Sample Business Contracts

California-Redwood City-Pacific Shores Center Lease - Pacific Shores Center LLC and Phone.com Inc.

Free Customizable Lease Forms

Commercial Lease. Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
Commercial Sublease. When a tenant vacates commercial property before the lease term has expired, it may be able to rent the premises to a third party. The tenant would be the sublessor and the third party would be the sublessee. Besides preparing a sublease, both parties will want to review the provisions for assignment or subletting in the original lease agreement between the landlord and the sublessor.
Sublease Agreement. Tenants of residential property should prepare a sublease agreement if they are seeking to sublease a room or the entire apartment or house to a third party. All parties should review the original lease agreement to see if there are any restrictions on subletting or assigning the premises.
Triple Net Lease. Triple net leases are a type of commercial leases where the tenant has to pay for property taxes, insurance, utilities, and maintenance, in addition to the monthly rent.
Office Space Lease. When renting an office space, tenants should understand the amount of the rent and duration of the lease. Other important terms include whether the space can be subleased, which parties are responsible for maintenance, and whether any furniture and furnishings will be provided.

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TRIPLE NET BUILDING LEASE

Between

PACIFIC SHORES CENTER LLC,
as
LESSOR

and

PHONE.COM, INC.
a California corporation
as
LESSEE

for

PREMISES
at
Pacific Shores Center
Building 9
Redwood City, California

<PAGE>

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

Section 1.01. Parties. This Lease, dated for reference purposes, and
----------------------
effective as of February 4, 2000, is made by and between PACIFIC SHORES CENTER
LLC, or assignee (provided that such assignee is an entity controlled or
managed, directly by Jay Paul) ("Lessor") and PHONE.COM, INC., a California
corporation ("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 five stories tall and will consist of approximately two
hundred seventy-nine thousand five hundred eighty-four (279,584) 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,
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 Buildings 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 is commonly
known as Building 9 - 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 and, provided further, that
Lessor will continue to maintain the baseball and soccer fields and the
amenities/athletic facility or replacement items of like kind for so long as
Lessor is legally able to do so during the Lease Term. Lessor further reserves
the right to establish, repeal and amend from time to time rules and regulations
for the use of the Common Area (provided that, to the extent that any conflict
between any new Rules and Regulations and this Lease (including the Rules and
Regulations attached hereto as Exhibit "L") would materially and adversely
affect Lessee's use of the Premises, this Lease shall govern, and to grant
reciprocal easements or other rights to use the

2
<PAGE>

Common Area to owners of other property. "Common Area" includes, without
limitation, landscaping, sidewalks, walkways, driveways, curbs, parking lots
(including striping), sprinkler systems, lighting, surface water drainage
systems and amenities/athletic facility, as well as baseball and soccer
fields, and, to the extent required by government authorities having
jurisdiction over Lessor's development of the Project, a waterfront park,
perimeter walking/biking trail, 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 Tenant 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. 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. Said parking shall be provided at no additional
cost except as expressly provided herein in Article VI for reimbursement of
repair, replacement and maintenance, and except for any 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 Buildings 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 Buildings 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," and further provided that
all revisions to the plans and specifications which may materially and adversely
affect the use, accessibility, safety or design of the Premises shall be subject
to the review and (unless imposed by law or any governmental agency) consent of
Lessee, which shall not be unreasonably withheld, conditioned or delayed,
provided further that any delay to the construction schedule caused by such
review and giving or withholding of consent shall be Lessee Delay.

(b) Construction of Shell Buildings. 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") 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.

3
<PAGE>

(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. Notwithstanding the foregoing, Lessee may select a
general contractor other than Lessor's General Contractor to construct the
Tenant Improvements by giving written notice to Lessor on or before April 1,
2000, provided that (i) such general contractor has sufficient financial
strength and experience in constructing first class quality improvements of the
type to be constructed in the Premises to reasonably satisfy Lessor and any
lender whose loan is secured by the Project or any part thereof and, (ii) Lessee
agrees in such notice that the Tenant Improvements identified on Exhibit N
hereto as "Early Construction Improvements" shall be constructed by Lessor's
General Contractor to facilitate construction of the balance of the Tenant
Improvements by the Lessee selected general contractor (that the Early
Construction Improvements shall retain concurrent status as Tenant Improvements,
the cost of which is to be charged to the Tenant Improvement Allowance), and
(iii) such general contractor is ready, willing and able and agrees to construct
the Tenant Improvements in accordance with Lessor's General Contractor's
construction schedule, and (iv) any failure by such Lessee selected general
contractor to construct the Tenant Improvements in accordance with Lessor's
General Contractor's construction schedule shall be Lessee Delay. If Lessor's
General Contractor constructs the Tenant Improvements, or if Lessee selects a
general contractor other than Lessor's General Contractor, but Lessor's General
Contractor nonetheless contracts with Lessor to construct the "Early
Construction Improvements," in each case the contract shall be a guaranteed
maximum price contract based upon the successful bids of subcontractors and/or
negotiated prices as provided in Section 2.04(f). The total compensation to the
General Contractor under such contract shall be equal to a contractor's fee not
to exceed an amount equal to 2.5% of the contract (provided that a contractor's
fee shall not be payable for change orders required due to coordination errors
caused by the General Contractor or any of its subcontractors) and an amount not
to exceed an amount equal to 2 1/2% of the contract for general conditions plus
an amount equal to .75% of the contract for insurance.

(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 Improvements no later
than June 6, 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 July 15, 2000. The
cost of the interior schematic drawings and Working Drawings shall be a Tenant
Improvement cost paid by Lessee. Based on this information, Lessee 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 and Lessee (neither of
whom shall unreasonably withhold or delay such consent) in writing and must
provide for Tenant Improvements 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 ("GMP") contract with the General Contractor for
the construction of the Tenant Improvements, and any

4
<PAGE>

additional costs for Tenant Improvements in excess of the GMP contract shall
be Lessor's responsibility except for Lessee initiated change orders which
shall be Lessee's responsibility.

(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.

(f) Tenant Improvement Allowance. Lessor shall provide to Lessee a
----------------------------
semi-improved "cold" shell facility as described in Exhibit "D" attached and a
Tenant Improvement Allowance of $27.50 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 five (5) business days after
-------------------------------
the Budget is approved by Lessor and Lessee, Lessee shall deposit Lessee's
share of the amount budgeted for the first three (3) months of the
construction schedule (together with the cost of any Tenant Improvements
already made), with Lessor's construction lender to be held in an escrow
account. Until the Tenant Improvements are completed, Lessee shall deposit, on
the first day of the third calendar month of the construction schedule,
Lessee's share of the amount budgeted for the following three (3) months and
on the first day of the sixth calendar month of the construction schedule
Lessee's share of all remaining budgeted amounts. 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 (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. At least thirty (30) days prior to such
-------------------------
date that is estimated by Lessor to be forty-five (45) days prior to the
Commencement Date, Lessor shall notify Lessee of the date that is estimated to
be forty-five (45) days prior to the Commencement Date. Lessor shall provide
Lessee access to the Premises during the forty-five (45) day period prior to the
estimated Commencement Date ("Lessee's Fixturing Period") for the purpose of
installing furnishings and equipment, e.g. security system, furniture system and
phone and data

5
<PAGE>

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.

(i) Construction of Offsite and Onsite Improvements. In addition to the
-----------------------------------------------
Building Shell and Tenant Improvements, and concurrently with its construction
schedule Lessor shall construct both offsite and onsite improvements required
as a condition to the Certificate of Occupancy for the Building which are (i)
(onsite) shoreline park, baseball field, soccer field and an
amenities/athletic facility, and (ii) (offsite) Seaport Boulevard improvements
and deep water slough restoration.

(j) Lessee Termination Rights. In the event that either (i) Lessor is not
-------------------------
the fee owner of the Property on or before April 1, 2000, or (ii) Lessor has not
presented Lessee with reasonable evidence on or before June 1, 2000, that it has
closed a loan with one or more lenders and obtained financing in an amount
sufficient to purchase the Property, to complete the construction of the
Building Shell and all onsite and offsite improvements described in subparagraph
(i) above, and to 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 April 1, 2000 or June 15, 2000, as applicable. If Lessee
terminates this Lease in accordance with this paragraph, neither party shall
have any further rights or obligations hereunder.

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 first date on which
Lessee occupies or conducts business at the Premises or (ii) the date on which a
Certificate of Occupancy is issued affecting the Building and the Seaport
Boulevard improvements, the baseball and soccer fields and the
amenities/athletic facility have been substantially completed (the "Commencement
Date") provided that, (A) 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 (B) 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 (C) for each day of delay caused
by any changes to the approved Working Drawings requested by Lessee, or (D) for
each day that any other act or omission by Lessee causes the construction
schedule for Tenant Improvements to be delayed provided that Lessor gives Lessee
written notice of such Lessee Delay within five (5) business days after its
occurrence (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 April 8, 2001 rather than
April 1, 2001, the Commencement Date shall be April 1, 2001 for all purposes,
including payment of Base Rent and Additional Rent. The Lease Term shall
expire, unless sooner terminated or

6
<PAGE>

extended as provided herein, on the date which completes twelve 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 April 1, 2001, the Lease Term shall expire on March 31, 2013 and
if that date is April 3, 2001, the Lease Term shall expire on April 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."

(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 April 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 delay excused under
Section 20.01.), Lessee, at its sole election, may terminate this Lease upon
giving notice within ten (10) 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).

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

(a) Exercise. Lessee is given two (2) options to extend the Lease
--------
Term ("Option to Extend"), each for a five (5) year period ("Extended Term")
following the date on which the initial Lease Term of first Extended 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 or the first Extended Term, as the case may
be, ("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 of the first Extended Term, the Option Notice shall be
totally ineffective, and this Lease shall expire on the last day of the initial
Lease Term or the first Extended 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

7
<PAGE>

applicable during the period of the Extended Term), for comparable space in
similar buildings in 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, but in no event
less than the monthly Base Rent prevailing during the last year of the initial
Lease Term or first Extended Term, as applicable.

(i) Negotiation. If Lessee so exercises an 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 in
question 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

8
<PAGE>

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 or the first Extended Term, as
applicable, (in lieu of "holdover rent" payable under Section 17.09(b)). Once
a determination is made, any over payment or under payment 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 twenty-five Cents ($3.25) 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. 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 the first day of
every thirteenth (13th) calendar month thereafter during the Lease Term, as
shown on Exhibit "E" attached hereto.

Section 4.03. First Payment of Base Rent. If the Commencement Date is
-----------------------------------------
other than the first day of a calendar month, the first installment of Base Rent
shall be paid on the first day of the calendar month immediately succeeding the
Commencement Date and shall include pro rata payment for the calendar month in
which the Commencement Date occurs.

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) Defined. In addition to the Base Rent reserved by Section
-------
4.01., Lessee shall pay, as Additional Rent, all taxes, assessments, fees and
other impositions in accordance with the provisions of Article IX, insurance
premiums in accordance with the provisions of Article VII,

9
<PAGE>

operating charges, and Common Area facility use privilege charges with respect
to the amenities/athletic facility (in lieu of any separate use charge to
Lessee's employees who use said facility the baseball and soccer fields) as
well as, maintenance, repair and replacement costs and expenses, utility
charges, and other costs and charges allocable to the Common Area and the
Common Area facilities and the Outside Areas of the Premises, all in
accordance with the provisions of Article VI and 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 4% 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. To the extent any of the aforesaid amounts are
fairly allocable to the Common Area or to other portions of the Project,
Lessee's obligation is to pay only its proportionate share as determined by
Lessor based upon the ratio of the Rentable Area of the Premises to the
Rentable Area of other office and research and development buildings at the
Project that have been approved for development which share is presently
determined to be seventeen percent (17%).

(b) Payment. 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 for such period. Within
fifteen (15) days thereafter, Lessee shall pay to Lessor, as 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. Within two (2) business days after the
-------------------------------
first date when Lessor is both the fee owner of the Property and has obtained
financing in an amount sufficient both to purchase the Property and to complete
the construction of the Building Shell, the offsite and offsite improvements
described in subsection 2.04(j) and to fund the Tenant Improvement Allowance,
Lessee shall deposit with Lessor a Security Deposit equal to eighteen (18)
month's of Base Rent in the amount of Sixteen Million, Five Hundred Forty Five
Thousand Dollars and no Cents ($16,545,000) in the form of cash or an
unconditional, irrevocable letter of credit without documents, i.e. no
obligation on Lessor's part to present anything but a sight draft, with Lessor
as beneficiary and providing for payment in San Francisco on presentation of
Lessee's drafts on sight and drawable in whole or in part San Francisco 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

10
<PAGE>

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 (or a
replacement Letter of Credit in form and substance subject to the same
requirements as the original Letter of Credit) 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 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. 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.
--------------------------------------------------------

(1) 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 Paragraph, 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
Paragraph, 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 3
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 Paragraph. The right to review granted to Lessee under
this Paragraph 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 Paragraph for a
particular Lessor's statement shall be deemed waived.

(2) 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
Paragraph shall occur at such location. Any review to be conducted under this
Paragraph shall be at the sole expense of Lessee and shall be conducted by an
independent firm of certified public accountants of national standing. Lessee
acknowledges and agrees that any supporting data reviewed under this Paragraph
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

11
<PAGE>

information to any other person, whether or not caused by the conduct of
Lessee, shall constitute a material breach of this Lease.

(3) Finding of Error. Any errors disclosed by the review of
----------------
supporting data under this Paragraph 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 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 Paragraph, said right to review shall
immediately cease and the matters originally set forth in the Lessor's
statement shall be deemed to be correct.

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. Lessee shall not use, suffer or permit the use
of the Premises in any manner that will tend to create 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. 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 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, or (iv) damage, overload or corrode the sanitary sewer system. 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

12
<PAGE>

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 install any equipment or fixtures on or make any penetrations of the
exterior or roof of the Building, provided that Lessee may install rooftop
antennae or other communication devices on the roof of the Building with
Lessor's prior written consent which shall not be unreasonably withheld or
delayed. 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.

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

(a) Lessor shall deliver the Premises to Lessee on the Commencement
Date, for office use, 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, provided that Lessor represents that the Premises, when
certified for occupancy, may legally be used for general office purposes.

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

13
<PAGE>

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 5.02.(a) or Section 5.03.(a) 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 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 5.02. 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, 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, that
portion of the Common Area located on the legal parcel which the Building is
located 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. 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.

14
<PAGE>

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 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, shall repair defects in the
Building Shell, including, exterior walls (including all exterior glass which is
damaged by structural defects in such exterior walls), floors installed as part
of the Building Shell, supporting pillars, structural walls, roof structure and
foundations of the Building and sewer and plumbing systems outside the Building
as well as any defects in the offsite and onsite improvements listed in Section
2.04(i), provided that the need for repair is not caused by Lessee, in which
event Lessor shall repair same, at Lessee's sole cost and expense (to the extent
not insured) and Lessee shall reimburse Lessor for same upon demand. 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 that portion of the cost of each replacement, together with
annual interest at the Agreed Rate which shall be amortized over the useful life
of each such replacement applicable to the balance of the Lease Term, 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. 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

15
<PAGE>

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 refuses or neglects to commence such repairs and/or
maintenance for which Lessee is responsible under this Article VI (including
with respect to that portion of the Common Area located on the legal parcel on
which the Building is located) 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 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 and Outside 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 and Lessor shall also
maintain, repair and replace all landscape, hardscape and other improvements
within the Outside Areas of the Premises ("Outside Areas"), including without
limitation, 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 Seventy-five
Thousand Dollars ($75,000) 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 third party

16
<PAGE>

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.

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.

17
<PAGE>

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 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 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.

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

18
<PAGE>

such others as designated by Lessor) against liability for bodily injury,
property damage on our about the Project, with combined single limit coverage
of not less than Thirty Million Dollars ($30,000,000.00). Lessee, in addition
to the rent and other charges provided herein, agrees to pay to Lessor
Lessee's proportionate share of the premium(s) for all such insurance pursuant
to Section 4.05. The insurance premiums shall be paid in accordance with
Article IV, within (15) days of Lessee's receipt of a copy of Lessor's
statement therefore.

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 from 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.

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. Within ten (10) business days
after Lessee's written request for same, Lessor shall furnish once during any
calendar year, certificates indicating that the property insurance and liability
insurance required to be kept by Lessor is in full force and effect.

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.

19
<PAGE>

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 because of the active negligence or
willful acts of misconduct of Lessor or its agents, employees or contractors or
which is or could be covered by the insurance Lessor is required to carry under
this Lease. Lessor hereby waives all claims against Lessee for any damage which
is or could be covered by the insurance Lessee is required to carry under this
Lease.

(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 to persons in, on or about the Premises from
any cause arising at any time to the fullest extent permitted by law and in no
event shall Lessor be liable for lost profits or other consequential damages
arising from any cause or 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 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

20
<PAGE>

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 the payment of Rental Income
Insurance received by Lessor. Lessor shall use diligence in making such
repairs within a reasonable time period, acts of God, strikes and delays
beyond Lessor's control excepted, 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 from any cause, Lessor shall promptly
furnish Lessee with the written opinion of Lessor's architect of when the
restoration work to repair the damage may be complete. Lessee shall have the
option to terminate this Lease if the time estimated to substantially complete
the restoration exceeds fifteen (15) months from the date Lessor's architect's
opinion is delivered to Lessee, which shall be (i) exercised by written notice
to Lessor delivered within thirty (30) days after delivery to Lessee of Lessor's
architect's opinion or (ii) irrevocably and automatically waived if not so
timely exercised. 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 except to the extent allocable to the unamortized (over the Lease
Term) cost of (i) Tenant Improvements paid for by Lessee over and above the
Tenant Improvement Allowance and (ii) or other Alterations installed therein at
Lessee's sole cost and expense.

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 Rentals and other charges due
--------------------------------------
under this Lease shall not be reduced or abated by reason of any damage or
destruction to the Premises (except to the extent of proceeds received by Lessor
from the 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.(a) above, or if the Lease is terminated
pursuant to Section 8.01.(a) 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 (except to the extent Lessor receives insurance proceeds to
repair damage to same) in or upon the Premises by Lessee.

21
<PAGE>

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

Section 9.01. Payment of Taxes. Lessee 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 taxes"), imposed, assessed or
levied on or with respect to the Premises (and Lessee shall pay its
proportionate share of real property taxes imposed, assessed or levied on or
with respect to the Common Area) 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, as against any legal or equitable interest of Lessor in the
Premises or against the Premises or any part thereof applicable to the Premises
for a period of time included within the Lease Term 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 at least ten (10) days prior to the
delinquency date for such payment or ten (10) days after Lessee's receipt of the
tax bill, whichever is later. 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 any 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 or imposition, excise on rents under the Lease, the square
footage of the Premises, 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 limitation, a so-called value added,
business license, transit, commuter, environmental or energy tax fee, charge or
excise or imposition related to the Premises as a direct substitution in whole
or in part for, or in addition to, any real property taxes on the Premises,
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. A good faith estimate of anticipated real property taxes is
attached hereto as Exhibit M.

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,

22
<PAGE>

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.

Section 9.04. Lessee's Right to Contest Real Property Taxes. Lessee at
-------------------------------------------------------------
its sole cost and expense shall have the right, at any time, to seek a reduction
in the assessed valuation of the Premises or to contest any real property taxes
that are to be paid by Lessee with respect to the Premises. If Lessee seeks a
reduction or contests any such real property taxes, the failure on Lessee's part
to pay such real property taxes shall not constitute a default as long as Lessee
complies with the provisions of this Section. Lessor shall not be required to
join in any proceeding or contest brought by Lessee unless the provisions of any
law require that the proceeding or contest be brought by or in the name of
Lessor or any owner of the Premises. In that case Lessor shall join in the
proceeding or contest or permit it to be brought in Lessor's name as long as
Lessor is not required to bear any cost or expense. Lessor, on final
determination of the proceeding or contest, shall immediately pay or discharge
any decision or judgment rendered, together with all costs, fees, charges,
interest, penalties and all other amounts incidental to the decision or
judgment. If Lessor does not pay the real property taxes when due and Lessor
seeks a reduction or contests them as provided in this Section, before the
commencement of such proceeding or contest Lessee shall furnish to Lessor a
surety bond issued by an insurance company qualified to do business in
California provided that said bond and company are both reasonably satisfactory
to Lessor. The amount of the bond shall equal one hundred thirty three percent
(133%) of the total amount of real property taxes in dispute. The bond shall
hold Lessor and the Premises harmless from any damage arising out of the
proceeding or contest and shall insure the payment of any judgment that may be
rendered.

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 Lessor 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, provided that, Lessor shall credit Lessee to the extent of
any rental interruption proceeds Lessor receives as a result of such disruption,
failure, lack or shortage of services or utility.

23
<PAGE>

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

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 (but not necessarily
financial strength as great as that of Lessee), (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.

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, 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 reasonable leasing commissions and the cost of any Tenant Improvements
paid by Lessee with respect to such sublease or assignment.

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 (to anyone other than an Affiliate) 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 the major portion 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.

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 vacation of the Premises by Lessee for a period of time which would
thereafter terminate Lessor's insurance coverage at the Premises or cause an
increase of Lessor's insurance coverage at the Project or which for a period of
more than six consecutive calendar months (other than vacation caused by damage
or destruction and during the repair of same) or

25
<PAGE>

the commission of waste at the Premises or the making of an assignment or
subletting in violation of Article XI;

(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.

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 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.

27
<PAGE>

Notwithstanding the foregoing, nothing herein shall be deemed applicable in
the event of Lessor's 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 by the later
of two (2) days after written notice of such failure is given or five (5) days
after such amount is due and owing, Lessee shall pay to Lessor a late charge
equal to ten percent (10%) 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.

Section 12.05. Impounds. In the event that a late charge is payable
------------------------
hereunder, whether or not collected, for three (3) installments of rent or any
other monetary obligation of Lessee under the terms of this Lease within a
twelve (12) month period, Lessee shall pay to Lessor, if Lessor shall so request
in writing, in addition to any other payments required under this Lease, a
monthly advance installment, payable at the same time as the monthly rent, as
estimated by Lessor, for real property tax and insurance expenses on the
Premises which are payable by Lessee under the terms of this Lease. Such fund
shall be established to insure payment when due, before delinquency, of any or
all such real property taxes and insurance premiums. If the amounts paid to
Lessor by Lessee under the provisions of this paragraph are insufficient to
discharge the obligations of Lessee to pay such real property taxes and
insurance premiums as the same become due, Lessee shall pay to Lessor, upon
Lessor's demand, such additional sums necessary to pay such obligations. All
moneys paid to Lessor under this paragraph may be intermingled with other moneys
of Lessor and shall not bear interest. In the event of a default in the
obligations of Lessee to perform under this Lease, then any balance remaining
from funds paid to Lessor under the provisions of this paragraph may, at the
option of Lessor, be applied to the payment of any monetary default of Lessee in
lieu of being applied to the payment of real property tax and insurance
premiums.

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

28
<PAGE>

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 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 (i) the taking of the unamortized or undepreciated value of
any leasehold improvements owned by Lessee that Lessee has the right to remove
at the end of the Lease Term and that Lessee elects not to remove, (ii)
reasonable removal and relocation costs for any leasehold improvements that
Lessee has the right to remove and elects to remove (if condemnor approves of
the removal), and (iii) relocation costs under Government Code section 7262, the
claim for which Lessee may pursue by separate action independent of this Lease.

29
<PAGE>

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 pursuant to Section 6.01(d); to make
repairs, alterations or additions to any other portion of the Project 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. Lessee shall have the right to
accompany Lessor on any entry, provided that Lessor shall not be required to
give Lessee any notice of an emergency entry and shall not be required to delay
any noticed entry to accommodate Lessee's exercise of its right to so accompany.

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

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

(a) Either party shall at any time upon not less than fifteen (15) days'
prior written request from the other party execute, acknowledge and deliver to
the other party 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) acknowledging, if true, that there are
not, to such party's knowledge, any uncured defaults on the part of the other
party 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) Either party's failure to deliver such statement within such time
shall be conclusive upon the other party (i) that this Lease is in full force
and effect, without modification except as may be represented by the requesting
party in the statement, (ii) that there are no uncured defaults in requesting
party's performance, and (iii) that not more than one month's rent has been paid
in advance.

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<PAGE>

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 (i) the interest of Lessor, and Lessor's successors in interest, in
and to the Premises including any sales proceeds or condemnation awards received
by Lessor from the sale or condemnation of the Premises after said breach and
(ii) any insurance coverage pertaining to such breach provided by policies
caused pursuant to this Lease. 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 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

31
<PAGE>

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.

(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

32
<PAGE>

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 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.

33
<PAGE>

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 which consent is hereby given to the
signage described in Exhibit "G" hereto. 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.

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.

34
<PAGE>

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 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

35
<PAGE>

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. 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, licensees, 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. Prior to the expiration or earlier termination of the
Lease, Lessee shall remove from the Project all Hazardous Materials used or
brought onto the Premises during the Lease Term by anyone other than Lessor,
its agents, employees or contractors.

(d) Lessee's and Lessor's Environmental Indemnities. 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

36
<PAGE>

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. Lessor agrees to indemnify and hold Lessee 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 Premises, and/or subsurface or ground water, after the Commencement
Date from an act or omission of Lessor (or Lessor's successor), its agents or
employees.

(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 Premises or Project or any water or soil beneath the
Premises or Project, 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.
Lessor's consent shall not be unreasonably withheld.

(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
Premises.

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. Right of First Offer to Lease Building 10.
---------------------------------------------------------

(a) During the Lease Term, Lessee shall have a right of first offer ("Right
of First Offer") to lease the adjacent Building 10 as shown on Exhibit A
("Building 10") subject to Paragraphs (b) through (g).

37
<PAGE>

(b) At the time Lessee exercises the Right of First Offer: (i) The Lease
must be in full force and effect; (ii) Lessee shall not be in Default under the
Lease; nor shall Lessee be in Default under the Lease at the Commencement Date
(defined in paragraph g(1)) for the Offer Building, (defined in Paragraph c);
and (iii) Lessee's then current financial condition, as revealed by its most
recent financial statements (which shall include quarterly and annual financial
statements, including income statements, balance sheets, and cash flow
statements), must demonstrate that either: (1) Lessee's net worth is at least
equal to its net worth at the time this Lease was signed; or (2) Lessee meets
the financial criteria reasonably acceptable to Lessor.

(c) Lessor shall not lease Building10 to another lessee unless and until
Lessor has first offered Building 10 to Lessee in writing (the "Offer Notice")
and Lessee either rejects such offer or a period of ten (10) business days has
elapsed from the date that Lessor has delivered the Offer Notice without Lessee
having notified Lessor in writing of its acceptance of such Offer Notice and
supplied Lessor with current financial statements pursuant to Paragraph b(3),
which ever event occurs first. The Offer Notice shall contain the following
information: (i) The date on which the Lessor expects Building 10 to become
available; (ii) The Base Rent; (iv) The pro rata share of Additional Rent; and
(v) Such other terms and conditions upon which Lessor wishes to lease Building
10.

(d) If Lessee timely delivers to Lessor, in accordance with the conditions
of this Section, written notice of Lessee's exercise of the Right of First Offer
(along with Lessee's financial statements pursuant to Paragraph b(3)) and Lessor
determines that Lessee meets all of the conditions provided in this Section,
then Building 10 shall be deemed added to the Premises and subject to the then
applicable terms and conditions in the Lease, as modified by the terms and
conditions set forth in the Offer Notice.

(e) If Lessee declines or fails to duly and timely exercise its Right of
First Offer or fails to meet all of the conditions provided in this Section,
Lessor shall thereafter be free to lease the Building 10 in portions or in its
entirety to any third-party tenant at any time without regard to the
restrictions in this Section 17.25 and on whatever terms and conditions Lessor
may decide in its sole discretion, without again complying with all the
provisions of this Section 17.25.

(f) Within ten (10) business days after the Commencement Date for the Offer
Building, Lessor and Lessee shall confirm the foregoing in a written amendment
to the Lease.

(g) This Right of First Offer is personal to the Lessee and shall become
null and void upon the occurrence of an assignment of the Lease or a sublet of
all or a major part of the Premises.

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.

38
<PAGE>

Section 17.27. List of Exhibits.
---------------------------------
Ref. Page
---------

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

EXHIBIT B: Plans and Specifications for Shell Building

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

EXHIBIT D: Cost Responsibilities of Lessor and Lessee

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

EXHIBIT F: SNDA

EXHIBIT G: Signage Exhibit

EXHIBIT H: Guaranty of Lease [Intentionally Omitted]

EXHIBIT I: Hazardous Materials Disclosure

EXHIBIT J: Notice to Tenants

EXHIBIT K: Notice to Tenants

EXHIBIT L: Rules and Regulations

EXHIBIT M: Estimate of Real Property Taxes

39
<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:

____________________________, 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:

Phone.Com, Inc.
a California corporation _______________________
_______________________
By: /s/ Alain Rossmann (Before Commencement Date)
-----------------------
(Type or print name) Pacific Shores Center
Its: _______________________ Building 9
Redwood City, CA
(After Commencement Date)

40
<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.

LESSOR'S BROKER: ADDRESS:

Cornish & Carey Commercial 2804 Mission College Boulevard
Suite 120
Santa Clara, California 95054
By: ___________________________
___________________________
(Type or print name)
Its: Executive Vice President
--------------------------

LESSEE'S BROKER: ADDRESS:

Wayne Mascia ___________________________
___________________________
By: ___________________________
___________________________
(Type or print name)

Its: ___________________________

41
<PAGE>

February 10, 2000

Mr. Tim Hennessey
Jay Paul Company
353 Sacramento Street, Suite 1740
San Francisco, CA 94111

Re: Pacific Shores Lease
____________________
[LOGO:phone.com]
Dear Tim:

Enclosed are two (2) execution copies of the Pacific Shores
lease executed by Phone.com. These leases are being sent to
you on the condition that you properly attach the Exhibits
referred to in Exhibit I. Please have executed and initialed
and return one copy to me with the exhibits completed.

If you have any questions, please feel free to call me.

Very truly yours,

/s/ Joseph Chen
Joseph Chen

<PAGE>

EXHIBIT A
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

REAL PROPERTY LEGAL DESCRIPTION,
SITE PLAN AND BUILDING ELEVATIONS
---------------------------------

(See Attached)
<PAGE>

Exhibit A

[MAP Page 1]
<PAGE>

Exhibit A

[MAP Page 2]
<PAGE>
EXHIBIT B
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

SHELL BUILDING PLANS AND SPECIFICATIONS
_______________________________________

(To be provided)

NOTE: Shell Building Plans and Specifications shall be consistent with DES
Development Progress Plans dated February 7, 2000 for (a) exterior skin and (b)
structural steel.
<PAGE>

EXHIBIT C
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

WORK LETTER AGREEMENT FOR TENANT IMPROVEMENTS
AND INTERIOR SPECIFICATION STANDARDS
------------------------------------

This agreement supplements the above referenced Lease executed concurrently
herewith and is as follows:

1. Lessee shall devote such time and may be necessary to enable Lessor to
complete and obtain by the respective dates specified in Section 2.04(d) of the
Lease Lessee's written approval, and approval by appropriate government
authorities, of the final Working Drawings. The Working Drawings, as they may
be modified or provided herein, shall be prepared by Lessor in accordance with
the design specified by Lessee and reasonably approved by Lessor. Lessee shall
be responsible for the suitability, for Lessee's needs and business, of the
design and function of all Tenant Improvements. All improvements to be
constructed by Lessor as shown on the Working Drawings, standard or special,
shall be defined as "Tenant Improvements." All Tenant Improvements materials
shall be of a quality equal to or greater than the quality of materials
described on the Interior Specification Standards attached hereto as Schedule
One.

2. Lessor shall cause General Contractor to complete the construction of
the Tenant Improvements in a good and workmanlike manner and in substantial
accordance with the Working Drawings. Lessor shall not, however, be responsible
for procuring or installing in the Premises any trade fixtures, equipment,
furniture, furnishings, telephone equipment or other personal property
("Personal Property") to be used in the Premises by Lessee, and the cost of such
Personal Property shall be paid by Lessee. Lessee shall conform to all Project
standards in installing any Personal Property and shall be subject to any and
all rules of the site during construction.

3. Payment for the Tenant Improvements shall be pursuant to Section 2.04(g)
of the Lease.

4. Lessee shall, by signing the Working Drawings within the time set forth
in Section 2.04(d) of the Lease, give Lessor authorization to complete the
Tenant Improvements in accordance with such Working Drawings. If Lessee shall
request any change, addition or alteration in the approved Working Drawings,
Lessor shall promptly give Lessee a written
<PAGE>

estimate of the cost of engineering and design services to prepare a change
order (the "Change Order") in accordance with such request and the time delay
expected because of such request. If Lessee, in writing, approves such written
estimate, Lessor shall have the Change Order prepared and Lessee shall
concurrently reimburse Lessor for the cost thereof. Promptly upon the
completion of such Change Order, Lessor shall notify Lessee in writing of the
cost and delay which will be chargeable to Lessee by reason of such change,
addition or deletion. Lessee shall within three (3) business days notify Lessor
in writing whether it desires to proceed with such change, addition or deletion,
and in the absence of such written authorization, the Change Order will be
deemed canceled and Lessee shall be chargeable with any delay in the completion
of the Premises resulting from the processing of such Change Order, including
the three (3) business day approval period.

5. If the completion of the Tenant Improvements in the Premises is delayed
(i) at the request of Lessee, (ii) by Lessee's failure to comply with the
foregoing provisions, (iii) by changes in the work ordered by Lessee or by extra
work ordered by Lessee, or (iv) because Lessee chooses to have additional work
performed by Lessor, then Lessee shall be responsible for all costs and any
expenses occasioned by such delay including, without limitation, any costs and
expenses attributable to increases in labor or materials; and there shall be no
delay in the commencement of Lessee's obligation to pay Rent because of Lessor's
failure to complete the Tenant Improvements on time and any such delay in
completion shall constitute Lessee Delay for purposes of Section 3.01(a) of the
Lease.

Each person executing this Work Letter Agreement certifies that he or she
is authorized to do so on behalf of and as the act of the entity indicated.
Executed as of , at Mountain View (Santa Clara County), California.

[initials]

PACIFIC SHORES CENTER LLC PHONE.COM, Inc.
a California corporation

By: /s/ Jay Paul By: /s/ Alain Rossmann
---------------------- ---------------------------
Jay Paul
---------------------------
Its: Manager (Type or print name)

Its:
----------------------------

By:
----------------------------

----------------------------
(Type or print name)

Its:
----------------------------
<PAGE>

SCHEDULE ONE
TO
EXHIBIT C
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

INTERIOR SPECIFICATION STANDARDS
--------------------------------

ABBREVIATED BUILDING STANDARDS
------------------------------

For Pacific Shores
------------------

Note: The Tenant Improvements shall be a Class "A" and their quality must be at
a minimum, per the following standards:

GENERAL OFFICE
--------------

CUSTOM CABINETRY

SCOPE: All materials and labor for the construction and installation of
Cabinetry and all related accessories per WIC Standards.

A. Trade Standards: Woodworking Institute of California (WIC) latest edition
Section 15 and 16 for plastic laminated casework and plastic laminated
countertops. Color of plastic laminate to be selected by Architect.
B. All cabinetry to be constructed to "Custom-Grade" Specifications. Cabinetry
to be flush overlay construction.
C. Plastic Laminate: High Pressure thermoset laminated plastic surfacing
material to equal or surpass NEMA LD3, Nevamar, WilsonArt or approved
equal.
1. Countertops, shelf-tops, splashes, and edges: Grade GP 50, 0.050 inches
thick.
2. All other exposed vertical surfaces: Grade GP 28, 0.028 inches thick
3. Semi-exposed backing sheet: Grade CI, 20, 0.020 inches thick
4. Concealed backing sheet: Grade BK 20, 0.020 inches thick
D. Adhesives: Bond surfaces to Type 11 as recommended by Plastic Laminate
Manufacturer.
<PAGE>

E. Hinges: Heavy-duty concealed self-closing hinges. Amount of hinges per Door
per WIC. Stanley or approved equal
F. Door and Drawer Pulls: Wire-pull with 4-inch centers; Dull chrome finish;
Stanley 4483 or approved equal.
G. Drawer slides: Heavy-duty grade with ball-bearings. Stanley, Klein or
approved equal
H. Door Catches: Heavy-duty commercial friction type.
1. Recessed Adjustable Shelf Standards: Aluminum or zinc-plated recessed
type; Knape & Vogt with clips or approved equal.
J. Base and Wall Cabinets including doors: 3/4-inch thick medium-density
particleboard;
1. Conceal all fastenings.
2. Provide clear spaces as required for mechanical and electrical
fittings
3. Plastic laminate and self-edge all shelves.
4. Provide 3/4-inch thick doors and drawer faces.
5. Unless indicated otherwise, all shelving to be adjustable.
6. Provide back and ends on all cabinets.
7. All exposed cabinet faces to be plastic laminated.
K. Countertops and Shelving: 3/4-inch thick medium density particleboard.
Backsplash to be 3/4 inches thick, glued and screwed into top with
scribed edges. Joints in countertop to be not closer that 24 inches from
sinks. Joints shall be shop fitted, spined, glued and mechanically
fastened.
L. Installation of Cabinetry shall be per WIC instructions, Custom Grade.

WOOD DOORS

SCOPE: All materials and labor necessary for the installation of Wood Doors,
required accessories and preparations for hardware.

A. Non-rated Wood Doors: 1-3/4 inch thick, flush, solid core, plain sliced
Birch veneer with Birch edge. Cores may be either of the following: Glued
block Hardwood Core per NWMA or Particleboard Core per NWMA. Manufacturer:
Algoma, Weyerhaeuser, or approved equal.
B. Fire-rated Wood Doors: 1-3/4 inch thick, flush, solid core, plain sliced
Birch face veneer with Birch Edge with mineral core per rating.
Manufacturer: Algoma, Weyerhaeuser, or approved equal. Doors shall have a
permanent UL label.
C. Vision Panels (where applies): Fire rated vision panel where required. Set
in square metal stop to match metal doorstops as provided by doorframe
manufacturer.
D. Doors shall be 8'-0" x 3'-0" leafs typical.

ALUMINUM DOOR AND WINDOW FRAMES

SCOPE: All materials and labor necessary for the installation of Aluminum Door
Frames.

A. Frame Manufacturers: Raco, or Ragland Manufacturing Company, Inc.
B. Door Frames: Non-rated and 20-minute label, Raco "Trimstyle" frame with
Trim 700 (3/8 inch by 1-1/2 inch) with no exposed fasteners.
C. Finish, Door and Window Frame Extrusions, Wall Trim:
1. Painted and oven-cured with "Duralaq" finish.
2. Color: Clear.
3. Finish shall meet or exceed requirements of AAMA Specifications 603.
4. Coat inside of frame profile with bituminous coating to a thickness of
1/16 inch where in contact with dissimilar materials.

DOOR HARDWARE

SCOPE: All materials and labor for the installation of all Door Hardware,
locksets, closers, hinges,
<PAGE>

miscellaneous door hardware.

A. Swinging Door Lockset and Cylinder: Schlage "L" series with lever
handle with 6 pin cylinder.
B. Keyway: Furnish blank keyways to match existing master-key system.
Match existing keyways.
C. Finishes: Satin Chrome, 626 finish. Paint closers to match.
D. Kickplates: 16 gauge stainless steel; 10 inches high: width to equal
door width less 2 inches.

HARDWARE SCHEDULE

Hardware Group A (Typical, rated, single door)

1 Lockset Schlage L9050PD
1-1/2 pair Butt Hinges Hager BB1279
1 Closer Norton 700 Series
1 Stop Quality (332 @ carpet)
1 Smoke Seal Pemko

Hardware Group B (Typical, rated, closet/service door)

1 Lockset Schlage L9080PD
1-1/2 pair Butt hinges Hager BB1279
1 Closer Norton 700 Series w/ hold-open
1 Stop Quality (332 @ carpet)
1 Smoke Seal Pemko

Hardware Group C (Typical, non-rated door)

1 Lockset Schlage L9050PD
1-1/2 pair Butt hinges Hager BB1279
1 Stop Quality (332 @ carpet)

Hardware Group D (Typical, non-rated, closet/service door)

1 Lockset Schlage L9080PD
1-1/2 pair Butt hinges Hager BB1279
1 Stop Quality (332 @ carpet)

Hardware Group E (Card-access door)

1 Electric Lockset Schlage L9080PDGU
1-1/2 pair Butt hinges Hager BB1279 - NRP
(2 pr @ 8' door)
1 Electric Butt Hager
1 Closer Norton 700 Series w/ hold-open
1 Stop Quality (332 @ carpet)

Hardware Group F (typical, double door)

1 Electric Lockset Schlage L9050PD
3 pair Butt hinges Hager BB1270
1 Auto Flush Bolt Glyn Johnson FB-8
1 Dustproof Strike Glyn Johnson DP2
2 Closer Norton 700 Series
2 Stop Quality (332 @ carpet)
1 Astragal Pemko
1 Coordinator Glyn Johnson
1 Smoke Seal Pemko

<PAGE>

GLAZING

SCOPE: All materials and labor for the installation of Glass.

A. Manufacturers: PPG Industries, or Viracom, Inc. See glazing schedule
below.
B. Shop prepares all glazing. Edges to have no chips or fissures.
C. Glazing Materials:
1. Safety Glass: ASTM C1048, fully tempered with horizontal tempering.
Condition A uncoated, Type 1 transparent flat, Class 1 clear, Quality
q3 glazing select, conforming to ANSI Z97.1
2. Mirror Glass: Clear float type with copper and silver coating, organic
overcoating, square polished edges, 1/4-inch thick.
3. Wire Glass: Clear, polished both sides, square wire mesh of woven
stainless steel wire 1/2 inch x 1/2 inch grid: 1/4 inch thick.
4. Tempered Glass: 1/4 inch thick, no tong marks. UL rated for 1-hour
rating.
5. Spacers: Neoprene.
6. Tape to be poly-iso-butylene.

D. Schedule:
1. Type A: 1/4-inch thick mirror, annealed, heat strengthened, or full
tempered as required.
2. Type B: 1/4 inch thick clear float glass, annealed, heat strengthened,
or full tempered as required.
3. Type C: 1/4-inch thick wire glass plate, square pattern "Baroque"

LIGHT GAUGE METAL FRAMING

SCOPE: All materials and labor necessary for the installation of metal framing
and related accessories.

A. Structural Studs: 14 gauge punched channel studs with knurled screw-type
flanges, prime-coated steel. Manufacturer: United States Gypsum SJ or
approved equal: Submit cut-sheet of material.
B. Partition Studs: 20 gauge studs with key-hole shaped punch-outs at 24
inches on center. Manufacturer: United States Gypsum ST or approved equal.
C. Fasteners for Structural Studs: Metal screws as recommended by metal system
manufacturer. Weld at all structural connection points.
D. Reinforce framed door and window openings with double studs at each jamb
(flange-to-flange and weld) and fasten to runners with screws and weld.
Reinforce head with 14 gauge double stud same width as wall. Screw and
weld.
E. Provide all accessories as required to fasten metal-framing per
manufacturers recommendations.
F. Provide and install flat-strapping at all structural walls (walls with
concrete footings beneath the walls). Minimum bracing shall be 25% of
structural walls shall be braced with flat-strapping per Manufacturer's
recommendations. Weld at all strap ends and at all intermediate studs.
G. Provide foundation clips at 4'-0" on center at structural walls. Anchor
with 1/2 inch diameter by 10 inch long anchor bolts.
H. Non-structural interior partitions shall be anchored with power-driven
fasteners at 4'-0" on center at the concrete slab.

ACOUSTIC CEILING SYSTEM

SCOPE: All materials and labor for the installation of the Acoustic Ceiling
System including T-bar system, Acoustic Ceiling Panels, Suspension
wiring and fastening devices and Glued-down Ceiling Panels.
<PAGE>

A. Manufacturer: Armstrong, or approved equal. Exposed T-bar system; factory
painted; steel construction; rated for the intermediate duty.
D. Acoustical Tile: "Second Look", conforming to the following:
1. Size: 24 x 48 inches.
2. Thickness: 3/4 inches.
3. Composition: Mineral.
4. NRC Range: .55 to .60.
5. STC Range: 35 to 39.
6. Flame Spread: ASTME84,0-25, UL Label, 25 or under.
7. Edge: Tegular, Lay-in.
8. Surface Color: White.
9. Surface Finish: Factory-applied washable vinyl latex paint.

G. Installation to be per ASTM C636 structural testing. Lateral support for
each 96 square feet of ceiling flared at 45 degrees in 4 directions.
H. Provide clips for panel uplift restraints at all panels, 2 per panel.

GYPSUM WALLBOARD

SCOPE: Provide all materials and labor for the installation of Gypsum Wallboard
including all accessories and finishes.

A. Standard Gypsum Wallboard: ASTM C36; Ends square cut, tapered edges.
B. Fire Restraint Gypsum Wallboard: ASTM C36, 5/8 inches thick Type X. Ends
square cut, tapered edges. See Drawings for locations.
C. Moisture-resistant gypsum wallboard: ASTM C630-90.
D. Joint-reinforcing Tape and Joint Compound: ASTM C475, as manufactured by or
recommended by wallboard manufacturer. Minimum 3 coat application for a
smooth finish.
E. Corner Bead: Provide at all exposed outside corners;
F. L-shaped edge trim: Provide at all exposed intersections with different
materials.
G. All work shall be done in accordance with the USG recommended method of
installation.
1. Finish: smooth.

PAINTING

A. Paint Manufacturers: ICI, Dunn-Edwards Corporation, Kelly Moore.
B. Paint colors shall be selected by the Architect.
C. Painting Schedule: Provide for 4 different color applications
1. P-1: "Field". Color to be selected.
2. P-2: "Accent". Color to be selected.
3. P-3: "Accent". Color to be selected.
4. P-4: "Accent". Color to be selected.
D. Interior Gypsum Wallboard:
1. Primer: Vinyl Wall Primer/Sealer.
2. 1 stand 2nd Coat: Eggshell Acrylic Latex.
E. Metal Framing:
1. Primer: Red Oxide, shop-primed (for non-galvanized) if exposed.
F. Wood Work, Wood Doors:
1. Two coats of transparent finish. Sand lightly between coats with steel
wool.

INSULATION

A. R-15 in exterior walls.
B. R-25 on Roof.
<PAGE>

C. Sound batts in conference, restroom and lobby walls.

ROOF EQUIPMENT

A. Stainless steel mechanical platform and associated access stairs and
guard rail system
B. EIFS roof screen to match detail of exterior GFRC Panel.

FULL HEIGHT GLAZED PARTITION

A. 1/4" glazed partition, in building standard aluminum frame

FINISHES

A. Vinyl Composite Tile: Armstrong stonetex, 12" x 12"
B. Resilient Base: Burke rubber wall base, 4" top set or cove, as appropriate
for VCT or carpet.
C. Window Coverings: Miniblinds, Levelor, color: TBD
D. Carpet:
Option 1: Designweave, Windswept Classic 30 oz. (Direct
glue installation) or equal

Option2: (cut pile) Designweave, Tempest Classic 32 oz. (Direct glue
Upgrade installation) or equal.

Option 3: (cut pile) Designweave, Sabre Classic, 38 oz. (Direct glue
Upgrade installation) or equal.

KITCHEN FIXTURES

A. Sink: Ekkay stainless steel, GECR-2521-L&R, 20 gauge, 25"w x 21 1/4"D x
5 3/8" D, ADA compliant.
B. Kitchen Faucet: American Standard, Silhouette Single control, #4205 series,
spout 9 3/4".

KITCHEN APPLIANCES

A. Dishwasher
Option 1: GE GSD463DZWW, 24" W x 24 3/4" D x 34-35" H, 9 gallons/wash
Option 2: Bosch, SHU5300 series, 5.4 gallons/wash-with water heater

B. Refrigerator:
Full Size: GE, "S" series top-mount, TBX16SYZ, 16.4 cubic feet,
recessed, recessed handles, 28" W x 29 1/8" D x 66 3/4"
H, white, optional factory installed ice-maker.

Under-counter:
Option 1: U-Line, #29R, 3.5 cubic feet, white
Option 2: U-Line, Combo 29FF, Frost Free with factory
installed icemaker, 2.1 cubic feet, white

C. Microwave: GE, Spacemaker II JEM25WY, Midsize, 9 cubic feet, 800 watts,
23 13/16" W x 11 13/16" D x 12 5/16" H
<PAGE>

Option 1: Under counter Mounting Kit, #4AD19-4
Option 2: Accessory Trim Kit # JXB37WN, 26 1/8" W X 18 1/4" H
(built-in application)

D. Garbage Disposal: ISE #77, 3/4" horsepower

E. Water Heater: To be selected by DES.

PUBLIC SPACES
-------------

FRONT BUILDING LOBBY

Walk off Matts: Design Materials, Sisel, Calcetta #68, Natural, 100%
coir

Floor Tile: 3/8" x 18" x 18" Stone or Marble set in mortar bed in
recessed slab as approved by Owner

Transition Strips: 5/16" x 1 1/2" x random length strips, cherry wood
flooring

Corridor Carpeting: Carpet over pad, Atlas, New Vista or as approved by
Owner

Lobby Ceiling: Suspended gypsum board ceiling, Painted

Building Lobby: Akari shades hanging #J1-9 3/4" x 5'-2" or equal as
Pendant Fixture approved by owner.

Stairs & P & P Railing, Modesto with custom cherry guard rail
Mezzanine Railing: Rep: Oliver Capp (805) 241-8810. Hand and guard railing
P & P Railings, Modesto stainless steel railing with
horizontal spirals and custom cherry guard rail cap by
others, fittings dark gray metallic or equal as
approved by Owner.

BACK BUILDING LOBBY & EMERGENCY STAIRS

Walk off Matts: Design Materials, Sisal, Calcutta #68, Natural, 100%
coir.

Treads & Landings: Carpet covered concrete, as approved by Owner

Stringers, Risers Painted steel stringer, eggshell
& Handrails finish enamel.

Ceiling: Suspended gypsum board ceiling.

ELEVATORS

Cars: (1) 2800 lb, (1) 3500 lb 150 ft/min by Otis

Elevator Doors: Stainless Steel

Elevator
Interior Paneling: Cherry veneer with stainless steel reveals and railing

Elevator Floor: Slate 3/8" x 18" x 18" tile as approved by Owner.
<PAGE>

RESTROOMS

Counter tops: Stone/marble or equal as approved by Owner

Walls at Lavatories: Eggshell finish, latex paint, Benjamin Moore

Floor at Toilets: 2" x 2" matte porcelain ceramic floor tiles, thin
set, Dal-tile.

Walls at Toilets: 2" x 2" matte porcelain ceramic floor tiles, thin
set, Dal-tile.

Ceiling: Suspended gypsum board ceiling.

Toilet compartments:

A. Manufactured floor-anchored metal toilet compartments and wall-
hung urinal screens.
B. Approved Manufacturer, Global Steel Products Corp, or approved
equal.
C Toilet Partitions: Stainless Steel finish.
D. Hardware: Hinges: Manufacturer's standard self-closing type that
can be adjusted to hold door open at any angle up to 90 degrees.
Latch and Keeper: Surface-mounted latch unit, designed for
emergency access, with combination rubber-faced door strike and
keeper. Coat Hook: Combination hook and rubber-tipped bumper. Door
Pull: Manufacturer's standard.

Ceramic Tile

A. Manufacturer: Dal-Tile or approved equal.
B. Size: 4-1/4" x 4-1/4" for walls, 8 x 8 for floors, 3/4" liner
strip as accent.
C. Glaze: Satin glaze for walls, unglazed tile for floors.
D. Color: As selected by Architect.
E. Accessories: Base, corners, coved cap and glazed to
match
F. Wall and floor installation: per applicable TCA
G. Waterproof Membrane: Chloraloy or approved equal:
H. Tile Backer Board: 1/2 inch thick wonderboard
I. Grout: Commercial Portland Cement Grout; Custom Building Products
or approved equal
J. Mortar: Latex-Portland cement mortar; Custom Building Products or
approved equal.

RESTROOM:

Toilet: Kohler/American Standard, commercial quality.

Urinal: Kohler/American Standard, commercial quality.

Lavatory: Kohler/American Standard, undercounter.

Lavatory Faucet: Kroin handicap lavatory faucet #HV1LH, polished chrome.

Soap Dispenser Bobrick, 8226, Lavatory mounted for soaps, 34 fl oz.
Counter:

Toilet accessories:

A. Manufacturer: Bobrick Washroom Equipment, or approved equal.
<PAGE>

B. Schedule: Model numbers used in this schedule are Bobrick (134)
unless otherwise noted.
C. Combination Paper Towel Dispenser/Waste Receptacle: Recessed Model
B-3944, one per restroom #7151 and 7152, and two per restroom
#7050 and 7061.
D. Feminine Napkin Vendor: Recessed, combination napkin/tampon
vendor, Model B-3500 with 25 cent operation, one per each women's
toilet room.
E. Soap Dispenser: Lavatory mounted dispenser, Model B-822, one per
each lavatory.
F. Toilet Paper Dispenser: Surface-mounted, Model JRT, JR Escort,
"In-Sight" by Scott Paper Company, one per stall.
G. Toilet Seat Cover Dispenser: Recessed, wall-mounted, Model B-301,
one per stall.
H. Sanitary Napkin Disposal: Recessed, wall-mounted, Model B-353, one
per each women's handicapped and odd stall.
I. Sanitary Napkin Disposal: Partition-mounted, Model B-354 (serves
two stalls).
J. Grab Bars: Horizontal 36" B6206-36: 42", B62-6-42: one per each
handicapped stall.
K. Mop/Broom Holders: B223-24 (one per janitor closet).
L. Paper Towel Dispensers: Recessed mounted, Model B-359, one at side
wall adjacent to sink.

TENANT CORRIDORS

Walls: Eggshell finish, latex paint, Benjamin Moore.

Floors: Level loop carpet over pad with 4" resilient base as
approved by Owner.

Ceiling 4" x 24" x 3/4" thick fine fissures type mineral fiber,
Armstrong Circus acoustical tile (beveled regular edge)
in a 24" x 24" Donn Fineline suspended grid, white
finish.

Water Fountain: Haws Model #1114 Stainless Steel #4.

Cross Corridor 3'-6" x full height, 20 minute rated, pocket assembly,
Smoke Detector: on magnetic hold opens.

Corridor Carpyen "Berta" 35 cm x 33 cm, engraved curved opaque
Wall Sconce glass, 2 x 7-9W, #G-23 or equal as approved by owner

ELECTRICAL

A. 50 foot candles at working surface.
B. 3 Bulb 2x4 parbolic fixtures
C. 1/2 20 Amp circuit for each hard wall office
D. Electrical Devices: Recessed wall mounted devices with plastic cover plate.
Color: white, multi-gang plate 80400 Series duplex wall outlets.
E. Telephone/Data Outlets: Recessed wall mounted, Standard 2x4 wall box with
3/4" EMT conduit from box to sub out above ceiling walls pull string,
cabling, terminations and cover-plates, color: white, provided by tenants
vendor. Tenant shall furnish telephone backboard.
F. Light Switches: Dual level rocker type, mounted at standard locations, with
plastic cover plate, 5325-W cover plate single switch B0401-W, double
switch B0409-W. Decors by Leviton, colors: white, and will comply with
Title 24 Energy Codes. Decors by Leviton.
<PAGE>

MECHANICAL

A. VAV Reheat system - design/build. Each floor to have a minimum of thirty
zones. Provide reheat boxes on all zones on top floor and at all exterior
zones on lower floor. System shall meet T-24 for ventilation. Design shall
be for 73 deg. Ambient interior temperature and 2 1/2 watts per sq. ft.
min.

FIRE SPRINKLER SYSTEM

As required by NFPA & factory mutual standard hazard, seismically braced.

END
<PAGE>

EXHIBIT D
TO
PACIFIC SHORES CENTER LLC
LEASE TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

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

(See Attached)
<PAGE>

Exhibit D.
----------

COST RESPONSIBILITIES OF LESSOR AND LESSEE
------------------------------------------

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
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)
Case in pace concrete (if used)
Metal decking (if used)
<PAGE>

Metal framing (if used)
Rough carpentry as related to the 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 Shell
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 Lease:

Interior Building Permits
Gypsum drywall
Ceramic File or elate Tile in Lobbies
Quarry Tile as specified
Flag Pole
Metal 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

2
<PAGE>

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
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)

3
<PAGE>

EXHIBIT E
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
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 PHONE.COM, Inc.
a California corporation

By: By:
----------------------------- -----------------------------
Jay Paul

-----------------------------
Its: Manager (Type or print name)

Its:
-----------------------------

By:
-----------------------------

-----------------------------
(Type or print name)

Its:
------------------------------
<PAGE>

EXHIBIT F
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

SNDA
----

(See Construction And Permanent SNDA Samples Attached)
<PAGE>

RECORDING REQUESTED AND WHEN
RECORDED RETURN TO:

KEYBANK NATIONAL ASSOCIATION
Real Estate Division
Mailcode WA-31-10-5285
700 Fifth Avenue, 52nd Floor
Seattle, WA 98104-5099
Attn:
-------------------
Loan No.
----------------

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

SUBORDINATION, ACKNOWLEDGEMENT OF LEASE ASSIGNMENT,
NONDISTURBANCE AND ATTORNMENT AGREEMENT

AND ESTOPPEL CERTIFICATE

(Lease to Deed of Trust)

NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR LEASE BECOMING SUBJECT TO
AND OF LOWER PRIORITY THAN THE LIEN OF THE DEED OF TRUST (DEFINED
BELOW).

THIS AGREEMENT AND CERTIFICATE is made this day of , 1990, between
KEYBANK NATIONAL ASSOCIATION, a national banking association ("Lender")
and , a ("Tenant").
Recitals

A. ("Landlord"), is the owner of real property ("Property")
located in County, California, and legally described on Exhibit A.

B. Tenant is a tenant of a portion of the Property ("Premises") under a
lease ("Lease") with Landlord dated .

C. Lender has agreed to make a loan ("Loan") to Landlord. In connection
therewith, Landlord has executed or proposes to execute, a Construction Deed of
Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing
("Deed of Trust") encumbering the Property and securing, among other things, a
promissory note ("Note") in the principal sum of DOLLARS
($ ), of even date herewith, in favor of Lender, which Note is payable with
interest and upon the terms described therein. The Deed of Trust is to be
recorded concurrently herewith.

D. The Deed of Trust constitutes a present assignment to Lender of all
rights, title, and interest of Landlord under the Lease.
<PAGE>

E. Lender's agreement to make the Loan is conditioned on Tenant's specific
and unconditional subordination of the Lease to the lien of the Deed of Trust
such that the Deed of Trust at all times remains a lien on the Property, prior
and superior to all the rights of Lessee under the Lease, and Tenant's agreement
to attorn to Lender if Lender obtains possession of the Property by foreclosure
or deed in lieu of foreclosure. Tenant is willing to do so in consideration of
the benefits to Tenant from the Loan and the Lease and Lender's agreement not to
disturb Tenant's possession of the Premises under the Lease.

NOW, THEREFORE, Lender and Tenant agree as provided below.

1. Subordination. Tenant hereby intentionally and unconditionally
subordinates the Lease and all of Lessee's right, title and interest thereunder
an in an to the Property to the lien of the Deed of Trust and all of Lender's
rights thereunder, including any and all renewals, modifications and extensions
thereof and agrees that the Deed of Trust and any and all renewals,
modifications and extensions thereof shall unconditionally be an at all times
remain a lien on the Property prior and superior to the Lease. Without limiting
the generality of the foregoing, such subordination shall include all rights of
Tenant in connection with any insurance or condemnation proceeds with respect to
the Premises or Property.

2. Acknowledgment. Tenant understands that Lender would not make the Loan
without this Agreement and the subordination of the Lease to the lien of the
Deed of Trust as set forth herein and that in reliance upon, and in
consideration of, this subordination, specific loans and advances are being
and will be made by Lender and, as part and parcel thereof, specific monetary
other obligations are being and will be entered into which would not be made
or entered into but for reliance upon this subordination. This Agreement is
and shall be the sole and only agreement with regard to the subordination of
the Lease to the lien of the Deed of Trust and shall supersede and cancel, but
only insofar as would affect the priority between the Deed of Trust and the
Lease, any prior agreement as to such subordination, including, without
limitation, those provisions, if any, contained in the Lease which provide for
the subordination of the Lease to a deed or deeds of trust or to a mortgage or
mortgages.

3. Use of Proceeds. Lender, in making disbursement pursuant to the Note,
the Deed of Trust or any loan agreement with respect to the Property, is under
no obligation or duty to, nor has Lender represented that it will, see to the
application of such proceeds by the person or persons to whom Lender disburses
such proceeds, and any application or use of such proceeds for purposes other
than those provided for in such agreement or agreements shall not defeat this
agreement to subordinate in whole or in part.

4. Nondisturbance. Lender agrees that Tenant's possession of the Premises
shall not be disturbed by Lender during the term of the Lease, and Lender shall
not join Tenant in any action or proceeding for the purposes of terminating the
Lease, except upon the occurrence of a default by Tenant under the Lease and the
continuance of such default beyond any cure period given to Tenant under the
Lease.

5. Attornment. If Lender obtains possession of the Property by foreclosure
or deed in lieu of foreclosure, Tenant shall attorn to Lender, be bound to
Lender in accordance with all of the provisions of the Lease for the balance of
the term thereof, and recognize Lender as the landlord

-2-
<PAGE>

under the Lease for the unexpired term of the Lease. Such attornment shall be
effective without Lender being (i) subject to any offsets or defenses or
otherwise liable, for any prior act or omission of Landlord, (ii) bound by any
amendment, modification, or waiver of any of the provisions of the Lease, or by
any separate agreement between Landlord and Tenant relating to the Premises or
Property, unless any such action was taken with the prior written consent of
Lender, (iii) liable for the return of any security or other deposit unless the
deposit has been paid to Lender, (iv) bound by any payment of rent or other
monthly payment under the Lease made by tenant more then one (1) month in
advance of the due date, or (v) bound by any option, right of first refusal, or
similar right of Tenant to Lease any portion of the Property (other than the
Premise) or to purchase all or any portion of the Property. Lender's
obligations as landlord under the Lease after obtaining possession of the
Property by foreclosure or deed in lieu of foreclosure shall terminate upon
Lender's subsequent transfer of its interest in the Property.

6. Termination of Lease. Notwithstanding any other provision of this
Agreement, in the event Lender obtains ownership of the Property by foreclosure
of deed in lieu of foreclosure and the Lease requires the landlord to construct
any improvements on the Premises or Property, the Lease shall terminate unless
(i) Lender delivers written notice to Tenant expressly assuming such obligation
with ten (10) days after the foreclosure sale or acceptance of the deed in lieu
of foreclosure, or (ii) Tenant waives such obligation by delivery of written
notice to Lender within ten (10) days after receiving notice of foreclosure or
deed in lieu of foreclosure.

7. Covenants of Tenant. Tenant covenants and agrees with Lender as
follows:

(a) Tenant shall pay to Lender all rent and other payments otherwise
payable to Landlord under the Lease upon written demand form Lender. the consent
and approval of Landlord to this Agreement shall constitute an express
authorization for Tenant to make such payments to Lender and a release and
discharge of all liability of Tenant to Landlord for any such payments made to
Lender.

(b) Tenant shall enter into no material amendment or modification of
any of the provisions of the Lease without Lender's prior written consent.

(c) Tenant shall not subordinate its rights under the Lease to any
other mortgage deed of trust, or security instrument without the prior written
consent of Lender.

(d) In the event the Lease is rejected or deemed rejected in any
bankrupt proceeding with respect to Landlord, Tenant shall not exercise it
option to treat the Lease as terminated under 11 U.S.C. (S) 365(h), as amended.

(e) Tenant shall not accept any waiver or release of Tenant's
obligations under the Lease by Landlord, or any termination of the lease by
Landlord, without Lender's prior written consent.

(f) Tenant shall promptly deliver written notice to Lender of any
default by Landlord under the Lease. Lender shall have the right to cure such
default within thirty (30) days after the receipt of such notice. Tenant
further agrees not to invoke any of its remedies under the Lease until the
thirty (30) days have elapsed, or during any period that Lender is proceeding to
cure

-3-
<PAGE>

the default with due diligence, or is attempting to obtain the right to enter
the Premises and cure the default

8. Effect of Assignment. Notwithstanding that Landlord has made a
present assignment of all of its rights under the Lease to Lender, Lender shall
not be liable for any of the obligations of Landlord to Tenant under the Lease
until Landlord has obtained possession of the Property by foreclosure or deed in
lieu of foreclosure, and then only to the extent provided in paragraph 3 above.

9. Estoppel Certifications. Tenant hereby certifies and represents
to Lender as provided below.

(a) The Lease constitutes the entire agreement between Landlord
and Tenant relating to the Premises and the Property.

(b) The Lease is in full force and effect, and has not been
amended, modified, or assigned by Tenant, either orally or in writing.

(d) Tenant has no present claim, offset or defense under the
Lease, and Tenant has no knowledge of any uncured breach or default by Landlord
or Tenant under the Lease or of any event or condition which, with the giving of
notice or the passage of time or both, could constitute a breach or default
under the lease.

(e) Tenant has no knowledge of any prior sale, transfer,
assignment, hypothecation or pledge of Landlord's interest under the Lease or of
the rents due under the Lease.

(f) Except as otherwise provided in the Lease, Tenant has made
no agreements with Landlord concerning free rent, partial rent, rebate or rental
payments, setoff, or any other type of rental concession.

10. Costs and Attorney's Fees. In the event of any claim or dispute
arising out of this Agreement, the party that substantially prevails shall be
awarded , in addition to all other relief, all attorneys' fees and other costs
and expenses incurred in connection with such claim or dispute; including
without limitation those fees, costs, and expenses incurred before or after
suit, and in any arbitration, and any appeal, any proceedings under any present
or future bankruptcy act or state receivership, and any post-judgement
proceedings.

11. Notices. All notices to be given under this Agreement shall be in
writing and personally delivered or mailed, postage prepaid, certified or
registered mail, return receipt requested, to Lender at the address indicated on
the first page of this Agreement, and to Tenant at its address indicated below.
All notices which are mailed shall be deemed given three (3) days after the
postmark thereof. Either party may change their address by delivery of written
notice to the other party.

-4-
<PAGE>

12. Miscellaneous. This agreement may not be modified except in writing
and executed by the parties hereto or their successors in interest. This
agreement shall inure to the benefit of and be binding upon the parties hereto
and their successors and assigns. As used herein, "Landlord" shall include
Landlord's predecessors and successors in interest under the Lease, and "Lender"
shall include any purchaser of the Property at any foreclosure sale. All rights
of Lender herein to collect rents on behalf of Landlord under the Lease are
cumulative and shall be in addition to any and all other rights and remedies
provided by law and by other agreements between Lender and Landlord or others.
If any provision of this Agreement is determined to be invalid, illegal or
unenforceable, such provision shall be considered severed from the rest of
this Agreement and the remaining provisions shall continue in full force and
effect as if such provision had not been included. This Agreement shall be
governed by the laws of the State of California. This Agreement may be
executed in one or more counterparts, all of which together shall constitute
one and the same original.

DATED this day of , 1999

NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR LEASE BECOMING SUBJECT TO
AND OF LOWER PRIORITY THAN THE LIEN OF THE DEED OF TRUST (DEFINED
ABOVE).
IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS
AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT
HERETO.

"LENDOR"

KEYBANK NATIONAL ASSOCIATION,
a National banking association

By:
------------------------------------
Its
-------------------------------

-5-
<PAGE>

"TENANT"

------------------------------------
a
-----------------------------------

By:
---------------------------------
Its
------------------------------

Address:
----------------------------

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

CONSENTED AND AGREED TO:

"LANDLORD"

----------------------------- ,
a
---------------------------

By:
-------------------------
Its
----------------------

ALL SIGNATURES MUST BE ACKNOWLEDGED

-6-
<PAGE>

STATE OF CALIFORNIA )

) ss.

COUNTY OF )

On , 1999, before me, the undersigned, a notary public in and
for said state, personally appeared , personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
the same in his/her authorized capacity, and that by his/her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.

WITNESS my hand and official seal.

Notary Public

-7-
<PAGE>

EXHIBIT A

SUBORDINATION, NONDISTURBANCE AND

ATTORNMENT AGREEMENT AND ESTOPPEL CERTIFICATE

Legal Description

The Property is located in County, California and is legally described as
follows:

-8-
<PAGE>

SCHEDULE TWO
TO
EXHIBIT F
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

SNDA
----
(See Construction and Permanent SNDA Samples Attached)

These samples are subject to negotiation by Tenant.
<PAGE>

SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
------------------------

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") made as of the [ ] day of [ ], 1997, by and among Nomura Asset
Capital Corporation ("Leader"), ("Tenant") and ("Landlord").

WITNESSETH:
----------

WHEREAS, Lender has agreed to make a loan (the "Loan") of up to [ ] to
Landlord;

WHEREAS, the Loan will be evidenced by a deed of trust note (the "Note") of
even date herewith made by Landlord to order of Lender and will be secured by,
among other things, a deed of trust, assignment of leases and rents and security
agreement (the "Deed of Trust") of even date herewith made by Landlord to Lender
covering the land (the "Land") described on Exhibit A attached hereto and all
improvements (the "Improvements") now or hereafter located on the land (the Land
and the Improvements hereinafter collectively referred to as the "Property");
and

WHEREAS, by a lease dated as of [ ] (which lease, as the same may have
been amended and supplemented, is hereinafter called the "Lease"), Landlord
leased to Tenant approximately [ ] square feet of space located in the
Improvements (the "Premises"); and

WHEREAS, the parties hereto desire to make the Lease subject and
subordinate to the Deed of Trust.

NOW, THEREFORE, the parties hereto, in consideration of the covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby agree as follows:

1. The Lease, as the same may hereafter be modified, amended or
extended, and all of Tenant's right, title and interest in and to the Premises
and all rights, remedies and options of Tenant under the Lease, are and shall be
unconditionally subject and subordinate to the Deed of Trust and the lien
thereof, to all the terms, conditions and provisions of the Deed of Trust, to
each and every advance made or hereafter made under the Deed of Trust, and to
all renewals, modifications, consolidations, replacements, substitutions and
extensions of the Deed of Trust, so that at all times the Deed of Trust shall be
and remain a lien on the Property prior and superior to the Lease for all
purposes; provided, however, and Lender agrees, that so long as (A) no event has
occurred and no condition exists, which would entitle Landlord to terminate
the Lease or would cause, without further action of Landlord, the termination
of the Lease or would entitle Landlord to dispossess Tenant from the Premises,
(B) the term of the Lease has commenced and Tenant is in possession of the
Premises, (C) the Lease shall be in full force and effect and shall
<PAGE>

not have been otherwise modified or supplemented in any way without Lender's
prior written consent, (D) Tenant shall duly confirm its attornment to Lender or
its successor or assign by written instrument as set forth in Paragraph 3
hereof, (E) neither Lender nor its successors or assigns shall be liable under
any warranty of construction contained in the Lease or may implied warranty of
construction, and (F) all representations and warranties made herein by Tenant
shall be true and correct as of the date of such attornment; then, and in such
event Tenant's leasehold estate under the Lease shall not be terminated,
Tenant's possession of the Premises shall not be disturbed by Lender and Lender
will accept the attornment of Tenant.

2. Notwithstanding anything to the contrary contained in the Lease, Tenant
hereby agrees that in the event of any act, omission or default by Landlord or
Landlord's agents, employees, contractors, licensees or invitees which would
give Tenant the right, either immediately or after the lapse of a period of
time, to terminate the Lease, or to claim a partial or total eviction, or to
reduce the rent payable thereunder or credit or offset any amounts against
future rents payable thereunder, Tenant will not exercise any such right (i)
until it has given written notice of such act, omission or default to Lender by
delivering notice of such act, omission or default, in accordance with Paragraph
8 hereof, and (ii) until a period of not less than sixty (60) days for remedying
such act, omission or default shall have elapsed following the giving of such
notice. Notwithstanding the foregoing, in the case of any default of Landlord
which cannot be cared within such sixty (60) day period, if Lender shall within
such period proceed promptly to cure the same (including such time as may be
necessary to acquire possession of the Premises if possession is necessary to
effect such cure) and thereafter shall prosecute the curing of such default with
diligence, then the time within which such default may be cured by Lender shall
be extended for such period as may be necessary to complete the curing of the
same with diligence. Lender's cure of Landlord's default shall not be
considered an assumption by Lender of Landlord's other obligations under the
Lease. Unless Lender otherwise agrees in writing, Landlord shall remain solely
liable to perform Landlord's obligations under the Lease (but only to the extent
required by and subject to the limitation included with the Lease), both before
and after Lender's exercise of any right or remedy under this Agreement. If
Lender or any successor or assign becomes obligated to perform as Landlord under
the Lease, such person or entity will be released from those obligations when
such person or entity assigns, sells or otherwise transfers its interest in the
Premises or the Property.

3. Without limitation of any of the provisions of the Lease, in the
event that Lender succeeds to the interest of Landlord or any successor to
Landlord, then subject to the provisions of this Agreement including, without
limitation, Paragraph 1 above, the Lease shall nevertheless continue in full
force and effect and Tenant shall and does hereby agree to attorn to and accept
Lender and to recognize Lender as its Landlord under the Lease for the then
remaining balance of the term thereof, and upon request of Lender, Tenant shall
execute and deliver to Lender an agreement of attornment reasonably satisfactory
to Lender.

4. If Lender succeeds to the interest of Landlord or any successor to
Landlord, in no event shall Lender have any liability for any act or omission of
any prior landlord under the Lease which occurs prior to the date Lender
succeeds to the rights of Landlord under the Lease, nor any liability for
claims, offsets or defenses which Tenant might have had against Landlord.

2
<PAGE>

In no event shall Lender have any personal liability as sucessor to Landlord and
Tenant shall look only to the estate and property of Lender in the Land and the
Improvements for the satisfaction of Tenant's remedies for the collection of a
judgment (or other judicial process) requiring payment of money in the event of
any default by Lender as Landlord under the Lease, and no other property assets
of Lender shall be subject to levy, execution or other enforcement procedure for
the satisfaction of Tenant's remedies under or with respect to the Lease.

5. Tenant agrees that no prepayment of rent or additional rent due under
the Lease of more than one month in advance, and no amendment, modification,
surrender or cancellation of the Lease, and no waiver or consent by Landlord
under the terms of the Lease, shall be binding upon or as against Lender, as
holder of the Deed of Trust, and as Landlord under the Lease if it succeeds to
that portion, unless consented to in writing by Lender. In addition, and
notwithstanding anything to the contrary set forth in this Agreement, Tenant
agrees that Lender, as holder of the Deed of Trust, and as Landlord under the
Lease if it succeeds to that position, shall in no event have any liability
for the performance or completion of any initial work or installations or for
any loan or contribution or rent concession towards initial work, which are
required to be made by Landlord (A) under the Lease or under any related Lease
documents or (B) for any space which may hereafter become part of said
Premises, and any such requirement shall be inoperative in the event Lender
succeeds to the position of Landlord prior to the completion or performance
thereof. Tenant further agrees with Lender that Tenant will not voluntarily
subordinate the Lease to any lien or encumbrance without Lender's prior
written consent.

6. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute and
be construed as one and the same instrument.

7. All remedies which Lender may have against Landlord provided herein,
if any, are cumulative and shall be in addition to any and all other rights
and remedies provided by law and by other agreements between Lender and
Landlord or others. If any party consists of multiple individuals or entities,
each of same shall be jointly and severally liable for the obligations of such
party hereunder.

8. All notices to be given under this Agreement shall be in writing and
shall be deemed served upon receipt by the addressee if served personally or, if
mailed, upon the first to occur of receipt or the refusal of delivery as shown
on a return receipt, after deposit in the United States Postal Service certified
mail, postage prepaid, addressed to the address of Landlord, Tenant or Lender
appearing below, or, if sent by telegram, when delivered by or refused upon
attempted delivery by the telegraph office. Such addresses may be changed by
notice given in the same manner. If any party consists of multiple individuals
or entities, then notice to any one of same shall be deemed notice to such
party.

3
<PAGE>

Lender's Address:
----------------

Nomura Asset Capital Corporation
Two World Financial Center, Building B
New York, New York 10281-1198

Attention: Ms. Sheryl McAfee

Tenant's Address:
----------------

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

Attention:
-------------------------------

Landlord's Address:
------------------

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

Attention:
-------------------------------

9. This Agreement shall be interpreted and construed in accordance with
and governed by the laws of the State of California.

10. This Agreement shall apply to, bind and inure to the benefit of the
parties hereto and their respective successors and assigns. As used herein
"Lender" shall include any subsequent holder of the Deed of Trust.

11. Tenant acknowledges that Landlord has assigned to Lender its right,
title and interest in the Lease and to the rents, issues and profits of the
Property and the Property pursuant to the Deed of Trust, and that Landlord has
been granted the license to collect such rents provided no Event of Default has
occurred under, and as defined in, the Deed of Trust. Tenant agrees to pay all
rents and other amounts due under the Lease directly to Lender upon receipt of
written demand by Lender, and Landlord hereby consents thereto. The assignment
of the Lessee to Lender, or the collection of rents by Lender pursuant to such
assignment, shall not obligate Lender to perform Landlord's obligations under
the Lease.

[NO FURTHER TEXT ON THIS PAGE]

4
<PAGE>

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation

By:
----------------------------------
Name:
Title:

[LANDLORD]

By:
----------------------------------

[TENANT]

By:
----------------------------------

5
<PAGE>

STATE OF CALIFORNIA )

) ss.

COUNTY OF )

On , before me, a Notary Public in and for said
state, personally appeared , personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

WITNESS my hand and official seal.

----------------------------------
(SEAL)

6
<PAGE>

STATE OF CALIFORNIA )

) ss.

COUNTY OF )

WITNESS my hand and official seal.

----------------------------------
(SEAL)

7
<PAGE>

STATE OF CALIFORNIA )

) ss.

COUNTY OF )

WITNESS my hand and official seal.

----------------------------------
(SEAL)

8
<PAGE>

EXHIBIT G
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

SIGNAGE EXHIBIT
---------------

(To be provided)
<PAGE>

EXHIBIT H
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center

Building 9
Redwood City, California

Guaranty of Lease

(Intentionally Omitted)
<PAGE>

EXHIBIT I
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

HAZARDOUS MATERIALS DISCLOSURE
------------------------------

Lessor has provided Lessee, and Lessee acknowledges that it has received
and pursuant to Section 17.22(b) of the Lease, reviewed same, a copy of each of
those certain documents entitled: (i) PHASE I, ENVIRONMENTAL SITE ASSESSMENT
PACIFIC SHORES CENTER, REDWOOD CITY, CALIFORNIA, Prepared for: The Jay Paul
Company, San Francisco, California, Prepared by: IRIS ENVIRONMENTAL, Oakland,
California, December 20, 1999, Job No. 99-122A; and (ii) PHASE II, ENVIRONMENTAL
SITE ASSESSMENT, PACIFIC SHORES CENTER, 1000 SEAPORT BOULEVARD, REDWOOD CITY,
CALIFORNIA, Prepared for: The Jay Paul Company, San Francisco, California,
Prepared by: IRIS ENVIRONMENTAL, Oakland, California, January 14, 1999, Job No.
99-122-B

LESSEE

Phone.com, Inc.
A California corporation

By:
---------------------------

---------------------------
(Type or print name)

Its:
---------------------------

By:
---------------------------

---------------------------
(Type or print name)

Its:
---------------------------
<PAGE>

EXHIBIT J
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

NOTICE TO TENANTS AND TRANSFEREES OF
CURRENT OR FUTURE USES OF ADJACENT PORT PROPERTY
------------------------------------------------

Notice is hereby given to all lessees, tenants and transferees of land or
interests in land located within Pacific Shores Center of the presence or
potential future presence of Port related industrial activities on Port property
adjacent to and west of Pacific Shores Center. All recipients of this notice
should be aware of the following facts:

1. The parcel of Port property adjacent to Pacific Shores Center to the
northwest shown on the Exhibit____ attached hereto (the "Port Parcel") is now or
may be developed for Port related maritime and industrial uses similar to those
occupying other properties along the west side of Seaport Boulevard and to the
west of Pacific Shores Center.

2. Such Port related maritime and industrial activities are those which
are permitted by the general industrial zoning of the City of Redwood City and
may include heavy industrial land uses, including uses which involve the
receipt, transport, storage or management of hazardous wastes, aggregates,
cement, gravel and similar materials, including the outdoor storage and handling
of such materials.

3. Pacific Shores Center Limited Partnership, on behalf of itself, its
successors and assigns, has recognized, accepted and approved such uses of the
<PAGE>

Port Parcel subject to the utilization of Best Available Management Practices in
the development and use of the Port Parcel. Best Available Management Practices
are defined on Exhibit _____ attached hereto.

4. Despite the use of Best Available Management Practices on the Port
Parcel by the Port and its lessees and licensees and despite Pacific Shores
Center Limited Partnership's efforts to ensure compatibility between such uses
and those in Pacific Shores Center, it is possible that such uses will cause
emissions into the air of dust or other particulate matter, or noise or odorous
substances which may be offensive to or be perceived as a nuisance by occupants
of Pacific Shores Center.

5. Pursuant to covenants made by Pacific Shores Center Limited
Partnership on behalf of its successors and assigns, tenants and lessees, the
tenants, lessees and transferees of Pacific Shores Center Limited Partnership
have approved and accepted such neighboring uses subject to their utilization of
Best Available Management Practices.

6. Any actions to enjoin the continuation of such uses or to recover any
damages to persons or property related to their operations are subject to a
requirement for prior notice found in recorded covenants by Pacific Shores
Center Limited Partnership. The following language is excerpted from such
covenants:

"In the event that either party hereto believes that the other has failed
to perform any covenant made herein in favor of the other, at least ten
(10) days prior to the commencement of any action to enforce the covenants
hereunder or to recover damages for the breach thereof, that party who
believes that a failure to perform has occurred (the "Complaining Party")
shall give written notice (the "Notice") to the party alleged not to have
performed the covenant (the "Non-Complaining Party") of the specific nature
of the alleged failure and of the intent of the complaining Party to take
action to remedy the breach by the Non-Complaining Party. In the event
that the nature of the alleged failure to perform is such that the same
cannot reasonably be cured within ten (10) days after receipt of the Notice
(the "Notice Period"), the Non-Complaining Party shall not be deemed to be
in violation of its covenants and no action shall be commenced by the
Complaining Party if, within the
<PAGE>

Notice Period, the Non-Complaining Party commences such cure and thereafter
diligently and continuously prosecutes the same to completion within a
reasonable time. Provided, however, that the Complaining Party shall not
be precluded from recovering any actual damages suffered by reason of the
alleged failure to perform prior to or after delivery of the Notice,
whether or not such failure is thereafter cured."
<PAGE>

EXHIBIT K
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

NOTICE TO PACIFIC SHORES TENANTS, LESSEES,
SUCCESSORS, ASSIGNS AND TRANSFEREES REGARDING
CURRENT OR FUTURE USES OF ADJACENT RMC LONESTAR
AND PORT PROPERTY
-----------------

Notice is hereby given to all tenants, lessees, successors, assigns and
transferees of land or interest in land located within the Pacific Shores Center
of the presence or potential future presence of maritime and industrial
activities on RMC Lonestar and Port of Redwood City property west and adjacent
to Pacific Shores Center. Recipients of this notice should be aware of the
following:

1. The RMC Lonestar property and parcels of port property adjacent to and
west of Pacific Shores Center are shown on the map attached to this notice. The
RMC Lonestar and Port properties are now devoted to, or will be developed for,
maritime and industrial uses.

2. These maritime and industrial uses are those which are permitted by the
"Heavy Industry" General Plan designation and general industrial zoning of the
City of Redwood City. These uses include, by way of example and not limitation,
uses involving the receipt, transport, storage, handling, processing or
management of aggregates, cement, concrete, asphalt, soil or other landscaping
materials, recyclable metals and plastics, recyclable concrete and asphalt,
chemicals, petroleum products, hazardous wastes, and
<PAGE>

similar materials, including indoor storage, mixing and handling of these
materials.

3. These uses may cause, on either a regular or intermittent basis,
air emissions, including without limitation, dust and other particles, odors,
vibrations, loud noises, and heavy truck, rail or marine vessel traffic. These
uses may have a visual, aesthetic or other aspects that may be offensive or
perceived as a nuisance by occupants of Pacific Shores Center.
<PAGE>

EXHIBIT L
TO
PACIFIC SHORES CENTER LLC
LEASE
TO
PHONE.COM, INC.
FOR
Pacific Shores Center
Building 9
Redwood City, California

RULES AND REGULATIONS
---------------------

1. Lessee and Lessee's employees shall not in any way obstruct the
sidewalks, entry passages, pedestrian passageways, driveways, entrances and
exits to the Project or the Building, and they shall use the same only as
passageways to and from their respective work areas.

2. Any sash doors, sashes, windows, glass doors, lights and skylights
that reflect or admit light into the Common Area of the Project shall not be
covered or obstructed by the Lessee. Water closets, urinals and wash basins
shall not be used for any purpose other than those for which they were
constructed, and no rubbish, newspapers, food or other substance of any kind
shall be thrown into them. Lessee shall not mark, drive nails, screw or drill
into, paint or in any way deface the exterior walls, roof, foundations, bearing
walls or pillars without the prior written consent of Lessor, which consent may
be withheld in Lessor's sole discretion. The expense of repairing any breakage,
stoppage or damage resulting from a violation of this rule shall be borne by
Lessee.

3. No awning or shade shall be affixed or installed over or in the
windows or the exterior of the Premises except with the consent of Lessor, which
may be withheld in Lessor's discretion.

4. No boring or cutting for wires shall be allowed, except with the
consent of Lessor, which consent may be withheld in Lessor's discretion.

5. Lessee shall not do anything in the Premises, or bring or keep
anything therein, which will in any way increase or tend to increase the risk
<PAGE>

of fire or the rate of fire insurance or which shall conflict with the
regulations of the fire department or the law or with any insurance policy on
the Premises or any part thereof, or with any rules or regulations established
by any administrative body or official having jurisdiction, and it shall not use
any machinery therein, even though its installations may have been permitted,
which may cause any unreasonable noise, jar, or tremor to the floors or walls,
or which by its weight might injure the floors of the Premises.

6. Lessor may reasonably limit weight, size and position of all safes,
fixtures and other equipment used in the Premises. If Lessee shall require extra
heavy equipment, Lessee shall notify Lessor of such fact and shall pay the cost
of structural bracing to accommodate it. All damage done to the Premises or
Project by installing, removing or maintaining extra heavy equipment shall be
repaired at the expense of the Lessee.

7. Lessee and Lessee's officers, agents and employees shall not make nor
permit any loud, unusual or improper noises nor interfere in any way with other
Lessees or those having business with them, nor bring into or keep within the
Project any animal or bird or any bicycle or other vehicle, except such vehicle
as Lessor may from time to time permit.

8. No machinery of any kind will be allowed in the Premises without the
written consent of Lessor. This shall not apply, however, to customary
office equipment or trade fixtures or package handling equipment.

9. All freights must be moved into, within and out of the Project only
during such hours and according to such reasonable regulations as may be posted
from time to time by Lessor.

10. No aerial or satellite dish or similar device shall be erected on the
roof or exterior walls of the Premises, or on the grounds, without in each
instance, the written consent of Lessor. Any aerial installed without such
written consent shall be subject to removal without notice at any time. Lessor
may withhold consent in its sole discretion.

11. All garbage, including wet garbage, refuse or trash shall be placed by
the Lessee in the receptacles appropriate for that purpose and only at locations
prescribed by the Lessor.
<PAGE>

12. Lessee shall not burn any trash or garbage at any time in or about the
Premises or any area of the Project.

13. Lessee shall observe all security regulations issued by the Lessor and
comply with instructions and/or directions of the duly authorized security
personnel for the protection of the Project and all tenants therein.

14. Any requirements of the Lessee will be considered only upon written
application to Lessor at Lessor's address set forth in the Lease.

15. No waiver of any rule or regulation by Lessor shall be effective
unless expressed in writing and signed by Lessor or its authorized agent.

16. Lessor reserves the right to exclude or expel from the Project any
person who, in the judgment of the Lessor, is intoxicated or under the influence
of liquor or drugs, or who shall in any manner do any act in violation of the
law or the rules and regulations of the Project.

17. Lessor reserves the right at any time to change or rescind any one or
more of these rules and regulations or make such other and further reasonable
rules and regulations as in Lessor's judgment may from time to time be necessary
for the operation, management, safety, care, and cleanliness of the Project and
the Premises, and for the preservation of good order therein, as well as for the
convenience of other occupants and tenants of the Project. Lessor shall not be
responsible to Lessee or the any other person for the non-observance or
violation of the rules and regulations by any other tenant or person. Lessee
shall be deemed to have read these rules and have agreed to abide by them as a
condition to its occupancy of the Premises.

18. Lessee shall abide by any additional rules or regulations which are
ordered or requested by any governmental or military authority.

19. In the event of any conflict between these rules and regulations, or
any further or modified rules and regulations from time to time issued by
Lessor, and the Lease provisions, the Lease provisions shall govern and control.

20. Lessor specifically reserves to itself or to any person or firm it
selects, (i) the right to place in and upon the Project, coin-operated machines
for the
<PAGE>

sale of cigarettes, candy and other merchandise or service, and (ii) the revenue
resulting therefrom.
<PAGE>

EXHIBIT M
---------

ESTIMATED TAX ASSESSMENT FOR PACIFIC SHORES
-------------------------------------------

$12,000,000 @ 6% with 15-year amortization divided by 1,641,534 SF
= $0.06 (1)

For Phone.com:
--------------
279,584 x $0.06 = $16,775 per month

-------------------------------------------------------
(1) Interest rate subject to change.

1
<PAGE>

EXHIBIT N
---------

EARLY CONSTRUCTION ITEMS
------------------------

* Shell Fire Protection
* Perimeter Stairs
* Fireproofing of Steel
* Elevator Pits
* Elevator Penthouse Structure