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                                                                   EXHIBIT 10.12

                RESIGNATION AGREEMENT AND MUTUAL GENERAL RELEASE

        This Resignation Agreement and Mutual General Release ("Agreement"),
entered into by and between Western Water Company, a Delaware corporation
("Western Water"), on the one hand, and John H. Huston, an individual
("Huston"), on the other hand (Western Water and Huston are sometimes
hereinafter referred to individually as a "Party" and collectively as the
"Parties"), is made with respect to the following facts:

                                 R E C I T A L S

        A. Western Water and Huston entered into an Employment Agreement dated
August 15, 1997.

        B. Huston and Western Water desire to terminate the Employment
Agreement.

        C. The Parties now intend to fully and finally settle and compromise any
and all other Claims (as defined below) of any type, whether known or unknown,
arising prior to the date hereof, and to execute and deliver this Agreement.

        NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Parties agree as follows:

                              OPERATIVE PROVISIONS

        1. Resignation. As of the Effective Date of this Agreement Huston shall
resign in all capacities as an officer, employee and as a member of the Board of
Directors of Western Water by executing Exhibit A attached hereto.

        2. Consideration. Western Water and Huston agree to the following
actions in full discharge of any and all of Western Water's obligations to
Huston including, without limitation, any possible claims of Huston:

                (a) Western Water shall pay to Huston as a severance payment the
sum of One Hundred Thousand Dollars ($100,000.00) less deductions required by
law, including without limitation FICA, State and Federal withholding, and SDI
("appropriate withholdings").

                (b) Western Water shall pay to Huston Twenty-eight Thousand Four
Hundred Sixty-one Dollars ($28,461.00) for accrued vacation to which Huston is
entitled, less appropriate withholdings.

                (c) Huston presently owns incentive or non-qualified options to
purchase 196,000 shares of common stock of Western Water. The terms of such
options shall be amended to provide that they are fully vested on the Effective
Date of this Agreement, and shall expire on the second anniversary of the
Effective Date of this Agreement.

                (d) Western Water presently holds an option (the "Option") to
purchase 1,200,000 shares of common stock of Integrated Water Technologies
("IWT") pursuant to the "Option Agreement" dated November 24, 1993 and amended
April 24, 1996 ("The Option Agreement"), entered into between Alan M. Voorhees,
Summit Enterprises, Inc. of Virginia and Western Water Company. A copy of The
Option Agreement is attached hereto as Exhibit B and incorporated by reference.
As of the Effective Date, Huston shall own a 60% interest in such Option, and
from May 1, 1998 through March 28, 1999, Huston will have the exclusive right
and option to acquire Western Water's 40% interest in the Option in accordance
with the following procedure:



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                      (i)   On or before March 28, 1999, Huston may give Western
Water written notice that he desires to purchase Western Water's 40% interest in
the Option and the cash price for such purchase. Western Water shall have five
days from the receipt of such notice to accept Huston's proposal or to make
counter offer to Huston. In the event of a counter offer, Huston shall have five
days to accept a counter offer. In the event Huston does not accept the counter
offer, the Parties shall immediately attempt to agree on a person or entity to
determine the value of Western Water's 40% interest in the Option.

                      (ii)  In the event that the Parties cannot agree on the
fair market value as of such exercise date, then Huston and Western Water shall
select an independent third party expert to determine such fair market value
within thirty (30) days after exercise of the Huston Option. In the event Huston
and Western Water cannot agree on a third party expert then Huston and
Western will each select a third party expert, the two of whom will then agree
on an independent third party expert who will individually determine such fair
market value within ten (10) days of his selection.

                      (iii) Once the price is so determined, Huston shall have
five days to make payment in full of such price to Western Water and Western
Water shall thereupon assign the entire Option to Huston. If Huston fails to
exercise the Option by March 28, 1999, then Western Water shall be entitled to
exercise the Option. If between October 1, 1998 and March 28, 1999 Western Water
exercises the Option it will immediately notify Huston and he will have five
days to purchase 60% of the shares received by Western Water at Western Water's
cost. If Huston fails to purchase the shares within five days after exercise of
the Option by Western Water, Huston will have no further rights to such shares
and Western Water shall have 100% of the ownership of such shares.

               (e) Huston hereby agrees that he will act as a consultant to
Western Water for six (6) months from the date of execution of this Agreement at
ten (10) hours per month without charge, provided that Western Water shall pay
all of Huston's out-of-pocket expenses in performing such consulting services,
and provided further that Huston shall perform such services under the direction
of and at the request of the President of Western Water Company.

               (f) Western Water agrees to retain and pay IWT as a consultant in
1998 to the same total dollar extent as or more than in 1997. However, should
Western Water not use IWT's consulting services in 1998 to the same extent as in
1997, IWT shall credit any unused portion of the 1998 consulting fee against
Western Water's 1999 consulting fee(s) with IWT.

               (g) Huston shall be entitled to keep and retain the Xerox
machine, computer and fax machine, office supplies, and materials located at #2
Shining Oak Drive, Littleton, Colorado (Huston's residence from which he has
conducted Western Water's Colorado affairs).

               (h) Western Water shall reimburse Huston for his attorneys' fees
incurred in negotiating and completing this Agreement, but in an amount not to
exceed $2,000.00 for attorneys' fees, subject to appropriate documentation of
such attorneys' fees.

               (i) Western Water shall pay all debts charged to Huston's
corporate expense account through the Effective Date of this Agreement, upon
presentation by Huston of appropriate documentation of the expenses incurred.

        3. Release by Huston. Subject to Section 16, Huston, on behalf of
himself and his spouse, family members, relatives, affiliates, assignors,
assigns, predecessors and successors-in-interest, and their respective
officers, directors, shareholders, principals, partners, employees, assigns, and
attorneys (collectively the "Huston Releasing Parties"), hereby forever
unconditionally releases and discharges Western Water (including its
shareholders, officers, directors, employees, subsidiaries and affiliates,
agents, lawyers and representatives), and their spouses, family members,
relatives, predecessors and successors-in-interest, and their respective
affiliates, servants, agents, representatives, assigns and attorneys
(collectively the "Western Water Released Parties"), from any and all rights,
liabilities, claims, 



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demands, damages, costs, fees, expenses, losses, judgments, liens, interests,
debts, actions and causes of action of every kind whatsoever (collectively, the
"Claims") that Huston has, had or may have, arising or accruing on or before the
date hereof, regardless of whether asserted before, on or after the date hereof,
and regardless of whether known or unknown, including without limitation the
following: (a) Huston's employment with Western Water; (b) the cessation of
Huston's employment with Western Water; (c) the allegations by Huston regarding
allegedly improper management policies and practices of Western Water; (d)
violations of any contracts, express or implied, any covenant of good faith and
fair dealing, express or implied, any breach of fiduciary obligation, or any
tort, including, without limitation, defamation, invasion of privacy,
intentional or negligent infliction of emotional distress, fraud, negligent
misrepresentation, wrongful discharge in violation of public policy or any legal
restrictions on Western Water's right to terminate employees, or any federal,
state, or other governmental statute, regulation or ordinance, including,
without limitation; (i) Title Vll of the Civil Rights Act of 1964 (race, color,
religion, sex, and national origin discrimination); (ii) 42 U.S.C. Section 1981
(discrimination); (iii) 29 T.J.S.C. Section 206(d)(1) (equal pay); (iv) 29
U.S.C. Section 621, et seq. (age discrimination); (v) the California Fair
Employment and Housing Act (discrimination including race, color, national
origin, ancestry, physical handicap, medical condition, marital status, sex or
age); (vi) Executive Order 11246 (race, color, religion, sex and national origin
discrimination); (vii) Executive Order 11141 (age discrimination); (viii)
Sections 503 and 504 of the Rehabilitation Act of 1973 (handicap
discrimination); (ix) California Labor Code (wages, hours and other regulations
of employment); and (x) the Employee Retirement Income Security Act of 1974
(ERISA) (denial of employee benefits) (collectively the "Huston Released
Claims"). Huston agrees never to seek, apply or reapply for employment or
reemployment from Western Water or the Western Water Released Parties, and
agrees not to bring any action of any kind, administrative or judicial, based
upon any future denial of employment or reemployment.

        4. Covenant Not to Sue by Huston. Subject to Section 16, Huston, on his
behalf and on behalf of the Huston Releasing Parties, hereby forever
unconditionally agrees and covenants to refrain from suing Western Water or any
of the Western Water Released Parties or bringing any action of any kind
whatsoever against Western Water or any of the Western Water Released Parties
with respect to the Huston Released Claims.

        5. Release by Western Water. Subject to Section 16, Western Water, on
behalf of itself and on behalf of its affiliates, assignors, assigns,
predecessors and successors-in-interest, and their respective officers,
directors, shareholders, principals, partners, employees, assigns, and attorneys
(collectively the "Western Water Releasing Parties"), hereby forever
unconditionally releases and discharges Huston and his spouse, family members,
relatives, predecessors and successors-in-interest, and their respective
officers, directors, shareholders, principals, partners, employees, affiliates,
servants, representatives, assigns and attorneys (collectively the "Huston
Released Parties") from any and all rights, liabilities, claims, demands,
damages, costs, fees, expenses, losses, judgments, liens, interests, debts,
actions, and causes of action of every kind whatsoever (collectively the
"Claims") that Western Water has, had or may have, arising or accruing on or
before the date hereof, regardless of whether asserted before, on or after the
date hereof, and regardless of whether known or unknown, including without
limitation the following: (a) Huston's employment with Western Water; (b) the
cessation of Huston's employment with Western Water; (c) the allegations by
Huston regarding allegedly improper management policies and practices of Western
Water; and (d) violations of any contracts, express or implied, any covenant of
good faith and fair dealing, express or implied, any breach of fiduciary
obligation, or any tort, including, without limitation, defamation, invasion of
privacy, intentional or negligent infliction of emotional distress, fraud,
negligent misrepresentation, or any federal, state, or other governmental
statute, regulation or ordinance (collectively the "Western Water Released
Claims").

        6. Covenant Not to Sue by Western Water. Subject to Section 16, Western
Water, on its behalf and on behalf of the Western Water Releasing Parties,
hereby forever unconditionally agrees and covenants to refrain from suing Huston
or any of the Huston Released Parties or bringing any action of any kind
whatsoever against Huston or any of the Huston Released Parties with respect to
the Western Water Released Claims.



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        7. Unknown Claims. Subject to Section 16 Huston, on his behalf and on
behalf of the Huston Releasing Parties, and Western Water, on its behalf and on
behalf of the Western Water Releasing Parties, understand and hereby agree that
this Agreement shall act as a release of any and all Huston Released Claims and
Western Water Released Claims, respectively, whether known or unknown, arising,
accruing or based on facts, events or circumstances in existence on or before
the date hereof, whether known or unknown, that each of the Parties has, had or
may ever have against each of the other Parties relating to the Huston Released
Claims and the Western Water Released Claims.

               In this connection, each of Huston, on his behalf and on behalf
of the Huston Releasing Parties, and Western Water, on its behalf and on behalf
of the Western Water Releasing Parties, acknowledge that, subject to Section 16
hereof, each hereby releases the Huston Released Claims, and Western Water
Released Claims, respectively, whether such currently are known or unknown,
foreseen or unforeseen, suspected to exist or not suspected to exist, and each
of the Parties acknowledges that each has read, is familiar with, understands
and waives the provisions of California Civil Code Section 1542, which provides
as follows:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
               DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
               EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
               AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

               Furthermore, each of the Parties acknowledges that the foregoing
waivers were separately bargained for and are a key element of the consideration
for entering into this Agreement.

        8. Age Discrimination Waiver: Huston understands and hereby agrees that,
by entering into this Agreement, he is expressly waiving any and all Claims he
may have arising under the Age Discrimination in Employment Act of 1967, as
amended, in existence on or before the date hereof, Huston expressly
acknowledges and agrees he: (a) will receive compensation different from that
which he was already entitled to receive before entering into this Agreement;
(b) has been represented by an attorney of his choice in negotiating this
Agreement; (c) is hereby advised in writing to consult with an attorney before
signing this Agreement; (d) was given a copy of this Agreement on December 9,
1997 and informed that he has twenty-one (21) days within which to consider the
Agreement; and (e) was informed that he has seven (7) days following the date of
execution of the Agreement in which to revoke the Agreement.

        9. Insurance and Indemnification. Nothing contained in this Agreement
shall be interpreted or construed or deemed to be interpreted or construed as
preventing Huston from obtaining indemnification from Western Water if such
indemnification otherwise would be available to Huston strictly in accordance
with Article 11 of the Bylaws of Western Water and applicable common or
statutory law.

        10. Information. "Confidential Information" means documented information
not in the public domain and not published that Western Water or the Western
Water Released Parties, in the period preceding and up to and including the
cessation of Huston's employment have received under conditions of
confidentiality, and Western Water trade secrets, Western Water unpublished
data, Western Water marketing plans, Western Water business plans, Western Water
unpublished financial information, Western Water budgets, and Western Water
corporate unpublished projections, the disclosure of which could be detrimental
to Western Water or subject Western Water to liability to a third party. Huston
acknowledges that by reason of his position with Western Water he has been given
access to such Confidential Information. Huston represents and warrants that he
does have in his possession, but will deliver to Western Water on the effective
date of this Agreement, if physically possible, in no event later than January
31, 1998, any and all documented Confidential Information and any copies
thereof, together with all documents belonging to Western Water or the Western
Water Released Parties. Huston agrees that he shall preserve as confidential and
not use any Confidential Information.



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        11. Taxes. Except for the appropriate withholdings, Huston shall be
exclusively liable for the payment of all federal and state taxes which may be
due as a result of the payment of Western Water to Huston of the consideration
stated in sub-Sections 2(a) through 2(h). Should Huston not pay all state and
federal taxes which may be due as the result of Western Water's payment to him
of said consideration, Huston agrees to save, hold harmless, indemnify and
defend (with counsel reasonably acceptable to Western Water) Western Water and
the Western Water Released Parties from any and all loss, cost, fees, claims,
damages or expenses (including without limitation reasonable attorneys' fees,
costs and disbursements) taxes, interest or penalties incurred by Western Water
and the Western Water Released Parties in any way arising out of a breach of
Huston's obligations arising out of this section 11.

        12. No Duress. Each of the Parties hereto acknowledges that each has
been advised by or has had the opportunity to consult legal counsel in
connection with the granting of the releases contained in this Agreement and
that this Agreement is entered into freely, without duress, coercion, menace or
other undue influence.

        13. Voluntary Execution. Each of the Parties hereto: (a) voluntarily and
knowingly executes this Agreement with the intent of effecting the
extinguishment of the Huston Released Claims and the Western Water Released
Claims, whichever applies; (b) has read this Agreement and understands all of
its terms; and (c) has executed this Agreement, with full knowledge of its
significance without relying upon any representations or warranties, except
those set forth as provided for herein, by any of the other Parties or their
attorneys.

        14. Representations and Warranties. Each of the Parties hereto
represents and warrants that: (a) the person executing this Agreement on behalf
of such Party has the authority to execute and deliver this Agreement; (b) he or
it has taken all necessary action to authorize the execution and delivery of
this Agreement; and (c) he or it has all requisite power to consummate the
transactions contemplated by this Agreement and to perform the obligations under
this Agreement.

        15. No Admission of Liability. This Agreement is a compromise of
disputed claims, and the execution of this Agreement shall not be considered or
treated at any time or for any purpose as an admission of liability by any of
the Parties to this Agreement. No past or present wrongdoing on the part of any
of the Parties shall be implied from the negotiation or the consummation of this
Agreement.

        16. Effectiveness of Agreement and Releases. The date of execution or
entry into this Agreement shall be deemed the last date of execution of the
Agreement by any of the Parties (the "Date of Entry"). Huston may revoke this
Agreement in its entirety for a period of seven (7) days following the Date of
Entry (the "Revocation Period"). Any revocation of the Agreement must be in
writing and hand delivered to Western Water during the Revocation Period. This
Agreement shall become effective eight (8) days following the Date of Entry (the
"Effective Date"), unless it is revoked during the Revocation Period. The
releases set forth in this Agreement and the covenants set forth in this
Agreement are intended to and shall become effective eight (8) days following
the Date of Entry, unless this Agreement is revoked during the Revocation
Period. The releases set forth in this Agreement shall not apply to breaches of
this Agreement by either Party.

        17. No Transfer of Claims. Except as otherwise provided herein, each
Party warrants and represents to the other Party that it has not transferred,
assigned, sold, hypothecated or otherwise conveyed, or purported to transfer,
assign, sell, hypothecate or otherwise convey, any of the Huston Released
Claims or Western Water Released Claims, as the case may be, that such Party may
have against the other Party, and each Party hereby agrees to save, hold
harmless, indemnify and defend (with counsel reasonably acceptable to the
indemnified Party) the other Party from and against any and all loss, cost,
fees, claims, damages or expenses (including without limitation reasonable
attorneys' fees, costs and disbursements) in any way arising out of a breach of
the foregoing representations.


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        18. Confidentiality of Agreement. Except for the public announcement
attached as Exhibit C hereto, and except as provided in sub-Section 18(b), no
public announcement concerning the negotiation, execution and/or delivery of
this Agreement or the transactions contemplated hereby, or concerning the facts
and circumstances surrounding Huston's cessation of employment with Western
Water (the "Settlement Information"), shall be made by any Party, and all
Settlement Information shall be deemed confidential. Either Party's disclosure
of the fact that the Parties entered into this Agreement shall not be deemed a
public announcement of Settlement Information within the meaning of this Section
18.

                (a) Non-Defamatory and Disparaging Statements. Neither Party
shall make any defamatory statements concerning the other Party. Each Party
represents and warrants that such Party and its agents, representatives and
attorneys have not made, at any time, any defamatory statements regarding the
other Party to any third party. Huston agrees that he will not, directly or
indirectly, disparage Western Water in any way, and that he will not make any
disparaging comments to entities (including, without limitation, banks and
shareholders) doing business with or contemplating doing business with Western
Water concerning Western Water, its officers and directors, its management
policies, and its properties. Western Water, on its behalf and on behalf of the
Western Water Released Parties, agrees that it will not, directly or indirectly,
disparage IWT in any way and that it will not make any disparaging comments to
entities (including, without limitation, banks and shareholders) doing business
with or contemplating doing business with IWT concerning IWT, its officers and
directors, its management policies, and its properties.

                (b) Disclosure Provision. Notwithstanding any provision to the
contrary contained herein, each Party shall be entitled to disclose the
Settlement Information: (a) to the extent the same shall have otherwise become
publicly available (unless made publicly available only by the Party seeking to
disclose the same); (b) to their spouses, attorneys, and accountants, provided
such persons are informed of this confidentiality provision and agree to be
bound hereby; (c) as required by federal or state law, including without
limitation federal or state securities laws; (d) as required by court order
deposition or document subpoena or otherwise in truthful statements made under
oath or penalty of perjury; or (e) as necessary to enforce this Agreement or any
provision or term of this Agreement, or defend against the alleged breach of
this Agreement or any provision or term of this Agreement.

        19. Miscellaneous.

               (a) Attorneys' Fees. Should any Party to this Agreement
reasonably retain counsel for the purpose of enforcing any provision of this
Agreement, including without limitation instituting any action or proceeding to
enforce any provision of this Agreement, for damages or injunctive or other
relief by reason of any alleged breach of any provision of this Agreement for a
declaration based on a demonstrated necessity of such Party's rights or
obligations under this Agreement, or for any other judicial or equitable remedy,
then if the matter is resolved by judicial or quasi judicial determination
(including arbitration, if such arbitration is agreed to by the Parties), the
prevailing Party or Parties shall be entitled, in addition such other relief as
may be granted, to be reimbursed by the losing Party or Parties for all
reasonable costs and expenses incurred, including without limitation all
reasonable attorneys' fees and costs for services rendered to the prevailing
Party or Parties and all reasonable attorneys' fees and costs incurred in
enforcing any judgment or order entered. The prevailing Party or Parties shall
be determined by the court (or arbitrator, if arbitration is agreed to by the
Parties) in the initial or any subsequent proceeding.

               (b) Controlling Law. This Agreement shall be governed by,
construed and interpreted in accordance with the laws of the State of
California, without giving effect to any choice-of-law or conflicts-of-laws rule
or principle that would result in application of other laws.



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               (c) Headings. Headings, titles and captions hereof are for
convenience only and shall not constitute a portion of this Agreement or are
used for the interpretation thereof. Further, the Parties hereby stipulate that
signed counterpart facsimile copies of this Agreement shall be deemed an
executed original for all purposes.

               (d) Amendment. Neither this Agreement nor any provision hereof
may be waived, modified, amended, discharged, or terminated except by an
instrument in writing signed by the Party against which the enforcement of such
writing is sought, and then only to the extent set forth in writing.

               (e) Waiver. Any waiver of any provision or of any breach of any
provision of this Agreement must be in writing and any waiver by any Party of
any breach of any provision of this Agreement shall not operate as or be
construed to be a waiver of any other breach of that provision or of any breach
of any other provision of this Agreement. The failure of any Party to insist
upon strict adherence to any term of this Agreement on one or more occasions
shall not be considered or construed or deemed a waiver of any provision, or any
breach of any provision, of this Agreement or deprive that Party of the right
thereafter to insist upon strict adherence to that term or provision, or any
other term or provision, of this Agreement. No delay or omission on the part of
any of the Parties in exercising any right under this Agreement shall operate as
a waiver of any such right or any other right under this Agreement.

               (f) Liberal Construction. This Agreement constitutes a fully
negotiated agreement among commercially sophisticated parties, each assisted by
legal counsel, and the terms of this Agreement shall not be construed or
interpreted for or against any Party hereto. The Parties hereby agree that
California Civil Code Section 1654 shall not apply to the terms of this
Agreement.

               (g) Entire Agreement. This Agreement constitutes the entire
understanding between the Parties with respect to the matters set forth herein
and supersedes all prior or contemporaneous understandings or agreements between
the Parties with respect to the subject matter hereof whether oral or written.

               (h) Notice. Any notice, approval, consent, waiver or other
communication required or permitted to be given or to be served upon any of the
Parties in connection with this Agreement shall be in writing. Such notice shall
be personally served, sent by facsimile, telegram, or cable, or sent prepaid by
registered or certified mail with return receipt requested, or sent by reputable
overnight delivery service, such as Federal Express, and shall be deemed given:
(i) if personally served, when delivered to the Party to whom such notice is
addressed; (ii) if given by facsimile, telegram, or cable, when sent; (iii) if
given by prepaid or certified mail with return receipt requested, on the date of
execution of the return receipt; or (iv) if sent by reputable overnight delivery
service, such as Federal Express, when received. Any notice given by facsimile,
telegram, or cable shall be confirmed in writing by the Party sending such
notice, and such confirmation shall be delivered or sent by any of the other
means of delivery set forth in this Section 19, within forty-eight (48) hours
after notice was sent by facsimile, telegram or cable. Such notices shall be
addressed to the Party to whom such notice is to be given at the Party's address
set forth below or as such Party shall otherwise direct in a writing to all
other Parties delivered or sent in accordance with this Section 19(h).
If to Western Water, to:

        Western Water Company
        4660 La Jolla Village Drive
        Suite 825
        San Diego, California 92122
        Attn: Peter L. Jensen
        Fax No. (619) 535-9260



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With a copy to:

        Troy & Gould Professional Corporation
        1801 Century Park East, 16th Floor
        Los Angeles, CA 90067
        Attn: William D. Gould, Esq.
        Fax No. (310) 201-4746

If to Huston, to:

        John H. Huston
        #2 Shining Oak Drive
        Littleton, Colorado 80127

With a copy to:

        Strauss & Asher
        750 B Street
        Suite 1910
        San Diego, CA 92101
        Attn: David Strauss, Esq.
        Fax No. (619) 237-5311

        (i) Binding Effect; Assignment. Neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assignable by any Party
without the prior written consent of all other Parties, which shall not be
unreasonably withheld. Subject to the foregoing restriction, provisions of this
Agreement shall be binding upon and inure to the benefit of all affiliates,
parent corporations, subsidiaries, assigns, successors-in-interest, personal
representatives, administrators, spouses, family members, relatives, heirs,
devisees and legatees of the Parties hereto.

        (j) Severability. If any provision of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in full force and
effect notwithstanding such invalidity, illegality or unenforceability.

        (k) Good Faith and Fair Dealing. The Parties hereto acknowledge and
agree that the performances required by the provisions of this Agreement shall
be undertaken in good faith, and with all Parties dealing fairly with each
other.

        (l) No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed to create, any rights enforceable by any person,
partnership, corporation, joint venture, limited liability company or other form
of organization or association of any kind, not a Party to this Agreement.

        (m) Costs and Fees of Litigation. Except as otherwise set forth in this
Agreement, each of the Parties acknowledges and agrees that each of the Parties
shall bear his or its own attorney's fees and costs incurred on account of, or
in any way related to or arising from, the negotiation and execution of this
Agreement.

        (n) Arbitration. Any dispute or controversy between the Parties in any
way arising out of, related to, or connected with this Agreement or the subject
matter thereof, otherwise in any way arising out of, related to, or connected
with Huston's employment with Western Water, shall be resolved through final and
binding arbitration in San Diego, California, pursuant to California Civil
Procedure Code Sections 1282-1284.2. The arbitration shall be before the
American Arbitration Association Employee Dispute Panel and shall be governed by
the National Rules for the Resolution of Employment Disputes and/or the
Commercial Arbitration Rules promulgated by the American Arbitration
Association. In the event of such arbitration, it is the intent of the parties
to provide for judicial review of the arbitrator's award for errors of 



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law and fact and to permit the reviewing court to revise and correct the award
accordingly. The prevailing Party shall be entitled to recover all reasonable
costs and expenses incurred by such Party in connection therewith, including
attorneys' fees. The non-prevailing Party shall also be solely responsible for
all costs of the arbitration, including, but not limited to, the arbitrators'
fees, court reporters' fees, and any and all other administrative costs of the
arbitration, and promptly shall reimburse the prevailing Party for any portion
of such costs previously paid the prevailing Party. Any dispute as to the
reasonableness of costs and expenses shall be determined by the arbitrator.

        (o) Competition and Non-Solicitation. Huston agrees that for a period of
24 months from the Effective Date of this Agreement Huston shall not directly or
indirectly, without the prior written consent of Western Water:

               (i)   Solicit, entice, persuade or induce any employee,
consultant, agent or independent contractor of Western Water, (except Eric R.
Robbins) or any of the subsidiaries or affiliates of Western Water, to become
employed by any person, firm or corporation other than Western Water, or such
subsidiary or affiliate, or approach any such employee, (except Eric R. Robbins)
consultant, agent or independent contractor for any of the foregoing purposes,
or authorize or assist in the taking of any such actions by any third party.

               (ii)  Directly or indirectly own, control, or invest in any
entity (other than Western Water and IWT) which buys or sells water rights in
the states of California, Nevada, Utah, Arizona, and New Mexico. Notwithstanding
anything herein to the contrary, nothing shall limit Huston's right to hold and
make passive investments not in excess of 5% of the outstanding Common Stock of
any publicly traded entity; or

               (iii) Solicit any entity presently having a contractual
relationship with Western Water, which at the time of solicitation has a
contractual relationship with Western Water.

        IN WITNESS WHEREOF, this Agreement is executed as of the last date below
written.


WESTERN WATER COMPANY, a Delaware corporation


/s/ PETER L. JENSEN                            Dated: December 17, 1997.
----------------------------------             
By: Peter L. Jensen, President



JOHN H. HUSTON ("HUSTON")

/s/  JOHN H. HUSTON                            Dated: December 18, 1997.
----------------------------------
John H. Huston


APPROVED AS TO FORM AND CONTENT:


By: /s/  William D. Gould
----------------------------------
 Attorney for Western Water Company

By: /s/  Mark A. Bennett
----------------------------------
     Attorney for John H. Huston



                                       9
<PAGE>   10


                                   ENDORSEMENT


        I, John H. Huston, hereby acknowledge that I was given or took 21 days
to consider the foregoing Resignation Agreement and Mutual General Release
("Agreement") and voluntarily chose to sign the Agreement prior to the
expiration of the 21-day period.

        I declare under penalty of perjury under the laws of the State of
California that the foregoing is true and correct.

        Executed this 18th day of December, 1997 in Littleton, Colorado


                                                   /s/  JOHN H. HUSTON
                                                   -----------------------------
                                                   John H. Huston


                                CONSENT OF SPOUSE

        I, Candace A. Huston, acknowledge that I have read the foregoing
Resignation Agreement and Mutual General Release ("Agreement") and that I know
its contents. I am aware that by its provisions my spouse, John H. Huston,
agrees to waive and release the Huston Released Claims, as that term is defined
in the Agreement, against Western Water and the Western Water Released Parties,
as those terms are defined in the Agreement, including my community interest, if
any, in the Huston Released Claims. I am aware that my spouse was given or took
21 days to consider the foregoing Agreement and voluntarily chose to sign the
Agreement prior to the expiration of the 21-day period. I hereby consent to my
spouse's waiver and release of the Huston Released Claims and to my spouse's
execution of the Agreement prior to the expiration of the 21-day period, and
agree that the Huston Released Claims and my interest in them are subject to the
provisions of the Agreement and that I will take no action at any time to hinder
operation of the Agreement or to assert any of the Huston Released Claims
against Western Water or the Western Water Released Parties.

        I declare under penalty of perjury under the laws of the State of
California that the foregoing is true and correct.

        Executed this 17th day of December, 1997 in Littleton, Colorado.


                                             /s/  CANDACE A. HUSTON
                                             -----------------------------------
                                                  Candace A. Huston


                                       10
<PAGE>   11

                                    EXHIBIT A


        This is to advise you that effective December 26, 1997, I hereby resign
my positions as an officer and an employee of Western Water Company and any
subsidiaries or affiliates of Western Water Company.



                                             /s/  JOHN H. HUSTON
                                             -----------------------------------
                                                   John H. Huston



                                       11
<PAGE>   12

                                    EXHIBIT B


                    OPTION AGREEMENT DATED NOVEMBER 24, 1993

           FIRST AMENDMENT TO THE OPTION AGREEMENT DATED APRIL 4, 1996

                     ESCROW AGREEMENT DATED NOVEMBER 24, 1993


                                       12
<PAGE>   13

                                OPTION AGREEMENT

        This Option Agreement is made this 24th day of November 1993 by Alan M.
Voorhees ("Voorhees"), Summit Enterprises, Inc. of Virginia ("Summit") and
Western Water Company, a California corporation ("Water").

                                R E C I T A L S :

        A. BCI Geonatics, Inc., a Delaware corporation (the "Company"), has
issued and outstanding capital stock as indicated on Exhibit A hereto.

        B. Voorhees and Summit recently converted indebtedness owing by the
Company into shares of Common Stock of the Company.

        C. Voorhees and Summit desire to enter into an agreement with Water
pursuant to which Voorhees and Summit will grant Water an option with respect to
an aggregate of 15,000,000 shares of Common Stock of the Company (the "Stock").

        In order to consummate the transactions set forth in this Agreement and
in consideration of the mutual promises made in this Agreement and the mutual
benefits to be derived from this Agreement, the parties hereto agree as follows:

                1. Option and Exercise Price.

                      a. Voorhees and Summit hereby grant to Water an option to
purchase all (but not less than all) of the stock for a cash purchase price of
$1,500,000 (the "Exercise Price"). Such option may be exercised at any time
during the period commencing on November 10, 1993 and ending on October 14,
1998.

                      b. The option described in Paragraph a above shall be
exercised by Water's giving written notice of such exercise to Voorhees and
Summit. Such notice shall be effective when mailed certified mail to Voorhees
and Summit in accordance with the notice provisions found in Paragraph 4 of this
Agreement.

                      c. Upon the execution of this Agreement, Voorhees and
Summit shall deposit with Invisions, Inc. in escrow certificates for the stock
property endorsed in blank or with stock powers properly endorsed in blank. The
terms of such escrow are set forth in Exhibit B hereto.

                      d. In consideration for the option described in Paragraph
a above, Water, upon execution hereof, shall pay to each of Voorhees and Summit
One Hundred Dollars ($100.00) by check (the "Option Payment").



                                       13
<PAGE>   14

                      e. If at any time the Company shall by subdivision,
combination, consolidation or reclassification of shares, cash or stock
dividend, stock split or other distribution, or otherwise change the corporate
structure of the Company, Voorhees and Summit agree to make appropriate
adjustments to preserve the benefits to Water including, without limitation,
adjustments in the number of shares subject to this option.

                2. The Closing.

                      In the event the option described in Paragraph 1 is
exercised, the Escrow Holder shall release to Water certificates for the Stock
duly endorsed in blank or accompanied by stock powers duly executed in blank, in
proper form for transfer, upon Water's delivery of the Exercise Price, by
cashier's or certified check.

                3. Representation and Warranty of Voorhees and Summit.

                      Voorhees and Summit each represents and warrants that he
and it own all of the shares of the Stock and have good and marketable title
thereto and the absolute right to sell, assign and transfer the same to Water
free and clear of all liens, claims, ledges and encumbrances of any kind.

                4. Notices.

                      Any notice, request, instruction or other document to be
given hereunder to any party shall be in writing delivered personally or sent by
registered or certified mail, postage prepaid, as follows:

               If to Voorhees and Summit:

               Alan M. Voorhees
               c/o Summit Enterprises, Inc. of Virginia
               1308 Devils Reach Road
               Suite 302
               Woodbridge, VA 22192

               If to Water:

               Western Water Company
               4660 La Jolla Village Drive
               Suite 680
               San Diego, CA 92122



                                       14
<PAGE>   15


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


                                        SUMMIT ENTERPRISES, INC. OF VIRGINIA


                                        By /s/   ALAN M. VOORHEES, CHAIRMAN
                                           -------------------------------------


                                        /s/  ALAN M. VOORHEES
                                        ----------------------------------------
                                             Alan M. Voorhees


                                        WESTERN WATER COMPANY


                                        By /s/   PETER L. JENSEN
                                           -------------------------------------
                                             Peter L. Jensen, President



                                       15
<PAGE>   16


                                ESCROW AGREEMENT


        THIS ESCROW AGREEMENT is made and entered into this 24th day of November
1993, by and between Alan M. Voorhees and Summit Enterprises, Inc. of Virginia
(collectively, "Shareholder"), Western Water Company ("Water") and Invisions,
Inc., a corporation, as escrow holder ("Escrow Holder").

                                 R E C I T A L S

        A. Shareholder and Water have entered into that certain Option Agreement
dated as of even date (the "Agreement");

        B. The Agreement provides, among other things, that Water shall have the
option to purchase the Stock (as defined in the Agreement) of BCI Geonetics,
Inc., a Delaware corporation (the "Company"), at such times and on such terms
and conditions as are provided for in the Agreement (the "Option"); and

        C. Shareholder and Water desire to provide for an orderly and rapid
method of transfer of the Stock upon the exercise of the Option pursuant to the
Agreement.

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto do hereby agree as follows:

               1.     a. Immediately upon execution of this Escrow Agreement,
Shareholder shall deliver, or cause to be delivered to the Escrow Holder,
certificates for all shares of the Stock, duly endorsed in blank or with stock
powers duly endorsed in blank, in proper form for transfer (collectively, the
"Escrow Shares"), to be held in escrow under the terms of this Escrow Agreement.

                      b. If (i) any stock certificate deposited upon execution
hereof should subsequently be exchanged for or converted into any other
certificate, instrument, right or property, (collectively, "Exchange
Securities"), or (ii) the Company shall effect any reorganization,
reclassification, consolidation, merger or other event that results in the
exchange of securities or other assets ("Replacement Securities") for the Escrow
Shares, or (iii) the Company shall issue any additional shares of capital stock
to Shareholder, including but not limited to, shares issued upon any stock split
or stock dividend affecting the Escrow Shares ("Additional Securities"), then
all Exchange Securities, Replacement Securities and Additional Securities shall
be delivered to the Escrow Holder and when received by the Escrow Holder shall
become or be included in the Escrow Shares for the purpose of this Escrow
Agreement.

                      c. During the term of this Escrow Agreement, Shareholder
shall retain all rights with respect to the Escrow Shares, except for the right
to sell, 


                                       16
<PAGE>   17

assign or transfer any interest in the Escrow Shares free of the terms and
conditions of this Agreement.

               2. The Escrow Holder is hereby instructed by the Shareholder to
transfer to Water all Escrow Shares specified in a notice referred to in
subparagraph 2(a) below, upon the occurrence of all of the following events:

                      a. The delivery to Shareholder of the written notice of
exercise of the Option; and

                      b. The delivery to Shareholder by Water of the Exercise
Price (as defined in the Agreement) for the Escrow Shares being purchased
pursuant to the exercise of the Option in the amount and in the manner provided
for in the Agreement.

               3. This Escrow Agreement shall terminate upon the first to occur
of the following events:

                      a. The transfer to Water of the Escrow Shares pursuant to
Paragraph 2 hereof; or

                      b. The expiration of the period of time provided in the
Agreement for the exercise of the Option.

        If this Escrow Agreement is terminated pursuant to subparagraph b above,
the Escrow Holder shall thereupon return to Shareholder the Escrow Shares.

               4. This Escrow Agreement shall be binding upon the parties hereto
and their respective transferees, successors, assigns, legal representatives,
heirs and legatees.

               5. This Escrow Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California.



                                       17
<PAGE>   18


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


                                        "SHAREHOLDER"

                                        SUMMIT ENTERPRISES, INC. OF VIRGINIA


                                        By /s/  ALAN M. VOORHEES, CHAIRMAN
                                           -------------------------------------

                                           /s/  ALAN M. VOORHEES
                                           -------------------------------------


                                        "WATER"

                                        WESTERN WATER COMPANY


                                        By /s/   PETER L. JENSEN, PRESIDENT
                                           -------------------------------------


                                        "ESCROW HOLDER"

                                        INVISIONS, INC.


                                        By /s/   JAMES C. QUIBODEAUX
                                           -------------------------------------

                                        Address: 1275 30th Street
                                                 San Diego, CA 92154-3476
                                                 (619) 575-3300



                                       18
<PAGE>   19


                     FIRST AMENDMENT TO THE OPTION AGREEMENT


This Amendment is made as of April 4, 1996 by Alan M. Voorhees ("Voorhees"),
Summit Enterprises, Inc. of Virginia ("Summit") and Western Water Company, a
Delaware corporation ("Water").

WHEREAS Voorhees, Summit and Water (collectively, the "Parties") entered into an
Option Agreement on November 24, 1993 ("Agreement") and seek to modify such
Agreement.

In consideration of a check for Twenty-Five Dollars ($25.00) to each of Voorhees
and Summit, the mutual promises made herein, the mutual benefits to be derived
from this Amendment, and other good and valuable consideration, the Parties
agree as follows:

1.      The optioned share figure of "15,000,000" contained in line 4 of
        Paragraph C of the Agreement is hereby changed to "12,000,000".

2.      Paragraph 1(a) of the Agreement is deleted in its entirety and replaced
        with the following:

        a.     Voorhees and Summit hereby grant to Water an option to purchase
               all "but not less than all" of the Stock, for a cash purchase
               price of $480,000 (the "Exercise Price"). Such an option may be
               exercised at any time during the period commencing on April 4,
               1994 and ending on April 4, 1999.

3.      Except as amended herein, all other terms and conditions of the
        Agreement shall remain unchanged and in full force and effect.


SUMMIT ENTERPRISES, INC. OF VIRGINIA      WESTERN WATER COMPANY


/s/     ALAN M. VOORHEES                  /s/    MARILYN BUSEMAN DREYER
---------------------------------         --------------------------------------
By:     Chairman                          By: Marilyn Buseman Dreyer, CFO

Alan M. Voorhees


/s/     ALAN M. VOORHEES
---------------------------------


                                       19
<PAGE>   20


                                    EXHIBIT C


          WESTERN WATER COMPANY ANNOUNCES RESIGNATION OF JOHN H. HUSTON
                      AS DIRECTOR AND SENIOR VICE PRESIDENT


        Western Water Company (Nasdaq: WWTR) announced today that John H. Huston
has resigned as a Director and Senior Vice President of the Company. Mr. Huston,
a water attorney and geologist with 22 years experience in water rights
development and marketing started with the Company in 1992 and became a director
in 1995. He is presently Chairman of Integrated Water Technologies, Inc.
("IWT"). IWT is a geotechnical consulting company that provides groundwater
geological and GIS services to Western Water.

        Peter L. Jensen, President of 'Western Water, said "The Company has
benefited greatly from Mr. Huston's association, work and expertise. He will be
focusing his efforts at IWT and will continue to support Western Water with his
talents and insights. I wish to thank him for his help in building Western Water
over the past five and one-half years and look forward to a continuing
beneficial relationship as Western Water anticipates a new exciting growth
period."


                                       20