1.       BASIC LEASE TERMS


         a.   DATE OF LEASE:    August 14, 2001
                              ----------------------------------------------

         b.   TENANT:  Helix BioMedix, Inc., a Deleware corporation
                       -----------------------------------------------------

              Trade Name: Helix BioMedix, Inc.
                          --------------------------------------------------
              Address (Leased Premises):  22122 20th Avenue SE, Suite 148,
                                        ------------------------------------
                                          Bothell, WA  98021
                                        ------------------------------------
              Building/Unit: H/148 Address (For Notices): 22121 20th Avenue
                                                          ------------------
                                           SE, Suite 148, Bothell,  WA 98021
                                           ---------------------------------

         c.   LANDLORD:  Teachers Insurance & Annuity Association of
                         ---------------------------------------------------
                         America, Inc.,
                         ---------------------------------------------------

               Address (For Notices):  22118  20th Avenue SE, Suite 138,
                                       -------------------------------------
                                       Bothell,  WA 98021
                                       -------------------
              with a copy to such other place as  Landlord  may from time to
              time designate by notice to Tenant.

         d.   TENANT'S USE OF PREMISES: Office, warehouse and lab space for
                                        ------------------------------------
                                        company specializing in the research
                                        ------------------------------------
                                        and development of biopharmaceutical
                                        ------------------------------------
                                        products involving lytic peptides.
                                        ------------------------------------

         e.   PREMISES AREA: An agreed      3,038     Rentable Square Feet
                                         -------------

         f.   PROJECT AREA: An agreed       444,999   Rentable Square Feet
                                         -------------

         g.   TERM OF LEASE: This Lease shall commence on September 1, 2001
                                                          ------------------
              or such earlier or later date as is provided in Section 3 (the
              "Commencement  Date"),  and shall terminate on the last day of
              the forty-eighth  (48th)  full  calendar  month after the
                  --------------------
              Commencement Date (the "Expiration Date").

         h.   BASE MONTHLY RENT (months refer to period through the
              applicable full calendar month):

              Commencement Date - Month    12              $3,463.00
                                        ----------
              Month       13     - Month   24              $3,910.00
                    ------------        ---------
              Month       25     - Month   36              $4,106.00
                    ------------        ---------
              Month       37     - Month   48              $4,311.00
                    ------------        ---------

         i.   PREPAID RENT (for months in addition to first month's rent): $ N/A
                                                                           -----


         j.   SECURITY DEPOSIT: $ 4,311.00  NON-REFUNDABLE CLEANING FEE:$430.00.
                                 ----------                              ------
         k.   BROKER(S):  Tenant's Broker   Al Hodge; Broderick Group       ;
                                          ----------------------------------
              Landlord's Broker  Molly Brundage; CB Richard Ellis
                                 ---------------------------------
         l.   GUARANTOR(S):  NA
                            ----
         m.   EXHIBITS:
                     Exhibit A - The Premises
                     Exhibit B - The Project
                     Exhibit C - Premises Condition and Work Letter Agreement
                                 [if applicable]
                     Exhibit D - Rules and Regulations
                     Exhibit E - Tenant Sign Criteria
                     Exhibit F - Letter of Credit

                                       -1-
<PAGE>


2.   PREMISES/COMMON AREAS/PROJECT.

     a. Premises.  Landlord leases to Tenant the premises described in Section 1
     and in Exhibit A (the  "Premises"),  located in this  project  described on
     Exhibit B (the "Project").  By entry on the Premises,  Tenant  acknowledges
     that it has examined the Premises and accepts the Premises in their present
     condition,  subject to any  Landlord's  Work  required  under  this  Lease.
     Landlord's  Work shall  consist of such work,  if any,  as is  specifically
     identified as Landlord's  responsibility  under Exhibit C. Unless otherwise
     identified  in written  notice from  Tenant to Landlord  prior to the dates
     specified below,  Landlord's Work shall be deemed approved by Tenant in all
     respects on the earlier of (a) the date Tenant  commences  construction  or
     installation  of any Tenant's  Work,  or (b) the date Tenant begins to move
     its personal  property into the Premises.  Tenant  represents  and warrants
     that it agrees with the square  footage  specified for the Premises and the
     Project in Section 1 and will not hereafter  challenge  such  determination
     and agreement.
     b. Common  Areas.  As used in this  Lease,  "Common  Areas"  shall mean all
     portions  of the  Project  not  leased or  demised  for  lease to  specific
     tenants.  During  the  Lease  Term,  Tenant  and its  licensees,  invitees,
     customers  and  employees  shall  have the  non-exclusive  right to use the
     public  portions  of  the  Common  Areas,   including  all  parking  areas,
     landscaped areas, entrances,  lobbies,  elevators,  stairs,  corridors, and
     public  restrooms in common with Landlord,  other Project tenants and their
     respective licensees,  invitees, customers and employees. Landlord shall at
     all times have exclusive  control and management of the Common Areas and no
     diminution  thereof shall be deemed a  constructive  or actual  eviction or
     entitle  Tenant  to  compensation  or a  reduction  or  abatement  of rent.
     Landlord in its  discretion  may  increase,  decrease or change the number,
     locations and dimensions of any Common Areas and other  improvements  shown
     on  Exhibit A which are not  within  the  Premises.  c.  Project.  Landlord
     reserves  the  right  in  its  sole  discretion  to  modify  or  alter  the
     configuration  or number of buildings in the  Project,  provided  only that
     upon such  modification  or  alteration,  the Project  Area as set forth in
     Section 1(f) shall be adjusted to reflect such modification or alteration.

3.   TERM. The Commencement Date listed in Section l of this Lease represents an
     estimate  of the  Commencement  Date.  This  Lease  shall  commence  on the
     estimated Commencement Date if tenant improvement work required of Landlord
     pursuant to this Lease ("Landlord's  Work") is substantially  completed (as
     that term is used in the construction industry) by such date, but otherwise
     the  Commencement  Date shall be first to occur of the following events (i)
     the  date  on  which  Landlord  notifies  Tenant  that  Landlord's  Work is
     substantially  complete,  (ii) the date on which Tenant takes possession or
     commences  beneficial  occupancy of the Premises,  or (iii) if  substantial
     completion of Landlord's Work is delayed due to Tenant's failure to perform

                                       -2-
<PAGE>

     its obligations  under this Lease,  then the date determined by Landlord as
     the  date  upon  which  Landlord's  Work  would  have  been   substantially
     completed,  but for Tenant's failure to perform.  If this Commencement Date
     is later than the Section 1 Commencement Date, this Lease shall not be void
     or voidable,  nor shall Landlord be liable to Tenant for any loss or damage
     resulting  therefrom.  Landlord  shall  confirm  the  Commencement  Date by
     written  notice to Tenant.  This Lease shall be for a term  ("Lease  Term")
     beginning  on the  Commencement  Date and  ending on the  Expiration  Date,
     unless  extended or sooner  terminated in accordance with the terms of this
     Lease.  All provisions of this Lease,  other than those relating to payment
     of Base Monthly Rent and  Additional  Rent,  shall become  effective on the
     date that Tenant or its officers, agents, employees or contractors is first
     present on the Premises for inspection, construction or move in purposes.

4.   RENT
     a. Base Monthly  Rent.  Tenant shall pay Landlord  monthly base rent in the
     initial  amount in Section 1 which  shall be payable  monthly in advance on
     the  first day of each and  every  calendar  month  ("Base  Monthly  Rent")
     provided,  however,  the first month's Base Monthly Rent is due and payable
     upon execution of this Lease. If the term of this Lease contains any rental
     abatement  period,  Tenant hereby agrees that if Tenant  breaches the Lease
     and fails to cure such breach within the  applicable  cure period,  if any,
     and/or  abandons  the  Premises  before  the end of the Lease  term,  or if
     Tenant's right to possession is terminated by Landlord  because of Tenant's
     breach  of  the  Lease,   the  rental  abatement  period  shall  be  deemed
     extinguished,  and there shall be immediately  due from Tenant to Landlord,
     in addition  to any  damages  otherwise  due  Landlord  under the terms and
     conditions of the Lease, Base Monthly Rent prorated for the entirety of the
     rental  abatement  period at the average  Base  Monthly Rent for the Lease,
     plus any and all other charges  (such as Expenses)  that were abated during
     such rental abatement period.

          For purposes of Section 467 of the Internal  Revenue Code, the parties
     to this Lease hereby agree to allocate the stated Rents,  provided  herein,
     to the periods  which  correspond  to the actual Rent  payments as provided
     under the terms and conditions of this agreement.

     b.  Expenses.  The  purpose of this  Section  4(b) is to ensure that Tenant
     bears a share of all Expenses related to the use,  maintenance,  ownership,
     repair or replacement, and insurance of the Project. Accordingly, beginning
     on the date Tenant  takes  possession  of the  Premises,  Tenant shall each
     month pay to  Landlord  one-twelfth  (1/12) of  Tenant's  Share of Expenses
     related to the Project. As used in this Lease,  "Tenant's Share" shall mean
     the Premises Area, as defined in Section 1(e), divided by the Project Area,
     as defined in Section 1(f), and "Tenant's Share of Expenses" shall mean the
     total Expenses for the Project for the applicable  calendar year multiplied
     by Tenant's  Share.  Landlord may specially  allocate  individual  expenses
     where  and  in  the  manner  necessary,   in  Landlord's   discretion,   to
     appropriately  reflect  the  consumption  of the  expense or  service.  For

                                       -3-
<PAGE>

     example where some but not all premises in the Project have HVAC,  Landlord
     may reallocate  Project Expenses for HVAC to all premises utilizing HVAC to
     be  apportioned  on a per square  foot  basis,  or could  allocate  to each
     premises  utilizing  HVAC the cost of maintaining  that space's  individual
     unit. In the event the average  occupancy level of the Project for any year
     is less than ninety five percent (95%),  the actual  Expenses for such year
     shall be  proportionately  adjusted to reflect  those costs which  Landlord
     estimates  would have been  incurred,  had the  Project  been  ninety  five
     percent (95%) occupied during such year.

          1)  Expenses  Defined.  The term  "Expenses"  shall mean all costs and
     expenses of the ownership,  operation,  maintenance, repair or replacement,
     and insurance of the Project,  including without limitation,  the following
     costs:

               (a) All supplies, materials, labor, equipment, and utilities used
               in or related to the operation and maintenance of the Project,

               (b) All maintenance,  janitorial,  legal, accounting,  insurance,
               service agreement and management  (including  on-site  management
               office) costs related to the Project;

               (c) All maintenance, replacement and repair costs relating to the
               areas   within  or  around  the   Project,   including,   without
               limitation,  air conditioning  systems,  sidewalks,  landscaping,
               service areas,  driveways,  parking Areas (including  resurfacing
               and  restriping  parking  areas),  walkways,  building  exteriors
               (including  painting),  signs  and  directories,   repairing  and
               replacing roofs,  walls,  etc. These costs may be included either
               based on actual  expenditures or the use of an accounting reserve
               based on past cost experience for the Project.

               (d)  Amortization  (along with reasonable  financing  charges) of
               capital  additions or improvements  made to the Project which may
               be required by any government authority or which will improve the
               operating efficiency of the Project (provided,  however, that the
               amount of such  amortization  for  improvements  not  mandated by
               government  authority  shall not exceed in any year the amount of
               costs reasonably determined by Landlord in its sole discretion to
               have been saved by the  expenditure  either through the reduction
               or   minimization   of  increases   which  would  have  otherwise
               occurred).

               (e) Real Property Taxes including all taxes, assessments (general
               and special) and other impositions or charges which may be taxed,
               charged,  levied,  assessed or imposed upon all or any portion of
               or in  relation  to the  Project  or  any  portion  thereof,  any
               leasehold  estate in the  Premises  or  measured by Rent from the
               Premises,  including any increase caused by the transfer, sale or
               encumbrance of the Project or any

                                       -4-
<PAGE>

               portion  thereof.  "Real  Property  Taxes" shall also include any
               form of  assessment,  levy,  penalty,  charge or tax (other  than
               estate,  inheritance,  net income, or franchise taxes) imposed by
               any authority having a direct or indirect power to tax or charge,
               including, without limitation, any city, county, state federal or
               any  improvement  or  other  district,  whether  such  tax is (1)
               determined  by the value of the Project or the Rent or other sums
               payable  under this Lease;  (2) upon or with respect to any legal
               or  equitable  interest  of  Landlord  in the Project or any part
               thereof;  (3) upon  this  transaction  or any  document  to which
               Tenant is a party  creating a  transfer  in any  interest  in the
               Project,  (4) in lieu of or as a direct substitute in whole or in
               part of or in addition to any real property taxes on the Project,
               (5) based on any parking spaces or parking facilities provided in
               the Project,  6) in  consideration  for services,  such as police
               protection,   fire  protection,   street,  sidewalk  and  roadway
               maintenance,  refuse  removal  or  other  services  that  may  be
               provided by any  governmental or  quasi-governmental  agency from
               time to time which were formerly  provided without charge or with
               less charge to property  owners or  occupants,  or (7)  otherwise
               based  on  the   operation  of  the  Project  (such  as  transit,
               carpooling or environmental facilities.

               (f)  Landlord  agrees that  Expenses  as defined in Section  4(b)
               shall not include leasing commissions;  payments of principal and
               interest on any mortgages,  deeds of trust or other  encumbrances
               upon the  Project;  depreciation  of the capital  cost of capital
               additions  or  improvements  except as  provided  at  4(b)(1)(d);
               Landlord's  executive  salaries,  management  fees in  excess  of
               market  rates;   costs   resulting  from   defective   design  or
               construction  of the Project;  costs incurred in connection  with
               entering  into new leases;  or costs of disputes  under  existing
               leases.  In no event shall Expenses  include any charge for which
               Landlord  receives  reimbursement  from insurance or from another
               Tenant,  nor shall any item of Expense be counted more than once,
               nor shall Landlord  collect more than one hundred  percent (100%)
               of Expenses.

          2) Annual  Estimate of Expenses.  When Tenant takes  possession of the
          Premises,  Landlord shall estimate  Tenant's Share of Expenses for the
          remainder  of the  calendar  year,  and at the  commencement  of  each
          calendar  year  thereafter,  Landlord  shall  provide  Tenant  with an
          estimate of Tenant's Share of Expenses for the ensuing calendar year.

          3) Monthly Payment of Expenses. Tenant shall pay to Landlord,  monthly
          in  advance,  as  Additional  Rent,  one-twelfth  (1/12) of the Annual
          Estimate of

                                       -5-
<PAGE>

          Tenant's  Share  of  Expenses  beginning  on  the  date  Tenant  takes
          possession  of the  Premises.  As soon  as  practical  following  each
          calendar year, Landlord shall prepare an accounting of actual Expenses
          incurred  during the prior  calendar  year and such  accounting  shall
          reflect  Tenant's Share of Expenses.  If the  Additional  Rent paid by
          Tenant under this Section  4(b)(3) during the preceding  calendar year
          was  less  than the  actual  amount  of  Tenant's  Share of  Expenses,
          Landlord  shall so notify  Tenant and Tenant  shall pay such amount to
          Landlord  within 30 days of receipt of such notice.  Such amount shall
          be deemed to have accrued  during the prior calendar year and shall be
          due and  payable  from  Tenant  even though the term of this Lease has
          expired or this Lease has been terminated prior to Tenant's receipt of
          this  notice.  Tenant shall have thirty (30) days from receipt of such
          notice to contest the amount due,  failure to so notify Landlord shall
          represent  final  determination  of  Tenant's  Share of  Expenses.  If
          Tenant's  payments  were  greater  than the actual  amount,  then such
          overpayment  shall  be  credited  by  Landlord  to  Tenant's  Share of
          Expenses due under this Section 4(b)(3).

          Rent Without Offset and Late Charge. As used herein, "Rent" shall mean
          all monetary  sums due from Tenant to Landlord.  All Base Monthly Rent
          shall be paid by Tenant to Landlord  without prior notice or demand in
          advance on the first day of every calendar month, at the address shown
          in Section 1, or such other place as landlord may designate in writing
          from time to time.  Whether or not so  designated,  all other sums due
          from Tenant under this Lease shall constitute Additional Rent, payable
          without  prior notice or demand when  specified in this Lease,  but if
          not specified,  then within ten (10) days of demand. All Rent shall be
          paid  without any  deduction or offset  whatsoever.  All Rent shall be
          paid in lawful currency of the United States of America.  Proration of
          Rent due for any partial  month shall be  calculated  by dividing  the
          number of days in the month for which Rent is due by the actual number
          of days in that month and multiplying by the applicable  monthly rate.
          Tenant  acknowledges  that late  payment by Tenant to  Landlord of any
          Rent or other sums due under this Lease will cause  Landlord  to incur
          costs not  contemplated  by this Lease,  the exact amount of such cost
          being extremely  difficult and impracticable to ascertain.  Such costs
          include,  without  limitation,  processing and accounting  charges and
          late  charges  that may be  imposed  on  Landlord  by the terms of any
          encumbrance or note secured by the Premises. Therefore, if any Rent or
          other sum due from Tenant is not received  when due,  Tenant shall pay
          to Landlord an  additional  sum equal to 10% of such overdue  payment.
          Landlord and Tenant  hereby  agree that such late charge  represents a
          fair and reasonable  estimate of the costs that Landlord will incur by
          reason  of any such  late  payment  and that  the  late  charge  is in
          addition to any and all  remedies  available  to the Landlord and that
          the  assessment  and/or  collection  of the late  charge  shall not be
          deemed  a  waiver  of  any  other  default.   Additionally,  all  such

                                       -6-
<PAGE>

          delinquent  Rent or other  sums,  plus this late  charge,  shall  bear
          interest at the rate of 18 percent  per annum.  If the  interest  rate
          specified in this Lease is higher than the rate  permitted by law, the
          interest rate is hereby  decreased to the maximum legal  interest rate
          permitted by law. Any payments of any kind  returned for  insufficient
          funds will be subject to an additional  handling charge of $25.00, and
          thereafter,  Landlord may require Tenant to pay all future payments of
          Rent or other sums due by money order or cashier's check.

5.   PREPAID RENT.  Upon the execution of this Lease,  Tenant shall, in addition
     to the payment of the first month's Rent as set forth in Section 4(a),  pay
     to Landlord  the prepaid Rent set forth in Section  1(i),  and if Tenant is
     not in default of any provisions of this Lease,  such prepaid Rent shall be
     applied  toward Base Monthly Rent for the months set forth in Section 1(i).
     Landlord's  obligations  with  respect to the  prepaid  Rent are those of a
     debtor and not of a trustee,  and Landlord can  commingle  the prepaid Rent
     with Landlord's general funds. Landlord shall not be required to pay Tenant
     interest on the prepaid  Rent.  Landlord  shall be entitled to  immediately
     endorse and cash  Tenant's  prepaid Rent;  however,  such  endorsement  and
     cashing shall not constitute  Landlord's  acceptance of this Lease.  In the
     event  Landlord  does not accept this  Lease,  Landlord  shall  return said
     prepaid Rent.

6.   DEPOSIT.  Upon  execution of this Lease,  Tenant  shall  deposit a security
     deposit and a cleaning fee as set forth in Section 1(j) with  Landlord.  If
     twice within any 12 month period,  late charges are assessed against Tenant
     by Landlord,  Landlord may, by written notice to Tenant,  require Tenant to
     pay Landlord an amount equal to one month's Base Rent as an increase in the
     Security Deposit,  which additional amount shall be due within 5 days after
     Tenant's receipt of the notice.  If Tenant is in default,  Landlord can use
     the  Security  Deposit  or any  portion  of it to cure  the  default  or to
     compensate  Landlord for any damages  sustained by Landlord  resulting from
     Tenant's default.  Upon demand,  Tenant shall immediately pay to Landlord a
     sum equal to the  portion of the  Security  Deposit  expended or applied by
     Landlord to restore the Security  Deposit to its full  amount.  In no event
     will Tenant have the right to apply any part of the Security Deposit to any
     Rent or other sums due under this Lease. If Landlord transfers its interest
     in the  Premises,  Landlord  shall  transfer  the  Security  Deposit to its
     successor in interest,  whereupon Landlord shall be automatically  released
     from any liability for the return of the Security  Deposit.  If, at the end
     of the Lease Term,  Tenant has fully  complied with all  obligations  under
     this Lease, then the remaining Security Deposit shall be returned to Tenant
     after  Landlord has verified  that Tenant has fully  vacated the  Premises,
     removed all of its property and  surrendered  the Premises in the condition
     required  under this Lease;  provided that Landlord may hold back a portion
     of the Security  Deposit  until final  determination  of Tenant's  share of
     Common  Expenses,  whereupon  a final  adjustment  shall  be  made  and any
     remaining  Security Deposit shall be returned to Tenant. The Non-Refundable
     Cleaning Fee shall be retained by  Landlord.  Landlord's  obligations  with
     respect to the Security Deposit are those of a debtor and not of a trustee,

                                       -7-
<PAGE>

     and Landlord can commingle  the Security  Deposit with  Landlord's  general
     funds.  Landlord  shall  not be  required  to pay  Tenant  interest  on the
     deposit. Each time the Base Monthly Rent is increased, Tenant shall deposit
     additional  funds with  Landlord  sum  sufficient  to increase the Security
     Deposit to an amount which bears the same relationship to the adjusted Base
     Monthly  Rent as the initial  Security  Deposit  bore to the  initial  Base
     Monthly Rent.

7.   USE OF  PREMISES  AND PROJECT  FACILITIES.  Tenant  shall use the  Premises
     solely for the  purposes  set forth in  Section 1 and for no other  purpose
     whatsoever without obtaining the prior written consent of Landlord.  Tenant
     acknowledges  that neither  Landlord nor any agent of Landlord has made any
     representation  or warranty with respect to the Premises or with respect to
     the  suitability of the Premises or the Project for the conduct of Tenant's
     business, nor has Landlord agreed to undertake any modification, alteration
     or  improvement  to the  Premises  or the  Project,  except as  provided in
     writing in this Lease.  Tenant  acknowledges that Landlord may from time to
     time,  at  its  sole  discretion,  make  such  modifications,  alterations,
     deletions or  improvements to the Project as Landlord may deem necessary or
     desirable,  without compensation or notice to Tenant. Tenant shall promptly
     comply with all laws,  ordinances,  orders and  regulations  affecting  the
     Premises  and the Project,  including,  without  limitation,  the rules and
     regulations  attached hereto as Exhibit D and any reasonable  modifications
     to these rules and  regulations  as  Landlord  may adopt from time to time.
     Tenant  acknowledges  that, except for Landlord's  obligations  pursuant to
     Section 13,  Tenant is solely  responsible  for ensuring  that the Premises
     comply with any and all  governmental  regulations  applicable  to Tenant's
     conduct of business on the Premises,  and that Tenant is solely responsible
     for  any  alterations  or  improvements   that  may  be  required  by  such
     regulations,  now  existing or  hereafter  adopted.  Tenant shall not do or
     permit  anything  to be done in or  about  the  Premises  or  bring or keep
     anything in the Premises that will in any way increase the premiums paid by
     Landlord on its  insurance  related to the Project or which will in any way
     increase  the  premiums  for fire or  casualty  insurance  carried by other
     tenants in the  Project.  Tenant  will not  perform any act or carry on any
     practices  that may  injure  the  Premises  or the  Project;  that may be a
     nuisance or menace to other  tenants in the  Project;  or that shall in any
     way interfere with the quiet enjoyment of such other tenants.  Tenant shall
     not  use  the  Premises  for  sleeping,  washing  clothes,  cooking  or the
     preparation,  manufacture  or  mixing  of  anything  that  might  emit  any
     objectionable  odor, noises,  vibrations or lights onto such other tenants.
     If sound  insulation is required to muffle noise  produced by Tenant on the
     Premises,  Tenant at its own cost shall provide all  necessary  insulation.
     Tenant  shall not do  anything  on the  premises  which will  overload  any
     existing  parking or service to the  Premises.  Pets and/or  animals of any
     type shall not be kept on the Premises.


8.   HAZARDOUS SUBSTANCES; DISRUPTIVE ACTIVITIES

                                       -8-
<PAGE>

          a. Hazardous Substances.
             --------------------

               (1) Presence and Use of Hazardous Substances.
               ---------------------------------------------
               As used in this Lease, "Hazardous Substances" shall mean anything
          which may be  harmful  to  persons  or  property,  including,  but not
          limited to, materials  designated as a "Hazardous  Substance" pursuant
          to  Section   101  of  the   Comprehensive   Environmental   Response,
          Compensation  and Liability Act of 1980, as now or hereafter  amended,
          42 USC 9601, et seq., or as a Hazardous Substance, Hazardous Household
          Substance,   Moderate   Risk  Waste  or  Hazardous   Waste  under  RCW
          70.105.010, or which is regulated by any federal, state, or local law,
          statute,  ordinance or  regulation  pertaining  to health,  industrial
          hygiene or the environment. Tenant shall not, without Landlord's prior
          written  consent,  keep on or around  the  Premises,  Common  Areas or
          Building, for use, disposal, treatment,  generation,  storage or sale,
          any  Hazardous  Substances  except such  Hazardous  Substances  as are
          commonly  used  in  general  administrative  office  operations.  With
          respect to any Hazardous Substance, Tenant shall:

                    (i)  Comply  promptly,   timely,  and  completely  with  all
               governmental requirements for reporting,  keeping, and submitting
               manifests,  and  obtaining  and  keeping  current  identification
               numbers;

                    (ii)  Submit  to  Landlord  true and  correct  copies of all
               reports,  manifests,  and identification numbers at the same time
               as  they  are  required  to  be  and/or  are   submitted  to  the
               appropriate governmental authorities;

                    (iii)  Within five (5) days of  Landlord's  request,  submit
               written  reports to Landlord  regarding  Tenant's  use,  storage,
               treatment,  transportation,   generation,  disposal  or  sale  of
               Hazardous   Substances  and  provide  evidence   satisfactory  to
               Landlord of Tenant's  compliance  with the applicable  government
               regulations;

                    (iv) Allow Landlord or Landlord's agent or representative to
               come on the  premises at all times to check  Tenant's  compliance
               with all applicable governmental  regulations regarding Hazardous
               Substances;

                    (v)  Comply  with   minimum   levels,   standards  or  other
               performance  standards or requirements  which may be set forth or
               established   for  certain   Hazardous   Substances  (if  minimum
               standards  or  levels  are  applicable  to  Hazardous  Substances
               present  on the  Premises,  such  levels  or  standards  shall be
               established   by  an  on-site   inspection  by  the   appropriate
               governmental authorities and shall be set forth in an addendum to
               this Lease); and

                    (vi)  Comply  with  all   applicable   governmental   rules,
               regulations and requirements regarding the proper and lawful use,
               sale,  transportation,  generation,  treatment,  and  disposal of
               Hazardous Substances.

                                       -9-
<PAGE>

               (2) Any and all costs  incurred by Landlord and  associated  with
          Landlord's  monitoring  of Tenant's  compliance  with this  Section 8,
          including  Landlord's  attorneys' fees and costs,  shall be Additional
          Rent and shall be due and payable to Landlord  immediately upon demand
          by Landlord.

          b. Cleanup Costs, Default and Indemnification.
             -------------------------------------------

          (1) Tenant  shall be fully and  completely  liable to Landlord for any
          and all cleanup costs, and any and all other charges,  fees, penalties
          (civil  and  criminal)  imposed  by any  governmental  authority  with
          respect to Tenant's use, disposal,  transportation,  generation and/or
          sale of Hazardous Substances,  in or about the Premises, Common Areas,
          or Building.

          (2) Tenant shall  indemnify,  defend and save Landlord and  Landlord's
          lender,  if  any,  harmless  from  any  and  all of the  costs,  fees,
          penalties  and charges  assessed  against or imposed upon Landlord (as
          well as Landlord's and Landlord's  lender's attorneys' fees and costs)
          as a result of  Tenant's  use,  disposal,  transportation,  generation
          and/or sale of Hazardous Substances.

          (3) Upon  Tenant's  default  under this  Section 8, in addition to the
          rights and remedies set forth elsewhere in this Lease,  Landlord shall
          be entitled to the following rights and remedies:

                    (i)  At   Landlord's   option,   to  terminate   this  Lease
               immediately; and/or

                    (ii) To  recover  any and all  damages  associated  with the
               default, including, but not limited to cleanup costs and charges,
               civil and criminal penalties and fees, loss of business and sales
               by  Landlord  and  other  tenants  of the  Building,  any and all
               damages  and claims  asserted  by third  parties  and  Landlord's
               attorneys' fees and costs.

          c. Disposal of Waste
             -----------------

               (1) Refuse  Disposal.  Tenant shall not keep any trash,  garbage,
          waste or other  refuse on the Premises  except in sanitary  containers
          and shall  regularly  and  frequently  remove same from the  Premises.
          Tenant shall keep all incinerators, containers or other equipment used
          for  storage or  disposal of such  materials  in a clean and  sanitary
          condition.

               (2)  Sewage  Disposal.  Tenant  shall  properly  dispose  of  all
          sanitary  sewage and shall not use the sewage  disposal system (a) for
          the disposal of anything  except  sanitary  sewage or (b) in excess of
          the lesser amount (i)  reasonably  contemplated  by the uses permitted
          under this Lease or (ii) permitted by any governmental entity.  Tenant
          shall keep the sewage disposal system free of all  obstructions and in
          good operating condition.

                                      -10-
<PAGE>

               (3) Disposal of Other Waste. Tenant shall properly dispose of all
          other waste or other matter delivered to, stored upon, located upon or
          within,  used on, or removed from,  the Premises in such a manner that
          it does not, and will not,  adversely  affect the (a) health or safety
          of persons, wherever located, whether on the Premises or elsewhere (b)
          condition,  use or  enjoyment  of the  Premises  or any other  real or
          personal  property,  wherever  located,  whether  on the  Premises  or
          anywhere else, or (c) Premises or any of the  improvements  thereto or
          thereon  including  buildings,   foundations,  pipes,  utility  lines,
          landscaping or parking areas.

          d. Disruptive Activities.  Tenant shall not:
             ----------------------

               (1) Produce,  or permit to be produced,  any intense glare, light
          or heat except  within an  enclosed or screened  area and then only in
          such  manner  that the glare,  light or heat shall  not,  outside  the
          Premises,  be materially  different  that the light or heat from other
          sources outside the Premises;

               (2) Create,  or permit to be created,  any sound  pressure  level
          which will  interfere  with the quiet  enjoyment of any real  property
          outside the  Premises,  or which will create a nuisance or violate any
          governmental law, rule, regulation or requirement;

               (3) Create, or permit to be created, any ground vibration that is
          materially discernible outside the Premises;

               (4) Transmit,  receive or permit to be  transmitted  or received,
          any electromagnetic,  microwave or other radiation which is harmful or
          hazardous to any person or property in, or about the Project; or

               (5)  Create,  or permit to be created,  any noxious  odor that is
          disruptive  to the  business  operations  of any  other  tenant in the
          Project.


9.   SIGNAGE.  All signing shall comply with rules and  regulations set forth by
     Landlord  as  may  be  modified  from  time  to  time.  Current  rules  and
     regulations  relating to signs are  described  on Exhibit E.  Tenant  shall
     place no window covering (e.g., shades, blinds, curtains,  drapes, screens,
     or tinting materials),  stickers, signs, lettering,  banners or advertising
     or display  material on or near exterior windows or doors if such materials
     are visible from the exterior of the  Premises,  without  Landlord's  prior
     written consent.  Similarly,  Tenant may not install any alarm boxes,  foil
     protection  tape  or  other  security  equipment  on the  Premises  without
     Landlord's prior written consent. Any material violating this provision may
     be destroyed by Landlord without compensation to Tenant.

10.  PERSONAL  PROPERTY  TAXES.  Tenant shall pay before  delinquency all taxes,
     assessments,  license fees and public charges  levied,  assessed or imposed
     upon its business operations as well as upon all trade fixtures,  leasehold
     improvements,  merchandise  and  other  personal  property  in or about the
     Premises.

                                      -11-
<PAGE>

11.  PARKING.  Landlord  grants to Tenant  and  Tenant's  customers,  suppliers,
     employees  and  invitees,  a  non-exclusive  license to use the  designated
     parking areas in the Project for the use of motor vehicles  during the term
     of this Lease.  Landlord  reserves  the right at any time to grant  similar
     non-exclusive  use to other tenants,  to promulgate  rules and  regulations
     relating  to  the  use  of  such  parking   areas,   including   reasonable
     restrictions  on parking by tenants and  employees,  to designate  specific
     spaces for the use of any tenant,  to make  changes in the  parking  layout
     from time to time,  and to  establish  reasonable  time  limits on parking.
     Overnight parking is prohibited and any vehicle violating this or any other
     vehicle regulation adopted by Landlord is subject to removal at the owner's
     expense.

12.  UTILITIES;  SERVICES.  Landlord shall furnish the Premises with electricity
     for office use,  including lighting and low power usage for office machines
     and water for restroom facilities.  From 7:00 a.m. to 6:00 p.m. on weekdays
     and 9:00 a.m. to 1:00 p.m. on Saturday,  excluding legal holidays  ("Normal
     Business  Hours"),  Landlord  shall  furnish the Premises with heat and air
     conditioning  services  as  required,  in  Landlord's  judgment,   for  the
     comfortable  use and  occupancy of the  Premises.  Landlord  shall  provide
     further  services  (such as  janitorial  services  and trash  disposal)  if
     Landlord  and Tenant  specifically  agree to such  additional  services and
     identify such services with  specificity on Exhibit F hereto.  If requested
     by Tenant,  Landlord  shall furnish heat and air  conditioning  services at
     times  other than  Normal  Business  Hours,  and  supplements  to Exhibit F
     special  services,  and Tenant  shall pay for such  additional  services as
     additional rent at such rates as Landlord may establish from time to time.

     The mechanical system is designed to accommodate heating loads generated by
     the types and quantities of lights and equipment commonly found in suburban
     office park general  administrative  offices.  Before installing lights and
     equipment in the Premises  which in the aggregate  exceed such amount (e.g.
     devoting the Premises to high density computer work station  operations) or
     require a voltage  other than 120 volts single  phase,  Tenant shall obtain
     the  written  permission  of  Landlord.  Landlord  may refuse to grant such
     permission  unless Tenant agrees to pay Landlord's  costs of installing any
     supplementary  air  conditioning  or  electrical  systems  required by such
     equipment or lights. In addition,  Tenant shall pay Landlord in advance, as
     additional rent, on the first day of each month during the Term, the amount
     estimated  by  Landlord  as the  cost  of  furnishing  electricity  for the
     operation of such equipment or lights and the amount  estimated by Landlord
     as the cost of operating and  maintaining  supplementary  air  conditioning
     units  necessitated  by Tenant's use of such equipment or lights.  Landlord
     shall  be  entitled  to  install  and   operate,   at  Tenant's   cost,   a
     monitoring/metering  system in the Premises to measure the added demands on
     electricity and the HVAC systems  resulting from such equipment and lights,
     and from  Tenant's  HVAC  requirements  during  other than Normal  Business

                                      -12-
<PAGE>

     Hours.  Tenant  shall  comply with  Landlord's  instruction  for the use of
     drapes,  blinds and thermostats.  Tenant  acknowledges  that Landlord shall
     have sole control over the  determination  of what utility  providers serve
     the  Project,  and  Landlord  shall have no  obligation  to give  access or
     easement rights or otherwise  allow onto the Project any utility  providers
     except those approved by Landlord in its discretion.  . If, for any reason,
     Landlord  permits Tenant to purchase utility services from a provider other
     than Landlord's designated compan(ies), such provider shall be considered a
     contractor  of Tenant and Tenant shall  indemnify  defend and hold Landlord
     harmless from such provider's acts and omissions while in, or in connection
     with their  services  to, the  Building or Project in  accordance  with the
     terms and  conditions  of  Article  15. In  addition,  Tenant  shall  allow
     Landlord  to  purchase  such  utility  service  from  Tenant's  provider at
     Tenant's rate or at such lower rate as can be negotiated by the aggregation
     of Landlord's tenants' requirements for such utility.

     Except  for  the  costs  of  above-building   standard  and/or  after-hours
     services,  which  shall  be paid  directly  by  Tenant,  the  costs  of all
     utilities  and  services  provided  pursuant  to this  Section  12 shall be
     Expenses allocated to Tenant as part of Tenant's Share of Expenses pursuant
     to Section  4(b).  above.  Tenant  shall pay when due and  directly  to the
     service  provider any telephone or other  services  metered,  chargeable or
     provided  to the  Premises  and not  charged as part of  Tenant's  Share of
     Expenses.

     Landlord  does not warrant that any utilities or services will be free from
     interruption  including  by reason of  accident,  repairs,  alterations  or
     improvements  and  including by reason of computer  programming  weaknesses
     known generally as the "Year 2000" problem.  No utility  interruption shall
     be deemed an eviction or disturbance of Tenant,  or render  Landlord liable
     to  Tenant  for  damages,  or  relieve  Tenant  from the full and  complete
     performance of all of Tenant's obligations under this Lease.

     Landlord   shall  provide  such  security  for  the  Project  as  it  deems
     appropriate. During other than Normal Business Hours, Landlord may restrict
     access to the Project in  accordance  with the Project's  security  system.
     Landlord shall not be liable to Tenant for injury to its agents, employees,
     customers  or  invitees,  or for  losses due to theft or  burglary,  or for
     damages done by unauthorized persons in the Project.

     Landlord  shall  provide  two  keys  for the  corridor  door  entering  the
     Premises, and additional keys at a charge by Landlord on an order signed by
     Tenant. All such keys shall remain the property of Landlord.  No additional
     locks  shall be  allowed  on any door of the  Premises  without  Landlord's
     written  permission,  and Tenant shall not make, or permit to be made,  any
     duplicate  keys,  except those furnished by Landlord.  Upon  termination of
     this Lease, Tenant shall surrender to Landlord all keys to the Premises.

                                      -13-
<PAGE>

13.  MAINTENANCE.  Landlord shall maintain,  in good  condition,  the structural
     parts of the Premises,  which shall include only the  foundations,  bearing
     and exterior  walls  (excluding  glass),  subflooring  and roof  (excluding
     skylights),  the  unexposed  electrical,  plumbing  and  sewerage  systems,
     including those portions of the systems lying outside the Premises, gutters
     and  downspouts  on the  Building  and  the  heating,  ventilating  and air
     conditioning system servicing the Premises;  provided, however, the cost of
     all such maintenance shall be considered "Expenses" for purposes of Section
     4(b).  Except as  provided  above,  Tenant  shall  maintain  and repair the
     Premises in good condition, including, without limitation,  maintaining and
     repairing all walls, storefronts,  floors, ceilings,  interior and exterior
     doors,  exterior and interior windows and fixtures and interior plumbing as
     well as damage caused by Tenant,  its agents,  employees or invitees.  Upon
     expiration  or  termination  of this  Lease,  Tenant  shall  surrender  the
     Premises to Landlord in the same  condition as existed at the  commencement
     of the term,  except for reasonable  wear and tear or damage caused by fire
     or other casualty for which  Landlord has received all funds  necessary for
     restoration of the Premises from insurance proceeds.

14.  ALTERATIONS.  Tenant shall not make any alterations to the Premises,  or to
     the Project,  including  any changes to the existing  landscaping,  without
     Landlord's  prior  written  consent.  If  Landlord  gives  its  consent  to
     alterations,  Landlord may post notices in accordance  with the laws of the
     state in which the premises are located.  Any alterations made shall remain
     on and be surrendered  with the Premises upon  expiration or termination of
     this Lease,  except  that  Landlord  may,  within 30 days before or 30 days
     after  expiration  of the term,  elect to  require  Tenant  to  remove  any
     alterations  which  Tenant may have made to the  Premises.  If  Landlord so
     elects,  at its own cost Tenant shall restore the Premises to the condition
     designated by Landlord in its election,  before the last day of the term or
     within 30 days after notice of its election is given, whichever is later.

     Should Landlord consent in writing to Tenant's  alteration of the Premises,
     Tenant  shall  contract  with a  contractor  approved by  Landlord  for the
     construction of such alterations, shall secure all appropriate governmental
     approvals  and  permits,  and  shall  complete  such  alterations  with due
     diligence in compliance with plans and specifications approved by Landlord.
     All  such  construction  shall be  performed  in a  manner  which  will not
     interfere with the quiet enjoyment of other tenants of the Project.  Tenant
     shall pay all costs for such  construction  and shall keep the Premises and
     the Project  free and clear of all  mechanics'  liens which may result from
     construction  by  Tenant.  Tenant  shall not use any  portion of the common
     areas in connection with an alteration without the prior written consent of
     Landlord.

15.  RELEASE AND INDEMNITY.

     a.  Indemnity.   Tenant  shall  indemnify,   defend  (using  legal  counsel
     acceptable to Landlord) and save Landlord and its property manager harmless

                                      -14-
<PAGE>

     from all claims, suits, losses, damages, fines, penalties,  liabilities and
     expenses (including  Landlord's  personnel and overhead costs and attorneys
     fees and other costs  incurred in  connection  with claims,  regardless  of
     whether  such  claims  involve  litigation)  resulting  from any  actual or
     alleged  injury  (including  death)  of any  person  or from any  actual or
     alleged loss of or damage to, any property  arising out of or in connection
     with (i) Tenant's occupation,  use or improvement of the Premises,  or that
     of its  employees,  agents  or  contractors,  (ii)  Tenant's  breach of its
     obligations  hereunder,  or (iii)  any act or  omission  of  Tenant  or any
     subtenant,  licensee,  assignee  or  concessionaire  of  Tenant,  or of any
     officer, agent, employee, guest or invitee of Tenant, or of any such entity
     in or about  the  Premises.  Tenant  agrees  that the  foregoing  indemnity
     specifically  covers actions  brought by its own employees.  This indemnity
     with  respect to acts or  omissions  during  the term of this  Lease  shall
     survive termination or expiration of this Lease. The foregoing indemnity is
     specifically  and  expressly  intended to,  constitute a waiver of Tenant's
     immunity under Washington's  Industrial Insurance Act, RCW Title 51, to the
     extent  necessary to provide  Landlord  with a full and complete  indemnity
     from  claims  made by Tenant  and its  employees,  to the  extent  provided
     herein.  Tenant shall promptly  notify  Landlord of casualties or accidents
     occurring in or about the Premises.  LANDLORD AND TENANT  ACKNOWLEDGE  THAT
     THE  INDEMNIFICATION  PROVISIONS  OF  SECTION  8 AND THIS  SECTION  15 WERE
     SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.

     b.  Release.  Tenant  hereby fully and  completely  waives and releases all
     claims against Landlord for any losses or other damages sustained by Tenant
     or any person  claiming  through  Tenant  resulting  from any  accident  or
     occurrence  in or upon the  Premises,  including  but not  limited  to: any
     defect in or failure of Project equipment; any failure to make repairs; any
     defect,  failure,  surge in,  or  interruption  of  Project  facilities  or
     services;  any defect in or failure of Common Areas;  broken  glass;  water
     leakage;  the collapse of any Building  component;  or any act, omission or
     negligence  of  co-tenants,  licensees or any other persons or occupants of
     the  Building,  provided  only that the release  contained  in this Section
     15(b)  shall not apply to claims for actual  damage to persons or  property
     (excluding  consequential  damages such as lost profits) resulting directly
     from Landlord's  breach of its express  obligations  under this Lease which
     Landlord has not cured within a  reasonable  time after  receipt of written
     notice of such breach from Tenant.  Notwithstanding  any other provision of
     this Lease,  and to the fullest  extent  permitted  by law,  Tenant  hereby
     agrees that Landlord shall not be liable for injury to Tenant's business or
     any loss of income  therefrom,  whether  such injury or loss  results  from
     conditions arising upon the Premises or the Project,  or from other sources
     or places including,  without limitation,  any interruption of services and
     utilities  or any  casualty,  or  from  any  cause  whatsoever,  including,
     Landlord's  negligence,  and regardless of whether the cause of such injury
     or loss or the means of repairing the same is  inaccessible  to Landlord or
     Tenant.  Tenant may elect, at its sole cost and expense, to obtain business
     interruption insurance with respect to such potential injury or loss.

                                      -15-
<PAGE>

     c. Limitation on Indemnity. In compliance with RCW 4.24.115 as in effect on
     the date of this  Lease,  all  provisions  of this Lease  pursuant to which
     Landlord or Tenant (the  "Indemnitor")  agrees to indemnify  the other (the
     "Indemnitee") against liability for damages arising out of bodily injury to
     Persons or damage to  property  relative to the  construction,  alteration,
     repair,  addition to, subtraction from,  improvement to, or maintenance of,
     any  building,  road,  or  other  structure,   project,   development,   or
     improvement attached to real estate,  including the Premises, (i) shall not
     apply to damages  caused by or resulting  from the sole  negligence  of the
     Indemnitee,  its agents or  employees,  and (ii) to the extent caused by or
     resulting  from the  concurrent  negligence  of (a) the  Indemnitee  or the
     Indemnitee's   agents  or  employees,   and  (b)  the   Indemnitor  or  the
     Indemnitor's  agents or  employees,  shall  apply only to the extent of the
     Indemnitor's  negligence;  PROVIDED,  HOWEVER, the limitations on indemnity
     set forth in this Section shall  automatically  and without  further act by
     either  Landlord  or Tenant be deemed  amended  so as to remove  any of the
     restrictions   contained  in  this  Section  no  longer  required  by  then
     applicable law.

     d. Definitions. As used in any Section establishing indemnity or release of
     Landlord,  "Landlord"  shall  include  Landlord,  its  partners,  officers,
     agents,  employees and  contractors,  and "Tenant" shall include Tenant and
     any person or entity claiming through Tenant.


16.  INSURANCE.  Tenant shall, throughout the term of this Lease and any renewal
     hereof,  at its own expense,  keep and maintain in full force and effect, a
     policy  of  commercial  general  liability   (occurrence  form)  insurance,
     including   contractual   liability  (including  Tenant's   indemnification
     obligations  under this Lease)  insuring  Tenant's  activities  upon, in or
     about the Premises or the Project, against claims of bodily injury or death
     or property  damage or loss with a combined  single  limit of not less than
     One  Million  Dollars   ($1,000,000)  per  occurrence  and  excess/umbrella
     liability  insurance  policy  with  minimum  limits  of not less  than Five
     Million Dollars ($5,000,000), with such increases in limits as Landlord may
     from  time  to time  require  consistent  with  insurance  requirements  of
     institutional  landlords  in  similar  projects  in  the  area.  If  Tenant
     manufactures on the Premises consumer goods using any materials supplied by
     Landlord  (including but not limited to water supplied as part of utilities
     to the  Premises),  Tenant's  insurance  shall include  products  liability
     insurance in the amounts  specified for the  commercial  general  liability
     insurance.

     Tenant  shall  further,  throughout  the term of this Lease and any renewal
     thereof,  at its own  expense,  keep and maintain in full force and effect,
     what is  commonly  referred  to as  "Special  Cause of  Loss" or  "Special"
     coverage insurance  (excluding  earthquake and flood) on tenant's leasehold
     improvements  in an  amount  equal to one  hundred  percent  (100%)  of the
     replacement value thereof with a coinsurance  waiver. The proceeds from any
     such  policy  shall  be used by  Tenant  for the  restoration  of  Tenant's

                                      -16-
<PAGE>

     improvements or  alterations.  As used in this Lease,  "tenant's  leasehold
     improvements"  shall  mean  any  alterations,   additions  or  improvements
     installed  in or about the  Premises by or with  Landlord's  permission  or
     otherwise permitted by this Lease, whether or not the cost thereof was paid
     for by Tenant.

     All insurance required to be provided by Tenant under this Lease: (a) shall
     be issued by Insurance companies  authorized to do business in the state in
     which the premises  are located with a financial  rating of at least an A+X
     status as rated in the most recent edition of Best's Insurance Reports; (b)
     shall be issued as a primary policy;  shall be on an occurrence  basis; (c)
     name Landlord and Landlord's  property manager as additional  insured;  and
     (d) shall contain an  endorsement  requiring at least 30 days prior written
     notice  of   cancellation  to  Landlord  and  Landlord's   lender,   before
     cancellation or change in coverage,  scope or amount of any policy.  Tenant
     shall deliver a certificate  or copy of such policy  together with evidence
     of payment of all current  premiums to Landlord within 30 days of execution
     of this Lease and at the time of all renewals  thereof.  If Tenant fails at
     any time to maintain  the  insurance  required by this Lease,  and fails to
     cure such  default  within five (5)  business  days of written  notice from
     Landlord then, in addition to all other remedies available under this Lease
     and applicable law, Landlord may purchase such insurance on Tenant's behalf
     and the cost of such insurance shall be Additional Rent due within ten (10)
     days of written invoice from Landlord to Tenant.

     Tenant hereby  releases  Landlord,  and waives its entire right of recovery
     for loss or damage to property located within or constituting a part or all
     of the  Building  or the  Project to the extent  that the loss or damage is
     covered by (a) Tenant's insurance,  or (b) the insurance Tenant is required
     to carry under this Article 16,  whichever is greater.  This waiver applies
     whether  or not the  loss is due to the  negligent  acts  or  omissions  of
     Landlord or Tenant,  or their respective  officers,  directors,  employees,
     agents,  contractors,  or invitees.  Tenant shall have its insurers endorse
     the  applicable  insurance  policies  to reflect  the  foregoing  waiver of
     claims, provided however, that the endorsement shall not be required if the
     applicable policy of insurance permits the named insured to waive rights of
     subrogation on a blanket  basis,  in which case the blanket waiver shall be
     acceptable


17.  DESTRUCTION.  If during the term, the Premises or Project are more than 10%
     destroyed  from any cause,  or rendered  inaccessible  or unusable from any
     cause,  Landlord  may,  in its sole  discretion,  terminate  this  Lease by
     delivery  of  notice  to  Tenant  within  30  days of  such  event  without
     compensation to Tenant. If in Landlord's estimation, the Premises cannot be
     restored  within 90 days  following  such  destruction,  the Landlord shall
     notify Tenant and Tenant may terminate  this Lease by delivery of notice to
     Landlord  within  30 days of  receipt  of  Landlord's  notice.  If  neither
     Landlord nor Tenant  terminates this Lease as provided above, then Landlord

                                      -17-
<PAGE>

     shall  commence to restore the Premises in  compliance  with then  existing
     laws and shall complete such restoration with due diligence. In such event,
     this Lease  shall  remain in full force and  effect,  but there shall be an
     abatement of Base Monthly Rent and Tenant's  Share of Expenses  between the
     date of destruction and the date of completion of restoration, based on the
     extent to which destruction interferes with Tenant's use of the Premises.

18.  CONDEMNATION.

     a. Taking.  If all of the Premises are taken by Eminent Domain,  this Lease
     shall  terminate  as of the date Tenant is required to vacate the  Premises
     and all Base and  Additional  Rent  shall  be paid to that  date.  The term
     "Eminent  Domain"  shall  include the taking or  damaging  of property  by,
     through or under any governmental or statutory authority,  and any purchase
     or  acquisition  in lieu  thereof,  whether  the  damaging  or taking is by
     government or any other person. If, in the reasonable judgment of Landlord,
     a  taking  of any  part of the  Premises  by  Eminent  Domain  renders  the
     remainder  thereof  unusable  for the  business  of Tenant  (or the cost of
     restoration of the Premises is not commercially reasonable), the Lease may,
     at the option of either party, be terminated by written notice given to the
     other  party not more than  thirty (30) days after  Landlord  gives  Tenant
     written notice of the taking, and such termination shall be effective as of
     the date when Tenant is  required to vacate the portion of the  Premises so
     taken.  If this Lease is so terminated,  all Base and Additional Rent shall
     be paid to the date of termination. Whenever any portion of the Premises is
     taken by Eminent Domain and this Lease is not terminated, Landlord shall at
     its expense proceed with all reasonable  dispatch to restore, to the extent
     of available  proceeds and to the extent it is reasonably prudent to do so,
     the  remainder of the Premises to the  condition  they were in  immediately
     prior to such  taking,  and Tenant  shall at its expense  proceed  with all
     reasonable  dispatch to restore its personal  property and all improvements
     made by it to the Premises to the same  condition  they were in immediately
     prior to such taking.  The Base and Additional Rent payable hereunder shall
     be  reduced  from the date  Tenant is  required  to  partially  vacate  the
     Premises in the same  proportion  that the Rentable Area taken bears to the
     total Rentable Area of the Premises prior to taking.

     b. Award. Landlord reserves all right to the entire damage award or payment
     for any taking by Eminent  Domain,  and Tenant waives all claim  whatsoever
     against  Landlord for damages for termination of its leasehold  interest in
     the Premises or for  interference  with its business.  Tenant hereby grants
     and assigns to Landlord any right Tenant may now have or hereafter  acquire
     to such damages and agrees to execute and deliver such further  instruments
     of  assignment  as Landlord may from time to time  request.  Tenant  shall,
     however,  have the  right  to  claim  from  the  condemning  authority  all
     compensation  that may be  recoverable  by  Tenant on  account  of any loss
     incurred  by  Tenant  in  moving  Tenant's  merchandise,  furniture,  trade
     fixtures  and  equipment,  provided,  however,  that  Tenant may claim such
     damages  only  if  they  are  awarded  separately  in  the  eminent  domain
     proceeding and not out of or as part of Landlord's damages.

                                      -18-
<PAGE>

19.  ASSIGNMENT OR SUBLEASE. Tenant shall not assign or encumber its interest in
     this Lease or the  Premises or sublease  all or any part of the Premises or
     allow   any   other   person  or   entity   (except   Tenant's   authorized
     representatives,  employees,  invitees,  or guests) to occupy or use all or
     any part of the Premises without first obtaining  Landlord's  consent which
     Landlord may withhold or condition in its sole discretion. No assignment or
     sublease   shall  release   Tenant  from  the  obligation  to  perform  all
     obligations  under this  Lease.  Any  assignment,  encumbrance  or sublease
     without  Landlord's  written  consent  shall be voidable and at  Landlord's
     election,  shall  constitute  a  default.  If  Tenant is a  partnership,  a
     withdrawal or change, voluntary,  involuntary or by operation of law of any
     partner, or the dissolution of the partnership, shall be deemed a voluntary
     assignment.  If  Tenant  consists  of more  than one  person,  a  purported
     assignment, voluntary or involuntary or by operation of law from one person
     to the  other  shall be  deemed a  voluntary  assignment.  If  Tenant  is a
     corporation, any dissolution, merger, consolidation or other reorganization
     of Tenant,  or sale or other  transfer of a  controlling  percentage of the
     capital  stock of  Tenant,  or the sale of at least 25% of the value of the
     assets  of  Tenant  shall be  deemed a  voluntary  assignment.  The  phrase
     "controlling  percentage"  means  ownership  of and  right  to  vote  stock
     possessing at least 25% of the total  combined  voting power of all classes
     of Tenant's  capital  stock  issued,  outstanding  and entitled to vote for
     election of directors.  This Section 19 shall not apply to corporations the
     stock of which is traded through an exchange or over the counter.  All rent
     received by Tenant  from its  subtenants  in excess of the Rent  payable by
     Tenant to Landlord under this Lease shall be paid to Landlord,  or any sums
     to be paid by an assignee to Tenant in  consideration  of the assignment of
     this Lease shall be paid to  Landlord.  In lieu of granting  consent to any
     proposed  Transfer  for which  Tenant  is  required  to  obtain  Landlord's
     consent,  Landlord  reserves the right to  terminate  this Lease or, in the
     case of subletting of less than all the Premises,  to terminate  this Lease
     with respect to such portion of the Premises,  as of the proposed effective
     date of  such  Transfer,  in  which  event  Landlord  may  enter  into  the
     relationship  of  landlord  and  tenant  with  such  proposed   Transferee.
     Notwithstanding the foregoing,  Landlord's  recapture right shall not apply
     to a sublease if (a) the term of the sublease ends at least 1 year prior to
     the end of the term of the Lease and contains no extension rights,  and (b)
     the total area  subleased,  including  the sublease at issue,  will be less
     than 80% of the  Premises.  If Tenant  requests  Landlord  to  consent to a
     proposed assignment or subletting, Tenant shall pay to Landlord, whether or
     not consent is ultimately given, $100 or Landlord's  reasonable  attorney's
     fees incurred in connection with such request, whichever is greater.

     No  interest  of Tenant in this Lease shall be  assignable  by  involuntary
     assignment  through  operation of law  (including  without  limitation  the
     transfer of this Lease by testacy or intestacy). Each of the following acts
     shall be considered an involuntary assignment:  (a) if Tenant is or becomes
     bankrupt or insolvent, makes an assignment for the benefit of creditors, or

                                      -19-
<PAGE>

     institutes  proceedings  under the  Bankruptcy  Act in which  Tenant is the
     bankrupt; or if Tenant is a partnership or consists of more than one person
     or entity,  if any partner of the  partnership or other person or entity is
     or becomes bankrupt or insolvent, or makes an assignment for the benefit of
     creditors;  or (b) if a writ of  attachment  or execution is levied on this
     Lease;  or (c) if in any proceeding or action to which Tenant is a party, a
     receiver is appointed with authority to take possession of the Premises. An
     involuntary  assignment  shall  constitute a default by Tenant and Landlord
     shall have the right to elect to terminate  this Lease,  in which case this
     Lease shall not be treated as an asset of Tenant.

20.  DEFAULT.  The occurrence of any of the following shall constitute a default
     by  Tenant:  (a) a  failure  to pay  Rent or other  charge  when  due;  (b)
     abandonment and vacation of the Premises (failure to occupy and operate the
     Premises  for  ten  consecutive  days  shall  be  conclusively   deemed  an
     abandonment and vacation); or (c) failure to perform any other provision of
     this Lease.

21.  LANDLORD'S  REMEDIES.  Landlord shall have the following remedies if Tenant
     is in default.  (These remedies are not exclusive;  they are cumulative and
     in addition to any  remedies  now or later  allowed by law):  Landlord  may
     terminate  Tenant's right to possession of the Premises at any time. No act
     by Landlord other than giving notice to Tenant shall  terminate this Lease.
     Acts of maintenance, efforts to relet the Premises, or the appointment of a
     receiver on Landlord's initiative to protect Landlord's interest under this
     Lease shall not  constitute a termination  of Tenant's right to possession.
     Upon termination of Tenant's right to possession, Landlord has the right to
     recover from Tenant:  (1) the worth of the unpaid Rent that had been earned
     at the time of termination  of Tenant's right to possession;  (2) the worth
     of the amount of the unpaid Rent that would have been earned after the date
     of termination of Tenant's right to possession  less the amount that Tenant
     proves  Landlord  should  be able to earn  during  such  period  net of all
     releasing  costs;  (3) any other  amount,  including  but not  limited  to,
     expenses  incurred to relet the Premises,  court,  attorney and  collection
     costs,  necessary  to  compensate  Landlord  for all  detriment  caused  by
     Tenant's default. "The Worth," as used for Item (1) in this Paragraph 21 is
     to be computed by allowing interest at the rate of 18 percent per annum. If
     the interest rate specified in this Lease is higher than the rate permitted
     by law, the interest rate is hereby decreased to the maximum legal interest
     rate  permitted by law. "The Worth" as used for Item (2) in this  Paragraph
     21 is to be computed by discounting  the amount at the discount rate of the
     Federal  Reserve  Bank  of San  Francisco  at the  time of  termination  of
     Tenant's right of possession.

22.  ENTRY ON PREMISES.  Landlord and its authorized  representatives shall have
     the  right to enter the  Premises  at all  reasonable  times for any of the
     following  purposes:  (a) to  determine  whether the  Premises  are in good
     condition and whether Tenant is complying with its  obligations  under this
     Lease;  (b) to do any necessary  maintenance and to make any restoration to
     the Premises or the Project that  Landlord has the right or  obligation  to

                                      -20-
<PAGE>

     perform;  (c) to post "for sale" signs at any time during the term, to post
     "for rent" or "for  lease"  signs  during the last 90 days of the term,  or
     during any period while  Tenant is in default;  (d) to show the Premises to
     prospective  brokers,  agents,  buyers,  tenants or persons  interested  in
     leasing or purchasing the Premises,  at any time during the term; or (e) to
     repair,  maintain  or improve  the  Project  and to erect  scaffolding  and
     protective  barricades  around  and  about  the  Premises  but not so as to
     prevent  entry to the Premises  and to do any other act or thing  necessary
     for the safety or  preservation  of the Premises or the  Project.  Landlord
     shall not be liable in any manner for any inconvenience,  disturbance, loss
     of business,  nuisance or other damage arising out of Landlord's entry onto
     the Premises as provided in this  Section 22.  Tenant shall not be entitled
     to an  abatement  or  reduction  of Rent if Landlord  exercises  any rights
     reserved in this Section 22.  Landlord  shall conduct his activities on the
     Premises as provided  herein in a commercially  reasonable  manner so as to
     limit  inconvenience,  annoyance  or  disturbance  to Tenant to the maximum
     extent practicable. For each of these purposes, Landlord shall at all times
     have and retain a key with which to unlock all the doors in, upon and about
     the Premises,  excluding Tenant's vaults and safes.  Tenant shall not alter
     any lock or  install  a new or  additional  lock or bolt on any door of the
     Premises  without prior written consent of Landlord.  If Landlord gives its
     consent, Tenant shall furnish Landlord with a key for any such lock.

23.  SUBORDINATION; ESTOPPEL CERTIFICATE.

     Subordination.  Without the  necessity  of any  additional  document  being
     executed by Tenant for the purpose of effecting a subordination, and at the
     election of Landlord or any mortgagee or any beneficiary of a Deed of Trust
     with a lien  on the  Project  or any  ground  lessor  with  respect  to the
     Project,  this Lease shall be subject and  subordinate  at all times to (a)
     all ground leases or underlying  leases which may now exist or hereafter be
     executed affecting the Project, and (b) the lien of any mortgage or deed of
     trust which may now exist or  hereafter be executed in any amount for which
     the Project,  ground leases or underlying leases, or Landlord's interest or
     estate in any of said items is specified as security. In the event that any
     ground lease or underlying  lease terminates for any reason or any mortgage
     or Deed of Trust is foreclosed or a conveyance  in lieu of  foreclosure  is
     made for any  reason,  Tenant  shall,  notwithstanding  any  subordination,
     attorn to and become the Tenant of the  successor  in interest to Landlord,
     at the option of such successor in interest. Tenant covenants and agrees to
     execute and deliver,  upon demand by Landlord and in the form  requested by
     Landlord any additional  documents evidencing the priority or subordination
     of this Lease with respect to any such ground lease or underlying leases or
     the lien of any such mortgage or Deed of Trust.  Tenant hereby  irrevocably
     appoints  Landlord as  attorney-in-fact  of Tenant to execute,  deliver and
     record any such document in the name and on behalf of Tenant.

                                      -21-
<PAGE>

b.   Estoppel Certificate.  Tenant shall, within 10 days of demand,  execute and
     deliver to Landlord a written  statement  certifying:  (i) the commencement
     and the expiration  date of the Term;  (ii) the amount of Base Rent and the
     date to which it has been paid;  (iii) that this Lease is in full force and
     effect and has not been assigned or amended in any way (or  specifying  the
     date and terms of each  agreement so affecting this Lease) and that no part
     of the  Premises  has been sublet (or to the extent such is not the case, a
     copy of any  sublease);  (iv) that  Landlord  is not in default  under this
     Lease (or if such is not the case,  the extent and nature of such default);
     (v) on the date of such  certification,  there are no existing  defenses or
     claims which Tenant has against  Landlord (or if such is not the case,  the
     extent  and  nature of such  defenses  or  claims);  (vi) the amount of the
     Security   Deposit  held  by   Landlord;   and  (vii)  any  other  fact  or
     representation  that a mortgagee or purchaser may reasonably request. It is
     intended  that any such  statement  shall be binding upon Tenant and may be
     relied upon by a  prospective  purchaser or  mortgagee.  If Tenant fails to
     respond  within  10  days of  receipt  of a  written  request  by  Landlord
     therefor,  (a) Tenant shall be deemed to have given a certificate  as above
     provided,  without  modification,  and shall be conclusively deemed to have
     admitted  the  accuracy  of  any  information  supplied  by  Landlord  to a
     prospective  purchaser or  mortgagee,  and (b) Landlord may impose a fee of
     $100 per day for each day of delay in  providing  the  statement  by Tenant
     after the 10 day period.

24.  NOTICE. Any notice,  demand or request required hereunder shall be given in
     writing to the party's  facsimile  number or address set forth in Section 1
     hereof by any of the following means: (a) personal service;  (b) electronic
     communication,  whether by telex,  telegram or  facsimile  with  electronic
     confirmation;  (c) overnight courier; or (d) registered or certified, first
     class mail,  return  receipt  requested.  Such  addresses may be changed by
     notice to the other parties given in the same manner as above provided. Any
     notice,  demand or request sent  pursuant to either  subsection  (a) or (b)
     hereof shall be deemed received upon such personal service or upon dispatch
     by electronic  means with electronic  confirmation of receipt.  Any notice,
     demand or request sent  pursuant to  subsection  (c) hereof shall be deemed
     received  on the  business  day  immediately  following  deposit  with  the
     overnight  courier and, if sent pursuant to subsection (d), shall be deemed
     received  forty-eight (48) hours following deposit in the U.S. mail. Tenant
     hereby appoints as its agent to receive the service of all dispossessory or
     distraint  proceedings  and notices  thereunder  the person in charge of or
     occupying the Premises at the time, and, if no person shall be in charge of
     occupying the same,  then such service may be made by attaching the same on
     the main entrance of the Premises.

25.  WAIVER.  No delay or  omission  in the  exercise  of any right or remedy by
     Landlord shall impair such right or remedy or be construed as a waiver.  No
     act or conduct of Landlord, including without limitation, acceptance of the
     keys to the  Premises,  shall  constitute an acceptance of the surrender of
     the  Premises by Tenant  before the  expiration  of the term.  Only written

                                      -22-
<PAGE>

     notice from Landlord to Tenant shall constitute acceptance of the surrender
     of the Premises and accomplish termination of the Lease. Landlord's consent
     to or  approval  of any  act by  Tenant  requiring  Landlord's  consent  or
     approval  shall not be deemed  to waive or  render  unnecessary  Landlord's
     consent to or  approval  of any  subsequent  act by  Tenant.  Any waiver by
     Landlord of any default must be in writing and shall not be a waiver of any
     other  default  concerning  the same or any other  provision  of the Lease.
     TENANT SPECIFICALLY ACKNOWLEDGES AND AGREES THAT, WHERE TENANT HAS RECEIVED
     A NOTICE TO CURE DEFAULT  (WHETHER  RENT OR  NON-RENT),  NO  ACCEPTANCE  BY
     LANDLORD OF RENT SHALL BE DEEMED A WAIVER OF SUCH  NOTICE,  AND,  INCLUDING
     BUT WITHOUT LIMITATION,  NO ACCEPTANCE BY LANDLORD OF PARTIAL RENT SHALL BE
     DEEMED TO WAIVE OR CURE ANY RENT DEFAULT.  LANDLORD MAY, IN ITS DISCRETION,
     AFTER  RECEIPT OF PARTIAL  PAYMENT OF RENT,  REFUND SAME AND  CONTINUE  ANY
     PENDING  ACTION TO COLLECT THE FULL AMOUNT DUE, OR MAY MODIFY ITS DEMAND TO
     THE UNPAID  PORTION.  IN EITHER EVENT THE DEFAULT  SHALL BE DEEMED  UNCURED
     UNTIL THE FULL AMOUNT IS PAID IN GOOD FUNDS.

26.  SURRENDER OF PREMISES;  HOLDING OVER. Upon  expiration of the term,  Tenant
     shall  surrender to Landlord the Premises and all Tenant  improvements  and
     alterations  in good  condition,  except  for  ordinary  wear  and tear and
     alterations  Tenant  has the  right or is  obligated  to  remove  under the
     provisions of Section 14 herein.  Tenant shall remove all personal property
     including,  without  limitation,  all  data  and  phone  wires,  wallpaper,
     paneling and other  decorative  improvements  or fixtures and shall perform
     all  restoration  made  necessary  by the  removal  of any  alterations  or
     Tenant's personal property before the expiration of the term, including for
     example,  restoring  all  wall  surfaces  to their  condition  prior to the
     commencement  of this Lease.  Landlord can elect to retain or dispose of in
     any manner  Tenant's  personal  property  not removed  from the Premises by
     Tenant  prior to the  expiration  of the term.  Tenant  waives  all  claims
     against  Landlord  for any  damage  to  Tenant  resulting  from  Landlord's
     retention or disposition  of Tenant's  personal  property.  Tenant shall be
     liable to Landlord for Landlord's cost for storage,  removal or disposal of
     Tenant's personal property.

     If Tenant, with Landlord's  consent,  remains in possession of the Premises
     after  expiration  or  termination  of the  term,  or after the date in any
     notice given by Landlord to Tenant  terminating this Lease, such possession
     by Tenant  shall be deemed to be a  month-to-month  tenancy  terminable  as
     provided  under  Washington  law, by either party.  All  provisions of this
     Lease,  except  those  pertaining  to term  and  Rent,  shall  apply to the
     month-to-month  tenancy.  During any holdover  term,  Tenant shall pay Base
     Monthly  Rent in an amount  equal to 150% of Base Monthly Rent for the last
     full calendar  month during the regular term plus 100% of Tenant's share of
     Expenses  pursuant  to  Section  4(b)(3).  If  Tenant  fails  to  surrender
     possession of the Premises upon termination or expiration of this Lease and

                                      -23-
<PAGE>

     if Tenant does not obtain Landlord's  written consent to Tenant's continued
     occupancy,  then Tenant shall be deemed a trespasser and shall be liable to
     Landlord  for all  damages  sustained  by  Landlord  as a  result  thereof,
     together with Base Rate at a rate double the Latest Rate.

27.  LIMITATION  OF  LANDLORD'S  LIABILITY.  In  consideration  of the  benefits
     accruing  hereunder,  Tenant  agrees  that,  in the event of any  actual or
     alleged  failure,  breach or default of this Lease by Landlord,  Landlord's
     liability  under this Lease shall be limited to, and Tenant shall look only
     to Landlord interest in the Project and the rents and proceeds thereof.

28.  BUILDING PLANNING. If Landlord requires the Premises for use in conjunction
     with another suite or for other reasons connected with the Project planning
     program, upon notifying Tenant in writing, Landlord shall have the right to
     move Tenant to other space in the Project that is substantially the same in
     size,   configuration  and  tenant   improvements,   such  move  (including
     out-of-pocket  ancillary  costs such as reprinting of  stationary) to be at
     Landlord's sole cost and expense.  Upon such move, the terms and conditions
     of the  original  Lease  shall  remain in full force and  effect,  save and
     excepting  that a revised  Exhibit "A" shall  become part of this Lease and
     shall  reflect  the  location  of the new space and Section 1 of this Lease
     shall be amended to include and state all correct data as to the new space.

29.  MISCELLANEOUS PROVISIONS.

     a. Time of Essence. Time is of the essence of each provision of this Lease.

     b.  Successor.  This Lease  shall be binding on and inure to the benefit of
     the parties and their successors, except as provided in Section 19 herein.

     c. Landlord's  Consent.  Any consent  required by Landlord under this Lease
     must be granted in writing and may be withheld or  conditioned  by Landlord
     in its sole and absolute discretion.

     d. Commissions. Each party represents that it has not had dealings with any
     real estate  broker,  finder or other  person with respect to this Lease in
     any manner,  except for the broker(s) identified in Section 1, who shall be
     compensated by Landlord.  Landlord and Tenant recognize that it is possible
     that  they may  hereafter  make  additional  agreements  regarding  further
     extension  or renewal of this Lease or a new lease or leases for all or one
     or more parts of the  Premises  or other space in the Project for a term or
     terms commencing after the  Commencement  Date of this Lease.  Landlord and
     Tenant  recognize  that it is also possible that they may hereafter  modify
     this Lease to add  additional  space or to substitute  space as part of the
     Premises. If any such additional agreements, new leases or modifications to
     this  Lease are made,  Landlord  shall not have any  obligation  to pay any
     compensation to any real estate broker or to any other third person engaged
     by Tenant to render services to Tenant in connection with  negotiating such
     matters, regardless of whether under the circumstances such person is or is
     not regarded by the law as an agent of Landlord.

                                      -24-
<PAGE>

     e. Other  Charges.  If either party  commences any  litigation  against the
     other  party  or  files  an  appeal  of a  decision  arising  out  of or in
     connection  with the Lease,  the  prevailing  party  shall be  entitled  to
     recover from the other party reasonable  attorney's fees and costs of suit.
     If Landlord  employs a  collection  agency to recover  delinquent  charges,
     Tenant agrees to pay all collection  agency and attorneys'  fees charged to
     Landlord in addition to Rent, late charges, interest and other sums payable
     under  this  Lease.  Tenant  shall  pay a  charge  of $75 to  Landlord  for
     preparation of a demand for delinquent Rent.

     f. Force Majeure. Landlord shall not be deemed in default hereof nor liable
     for damages  arising from its failure to perform its duties or  obligations
     hereunder  if  such  is  due  to  causes  beyond  its  reasonable  control,
     including,  but not  limited  to,  acts of God,  acts of civil or  military
     authorities,  fires,  floods,  windstorms,  earthquakes,  strikes  or labor
     disturbances,  civil  commotion,  delays  in  transportation,  governmental
     delays or war.

     g. Rules and Regulations.  Tenant shall faithfully  observe and comply with
     the "Rules and  Regulations",  a copy of which is attached hereto,  and all
     reasonable  and  nondiscriminatory   modifications  thereof  and  additions
     thereto from time to time put into effect by Landlord.  Landlord  shall not
     be responsible to Tenant for the violation or  non-performance by any other
     tenant or occupant of the building or Project of said tenant or  occupant's
     lease or of any of said Rules and Regulations.

     h. Landlord's Successors.  In the event of a sale or conveyance by Landlord
     of the  Project,  the same  shall  operate  to  release  Landlord  from any
     liability  under this  Lease,  and in such event  Landlord's  successor  in
     interest shall be solely  responsible for all obligations of Landlord under
     this Lease.

     i.  Interpretation.  This  Lease  shall be  construed  and  interpreted  in
     accordance  with the laws of the state in which the  premises  are located.
     This Lease  constitutes  the entire  agreement  between  the  parties  with
     respect to the  Premises  and the Project,  except for such  guarantees  or
     modifications  as may be executed  in writing by the  parties  from time to
     time.  When  required  by the  context of this Lease,  the  singular  shall
     include the plural,  and the masculine  shall  include the feminine  and/or
     neuter.  "Party" shall mean Landlord or Tenant.  If more than one person or
     entity constitutes  Landlord or Tenant,  the obligations  imposed upon that
     party  shall  be joint  and  several.  The  enforceability,  invalidity  or
     illegality  of  any  provision  shall  not  render  the  other   provisions
     unenforceable, invalid or illegal.

                                      -25-
<PAGE>

     j. Prior  Understandings.  Tenant  acknowledges  that neither  Landlord nor
     anyone representing  Landlord has made statements of any kind whatsoever on
     which  Tenant  has  relied in  entering  into this  Lease.  Tenant  further
     acknowledges that Tenant has relied solely on its independent investigation
     and its own  business  judgment in entering  into this Lease.  Landlord and
     Tenant  agree that:  this Lease  supersedes  all prior and  contemporaneous
     understandings and agreement;  the provisions of this Lease are intended by
     them as the final expression of their agreement; this Lease constitutes the
     complete and exclusive  statement of its terms;  and no extrinsic  evidence
     whatsoever  may be introduced  in any judicial  proceeding  involving  this
     Lease.  No provision of this Lease may be amended except by an agreement in
     writing  signed by the parties  hereto or their  respective  successors  in
     interest, whether or not such amendment is supported by new consideration.

     k. Authority.  If Tenant is a corporation,  each individual  executing this
     Lease on behalf of said corporation  represents and warrants that he/she is
     duly  authorized  to  execute  and  deliver  this  Lease on  behalf of said
     corporation.  Concurrently  with the execution of this Lease,  Tenant shall
     deliver  to  Landlord  a  certified  copy of a  resolution  of the Board of
     Directors of said  corporation  authorizing the execution of this Lease. If
     Tenant is a partnership,  each individual executing this Lease on behalf of
     said partnership  represents and warrants that he/she is duly authorized to
     execute and deliver this Lease on behalf of said  partnership and that this
     Lease is binding upon said  partnership in accordance  with its terms,  and
     concurrently with execution of this Lease, Tenant shall deliver to Landlord
     such  evidence of  authorization  as Landlord may  require.  If Tenant is a
     marital community, or a member of a marital community,  both members of the
     marital  community  shall execute this Lease.  Where Tenant is comprised of
     more than one person or entity,  all covenants,  agreements and obligations
     of Tenant  hereunder shall be the joint and several  covenants,  agreements
     and obligations of each person or entity comprising

     l.  Clean  Air Act.  Tenant  acknowledges  that  Landlord  has not made any
     portion  of  the  Premises  or  the  Building  accessible  for  smoking  in
     compliance with WAC  296-62-12000.  If Tenant wishes to make any portion of
     the Premises  accessible  for smoking,  Tenant shall make all  improvements
     necessary to comply with all applicable governmental rules and regulations.
     Tenant acknowledges that the indemnity contained in Section 15 of the Lease
     includes,  but is not  limited to claims  based on the  presence of tobacco
     smoke as a result of the activities of Tenant,  its employees,  agents,  or
     guests.

30.  COMMENCEMENT  DATE  Commencement  of this Lease and  occupancy by Tenant is
     conditioned  upon the  execution  of the Lease  Termination  Agreement,  as
     prepared  and approved by Landlord,  between  Teachers  Insurance & Annuity
     Association of America, Inc., and Kaizen Software for the subject premises.

                                      -26-
<PAGE>

31.  LETTER OF CREDIT.  As security for Tenant's  performance of its obligations
     under the Lease,  and to enter into this  Lease,  Tenant  shall,  upon full
     execution  of this Lease,  provide the  Landlord an  irrevocable  letter of
     credit in the amount of Twenty Four Thousand Six Hundred Fifty Four Dollars
     ($24,654.00)  for the Lease Term,  in form and content  attached  hereto as
     exhibit F, securing Tenant's full and timely performance of all obligations
     under  this  Lease.  If Tenant is in  default  beyond  the  Section 20 cure
     period, Landlord may draw on the Letter of Credit in the same manner and to
     the same extent as  Landlord  may use the  security  deposit or any portion
     thereof,  all as set forth in  Section  6,  except  that any stay of action
     against Tenant shall not effect  Landlord's  right to draw on the letter of
     credit.


Landlord:  Teachers Insurance & Annuity Association
           Of America, Inc.


           By
             ---------------------------------------------

           Its
              --------------------------------------------



Tenant:  Helix BioMedix, Inc., a Delaware corporation


           By: /s/ R. Stephen Beatty
               --------------------------------------------
               Mr. R. Stephen Beatty
           Its President
               --------------------------------------------

                                      -27-