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                                                                    EXHIBIT 10.5

                                      LEASE

THIS INDENTURE is made as of the 1st day of February, 1998.

BETWEEN:

                P.K. PROJECTS LTD., a British Columbia Company with an office at
                1203 - 20800 Westminster Highway, Richmond, B.C., V6V 2W3

                (hereinafter called the "Landlord")

                                                               OF THE FIRST PART

AND:

                INTRACEL CORPORATION, a company incorporated under the laws of
                the State of Washington, U.S.A., with an office at 1871 NW
                Gilman Boulevard, Issaqua, Washington, 98027

                (hereinafter called the "Tenant")

                                                              OF THE SECOND PART

1. LEASED PREMISES

1.1 WITNESSETH that in consideration of the rents, covenants, and agreements
hereinafter reserved and contained on the part of the Tenant to be paid,
observed and performed, the Landlord does demise and lease unto the Tenant the
premises known as Units 1123, 1128 and 1133 - 13351 Commerce Parkway, Richmond,
B.C. (hereinafter called the "Leased Premises") being all that portion of a
Building as shown outlined in dark outline on the Plan attached hereto as
Schedule "A" and containing a Rentable Area (hereinafter called the "Tenant's
Rentable Area") deemed and agreed by the parties to be 6,541 square feet and
being situate on the lands and premises owned by the Landlord at 13351 Commerce
Parkway, in the City of Richmond, in the Province of British Columbia, described
as:

                     PID: 023-310-006
                     Lot 1, Section 5, Block 4 North, Range 5 West,
                     New Westminster District, Plan LMP26739

                     (hereinafter called the "Lands")


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2. TERM

2.1 To have and to hold the Leased Premises for and during the term (hereinafter
called the "Term") of five (5) years to be computed from the 1st day of
February, 1998 and from thenceforth next ensuing and to be fully complete and
ended on the 31st day of January, 2003.

3. BASIC RENT

3.1 Yielding and paying therefor during the Term unto the Landlord, as basic
rent, the sum of SIXTY-TWO THOUSAND ONE HUNDRED THIRTY-NINE DOLLARS AND FIFTY
CENTS ($62,139.50) of lawful money of Canada to be paid in advance in equal
monthly installments of FIVE THOUSAND ONE HUNDRED SEVENTY-EIGHT DOLLARS AND
TWENTY-NINE CENTS ($5,178.29) on the first day of each and every month in each
and every year during the Term, commencing on the first day of February, 1998.
If the Term commences on any day other than the first or ends on any day other
than the last day of a month, rent for the fractions of the month at the
commencement and at the end of the Term shall be adjusted pro rata. The Landlord
acknowledges having received from the Tenant the sum of FIFTEEN THOUSAND FOUR
HUNDRED FIFTY-FIVE DOLLARS AND EIGHTY-FOUR CENTS ($15,455.84) to be applied
towards the first and last months' rent hereunder.

3.2 The parties agree that the commencement date of February 1, 1998 shall be
delayed, if necessary, until the Landlord substantially completes construction
of the Leased Premises. If for any reason the Landlord is unable to give
possession of the Leased Premises to the Tenant on February 1, 1998, then:

        (a)     the Tenant shall take possession of the Leased Premises when the
                Landlord delivers possession of the Leased Premises to the
                Tenant such date to be not later than March 1, 1998 (herein
                referred to as the "Outside Date");

        (b)     the Lease shall not be void or voidable nor shall the Landlord
                be liable for any claims of the Tenant resulting from any such
                delay in possession;

        (c)     the Term shall commence on the date the Landlord makes the
                Leased Premises available for occupancy;

        (d)     no rent shall be payable by the Tenant until the date possession
                of the Leased Premises is delivered to the Tenant;

        (e)     if possession of the Leased Premises is not delivered to the
                Tenant by on or before the Outside Date, then after such date
                either party may terminate this Lease on written notice to the
                other and the Landlord shall return any deposits paid to the
                Tenant.


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                                       -3-



3.3 The Landlord agrees to provide the Leased Premises to the Tenant basic
rent-free during the first three (3) months of the Term (the "Abatement
Months"). The Tenant shall still be responsible for all Direct Costs, its
Proportionate Share of Operating Expenses and all other additional rent over and
above the basic rent set out in clause 3.1 during the Abatement Months. The
entire basic rent otherwise due and payable for the Abatement Months shall
become immediately due and payable upon the occurrence of an event of default by
the Tenant that is not cured within the time period set out in Clause 22 of this
Lease.

4. DEFINITIONS

4.1 In this Lease:

        (a)     "Building" means the building in which the Leased Premises are
                situate;

        (b)     "Common Areas" means all parts of the Lands and the Building
                that are not comprised in premises leased or set aside or
                intended by the Landlord to be leased to tenants;

        (c)     "Direct Costs" means:

                (i)     all costs and expenses incurred by or levied on the
                        Landlord in connection with the Landlord performing on
                        behalf of the Tenant or enforcing any covenant or
                        agreement of the Tenant hereunder, including without
                        limitation, solicitors' costs and fees calculated on a
                        solicitor-client basis, and

                (ii)    all amounts stated by any clause of this Lease to be
                        included in or collectible by the Landlord as Direct
                        Costs;

        (d)     "levied" means levied, imposed, charged or assessed;

        (e)     "Operating Expenses" means all expenses chargeable against
                income in connection with the operation, maintenance and repair
                of the Building and the Lands, including without limitation, the
                following:

                (i)     all costs and expenses from time to time incurred by or
                        levied on the Landlord in respect of repairing,
                        maintaining, cleaning, heating, lighting,
                        air-conditioning and ventilating the Building and the
                        Lands and any fixtures and appurtenances thereof and any
                        improvements thereto, and;

                (ii)    all premiums from time to time paid by the Landlord for
                        fire, casualty, liability, loss of rental revenue, and
                        other insurance in respect of the Building, the Lands
                        and all fixtures and appurtenances thereof and
                        improvements thereto; and


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                (iii)   all costs and expenses from time to time incurred by or
                        levied on the Landlord in respect of janitorial services
                        and garbage disposal for the Building and the Lands; and

                (iv)    all taxes from time to time levied by any taxing
                        authority on the Building and the Lands or either of
                        them or on the Landlord in respect of the Building and
                        the Lands or either of them; and

                (v)     all Utility Charges from time to time levied on the
                        Building and the Lands or either of them or on the
                        Landlord in respect of the Building and the Lands or
                        either of them; and

                (vi)    an administration fee equal to 5% of the basic rent
                        paid pursuant to Clause 3.1;

                but not interest on debt, income, capital gains or corporate
                taxes of the Landlord, costs for which the Landlord is
                reimbursed by proceeds of insurance, or amounts charged to the
                Tenant under this Lease or to other tenants of the Building
                under their respective leases as Tenant's Taxes, Tenant's
                Utility Charges or Direct Costs;

        (f)     "Proportionate Share" means a fraction which has as the
                numerator the Tenant's Rentable Area and as the denominator the
                Total Rentable Area of the Building;

        (g)     "Taxes" means taxes, rates, duties, licenses, levies, fees and
                the costs of all works undertaken as local improvements by an
                Taxing Authority and levied on the owners or occupiers of lands
                benefiting or deemed to benefit from such works;

        (h)     "Taxing Authority" means any school, municipal, regional,
                provincial, federal, parliamentary, or other governmental or
                statutory body, corporation or authority;

        (i)     "Tenant's Taxes" means all taxes levied by an taxing authority
                on the Landlord or the Tenant in respect of the Leased Premises,
                in respect of the business or profession of the Tenant or in
                respect of improvements, fixtures, machinery, chattels or
                equipment brought onto or installed in the Leased Premises by
                the Tenant or at the request of the Tenant, and whether or not
                such taxes are included by the Taxing Authority in the Taxes
                included in Operating Expenses;

        (j)     "Tenant's Utility Charges" means all Utility Charges levied
                separately against the Leased Premises or on the Tenant or the
                Landlord in respect of the Leased Premises;

        (k)     "Total Rentable Area" of the Building means the total of the
                rentable area of all premises in the Building (including the
                Leased Premises) leased or set aside or intended by the Landlord
                to be leased to tenants;


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                                       -5-

        (1)     "Utility Charges" means all charges for electricity, heat,
                light, power, gas, oil, water, sewer or telephone provided to or
                made available upon the Building and the Lands or either of
                them.

5. NET LEASE

5.1 The Tenant acknowledges and agrees that it is intended that this Lease shall
be completely Net Lease for the Landlord, except as expressly hereinafter set
out, that the Landlord shall not be responsible during the Term for any costs,
taxes, charges, expenses or outlays of any nature whatsoever arising from or
relating to the Leased Premises or the contents thereof or the Common Areas, and
the Tenant shall pay all charges, impositions, costs and expenses of every
nature and kind relating to the Building and the Lands (or either or them) and
not directly levied on any tenant of the Building and the Tenant covenants with
the Landlord accordingly.

6. TENANT'S COVENANTS

6.1 The Tenant covenants with the Landlord as follows:

        (a)     to pay basic rent as set out in Clause 3.1;

        (b)     to pay immediately that they become due the Tenant's Taxes and
                the Tenant's Utility Charges, and if at any time for any reason
                during the Term of this Lease the Landlord pays any of the
                foregoing then a sum equal to the amount so paid shall be
                included in Direct Costs and paid to the Landlord immediately
                upon demand;

        (c)     to pay immediately on demand by the Landlord as additional rent
                all Direct Costs;

        (d)     to pay as additional rent the Tenant's Proportionate Share of
                Operating Expenses. The Tenant's Proportionate Share of
                Operating Expenses shall be paid monthly in accordance with the
                reasonable forward estimates thereof made by the Landlord and
                shall be adjusted at least once (or more often at the discretion
                of the Landlord) in each year during the Term, on the basis of
                actual Operating Expenses experienced during the period to which
                the adjustments relate. The certificate of a chartered
                accountant appointed by the Landlord shall, in the event of
                dispute, be conclusive and binding on the Landlord and the
                Tenant as to any amounts payable under this paragraph and the
                cost of obtaining such certificate shall be included in Direct
                Costs and be borne by the Tenant;

        (e)     to pay as additional rent an amount equal to any and all Goods
                and Services Taxes, it being the intention of the parties that
                the Landlord shall be fully reimbursed by the Tenant with
                respect to any and all Goods and Services Taxes at the full rate
                applicable from time to time in respect thereof. The amount of
                the Goods and Services Taxes so payable by the Tenant shall be
                calculated by the


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                                       -6-

                Landlord in accordance with the applicable legislation and shall
                be paid by the Tenant to the Landlord at the same time as
                amounts to which such Goods and Services Taxes apply are payable
                to the Landlord under the terms of this Lease. For the purposes
                of this section, "Goods and Services Taxes", means and includes
                any and all goods and services taxes, sales taxes, value added
                taxes, business transfer taxes, or any other taxes imposed on
                the Landlord under this Lease or the rental of the Leased
                Premises or the provision of any goods services or utilities,
                whatsoever by the Landlord to the Tenant under this Lease,
                whether characterized as a goods and services tax, sales tax,
                value added tax, business transfer tax, or otherwise;

        (f)     to repair, and at the Tenant's sole cost during the whole of the
                Term, to keep and maintain the Leased Premises and all fixtures,
                fittings and improvements thereto in good working order and
                first class condition including periodic painting and decoration
                as determined by the Landlord and to make all needed
                maintenance, repairs and replacements thereto with due diligence
                and dispatch reasonable wear and tear only excepted; and the
                Landlord may enter and view the state of repair, and that the
                Tenant will repair according to notice but failure of the
                Landlord to give notice shall not relieve the Tenant from its
                obligation to repair;

        (g)     if any part of the Building (including the Leased Premises), the
                Common Areas or any fixtures, fittings or improvements thereon
                or thereto get out of repair or become stopped up, unusable
                damaged or destroyed through the negligence, carelessness or
                misuse of the Tenant, its servants, agents, employees, invitees
                or any one permitted by the Tenant to be in the Building or on
                the Common Areas the expense of the necessary repairs,
                replacements or alterations shall be borne by the Tenant and
                included in Direct Costs;

        (h)     not to assign or sublet in whole or in part without first
                notifying the Landlord in writing of the intention to assign or
                sublet and the date such assignment or subletting is to take
                effect and obtaining the Landlord's prior written consent, such
                consent not to be unreasonably withheld to a financially
                responsible and reasonable person and provided always that such
                consent may be arbitrarily withheld where the subletting is to
                be for only a portion of the Leased Premises, or where the use
                of the Leased Premises by the assignee or sub-lessee will differ
                from the use authorized pursuant to this Lease. The Tenant shall
                pay the sum of FIVE HUNDRED DOLLARS ($500.00) plus G.S.T. to the
                Landlord with each request for consent which sum covers the
                Landlord's costs for considering, preparing and consenting to
                the Assignment of Lease;

        (i)     to comply at its own expense with all provisions of law
                including, without limiting the generality of the foregoing,
                federal and provincial legislative enactments, building by-laws
                and any other governmental or municipal regulations which relate
                to the partitioning, equipment, operation and use of the Leased
                Premises, and to


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                the making of any repairs, replacements, alterations, additions,
                or improvements of or to the Leased Premises;

        (j)     not to do or suffer any waste or damage, disfiguration or injury
                to the Leased Premises, the Building or the Common Areas or the
                fixtures, fittings and improvements thereto and not to permit or
                suffer any overloading of the floors of the Leased Premises or
                the Building; and to keep the Leased Premises and Common Areas
                in a neat and tidy condition;

        (k)     to indemnify and save harmless the Landlord from and against any
                and all actions, claims, costs, expenses, damages, losses or
                fines incurred or suffered by the Landlord by reason of:

                (i)     any breach, violation, non-observance or non-
                        performance by the Tenant of any covenant, agreement or
                        provision of this Lease;

                (ii)    damage or injury to persons or property arising from any
                        act or omission of the Tenant or any assignee,
                        sub-tenant, agent, contractor, employee, invitee or
                        licensee of the Tenant;

                (iii)   the Landlord observing, performing, exercising or
                        enforcing any covenant, agreement, right or remedy of
                        the Landlord hereunder, all costs and expenses incurred
                        by or levied on the Landlord in connection with the
                        Landlord performing on behalf of the Tenant any covenant
                        of the Tenant hereunder or in connection with the
                        Landlord enforcing any term, condition agreement or
                        provision of this Lease, and without in any way limiting
                        the generality of the foregoing including solicitors'
                        costs and fees calculated on a solicitor and own client
                        basis;

        (1)     not to make to, or erect in the Leased Premises any alterations,
                additions, decorations or improvements without submitting
                drawings and specifications to the Landlord and obtaining the
                Landlord's prior written consent in each instance not to be
                unreasonably withheld. Any work performed in the Leased Premises
                by contractors engaged by the Tenant shall be subject to all
                conditions which the Landlord may impose; and the Tenant
                covenants to prosecute such work to completion with reasonable
                diligence; provided nevertheless that the Landlord may at its
                option require that the Landlord's contractors be engaged for
                any mechanical or electrical work;

        (m)     not to suffer or permit during the Term any builders' liens or
                other liens for work, labour, services or material ordered by
                the Tenant or for the cost of which the Tenant may be in any way
                obligated, or any conditional sales agreements or chattel
                mortgages to attach to the Leased Premises or to the Building,
                the Common Areas or the Lands and that whenever and so often as
                any such liens or


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                claims therefor or conditional sales agreements or chattel
                mortgages shall be registered, the Tenant shall immediately
                discharge the same; to allow the Landlord to post and keep
                posted on the Leased Premises any notice which the Landlord may
                wish to post under the provisions of the Builders' Lien Act;

        (n)     to restore immediately, and with glass of the same colour and
                quality, any glass within, forming part of or bounding the
                Leased Premises that is damaged or broken during the Term;

        (o)     not to paint, display, inscribe, place or affix any sign,
                fixture, advertisement, notice, lettering or direction on any
                part of the Common Areas or the outside of the Building or
                Leased Premises or on windows of the Building or that are
                visible from the outside of the Building without the prior
                written consent of the Landlord, which consent will not be
                unreasonably withheld and to comply with the signage
                specifications attached as Schedule "B" hereto;

        (p)     if required to do so by the Landlord to register this Lease
                forthwith at the Tenant's expense in the Land Title Office for
                the area in which the Leased Premises are situate. Such
                registration to be in the form specified by the Landlord. Should
                the Tenant wish to register this Lease, it may only do so in the
                form of a Short Form of Lease registration which shall not
                contain any reference to rent payable under the Lease. The costs
                of such registration shall all be borne by the Tenant, which
                costs shall include the sum of TWO HUNDRED FIFTY DOLLARS
                ($250.00) plus G.S.T. payable to the Landlord for reviewing,
                approving and executing the necessary Land Title Office
                documents. Upon the expiry or earlier termination of this Lease,
                the Tenant will discharge such registration at its expense and
                provide discharge particulars to the Landlord;

        (q)     at any time and from time to time upon not less than ten (10)
                days prior notice, to execute and deliver to the Landlord or
                such other person or corporation that the Landlord directs, a
                written statement certifying that this Lease is in full force
                and effect and unmodified (or if modified, specifying the
                modifications), the amount of the annual rental being paid
                hereunder, whether or not any prepayments have been made
                hereunder, and if so details thereof, the dates to which other
                levies or charges hereunder have been paid, and whether or not
                there is any existing default on the part of the Landlord of
                which the Tenant has notice;

        (r)     to occupy and permit to be occupied only those parking spaces
                from time to time designated for the Tenant's use by the
                Landlord;

        (s)     not to employ more employees in the Leased Premises than are
                from time to time authorized or permitted by the relevant
                governmental acts, statutes, regulations and other authorities
                having regard to washroom, lunchroom and other facilities
                presently available in or to the Leased Premises and having
                regard also to any


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                                       -9-

                other relevant working conditions, provided that if the Tenant
                wishes to employ more employees in the Leased Premises than are
                from time to time so authorized or permitted then subject to the
                provisions of this Lease, the Tenant may, at his sole expense,
                install additional washroom, lunchroom or other facilities in
                the Leased Premises or otherwise alter the working conditions in
                the Leased Premises to permit such increased number of
                employees;

        (t)     not to install or use any equipment which will exceed or
                overload the capacity of any utility facilities on the Leased
                Premises or the Building or Common Areas;

        (u)     to notify the Landlord immediately that the Tenant becomes aware
                of any fire or accident in the Leased Premises or any damage to
                or malfunctioning of any heating, electrical, plumbing,
                mechanical or ventilating system in the Building or any damage
                to the foundations, structure, roof, exterior walls or
                supporting walls of the Building;

        (v)     to promptly and strictly comply, and cause any person for whom
                it is in law responsible to comply, with all environmental laws
                regarding the use and occupancy of the Leased Premises under or
                pursuant to this Lease, including without limitation obtaining
                all required permits or other authorizations;

        (w)     to promptly comply with all Tenant rules and regulations
                relating to the Building imposed by the Landlord for the smooth
                and efficient operation of the Building (a copy of the current
                rules is attached hereto as Schedule "C");

        (x)     if the Landlord so requests, to pay all rent obligations
                hereunder by way of a series of post-dated cheques delivered to
                the Landlord or by way of a pre-authorized debit system;

        (y)     to register with the Registrar of Companies in British Columbia
                as an extra-provincial company by on or before the commencement
                date of the Lease.

6.2 The Tenant shall be responsible for obtaining its business licence and all
permits and approvals required in connection with its leasehold improvements or
other work not included in the Landlord's responsibility. The Tenant shall also
be responsible for the installation of power and distribution to the operation
and maintenance of any special equipment or lighting required by its occupancy,
including but not limited to telephone and communication facilities.

7. LANDLORD'S COVENANTS

7.1 Subject to the terms and provisions of this Lease, the Landlord covenants
with the Tenant as follows:


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                                      -10-

        (a)     that provided the Tenant pays the rent hereby reserved, and
                observes and performs the covenants and agreements herein
                contained and on the part of the Tenant to be observed and
                performed, the Tenant shall and may peaceably possess and enjoy
                the Leased Premises for the Term hereby granted without
                interruption or disturbance from the Landlord, or any persons
                lawfully claiming by, through or under the Landlord;

        (b)     to repair and maintain the foundations, structure, roof and
                exterior walls of the Building, the costs of which shall be
                borne by the Tenant and paid as part of Operating Expenses;

        (c)     to permit the Tenant and its employees and all persons lawfully
                requiring communication with them to have the use in common with
                others having a like right of the Common Areas;

        (d)     to provide to the Tenant the exclusive use of thirteen (13)
                reserved parking stalls and two (2) loading bays, which stalls
                and loading bays shall be provided free of charge during the
                Term.

7.2 The Landlord agrees to provide the following tenant improvements to the
Leased Premises by, on or before the commencement date:

        (a)     partition wall separating the showroom area of the Leased
                Premises from the high ceiling warehouse area of the Leased
                Premises, partition wall to be installed along entire width of
                Units 1123 and 1128; two double personnel doors to be installed
                in the partition wall;

        (b)     T-Bar ceiling to entire showroom area, ceiling tiles to be
                non-shedding surface finish;

        (c)     air-conditioning for showroom portion of all three units;

        (d)     vinyl tile to be installed to the showroom portion of all three
                units;

        (e)     220 volt power to the warehouse area of the Leased Premises; and

        (f)     demising wall separating Unit 1133 from the other two units and
                a double door to be installed near the front of the unit for
                access.

8. LIMITATION OF LANDLORD'S COVENANTS

8.1 Unless negligent, the Landlord shall not be liable for any direct, indirect
or consequential loss, damage, injury or expense caused by the Tenant, its
agents, employees, invitees and licensees or its or their property by or arising
from:


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                                      -11-

        (a)     fire, explosion, falling plaster, gas, electricity or seeping or
                leaking water; or

        (b)     the interruption for any reason whatever, of any service
                facility or utility provided by the Landlord;

        (c)     the Landlord observing, performing, exercising or enforcing any
                covenant, agreement, right or remedy of the Landlord;

        (d)     any other cause beyond the reasonable control of the Landlord.

8.2 The Landlord does not warrant that any service or facility provided by the
Landlord hereunder will be free from interruptions caused or required by
maintenance, repairs, renewals, modifications, strikes, riots, insurrections,
labour controversies, force majeure, Acts of God or other cause or causes beyond
the Landlord's reasonable control. No such interruption shall render the
Landlord liable in damages to the Tenant, nor relieve the Tenant from its
obligations under this Lease, provided that the Landlord shall without delay
take all reasonable and practical steps within its power to remove the cause of
such interruption.

9. INSURANCE

9.1 The Landlord covenants to effect and maintain insurance of the Building and
the Lands, excluding all tenants' fixtures, fittings, machinery, chattels,
equipment and improvements for insurable risks against which and in amounts for
which a prudent Landlord would protect itself.

9.2 The Tenant covenants to effect and maintain in force during the Term in the
names of the Tenant, the Landlord and the Landlord's Mortgagees as their
respective interests may appear insurances in such forms and amounts and with
carriers and insuring such risks as the Landlord may from time to time
reasonably require, including, without limitation, the following:

        (a)     fire and extended coverage insurance on the Tenant's fixtures,
                fittings, machinery, chattels, equipment and improvements in an
                amount of not less than the full replacement costs thereof;

        (b)     property damage and public liability insurance including
                personal liability, contractual liability, tenant's legal
                liability, non-owned automobile liability, lease agreement
                contractual coverage and owners' and contractors' protective
                insurance coverage with respect to the Leased Premises, and the
                Tenant's use of the Common Areas and facilities, coverage to
                include the business operations conducted by the Tenant and any
                other person on the Leased Premises, and such policies to be
                written on a comprehensive basis with limits of not less than
                TWO MILLION DOLLARS ($2,000,000.00) per occurrence.


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                                      -12-

9.3 With respect to all policies of insurance effected by the Tenant hereunder,
the Tenant shall obtain from the insurers undertakings to notify the Landlord in
writing at least thirty (30) days prior to any material change or cancellation
thereof. The Tenant shall furnish the Landlord certified copies of all such
policies and shall provide written evidence of the continuation of such policies
not less than ten (10) days prior to their expected expiry dates. The cost or
premium for each and every such policy shall be paid by the Tenant. The Tenant
agrees that if the Tenant fails to take out or keep in force such insurance the
Landlord shall have the right to do so, without however imposing any obligation
on the Landlord to do so, and to pay the premiums therefor, and in such event
the amount paid as premiums shall be included as Direct Costs and paid to the
Landlord immediately on demand.

9.4 The Tenant covenants not to do or omit or permit to be done or omitted upon
the Leased Premises or the Common Areas anything whereby any policy of insurance
effected by the Landlord or the Tenant pursuant to this Lease may be
invalidated, or the coverage thereunder reduced, and will immediately upon
notice from the Landlord remedy the condition giving rise to the invalidation or
threatened invalidation or reduction in coverage and in default the Landlord may
at its option either cancel this Lease or enter the Leased Premises and remedy
the condition, and the costs occasioned thereby shall be included in Direct
Costs and paid to the Landlord immediately on demand.

9.5 If the Tenant does or omits or permits to be done or omitted upon the Leased
Premises or the Common Areas anything whereby the premiums for any insurance
carried by the Landlord with respect to the Building or the Lands are increased,
the amount of such increase shall be included in Direct Costs and paid to the
Landlord immediately on demand from time to time during the Term.

10. USE OF LEASED PREMISES

10.1 The Tenant covenants to use the Leased Premises solely for the purpose of
conducting business of the manufacture, assembly and distribution of medical
equipment and related business activities and not to use or permit the use of
the Leased Premises for any other business or purpose or by any persons other
than the Tenant, its employees and invitees.

11. OFFENSIVE TRADE ETC.

11.1 Notwithstanding the generality of Clause 10, the Tenant covenants not to
carry on or permit to be carried on in the Leased Premises any noisome or
offensive trade or business or any acts or practices which may injure the Leased
Premises, or the Building or the Common Areas or which may be a nuisance,
disturbance or menace to the Landlord or other tenants or occupants of the
Building and not to allow odours to escape from the Leased Premises which, in
the opinion of the Landlord, are offensive.


<PAGE>   13
                                      -13-

12. ACCESS TO LEASED PREMISES TO REPAIR ETC.

12.1 The Landlord, its agents, employees and contractors, with material and
equipment, shall have the right at all times to enter on the Leased Premises to
effect repairs, alterations, improvements or additions to the Leased Premises,
the Building and the Lands or any of them or to preserve any of them from injury
or damage, and no such entry or work shall constitute an eviction of the Tenant
in whole or in part and the rent reserved shall not abate while such work is
being carried out.

13. LANDLORD MAY SHOW LEASED PREMISES

13.1 The Landlord or its agents shall have the right at all reasonable times to
enter the Leased Premises to examine them and to show them to prospective
purchasers, lessees, or mortgagees and during the six months prior to the
expiration of the Term may place on the Leased Premises the usual notices to let
or for sale which notices the Tenant shall permit to remain thereon without
molestation.

14. LANDLORD MAY ENTER FORCIBLY

14.1 If the Tenant shall not be personally present to open and permit entry to
the Leased Premises at any time, when for any reason an entry therein shall be
necessary or permissible pursuant to Clauses 12 or 13, or any other clause of
this Lease, the Landlord, its agents, employees or contractors may enter the
Leased Premises by a master key or forcibly without rendering the Landlord or
such agents, employees or contractors liable therefor and without in any manner
affecting the obligations or covenants of the Tenant herein, and the Tenant
shall not be entitled to compensation for any inconvenience, nuisance or
discomfort or for any damage or injury to property or persons in the Leased
Premises occasioned by any such entry or by any work done in connection with
such entry.

15. SURRENDER OF LEASED PREMISES

15.1 At the end or sooner determination of the Term, the Tenant shall surrender
and yield up to the Landlord the Leased Premises in the same state of repair as
they were at the commencement of the Term, reasonable wear and tear only
excepted.

16. REMOVAL OF FIXTURES

16.1 All alterations, additions, decorations and improvements made by the Tenant
to the Leased Premises, other than the Tenant's trade fixtures, shall
immediately become the property of the Landlord without compensation therefor to
the Tenant and shall not be removed from the Leased Premises either during or at
the end or sooner determination of the Term except that:

        (a)     the Tenant may, if not in default, remove its trade fixtures;
                and


<PAGE>   14
                                      -14-

        (b)     the Tenant shall, at the end or sooner determination of the
                Term, remove such of the trade fixtures, alterations, additions,
                decorations and improvements as the Landlord may require; and

        (c)     in the case of every such removal, the Tenant shall repair any
                damage to the Leased Premises and the Common Areas caused by the
                installation and removal of any such trade fixtures,
                alterations, additions, decorations and improvements, and the
                cost of all such removals and repairs shall be borne by the
                Tenant.

16.2 If the Tenant does not remove as requested by the Landlord under 
Clause 16.1(b), then the Landlord may, but shall not be obliged to, remove such
items and the Tenant shall pay on demand the Landlord's costs of removal plus an
administration charge of twenty per cent (20%) of the cost of removal.

16.3 The Tenant shall not, without the prior written consent of the Landlord,
mortgage, charge or transfer any of its trade fixtures, alterations, additions,
decorations and improvements, and any purported mortgage, charge or transfer of
the said items without the prior written consent of the Landlord shall be of no
effect against the Landlord.

17. CONDITION OF LEASED PREMISES

17.1 The Tenant agrees that it has leased the Leased Premises after examining
them and that they are at the date of this Lease in a good state of repair and
suitable for the intended use and business of the Tenant.

18. NO REPRESENTATIONS

18.1 The Tenant agrees that no representations, warranties or conditions have
been made other than those expressed herein, and that no agreement collateral
hereto shall be binding upon the Landlord unless in writing and signed on behalf
of the Landlord.

19. SUBORDINATION

19.1 This Lease and all of the rights of the Tenant hereunder are, and shall at
all times be, subject and subordinate to any and all mortgages, trust deeds and
debentures, now or hereafter in force or registered against the Lands and
improvements thereto, and all renewals, extensions and modifications thereof and
all advances of money made thereunder. The Tenant covenants to execute in
registrable form immediately on request from time to time, any assurances that
the Landlord may require to confirm this subordination and will if requested by
the Landlord attorn to the holder of any such mortgages, trust deeds and
debentures.

20. DAMAGE OR DESTRUCTION

20.1 If the Leased Premises are damaged by fire or other casualty then:


<PAGE>   15
                                      -15-

        (a)     the basic rent under Clause 3 (but not sums payable hereunder as
                additional rent) shall be abated in whole or in part in the
                proportion that the area of the untenantable or non-useable
                portion of the Leased Premises is to the Tenant's Rentable Area
                until such damage is repaired provided that there shall be no
                abatement for time required to repair or replace the Tenant's
                trade fixtures or the alterations, additions, decorations and
                improvements made to the Leased Premises by the Tenant which is
                in excess of the time required to make other necessary repairs
                or replacements;

        (b)     subject to the provisions of Clause 21, the damage to the Leased
                Premises shall be repaired by the Landlord with reasonable
                diligence but the cost of the repairs and replacements of the
                Tenant's trade fixtures and of the alterations, additions,
                decorations and improvements made to the Leased Premises by the
                Tenant shall be borne by the Tenant.

21. DESTRUCTION OF LEASED PREMISES OR BUILDING

21.1 If more than thirty per cent (30%) of the Leased Premises and the Building,
or either of them, are so damaged by fire or other casualty that the Landlord
decides not to restore them or is unable to restore them within one hundred
eighty (180) days from the date of damage, the Landlord shall within forty-five
(45) days after the fire or other casualty give to the Tenant a notice in
writing of such decision, and thereupon the Term of this Lease shall end, and
the Tenant shall vacate the Leased Premises and surrender them to the Landlord,
but if the Leased Premises are untenantable during such period the Tenant's
liability for rent shall cease as of the day following the fire or other
casualty.

22. DEFAULT OF TENANT

22.1 If and whenever the rent hereby reserved or any part thereof shall not be
paid on the day appointed for payment thereof, whether lawfully demanded or not,
or in case of breach of non-observance or non-performance of any of the
covenants, agreements, provisos and conditions on the part of the Tenant to be
kept, observed or performed, or in case the Leased Premises shall be vacated or
remain unoccupied for fifteen (15) days or in case the Term shall be taken in
execution or attachment for any cause whatever, then and in every such case, it
shall be lawful for the Landlord thereafter to enter into and upon the Leased
Premises or any part thereof in the name of the whole and the same to have
again, repossess and enjoy as of its former estate, anything in this Lease
contained to the contrary notwithstanding other than the proviso to this Clause
22. Provided that the Landlord shall not at any time have the right to re-enter
and forfeit this Lease by reason of the Tenant's default in payment of the rent
reserved by this Lease or by reason of the failure of the Tenant to comply with
any of its obligations under this Lease, unless and until the Landlord shall
have given to the Tenant at least five (5) days written notice of its intention
so to do and setting forth the default complained of and the Tenant shall have
the right during such five (5) days to cure any such default in payment of rent
or cure any default of the Tenant's obligations, as the case may be.


<PAGE>   16
                                      -16-

23. BANKRUPTCY

23.1 In case, without the written consent of the Landlord, the Leased Premises
or any part thereof shall be used by any other person than the Tenant or for any
other purpose than that for which the same were let or in case the Term or any
of the goods and chattels of the Tenant shall be at any time seized in execution
or attachment by a creditor of the Tenant or if the Tenant or the indemnitor of
the Tenant's obligations under this Lease makes any assignment for the benefit
of creditors or any bulk sale or becomes bankrupt or insolvent or takes the
benefit of any Act now or hereafter in force for bankrupt or insolvent debtors,
or, if the Tenant is a corporation and any order shall be made for the
winding-up of the Tenant, or other termination of the corporate existence of the
Tenant then in any such case this Lease shall at the option of the Landlord
cease and terminate and the Term shall immediately become forfeited and void and
the then current month's rent and the next ensuing three months rent shall
immediately become due and be paid and the Landlord may re-enter and take
possession of the Leased Premises as though the Tenant or other occupant or
occupants of the Leased Premises was or were holding over after the expiration
of the Term without any right whatever, and in such event Clause 25 shall not
apply.

24. DISTRESS

24.1 The Landlord shall have the right to distrain for rent in arrears against
the goods and chattels of the Tenant and may use such force as may be necessary
for that purpose and for gaining admittance to the Leased Premises without being
liable to any action in respect thereof, or for any loss or damage occasioned
thereby and the Tenant hereby expressly releases the Landlord, its employees and
agents for all actions, proceedings, claims or demands whatsoever for or on
account of or in respect of any forcible entry or any loss or damage sustained
by the Tenant in connection therewith. The Tenant hereby waives and renounces
the benefit of any present or future statute taking away or limiting the
Landlord's right of distress, and covenants and agrees that notwithstanding any
such statute none of the goods and chattels of the Tenant on the Leased Premises
at any time during the Term shall be exempt from levy by distress for rent in
arrears.

25. RIGHT OF RE-ENTRY

25.1 The Tenant covenants and agrees that on the Landlord's becoming entitled to
re-enter upon the Leased Premises under any of the provisions of this Lease,
the Landlord in addition to all other rights shall have the right to enter the
Leased Premises as the agent of the Tenant either by force or otherwise, without
being liable for any prosecution therefor and to relet the Leased Premises as
the agent of the Tenant, and to receive the rent therefor, and as the agent of
the Tenant to take possession of any furniture or other property on the Leased
Premises and to sell the same at public or private sale without notice and to
apply the proceeds of such sale and any rent derived from reletting the Leased
Premises upon account of the rent under this Lease, and the Tenant shall be
liable to the Landlord for the deficiency, if any.


<PAGE>   17
                                      -17-

26. RIGHT OF TERMINATION

26.1 The Tenant covenants and agrees that on the Landlord's becoming entitled to
re-enter upon the Leased Premises under any of the provisions of this Lease,
the Landlord in addition to all other rights, shall have the right to terminate
this Lease and the Term by leaving upon the Leased Premises notice in writing of
its intention so to do, and thereupon the rent shall be computed, apportioned
and paid in full to the date of such termination and any other payments for
which the Tenant is liable under this Lease shall be paid and the Tenant shall
immediately deliver up possession of the Leased Premises to the Landlord, and
the Landlord may re-enter and take possession of the same.

27. NON-WAIVER

27.1 No condoning, excusing or overlooking by the Landlord of any default,
breach or non-observance by the Tenant at any time or times in respect of any
covenant, proviso or condition herein contained shall operate as a waiver of the
Landlord's rights hereunder in respect of any continuing or subsequent default,
breach or non-observance, and no waiver shall be inferred from or implied by
anything done or omitted by the Landlord save only express waiver in writing.
All rights and remedies of the Landlord in this Lease contained shall be
cumulative and alternative.

28. OVERHOLDING

28.1 If the Tenant shall continue to occupy the Leased Premises after the
expiration of this Lease with or without the consent of the Landlord, and
without any further written agreement, the Tenant shall be a monthly tenant on
the terms and conditions herein set out except as to length of tenancy and
further except that the rent shall be an amount per month equal to one hundred
fifty per cent (150%) of the monthly instalments payable on account of rent
pursuant to Clause 3.

29, RECOVERY OF ADJUSTMENT

29.1 The Landlord in addition to all other rights or remedies, shall have the
same rights and remedies in the event of default by the Tenant in payment of any
amount payable by the Tenant pursuant to any clause of this Lease, as the
Landlord would have in the case of default in payment of rent.

30. INTEREST ON RENT IN ARREARS

30.1 Any instalment of rent not paid on the due date shall, without prejudice to
any other rights and remedies of the Landlord arising from such breach, bear
interest from such due date at the rate of twenty per cent (20%) per annum
until paid.


<PAGE>   18
                                      -18-

31. ADDITIONAL RENT

31.1 Without prejudice to any other rights and remedies of the Landlord, any
money payable by the Tenant to the Landlord hereunder in addition to the basic
rent referred to in Clause 3 of this Lease shall be deemed to be rent and, with
interest at the rate of twenty per cent (20%) per annum thereon from the date
the Landlord shall have demanded payment of the same from the Tenant, shall be
paid as additional rent and shall be collectible as rent and unless otherwise
provided in this Lease shall be payable with the next ensuing monthly instalment
of rent.

32. LANDLORD MAY CURE TENANT'S DEFAULT

32.1 If the Tenant shall fail to perform or cause to be performed each and every
of the covenants, agreements and obligations of the Tenant hereunder, the
Landlord shall have the right (but shall not be obligated) to perform or cause
to be performed the same and all payments, expenses, costs and levies incurred
or paid by the Landlord in respect thereof shall be included in Direct Costs
together with an administration fee of twenty per cent (20%) of the total of
such costs and paid to the Landlord immediately on demand.

33. REMEDIES CUMULATIVE

33.1 No remedy conferred upon or reserved to the Landlord herein, by statute or
otherwise, shall be considered exclusive of any other remedy, but the same shall
be cumulative and shall be in addition to every other remedy available to the
Landlord and all such remedies and powers of the Landlord may be exercised
concurrently and from time to time and as often as occasion may be deemed
expedient by the Landlord.

33.2 No right or remedy provided for the Landlord herein shall preclude or be
deemed or construed to preclude the Landlord from exercising any other right or
remedy provided or implied by law, each such right and remedy being hereby
reserved to the Landlord.

34. SUBDIVISION, STRATIFICATION

34.1 The Landlord may subdivide or stratify the Lands some time during the Term
or the renewal. The Tenant agrees to consent to any such subdivision and/or
stratification. The parties agree to sign all such further documents as may be
necessary to allow any such subdivision and/or stratification to be completed,
including any necessary modifications to the within Lease to reflect the revised
legal status of the Lands (which modification shall include the Tenant's
agreement to comply with all of the bylaws, rules and regulations of the Strata
Corporation as set from time to time).


<PAGE>   19
                                      -19-

35. RENEWAL

35.1 If the Tenant duly and regularly pays the rent hereby reserved and observes
and performs all the covenants and agreements herein contained on the part of
the Tenant to be paid, observed and performed, the Landlord upon written request
by the Tenant delivered not less than six months before the expiration of the
Term, shall grant to the Tenant a renewal of this Lease for a further period of
five (5) years upon the same terms, covenants and conditions as are herein
contained except as to rent and except that there shall be no further right of
renewal. The rent for such renewal term shall be determined by agreement, and
failing agreement by on or before the 30th day prior to the start of the renewal
term, by arbitration before a single arbitrator in accordance with the
provisions of the Commercial Arbitration Act of British Columbia then in force
such single arbitrator to be appointed by agreement, and failing agreement, in
accordance with the provisions of the Commercial Arbitration Act of British
Columbia then in force provided that the monthly rent for the renewal term shall
not be less than the rent for the last month of the immediately preceding term.
This provision shall be binding on the arbitrator.

36. NOTICE AND PAYMENTS

36.1 Any and all payments to be made by the Tenant to the Landlord as provided
in this Lease shall be payable at the address of the Landlord hereinbefore set
out or at such other address as the Landlord may from time to time notify the
Tenant. Any notice required or contemplated by any clause of this Lease shall be
given in writing enclosed in a sealed envelope addressed, in the case of notice
to the Landlord at it at its address hereinbefore set out, and in the case of
notice to the Tenant to it at the Leased Premises, and mailed in British
Columbia registered and postage prepaid. The time of giving and receipt of such
notice shall be conclusively deemed to be the second business day after the day
of such mailing. Such notice shall also be sufficiently given if and when the
same shall be delivered, in the case of notice to the Landlord, to an executive
officer of the Landlord, and in the case of notice to the Tenant, delivered to
the Leased Premises. Such notice, if delivered, shall be conclusively deemed to
have been given and received at the time of such delivery. If in this Lease two
or more persons are named as Tenant, such notice shall also be sufficiently
given if and when the same shall be delivered personally or mailed as aforesaid
to any one of such persons. Provided that either party may, by notice to the
other, from time to time designate another address in Canada to which notices
shall be addressed.

37. HEADINGS

37.1 The headings to the clauses of this Lease are for convenience only and
shall not constitute a part of this Lease.


<PAGE>   20
                                      -20-

38. DEFINITIONS APPLY

38.1 The definitions of any words used in this Lease shall apply to such words
when used elsewhere in the clause in which they are defined and when used in any
other clause or place in this Lease whenever the context is consistent.

39. TIME OF THE ESSENCE

39.1 Time shall be of the essence of the Lease and every part hereof.

40. GOVERNING LAW

40.1 This Lease shall be construed and governed by the laws of the Province of
British Columbia.

41. SUCCESSORS

41.1 All rights and liabilities herein given to, or imposed upon, the respective
parties hereto shall extend to and bind the several respective permitted heirs,
executors, administrators, successors and assigns of the said parties. No
rights, however, shall enure to the benefit of any assignee of the Tenant
unless the assignment to such assignee has been approved by the Landlord in
writing as provided herein.

42. EXTENDED MEANINGS

42.1 Words importing the singular, masculine or neuter shall be construed as
meaning the plural, feminine or body corporate or politic and vice versa
wherever the context in this Lease or the Landlord so requires.

43. SEVERABILITY

43.1 It is agreed that should any clause, condition or term, or any part
thereof, contained in this Lease be unenforceable or prohibited by law or by any
present or future provincial or federal legislation, then such clause,
condition, term or part thereof, shall be amended, and is hereby amended, so as
to be in compliance with the said legislation or law but if such clause,
condition or term or part thereof cannot be amended so as to be in compliance
with any such legislation, then such clause, condition, term or part thereof is
severable from this Lease and all the rest of the clauses, terms and conditions
or parts thereof contained in this Lease shall remain binding on the parties.


<PAGE>   21
                                      -21-

44. ENVIRONMENTAL MATTERS

44.1 DEFINITIONS. - For the purpose of this Clause:

        (a)     "Contaminants" means any pollutants, contaminants, deleterious
                substances, underground or aboveground tanks, asbestos
                materials, urea formaldehyde, dangerous substances or goods,
                hazardous, corrosive or toxic substances, special waste or waste
                of any kind or any other substance which is now or hereafter
                prohibited, controlled or regulated under Environmental Laws;
                and

        (b)     "Environmental Laws" means any statutes, laws, regulations,
                orders, bylaws, standards, guidelines, permits and other lawful
                requirements of any governmental authority having jurisdiction
                over the Leased Premises now or hereafter in force relating in
                any way to the environment, health, occupational health and
                safety, product liability or transportation of dangerous goods,
                including the principles of common law and equity.

44.2 TENANT'S COVENANTS AND INDEMNITY. - The Tenant covenants and agrees as
follows:

        (a)     not to use or permit to be used all or any part of the Leased
                Premises for the sale, storage, manufacture, disposal, handling,
                treatment, use or any other dealing with any Contaminants,
                without the prior written consent of the Landlord, which may be
                unreasonably withheld. Without limiting the generality of the
                foregoing, the Tenant shall in no event use, and does not plan
                or intend to use, the Leased Premises to dispose of, handle or
                treat any Contaminants in a manner that, in whole or in part,
                would cause the Leased Premises or any adjacent property to
                become a contaminated site under Environmental Laws;

        (b)     to strictly comply, and cause any person for whom it is in law
                responsible to comply, with all Environmental Laws regarding the
                use and occupancy of the Leased Premises;

        (c)     to promptly provide to the Landlord a copy of any environmental
                site investigation, assessment, audit or report relating to the
                Leased Premises conducted by or for the Tenant at any time
                before, during or after the Term (or any renewal thereof). The
                Tenant shall, at its own cost at the Landlord's request from
                time to time, obtain from an independent environmental
                consultant approved by the Landlord an environmental site
                investigation of the Leased Premises or an environmental audit
                of the operations at the Leased Premises, the scope of which
                shall be satisfactory to the Landlord and shall include any
                additional investigations that the environmental consultant may
                recommend;


<PAGE>   22
                                      -22-

        (d)     to maintain all environmental site investigations, assessments,
                audits and reports relating to the Leased Premises in strict
                confidence and not to disclose their terms or existence to any
                third party (including without limitation, any governmental
                authority) except as required by law, to the Tenant's
                professional advisers and lenders on a need to know basis or
                with the prior written consent of the Landlord, which consent
                may be unreasonably withheld;

        (e)     to promptly provide to the Landlord on request such written
                authorizations as the Landlord may require from time to time to
                make inquiries of any governmental authorities regarding the
                Tenant's compliance with Environmental Laws;

        (f)     to promptly notify the Landlord in writing of any release of a
                Contaminant or any other occurrence or condition at the Leased
                Premises, or any adjacent property which could contaminate the
                Leased Premises, or subject the Landlord or the Tenant to any
                fines, penalties, orders, investigations or proceedings under
                Environment Laws;

        (g)     on the expiry or earlier termination of this Lease or at any
                time if requested by the Landlord or required by any
                governmental authority pursuant to Environmental Laws, to remove
                from the Leased Premises all Contaminants, and to remediate any
                contamination of the Leased Premises or any adjacent property
                resulting from Contaminants, in either case brought onto, used
                at or released from the Leased Premises by the Tenant or any
                person for whom it is in law responsible. The Tenant shall
                perform these obligations promptly at its own cost and in
                accordance with Environmental Laws. All such Contaminants shall
                remain the property of the Tenant, notwithstanding any rule of
                law or other provision of this Lease to the contrary and
                notwithstanding the degree of their affixation to the Leased
                Premises; and

        (h)     to indemnify the Landlord and its directors, officers,
                shareholders, employees, agents, successors and assigns, from
                any and all liabilities, actions, damages, claims, remediation
                cost recovery claims, losses, costs, orders, fines, penalties
                and expenses whatsoever (including all consulting and legal fees
                and expenses on a solicitor-client basis and the cost of
                remediation of the Leased Premises and any adjacent property
                arising from or in connection with:

                (i)     any breach of or non-compliance with the provisions of
                        this Clause by the Tenant; or

                (ii)    any release or alleged release of any Contaminants at or
                        from the Leased Premises related to or as a result of
                        the use and occupation of the Leased Premises or any act
                        or omission of the Tenant or any person for whom it is
                        in law responsible.


<PAGE>   23
                                      -23-

The obligations of the Tenant under this Clause shall survive the expiry or
earlier termination of this Lease. The obligations of the Tenant under this
Clause are in addition to, and shall not limit, the obligations of the Tenant
contained in other provisions of this Lease.


        IN WITNESS WHEREOF the parties hereto have hereunto executed this Lease
as a valid and binding act as of the day and year first before written.


The Corporate Seal of INTRACEL               )
CORPORATION was hereunto affixed in the      )
presence of:                                 )
                                             )
-------------------------------              )             (C/S)
Authorized Signatory                         )
                                             )
-------------------------------              )
Authorized Signatory                         )




The Corporate Seal of P.K PROJECTS           )
LTD. was hereunto affixed in the             )
presence of:                                 )
[SIG]                                        )
-------------------------------              )             (C/S)
Authorized Signatory                         )


<PAGE>   24
THIS INDEMNITY AGREEMENT dated for reference the 1st day of February, 1998.


BETWEEN:

               P.K PROJECTS LTD., a British Columbia Company with an
               office at 1203 - 20800 Westminster Highway, Richmond,
               B.C., V6V 2W3

               (hereinafter referred to as the "Landlord")

                                                      OF THE FIRST PART

AND:

               BARTELS, INC., a company incorporated under the laws of
               the State of Washington, U.S.A., with an office at 1871
               NW Gilman Boulevard, Issaqua, Washington, 98027

               (hereinafter referred to as the "Indemnitor")

                                                      OF THE SECOND PART

        In order to induce the Landlord to enter into the lease (the "Lease")
dated the 1st day of February, 1998, and made between the Landlord and INTRACEL
CORPORATION as Tenant, and for other good and valuable consideration, the
receipt and sufficiency whereof is hereby acknowledged, the Indemnitor hereby
makes the following indemnity and agreement (the "Indemnity") with and in favour
of the Landlord:


1. The Indemnitor hereby agrees with the Landlord that at all times during the
Term and any extension or renewal of the Lease, the Indemnitor shall:

        (a)     make due and punctual payment of all rent, moneys, charges and
                other amounts of any kind whatsoever payable under the Lease by
                the Tenant whether to the Landlord or otherwise and whether the
                Lease has been disaffirmed or disclaimed;


<PAGE>   25
                                       -2-

        (b)     effect prompt and complete performance of all of the terms,
                covenants and conditions contained in the Lease on the part of
                the Tenant therein to be kept, observed and performed; and

        (c)     promptly indemnify and save harmless the Landlord from and
                against any claims arising out of any failure by the Tenant to
                pay the rent, moneys, charges or other amounts due under the
                Lease or resulting from any failure by the Tenant to observe and
                perform any of the terms, covenants and conditions in the Lease.

2. The Indemnitor hereby expressly acknowledges and agrees that this Indemnity
is absolute and unconditional and the obligations of the Indemnitor shall not be
released, discharged, mitigated, impaired or affected by:

        (a)     any extension of time, indulgences or modifications which the
                Landlord extends to or makes with the Tenant in respect of the
                performance of any of the obligations of the Tenant under the
                Lease;

        (b)     any waiver by or failure of the Landlord to enforce any of the
                terms, covenants and conditions contained in the Lease;

        (c)     any transfer of the Lease by the Tenant or by any transferee or
                by any trustee, receiver or liquidator;

        (d)     any consent which the Landlord gives to any such transfer;

        (e)     any relocation of the Leased Premises or any changes to the
                Lease resulting therefrom;

        (f)     any amendment or modification to the Lease;


<PAGE>   26
                                       -3-


        (g)     any waiver by the Tenant or any transferee of any of its rights
                under the Lease;


        (h)     the expiration or termination of the Lease; or


        (i)     any overholding by the Tenant of the Leased Premises or any part
                thereof.


3. The Indemnitor hereby expressly waives notice of the acceptance of this
Indemnity and all notice of non-performance, non-payment or non-observance on
the part of the Tenant of the terms, covenants and conditions in the Lease.
Without limiting the generality of the foregoing, any notice which the Landlord
desires to give to the Indemnitor shall be sufficiently given if delivered in
person to the Indemnitor or if mailed by prepaid registered or certified post
addressed to the Indemnitor at the Leased Premises, and every such notice shall
be deemed to have been given on the day it was delivered in person or, if
mailed, seventy-two (72) hours after it was mailed. The Indemnitor may designate
by notice in writing a substitute address for that set forth above and
thereafter notices shall be directed to such substitute address. If two or more
persons are named as Indemnitor any notice given hereunder or under the Lease
shall be sufficiently given if delivered or mailed in the foregoing manner to
any one of such persons. 

4. In the event of a default under the Lease or under this Indemnity, the
Indemnitor waives any right to require the Landlord to:

        (a)     proceed against the Tenant or pursue any rights or remedies
                against the Tenant with respect to the Lease;

        (b)     proceed against or exhaust any security of the Tenant held by
                the Landlord; or

        (c)     pursue any other remedy whatsoever in the Landlord's power.


<PAGE>   27
                                       -4-

The Landlord shall have the right to enforce this Indemnity regardless of the
acceptance of additional security from the Tenant and regardless of any release
or discharge of the Tenant by the Landlord or by others or by operation of any
law.

5. Without limiting the generality of the foregoing, the liability of the
Indemnitor under this Indemnity shall not be and shall not be deemed to have
been waived, released, discharged, impaired or affected by reason of the release
or discharge of the Tenant in any receivership, bankruptcy, winding-up or other
creditor's proceedings or the rejection, disaffirmance or disclaimer of the
Lease in any proceeding and shall continue with respect to the periods prior
thereto and thereafter, for and with respect to the Term as if the Lease had not
been disaffirmed or disclaimed, and, in furtherance hereof, the Indemnitor
agrees, upon any such disaffirmance or disclaimer, that the Indemnitor shall, at
the option of the Landlord, become the Tenant of the Landlord upon the same
terms and conditions as are contained in the Lease, applied with the necessary
changes having been made, and the Indemnitor shall immediately execute any
documentation (prepared by the Landlord at the Indemnitor's expense) that the
Landlord requires in confirmation thereof. The liability of the Indemnitor shall
not be affected by any repossession of the Leased Premises by the Landlord,
provided, however, that the net payments received by the Landlord after
deducting all costs and expenses of repossession and reletting the Leased
Premises shall be credited from time to time by the Landlord against the
indebtedness of the Indemnitor hereunder and the Indemnitor shall pay any
balance owing to the Landlord from time to time immediately on demand.

6. No action or proceeding brought or instituted under this Indemnity and no
recovery in pursuance thereof shall be a bar or defense to any further action or
proceeding which may be brought under this Indemnity by reason of any further
default hereunder or in the performance and observance of the terms, covenants
and conditions in the Lease.

7. No modification of this Indemnity shall be effective unless it is in writing
and is executed by both the Indemnitor and the Landlord.


<PAGE>   28
                                      -5-

8. The Indemnitor shall, without limiting the generality of the foregoing, be
bound by this Indemnity in the same manner as though the Indemnitor were the
Tenant named in the Lease. The Indemnitor acknowledges that it has received the
Lease and is familiar with the terms, covenants and conditions contained herein.

9. If the Indemnitor is a corporation, it shall not change the effective voting
control thereof from that existing as of the date of commencement of the Term of
the Lease and, if the Indemnitor is a partnership, joint venture or co-tenancy,
it shall not change the persons comprising the partnership, joint venture or
co-tenancy as of the date of commencement of the Term of the Lease without in
either case obtaining the Landlord's prior written consent in each and every
instance, which consent may be unreasonably withheld.

10. If two or more individuals, corporations, partnerships or other business
associations (or any combination of two or more thereof) execute this Indemnity
as Indemnitor, the liability of each such individual, corporation, partnership
or other business association hereunder is joint and several. In like manner, if
the Indemnitor named in this Indemnity is a partnership or other business
association, the members of which are, by virtue to statutory or general law,
subject to personal liability, the liability of each such member is joint and
several.

11. All of the terms, covenants and conditions of this Indemnity extend to and
are binding on the Indemnitor, its heirs, executors, administrators, successors
and assigns, as the case may be, and enure to the benefit of and may be enforced
by the Landlord, its successors and assigns, as the case may be, and any
mortgagee of the Leased Premises.

12. The expressions "Landlord", "Tenant", "Term", "Leased Premises" and other
terms or expressions where used in this Indemnity, respectively, have the same
meaning as in the Lease.

13. This Indemnity shall be construed in accordance with the laws of the
Province of British Columbia.


<PAGE>   29
                                       -6-


14. Wherever in this Indemnity reference is made to either the Landlord or the
Tenant, the reference is deemed to apply also to the respective heirs,
executors, administrators, successors and permitted assigns of the Tenant and to
the successors and assigns of the Landlord. Any assignment by the Landlord of
any of its interest in the Lease operates automatically as an assignment to such
assignee of the benefit of this Indemnity. 

IN WITNESS WHEREOF the parties have hereunto set their hands and seals the day
and year first above written.



The Corporate Seal of P.K. PROJECTS             )
LTD. was hereunto affixed in the presence of:   )
                                                )         (C/S)
                                                )
[SIG]                                           )
-------------------------------                 )
Authorized Signatory                            )
                                                 
                                                     
                                                          
                                                 
                                                 
The Corporate Seal of BARTELS INC. was          )
hereunto affixed in the presence of:            )
                                                )
Signed by : Simon McKenzie                      )
-------------------------------                 )
Authorized Signatory                            )         (C/S)
                                                )
                                                )
-------------------------------                 )
Authorized Signatory                            )