/480 volt
               service capability for each building . The electrical conduits
               will be stubbed up above the floor level.
          Lessor to provide two vertical risers for fire sprinklers.
          Testing and Inspection for the shell.
          Building Permits for the Shell and exterior Premises.
          Utility Connection Fee (Fire Protection).
          Area Fees
          Construction Insurance
          Construction Interest
          Construction Taxes
          Land Interest (if any)
          Temporary Facilities
          All site work to include:
               Site clearing and grading
               Excavating/Fill
               Soil compaction

                                       41
<PAGE>

               Site drainage
               Site utilities
               Paving
               Curbs and gutters
               Sidewalks
               Parking lot lights
               Curb painting and parking lot striping and markings as required
                    by the City.
          Fences, to include special enclosures for trash
          Irrigation System
          Lawns and planting
          Building Shells to include:
               Concrete Formwork
               Concrete Reinforcement (if used)
               Cast in pace concrete (if used)
               Metal decking (if used)
          Metal framing (if used)
          Rough carpentry as related to shell
          Millworks as related to Shell
          Glue-Lam structure (if used)
          Building roof installation
          Roofing tiles
          Flashing
          Drainage Systems for Roof
          Roof Pitch Pans
          Caulking/Sealants
          Exterior Metal Door/Frames related to the Shell
          Wood or Glass Doors as designated as related to the
          Exterior Shell
          Overhead Doors
          Anodized Aluminum Windows
          Finish Hardware as related to the Shell Doors
          Glass Glazing as specific on plans
          Storefront if desired
          Gutters over front and rear entrances
          Exterior Loading Docks as specific on plans
          Water Supply stubbed to the ground floor (first floor of each Building
               only)
          Roof drainage
          Gas piping to face of building at First Floor
          Telephone and computer conduits between Buildings
          All Government fees applying to the exterior premises and shell.

     B.  The following shall be considered interior improvements costs and shall
be the responsibility of the Lessee subject to the tenant improvement allowance
as provided in the

                                       42
<PAGE>

Lease:

          Interior Building Permits
          Gypsum drywall
          Ceramic Tile or elate Tile in Lobbies
          Quarry Tile as specified
          Flag Pole
          Meal door framing
          All interior Wood doors and Hardware
          Custom Woodwork
          Specialized Security construction
          Interior Glass doors 2nd windows
          Acoustical Treatment (suspended ceiling)
          Resilient flooring
          Any special flooring
          Carpeting
          Sprayed fire proofing if required by the code on structural
          Steel and metal deck surfaces
          Lift and Lift Operator
          Interior Painting
          Wall Coverings including Ceramic Tiles
          Grease Interceptor if required
          Drapery, Blinds or Shades
          Pedestal floors
          Toilet Compartments
          Demountable partitions
          Firefighting devices (Extinguishers)
          Toilet and bath accessories
          Lift (Dock levelers)
          Plumbing fixtures, trims and vertical piping
          Interior electrical distribution
          Lighting
          Electrical controls
          Electrical Power Equipment
          Built in Audio-Visual facilities
          Built-in Projection screens
          Water Treatment Discharge
          Sinks in Coffee Rooms
          Lunch Room plumbing for vending machines
          Specialized security systems
          Specialized Halon Fire Extinguishing systems
          Fire sprinkler head drops and horizontal distribution
          Piping off owner-installed vertical risers
          Specialized caging

                                       43
<PAGE>

          Special piping for Tank Farm (If installed)
          Hot water heating system
          Cool water system
          HVAC units
          Ducting controls
          Air Tempering Systems
          Elevators and elevator pits (Otis Elevator Lessor Specs)
          Mechanical platforms, screens and associated roof accessories
          Stairs
          Electrical service (Lessor to provide exterior conduits)

                                       44
<PAGE>

                                   EXHIBIT E
                                       TO
                           PACIFIC SHORES CENTER LLC
                                     LEASE
                                       TO
                                  EXCITE@HOME
                                      FOR
                             Pacific Shores Center
                                   Building 7
                            Redwood City, California
                            ------------------------



                                   MEMORANDUM
                                       OF
                           COMMENCEMENT OF LEASE TERM
                           --------------------------

     Pursuant to Article III, Section 3.01, paragraph (a) of the above-
referenced Lease, the parties to said Lease agree to the following:

     1.  The Commencement Date of the Lease is ___________, 2001 and the Lease
         Term commenced on said date. The Expiration Date for the initial Lease
         Term is __________, 2013.

     2.  The date for commencement of rent for the Building is _________, 2001.

     3.  Attached hereto as a part hereof is a true and correct schedule of
         Base Rent.

     4.  The total Rentable Area of the Building is ____________ (       )
         rentable square feet.

     Each person executing this Memorandum certifies that he or she is
authorized to do so on behalf of and as the act of the entity indicated.
Executed as of ______________, 2000,
at Redwood City (San Mateo County), California.

PACIFIC SHORES CENTER LLC           AT HOME CORPORATION
                                    a Delaware corporation

By: _________________________       By: __________________________
     Jay Paul                           __________________________
Its: Manager                              (Type or print name)
                                    Its: __________________________

                                    By: __________________________
                                        __________________________
                                          (Type or print name)
                                    Its: __________________________

                                       45
</TEXT>
</DOCUMENT>
