<PAGE>

                                                                    Exhibit 10.2

                                    INTERBAY
                                    --------
                            B  U  I  L  D  I  N  G



                                     LEASE

                                    between

                             INTERBAY ONE, L.L.C.

                                 AS LANDLORD,

                                      and

                               PHOTOWORKS, INC.

                                   AS TENANT
<PAGE>

                                     INDEX
                                     -----

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
SECTION 1.  Lease Data; Exhibits.........................................    1

SECTION 2.  Premises.....................................................    3
     (a)    Premises.....................................................    3
     (b)    Condition....................................................    3
     (c)    Common Areas.................................................    3
     (d)    Alterations..................................................    3

SECTION 3.  Term.........................................................    3
     (a)    Initial Term.................................................    3
     (b)    Option to Extend.............................................    3

SECTION 4.  Base Rent and Additional Rent................................    5

SECTION 5.  Tenant's Share of Operating Costs and Real Property Taxes....    6
     (a)    Amount.......................................................    6
     (b)    Definitions..................................................    6

SECTION 6.  Late Charge; Interest........................................    7

SECTION 7.  Deposit......................................................    7

SECTION 8.  Tenant's Operations..........................................    8
     (a)    Use of Premises..............................................    8
     (b)    Unlawful Use.................................................    8
     (c)    Liens and Encumbrances.......................................    8
     (d)    Hazardous Substances.........................................    8
     (e)    Signs........................................................    9

SECTION 9.  Utilities and Services.......................................    9
     (a)    Tenant's Responsibility......................................    9
     (b)    Interruption.................................................   10

SECTION 10. Licenses and Taxes...........................................   10

SECTION 11. Alterations by Tenant........................................   10
</TABLE>

                                      -i-
<PAGE>

<TABLE>
<S>                                                                        <C>
SECTION 12. Care of Premises.............................................   11
     (a)    Landlord's Obligations.......................................   11
     (b)    Tenant's Obligations.........................................   11

SECTION 13. Surrender of Premises........................................   12

SECTION 14. Waiver; Indemnity............................................   12
     (a)    Tenant Indemnity.............................................   12
     (b)    Landlord's Indemnity.........................................   13
     (c)    General Indemnity Provisions.................................   13
     (d)    Release of Claims............................................   13

SECTION 15. Insurance....................................................   13
     (a)    Tenant's Insurance...........................................   13
     (b)    General Insurance Requirements...............................   14
     (c)    Landlord's Insurance.........................................   14
     (d)    Waiver of Subrogation........................................   14

SECTION 16. Assignment or Subletting.....................................   15
     (a)    Consent Required.............................................   15
     (b)    Recapture Right..............................................   15
     (c)    Additional Consideration.....................................   15
     (d)    Entities.....................................................   16
     (e)    Assignment by Landlord.......................................   16

SECTION 17. Destruction..................................................   16
     (a)    Partial Destruction..........................................   16
     (b)    Total Destruction............................................   16
     (c)    Limitation...................................................   17

SECTION 18. Eminent Domain...............................................   17
     (a)    Taking.......................................................   17
     (b)    Award........................................................   17

SECTION 19. Default by Tenant............................................   18
     (a)    Definition...................................................   18
     (b)    Remedies.....................................................   18
     (c)    Reentry......................................................   18
     (d)    Termination..................................................   19
     (e)    Adequate Security............................................   19
     (f)    Landlord's Remedies Cumulative; Waiver.......................   19

SECTION 20. Default by Landlord; Lender Protection.......................   19
     (a)    Default by Landlord..........................................   19
     (b)    Notice to Lender.............................................   20
</TABLE>

                                     -ii-
<PAGE>

<TABLE>
<S>                                                                        <C>
SECTION 21. Attorneys' Fees..............................................   20

SECTION 22. Access by Landlord...........................................   20

SECTION 23. Holding Over.................................................   20

SECTION 24. Subordination; Estoppel Certificates.........................   21
     (a)    Subordination................................................   21
     (b)    Estoppel Certificates........................................   21

SECTION 25. Financial Information........................................   22

SECTION 26. Liability of Landlord........................................   22

SECTION 27. Parking......................................................   22

SECTION 28. Miscellaneous................................................   22
     (a)    Quiet Enjoyment..............................................   22
     (b)    Notices......................................................   23
     (c)    Successors or Assigns........................................   23
     (d)    Tenant Authority and Liability...............................   23
     (e)    Brokers' Commission..........................................   23
     (f)    Partial Invalidity...........................................   23
     (g)    Recording....................................................   23
     (h)    Force Majeure................................................   23
     (i)    Name of Buildings............................................   24
     (j)    Headings.....................................................   24
     (k)    Execution by Landlord and Tenant; Approval of Lender.........   24
     (l)    Transportation Management Programs; Recycling................   24
     (m)    Fully Net Lease..............................................   24
     (n)    Entire Agreement; Applicable Law.............................   24
</TABLE>

                                     -iii-
<PAGE>

                                                                    Exhibit 10.2

                                     LEASE
                                     -----

     THIS LEASE is made as of February 3, 2000, between INTERBAY ONE,
L.L.C., a Washington limited liability company ("Landlord"), and PhotoWorks,
Inc., a Washington corporation ("Tenant").  Landlord and Tenant covenant and
agree as follows:

     SECTION 1.  Lease Data; Exhibits.  The following terms shall have the
following meanings, except as otherwise specifically modified in this Lease:

          (a)  Buildings: The buildings with a total rentable area of
               approximately 54,746 square feet, currently known as the Interbay
               Buildings, located at 3401 -3441 Thorndyke Avenue West, in
               Seattle, King County, Washington, situated on real property (the
               "Land") legally described in Exhibit A attached.

          (b)  Premises:  An agreed area of 8,712 rentable square feet located
               in the Building as shown on the floor plan attached to this Lease
               as Exhibit B (the "Floor Plan").  The Premises consist of
               approximately 8,712 square feet of office space in Building 1.

          (c)  Lease Term:  A period of approximately sixty six (66) full
               calendar months, commencing on the Commencement Date and expiring
               on the Expiration Date.

          (d)  Commencement Date:  April 1, 2000 or such earlier or later date
               as is provided in Section 3.

          (e)  Expiration Date:  11:59 on September 30, 2005.

          (f)  Base Rent:  Tenant shall pay the following dollar amounts per
               month as Base Rent on or before the first day of each month:

<TABLE>
<CAPTION>
                                            Monthly
Month of Lease Term                        Base Rent
-----------------------------------------  ----------
<S>                                        <C>
Commencement Date through and including
the last day of the 12th month             $12,886.79
Month 13 - Month 24                        $13,273.39
Month 25 - Month 36                        $13,671.60
Month 37 - Month 42                        $14,081.74
Month 43 - Month 60                        $14,504.20
Month 61 - Expiration Date                 $14,939.32
</TABLE>
          (g)  Additional Rent:  Whether or not so designated, all other sums
               due from Tenant under this Lease shall constitute Additional
               Rent, payable when specified in this Lease.

                                      -1-
<PAGE>

          (h)  Operating Costs and Real Property Taxes: Tenant will pay its
               share ("Tenant's Share") of Operating Costs and Property Taxes
               pursuant to Section 5 of this Lease.  Tenant's Share of Operating
               Costs and Property Taxes is estimated to be 15.92%.  Tenant's
               Share shall be calculated and may be adjusted during the Lease
               Term as provided in Section 5 below.  The terms Operating Costs
               and Property Taxes are defined in Section 5 below.

          (i)  Deposit:  $27,826.11.

          (j)  Permitted Use:  General office purposes; provided, up to 500
               square feet of the Premises may be used for retail purposes.

          (k)  Notice Addresses:
               To Landlord:   Interbay One, L.L.C.
                              217 Pine Street, 12th Floor
                              Seattle, WA  98101

               To Tenant:     Prior to the Commencement Date:
                              PhotoWorks, Inc.
                              1260 16th Avenue West
                              Seattle, WA  98119

                              After the Commencement Date:
                              PhotoWorks, Inc.
                              1260 16th Avenue West
                              Seattle, WA  98119

          (l)  Brokers:

               Landlord's Broker - Jeff Loftus of Kidder Mathews & Segner, Inc.

               Tenant's Broker - Business Space Resources, Ltd.

          (m)  Name and Address for Payments to Landlord:

               Interbay One, L.L.C.
               217 Pine Street, 12th Floor
               Seattle, WA  98101

          (n)  Exhibits:  The following exhibits are made a part of this Lease:

               Exhibit A - Legal Description of Land
               Exhibit B - Floor Plan
               Exhibit C - Landlord's Work
               Exhibit D - Rules and Regulations

                                      -2-
<PAGE>

     SECTION 2.  Premises.

     (a)  Premises.  Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, those certain premises (the "Premises") described above in
Section 1.

     (b)  Condition.  The Premises are leased by Landlord and accepted by Tenant
in an "AS IS" condition, except that prior to delivering possession of the
Premises to Tenant, Landlord, at its cost and expense, will complete the work
described on Exhibit C attached ("Landlord's Work").

     (c)  Common Areas.  During the Lease Term, Tenant and its licensees,
invitees, customers and employees shall have the non-exclusive right to use all
entrances, lobbies, elevators, stairs, common corridors, public restrooms,
exterior landscaping, loading areas, parking areas, and other public areas of
the Buildings (the "Common Areas") in common with Landlord, other 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.

     (d)  Alterations.  Landlord may in its discretion increase, decrease or
change the number, locations and dimensions of any hallways, lobby areas, Common
Areas and other improvements in the Buildings which are not within the Premises.
Landlord reserves the right from time to time (i) to install, use, maintain,
repair, relocate and replace pipes, ducts, conduits, wires and appurtenant
meters and equipment for service to the Premises or to other parts of the
Buildings in areas above the suspended ceiling surfaces, below the floor
surfaces, within the walls and in the central core areas of the Buildings within
the Premises and elsewhere in the Buildings; (ii) to alter or expand the
Buildings; and (iii) to alter, relocate or substitute any of the Common Areas.

     SECTION 3.  Term.

     (a)  Initial Term.  The Commencement Date listed in Section 1 of this Lease
represents an estimate of the actual Commencement Date.  The actual Commencement
Date shall be the first to occur of the following events: (i) three (3) days
after Landlord notifies Tenant the Premises are available for Tenant's occupancy
in the condition required pursuant to Section 2(b) above, (ii) the date on which
Tenant takes possession of the Premises or (iii) the date a certificate of
occupancy (either temporary or permanent) is issued for the Premises by the City
of Seattle.  If the Commencement Date is later than the estimated Commencement
Date specified in Section 1 above, this Lease shall not be void or voidable.
Landlord shall confirm the Commencement Date by written notice to Tenant.  The
Lease Term shall begin on the Commencement Date and end on the Expiration Date,
unless extended or sooner terminated in accordance with the terms of this Lease.

     (b)  Option to Extend.  So long as Tenant is not then in default under this
Lease, on the terms and conditions stated in this Section 3(b), Tenant shall
have the option to extend the term of this Lease for one (1) additional sixty
(60) month period (the "Additional Term").  To

                                      -3-
<PAGE>

exercise its option to extend this Lease for the Additional Term, Tenant must
deliver to Landlord a written notice (an "Option Notice") exercising its renewal
option at least twelve (12) months (but not more than fifteen (15) months) prior
to the date the then Lease Term will expire. The extension option granted to
Tenant pursuant to this paragraph is personal to Tenant and may not be exercised
by or for the benefit of any assignee or sublessee of Tenant. All of the terms
and conditions of this Lease shall apply during the Additional Term except (i)
the Base Rent shall be the "fair market rent" (defined below) for the Premises
as agreed to by Landlord and Tenant or determined by arbitration as set forth
below, but in no event shall the Base Rent payable by Tenant during the
Additional Term be less than one hundred and three percent (103%) of the amount
of the Base Rent payable by Tenant during the last full calendar month in the
initial Lease Term; (ii) unless otherwise agreed by Landlord in writing, there
shall be no further renewal options after the commencement of the Additional
Term; and (iii) Landlord shall have no tenant improvement obligations with
respect to the Premises except as otherwise agreed in writing by Landlord. When
the rental rate for the Additional Term is determined, whether by agreement of
the parties or pursuant to arbitration as provided below, Landlord and Tenant
shall enter into a lease extension agreement setting forth the new base rent for
the Premises and such other terms as may be applicable. If at the time Tenant
delivers the Option Notice to Landlord, or at any time between such date and the
commencement date of the Additional Term, Tenant defaults under this Lease and
fails to cure its default within the applicable cure period, if any, Landlord
may declare the Option Notice null and void by written notice to Tenant. The
term "fair market rent" means the rate per rentable square foot that a willing,
non-equity tenant would pay in an arms-length transaction for comparable space
in comparable buildings in Seattle, Washington, for leases having terms of sixty
(60) months, taking into account the then condition of the improvements in the
Premises. Landlord and Tenant agree the base annual rent for the Additional Term
shall be determined as follows:

               (i)  Landlord shall advise Tenant in writing ("Landlord's
Notice") of Landlord's determination of fair market rent not later than thirty
(30) days after receiving the Option Notice. Within thirty (30) days after
receiving Landlord's Notice, Tenant shall notify Landlord in writing ("Tenant's
Notice") whether or not Tenant accepts Landlord's determination of the fair
market rent. If Tenant disagrees with Landlord's determination of fair market
rent, Tenant's Notice shall set forth Tenant's determination of fair market
rent. If Tenant fails to give Tenant's Notice to Landlord within such thirty
(30) day period, then the Option Notice shall be deemed null and void, unless
otherwise agreed in writing by Landlord and Tenant. If Tenant does not accept
Landlord's determination of fair market rent, and Tenant has given Tenant's
Notice, the parties (or their designated representatives) shall promptly meet
and attempt to agree on the fair market rent. If the parties have not agreed on
the fair market rent within ninety (90) days after Landlord receives the Option
Notice, and Tenant's renewal option is still in effect in accordance with the
terms of this paragraph, then unless otherwise agreed in writing by the parties,
the parties shall submit the matter to arbitration in accordance with the terms
of the following paragraphs. The last day of such ninety (90) day period (as the
same may be extended by the written agreement of the parties) is referred to in
this Lease as the "Arbitration Commencement Date".

               (ii) The arbitration will be conducted by three MAI real estate
appraisers who have been active over the five (5) year period ending on the
Arbitration Commencement Date in the appraisal of commercial real estate in
Seattle, Washington. One appraiser will be selected by Tenant, one appraiser
will be selected by Landlord, and the third appraiser will be selected by the

                                      -4-
<PAGE>

two appraisers so chosen. If the two appraisers chosen by the parties cannot
agree on a third appraiser within ten (10) days after the date the second
appraiser has been appointed, the third appraiser will be appointed by the
Seattle office of the American Arbitration Association upon the application of
either party. Each party shall select its appraiser within ten (10) days after
the Arbitration Commencement Date. If either party fails to select its appraiser
within such ten (10) day period, and the other party timely selects its
appraiser, then the appraiser selected by the other party shall be the sole
arbitrator for determining fair market rent.

               (iii)  Within thirty (30) days after the selection of the third
appraiser (or if only one appraiser is to render the decision as provided in
subparagraph (ii) above, within thirty (30) days after the last day of the
above-referenced ten (10) day period), the appraiser(s) shall determine fair
market rent. If more than one appraiser has been appointed, the decision of a
majority of the appraisers shall control. If a majority of the appraisers do not
agree within the stipulated time period, then each appraiser shall in writing
render his or her separate determination as to fair market rent within five (5)
days after the expiration of the thirty (30) day period. In such case, the three
determinations shall be averaged to determine the fair market rent; however, if
the lowest fair market rent or the highest fair market rent is ten percent (10%)
lower or higher, as applicable, than the middle fair market rent, then the low
fair market rent and/or the high fair market rent, as applicable, shall be
disregarded and the remaining fair market rent(s) will be averaged in order to
establish the fair market rent.

               (iv)  Both parties may submit any information to the arbitrators
for their consideration, with copies to the other party. The arbitrators shall
have the right to consult experts and competent authorities for factual
information or evidence pertaining to the determination of fair market rent. The
arbitrators shall render their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power to modify the
provisions of this Lease. The determination of the arbitrators will be final and
binding upon Landlord and Tenant. The cost of the arbitration will be paid by
Landlord if the fair market rent determined by arbitration is ninety percent
(90%) or less than the fair market rent specified in Landlord's Notice; by
Tenant if the fair market rent determined by arbitration is one hundred ten
percent (110%) or more than the fair market rent specified in Tenant's Notice;
and otherwise shall be shared equally by Landlord and Tenant.

     SECTION 4.  Base Rent and Additional Rent.  Tenant shall pay to Landlord
at the address and to the account specified by Landlord in Section 1 above or
such other address or account as Landlord may hereafter designate in writing,
without notice or demand, or any setoff or deduction whatsoever except as
provided in this Lease, in lawful money of the United States: (a) Base Rent in
the amount(s) specified in Section 1 above in advance on the first day of each
month, and (b) Additional Rent as and when specified elsewhere in this Lease,
but if not specified, then within ten (10) days of demand.  Base Rent and
Additional Rent shall be prorated on a daily basis (based on a 30-day month and
the actual number of days elapsed) for any partial month within the Lease Term
and for any partial initial month in the Lease Term shall be paid on the first
day of the Lease Term.

                                      -5-
<PAGE>

     SECTION 5.  Tenant's Share of Operating Costs and Real Property Taxes.

          (a)  Amount.  In addition to Base Rent, Tenant shall pay to Landlord
as Additional Rent, Tenant's Share of the "Operating Costs" (defined below) and
"Property Taxes" (defined below) incurred by Landlord in any "Lease Year"
(defined below). After the end of each Lease Year, Landlord will notify Tenant
in writing of Landlord's estimate of Tenant's Share of the estimated Operating
Costs and Property Taxes. Tenant shall pay the estimated amount set forth in
Landlord's notice, in advance, in equal monthly installments, without deduction
or offset whatsoever, on or before the first (1st) day of each calendar month,
with the payment of Base Rent required pursuant to Section 4 above. Until
Landlord provides Tenant with the notice provided for above in this paragraph,
Tenant shall continue to pay Tenant's Share under this Section 5 in the monthly
amounts specified in the last such notice given to Tenant by Landlord, if any.
Following the end of each Lease Year, Landlord will compute Tenant's Share due
under this Section 5 for such Lease Year, based on actual costs, and, if
Tenant's Share for such Lease Year is greater than that already paid by Tenant
for such Lease Year, Tenant shall pay Landlord the deficiency within twenty (20)
days of its receipt of written notice or an invoice for the amount of the
deficiency. If the total amount paid by Tenant under this Section 5 for a Lease
Year exceeds Tenant's Share, then Landlord shall credit such excess to the
payment of Base Rent and Additional Rent thereafter coming due; however, upon
the expiration or sooner termination of the Lease Term, if Tenant has otherwise
complied with all other terms and conditions of this Lease, Landlord shall
refund the excess to Tenant. If during a Lease Year Landlord obtains information
regarding Operating Costs or Property Taxes which alters its prior estimates,
Landlord may adjust the amount due from Tenant under this Section 5 during the
balance of that Lease Year to reflect such new information by written notice to
Tenant.

          (b)  Definitions.  For purposes of this Lease:

               (i)  "Operating Costs" means all expenses paid or incurred by
Landlord or charged to Landlord for maintaining, managing, operating, repairing
and administering the Buildings (including the Common Areas), and the personal
property used in conjunction therewith, including without limitation, the costs
of refuse collection, water, sewer, electricity, fuel, light, fire protection,
and other utilities and services; supplies; janitorial and cleaning services;
parking lot sweeping, stripping and maintenance; snow and refuse removal;
security services and systems; landscape maintenance; compensation (including
employment taxes and fringe benefits) of all persons who perform duties in
connection with the operation, management, maintenance, repair and
administration of the Buildings; insurance premiums for all insurance carried by
Landlord with respect to the Buildings; licenses, permits and inspection fees;
subsidies and other payments required by public bodies; property management
fees; easement and license fees; legal and accounting expenses and all other
expenses or charges whether or not hereinabove described which, in accordance
with generally accepted accounting and management practices, would be considered
an expense of maintaining, managing, operating, repairing and administering the
Buildings, excluding: (a) costs of any special services rendered to individual
tenants (including Tenant) for which a special charge is made, or costs (such as
utility costs) which are separately metered and charged to tenants; (b) ground
lease rental payments and debt service on mortgages or deeds of trust; (c)
leasing commissions and attorneys' and other fees and costs incurred in leasing
space or in connection with disputes with tenants; (d) depreciation or
amortization expenses; and (e) costs

                                      -6-
<PAGE>

required to be capitalized in accordance with generally accepted accounting
practices, except Operating Costs shall include amortization of capital
improvements (1) designed with a reasonable probability of improving the
operating efficiency of the Buildings, (2) required to comply with governmental
laws or regulations, or (3) made for the general benefit or convenience of
tenants of the Buildings.

               (ii) "Property Taxes" means all taxes of every kind and nature on
the Buildings and/or the Land and on personal property used by Landlord in
conjunction therewith; surcharges and all local improvement and other
assessments levied with respect to the Buildings, the Land and all other
property of Landlord used in connection with the operation of the Buildings; and
any taxes levied or assessed in lieu of, in whole or in part, such real or
personal property taxes; and any taxes in addition to such real and personal
property taxes, including, but not limited to, taxes or license fees upon or
measured by the leasing of the Buildings or the rents or other income collected
therefrom, other than any federal or state net income or inheritance tax; and
all reasonable costs and expenses incurred by Landlord in efforts to reduce or
minimize taxes payable during the Lease Term.

               (iii) "Lease Year" means a twelve (12) month period beginning
January 1st and ending December 31st; however, if the Commencement Date is a
date other than the first day of a calendar year, the first Lease Year shall
commence on the Commencement Date and end on December 31 of such calendar year,
and the last Lease Year shall commence on January 1 of the last calendar year
during the Lease Term and end on the Expiration Date.

               (iv) "Tenant's Share" means the percentage determined by dividing
the rentable area of the Premises by the rentable area of the Buildings as a
whole. If the total square foot area of the Premises or the Buildings (or any
portion thereof) is increased or decreased by Landlord during the Lease Term (as
a result of remeasurement, remodeling or otherwise), Tenant's Share thereafter
shall be adjusted accordingly.

     SECTION 6.  Late Charge; Interest.  Time is of the essence of this Lease.
If Tenant fails to pay any Base Rent or Additional Rent within five (5) days of
the due date, a late charge equal to the greater of $50.00, or five percent (5%)
of the unpaid amount, shall be assessed and be immediately due and payable by
Tenant. In addition, any Base Rent or Additional Rent more than five (5) days
past due shall bear interest from the date due until paid in full (together with
late charges and interest) at an interest rate equal to the lesser of one and
one-half percent (1.5%) per month, or the maximum rate of interest permitted by
applicable law.

     SECTION 7.   Deposit.  Tenant has deposited with Landlord the sum specified
as the Deposit in Section 1 of this Lease, if any.  This sum shall belong to
Landlord and shall constitute partial consideration for the execution of this
Lease, subject only to repayment when required in this Section.  Landlord will
credit $12,886.79 of the Deposit to the Base Rent payable for the first full
calendar month of the Lease Term.  Landlord shall pay Tenant the remaining
balance of the Deposit, without any liability for interest, within thirty (30)
days after the expiration or prior termination of the Lease Term, or any
extension thereof, if and only if Tenant has fully performed all of its
obligations under this Lease.  Landlord may withdraw from the Deposit the amount
of any

                                      -7-
<PAGE>

unpaid rent or other charges not paid to Landlord when due, and Tenant shall
immediately redeposit an amount equal to that so withdrawn within ten (10) days
of demand.

    SECTION 8.  Tenant's Operations.

          (a)  Use of Premises. Tenant shall use the Premises only for Permitted
Use specified in Section 1. Tenant shall not permit any act that will increase
the then existing rate of insurance on the Buildings, without Landlord's prior
written consent. Tenant shall pay on demand the amount of the increase in
insurance rates caused by any such acts or omissions by Tenant, or its agents or
employees. Tenant shall not commit or allow to be committed any waste on the
Premises, or any public or private nuisance or other act which disturbs the
quiet enjoyment of any other tenant of the Buildings. Tenant shall not, without
the prior written consent of Landlord, use any apparatus, machinery or devise in
or about the Premises which will cause any substantial noise, vibration or
fumes. If any of Tenant's machines or equipment disturb the quiet enjoyment of
any other tenant of the Buildings, Tenant shall provide adequate insulation or
take such other action as Landlord directs to eliminate the disturbance.

          (b)  Unlawful Use.  Tenant shall not use or permit the Premises or the
Common Areas or any part thereof to be used for any purpose in violation of any
applicable municipal, county, state or federal law, ordinance or regulation and
Tenant shall comply with and shall cause its employees, invitees and contractors
to comply with such rules and regulations as Landlord may from time to time
promulgate.  The current rules and regulations of the Buildings are attached to
this Lease as Exhibit D.  Landlord at any time may alter, amend or replace the
rules and regulations for the Buildings by written notice to Tenant.  Tenant
shall promptly comply, at its sole cost and expense, with all laws, ordinances
and regulations now in force or hereafter adopted relating to or affecting the
condition, use or occupancy of the Premises, including without limitation the
Americans With Disabilities Act of 1990, as now or hereafter amended (the
"ADA").  Notwithstanding the foregoing, as between Landlord and Tenant, Landlord
shall be solely responsible for making any changes to the Common Areas as and
when required pursuant to the ADA.

          (c)  Liens and Encumbrances.  Tenant shall keep the Premises, the
Buildings and the Land free and clear of, and shall indemnify, defend and hold
Landlord harmless from, any and all liens and encumbrances arising or growing
out of Tenant's acts or omissions, or breach of this Lease or its use,
improvement or occupancy of the Premises. If any lien is so filed against the
Premises, the Land or the Buildings, Tenant shall cause the same to be fully
discharged and released of record within ten (10) days of demand or within such
period provide Landlord with cash or other security acceptable to Landlord in an
amount equal to one and one-half (1-1/2) times the amount of the claimed lien as
security for its prompt removal. Landlord shall have the right to disburse such
security to cause the removal of the lien if a judgment is entered against
Tenant in the lien proceeding, if such lien causes difficulties for Landlord in
connection with its financing of the Buildings, or if Tenant is otherwise in
default under this Lease.

         (d)  Hazardous Substances.  Tenant shall not, without Landlord's prior
written consent, keep any substances designated as, or containing components now
or hereafter designated as, hazardous, dangerous, toxic or harmful and/or
subject to regulation under any federal, state or

                                      -8-
<PAGE>

local law, regulation or ordinance ("Hazardous Substances") on or about the
Premises or Buildings. Notwithstanding the preceding sentence, Tenant may keep,
use, store and dispose of, in, on and from the Premises, materials and supplies
otherwise constituting Hazardous Substances which are normally used in the
ordinary course of Tenant's business, provided such materials and supplies are
used, handled, stored and disposed of in accordance with all applicable
governmental rules, regulations, laws and requirements, and in accordance with
all applicable manufacturers' or suppliers' recommendations. With respect to any
Hazardous Substances stored with Landlord's consent or permitted hereunder,
Tenant shall: promptly, timely and completely comply with all governmental
requirements for reporting and record keeping; 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; within five (5) days of Landlord's request, provide
evidence satisfactory to Landlord of Tenant's compliance with all applicable
governmental rules, regulations and requirements; and comply with all
governmental rules, regulations and requirements regarding the proper and lawful
use, sale, transportation, generation, treatment and disposal of Hazardous
Substances. Any and all costs incurred by Landlord and associated with
Landlord's inspections of the Premises and Landlord's monitoring of Tenant's
compliance with this Section 8(d), including Landlord's attorneys' fees and
costs, shall be Additional Rent and shall be due and payable to Landlord within
ten (10) days of Landlord's demand. Tenant shall be fully and completely liable
to Landlord for any and all cleanup costs and expenses and any and all other
charges, expenses, fees, fines, penalties (both civil and criminal) and costs
imposed with respect to Tenant's use, disposal, transportation, generation
and/or sale of Hazardous Substances, in or about the Premises or Buildings.
Tenant shall indemnify, defend and hold Landlord, and lenders to Landlord (each
a "Lender"), harmless from any and all of the costs, fees, penalties, charges
and expenses assessed against or imposed upon Landlord and Lender (as well as
Landlord's and Lender's attorneys' fees and costs) as a result of Tenant's use,
disposal, transportation, generation and/or sale of Hazardous Substances.

          (e)  Signs.  Without the prior written consent of Landlord, Tenant
shall not erect or place, or permit to be erected or placed, any signs of any
nature or kind whatsoever on the exterior walls or windows of the Premises or
elsewhere in the Buildings. Tenant shall comply with such signage rules and
regulations as Landlord may now or hereafter promulgate, including those
contained in Exhibit D attached. Upon expiration of the Lease, Tenant shall
remove all signs installed by Tenant and Tenant shall repair all building
surfaces where Tenant signs were installed to match adjacent surfaces. Subject
to applicable governmental laws, ordinances, rules and regulations, Tenant shall
have the right to place an exterior sign on the Buildings for the retail portion
of the Premises (the "Exterior Signage"). The size, design and location of the
Exterior Signage must be acceptable to Landlord, which consent shall not be
unreasonably withheld or delayed.

     SECTION 9.  Utilities and Services.

          (a)  Tenant's Responsibility.  Tenant shall be solely responsible and
shall pay separately for all charges for fuel, heat, water, sewer service,
refuse collection, gas, electricity, telephone and for all other utilities used
or consumed in the Premises. Tenant shall arrange and pay for its own janitorial
service to the Premises and for garbage and refuse removal. It is understood
that Landlord shall not be required to provide any services or utilities to
Tenant, and

                                      -9-
<PAGE>

Tenant shall make any necessary arrangements to have all of such services or
utilities billed directly to and paid directly by Tenant.

          (b)  Interruption.  Landlord shall not be liable for any loss, injury
or damage to person or property caused by or resulting from any variation,
interruption, or failure of such services due to any cause whatsoever, or from
failure to make any repairs or perform any maintenance. No temporary
interruption or failure of such services incident to the making of repairs,
alterations or improvements, or due to accident, strike or conditions or other
events beyond Landlord's reasonable control shall be deemed an eviction of
Tenant or to relieve Tenant from any of Tenant's obligations hereunder or to
give Tenant a right of action against Landlord for damages. Notwithstanding any
of the foregoing, if for reasons within the reasonable control of Landlord the
services to the Premises are interrupted for more than three (3) consecutive
days to such an extent that Tenant is unable to reasonably use and occupy the
Premises for its intended purposes, unless the interruption is caused by acts or
omissions of Tenant or its agents or employees, the Base Rent and the Additional
Rent shall equitably abate in proportion to the extent of the interference with
Tenant's use of the Premises, commencing on the last day of such three (3) day
period until the services are restored to the extent Tenant can again reasonably
use and occupy the Premises for its intended purposes.

     SECTION 10.  Licenses and Taxes.  Tenant shall be liable for, and shall pay
throughout the term of this Lease, all license and excise fees and occupation
taxes covering the business conducted on the Premises and all personal property
taxes levied with respect to all personal property located at the Premises.  If
any governmental authority levies a tax or license fee on rents payable under
this Lease or rents accruing from use of the Premises or a tax or license fee in
any form against Landlord or Tenant because of or measured by or based upon
income derived from the leasing or rental thereof (other than a net income tax
on Landlord's income), or a transaction privilege tax, such tax or license fee
shall be paid by Tenant, either directly if required by law, or by reimbursing
Landlord for the amount thereof upon demand.

     SECTION 11.  Alterations by Tenant.  Tenant shall not make any alterations,
additions or improvements in or to the Premises without first obtaining
Landlord's prior written approval, and if required by Landlord, submitting to
Landlord professionally-prepared plans and specifications.  Tenant covenants it
will cause all such alterations, additions and improvements to be performed at
Tenant's sole cost and expense by a contractor reasonably acceptable to Landlord
and in a manner which:  (a) is consistent with any Landlord-approved plans and
specifications and any reasonable conditions imposed by Landlord; (b) is in
conformity with first class commercial standards; (c) includes insurance
coverage for Landlord's benefit which is reasonably acceptable to Landlord; (d)
does not affect the structural integrity of the Buildings or the Buildings'
systems; (e) does not disrupt the business or operations of other tenants; and
(f) does not invalidate or otherwise affect the construction and systems
warranties then in effect with respect to the Buildings.  Tenant shall secure
all governmental permits and approvals and comply with all other applicable
governmental requirements and restrictions, and reimburse Landlord for all
expenses incurred in connection therewith.  Except as provided in Section 14
with regard to concurrent negligence, Tenant shall indemnify, defend and hold
Landlord harmless from and against all losses, liabilities, damages, liens,
costs, penalties and expenses (including attorneys' fees, but without waiver of
the duty to hold harmless) arising from or out of the performance of such
alterations, additions and improvements, including, but not limited to, all
which arise from or out of Tenant's breach of its obligations under

                                      -10-
<PAGE>

terms of this Section 11. All alterations, additions and improvements (expressly
including all light fixtures, heating, ventilation and air conditioning units
and floor, window and wall coverings), except Tenant's moveable trade fixtures
and appliances and equipment not affixed to the Premises, shall immediately
become the property of Landlord without any obligation on its part to pay
therefor. These improvements remain Landlord's and Tenant shall not remove all
or any portion thereof on the termination of this Lease except as specifically
directed by Landlord in writing. Any work to the Premises done by Tenant
pursuant to this Section 11 shall be done at times and in such a manner as
Landlord may designate from time to time. Landlord may require Tenant to remove
any improvements or alterations at the expiration of the earlier term of this
Lease at Tenant's sole cost and expense and to restore the Premises to their
original condition, ordinary wear and tear excepted.

     SECTION 12.  Care of Premises.

          (a)  Landlord's Obligations.  Landlord shall cause the Common Areas
to be maintained in reasonably good order and condition, except for damage
occasioned by any act or omission of Tenant or Tenant's officers, contractors,
agents, invitees, licensees or employees, the repair of which latter damage
shall be paid for by Tenant.   In addition, Landlord shall make necessary
repairs to the exterior foundations and roof of the Buildings, and the plumbing,
electrical and other utility systems serving but which are located outside of
the Premises, and shall make necessary structural repairs to the exterior walls
of the Buildings (excluding, however, repairs to windows, doors and plate
glass), and the load-bearing walls and load-bearing columns, if any, within the
Premises, provided that Landlord shall not be obligated hereby to do any work
required to be done because of any damage caused by any act, omission or
negligence of Tenant and its invitees, licensees, their respective officers,
agents and employees or their customers.  When necessary by reason of accident
or other cause occurring in the Buildings or in the Premises, or in order to
make any repairs or alterations or improvements in or relating to the Buildings
or the Premises, Landlord reserves the right to interrupt the supply of
electricity, water and gas or any other utility and also to suspend the
operation of the heating and air conditioning system, where there shall be one
installed in the Buildings, until said repairs, alterations or improvements
shall have been completed.    There shall be no abatement in rent because of any
such interruption or suspension, however, Landlord shall pursue such work with
reasonable continuity, diligence and dispatch and in such a manner as to cause a
minimum of interference with Tenant's use of the Premises and, whenever
reasonably possible, Landlord will provide Tenant with at least twenty four (24)
hours advance written notice of any such interruption or suspension of services.
Landlord shall maintain the landscaping on the Land and periodically paint and
repair the exterior surfaces of the Buildings and the cost thereof shall be an
Operating Cost.

          (b)  Tenant's Obligations.  Tenant shall (i) store all trash and
refuse in appropriate sealed and covered containers either within the Buildings
or in a concealed location designated by Landlord and shall attend to the
regular disposal and removal thereof, (ii) receive all deliveries, load and
unload goods, merchandise, supplies, fixtures, equipment, furniture and rubbish
only through proper service doors, and loading docks serving the Buildings, but
in no event through the main front entrance thereof, and (iii) not change the
exterior colors or architectural treatment of the Premises or make any
alterations or changes to the exterior of the Buildings, or the grading,
planting or landscaping of the exterior of the Premises without

                                      -11-
<PAGE>

Landlord's prior written approval. In addition, there shall be no outside
storage of any kind permitted without Landlord's written consent. Except for
repairs required to be made by Landlord and described in subparagraph 12(a)
above, Tenant shall take good care of the Premises and, at Tenant's sole cost
and expense, Tenant shall make all improvements, repairs and replacements,
interior and exterior, foreseen or unforeseen as and when needed to preserve the
Premises in good working order and condition. Without affecting or limiting
Tenant's obligations set forth in the preceding sentence, Tenant, at Tenant's
sole cost and expense, shall provide (1) maintenance and repair of the
electrical, heating, plumbing, elevators, sprinkler and air conditioning systems
in the Premises; (2) generally keep and maintain the Premises, both interior and
exterior, in good repair and condition; and (3) repair and maintain all exterior
and interior doors, windows, partitions, lighting, glass, floor surfaces and
entry ways of the Premises. Before installing any heavy equipment or fixtures in
the Premises, Tenant shall submit the plans and specifications therefor to
Landlord for approval. Tenant shall at all times during the term of this Lease,
keep and maintain in full force and effect maintenance and repair contracts for
the benefit of Landlord and Tenant, providing for the service, maintenance, and
repair of the heating, ventilating and air conditioning, elevators and sprinkler
systems of the Premises.

     If Tenant fails to take good care of the Premises, Landlord may, at its
option, do so, and in such event, upon receipt of written statements from
Landlord, Tenant shall promptly pay the entire cost thereof as Additional Rent.
Landlord shall have the right to enter the Premises for such purposes.  Landlord
shall not be liable for interference with light, air or view.  Except as
provided in Section 17, there shall be no abatement or reduction of rent arising
by reason of Landlord's making of repairs, alterations or improvements.

     SECTION 13.  Surrender of Premises.  At the expiration or sooner
termination of the Lease Term, Tenant shall return the Premises to Landlord in
the same or better condition than on the Commencement Date (or, if altered, then
the Premises shall be returned in such altered condition unless otherwise
directed by Landlord pursuant to Section 11), except for reasonable wear and
tear, damage by condemnation and damage by casualty not caused by Tenant or its
employees, agents, contractors or invitees. Prior to such return, Tenant shall
remove its furniture and equipment and shall restore the Premises to the
condition of the Premises prior to the installation of said items, and Tenant
shall repair any damage resulting from their removal. In no event shall Tenant
remove floor coverings; heating, ventilating and air conditioning equipment;
lighting equipment or fixtures; or floor, window or wall coverings unless
otherwise specifically directed by Landlord in writing. Tenant's obligations
under this Section 13 shall survive the expiration or termination of this Lease.
Tenant shall indemnify Landlord for all damages and losses suffered as a result
of Tenant's failure to so redeliver the Premises on a timely basis.

     SECTION 14.  Waiver; Indemnity.

          (a)  Tenant Indemnity.  Except as otherwise provided in this Section
14, Tenant shall indemnify, defend and hold Landlord, its partners, officers,
agents, employees and contractors and Lenders, harmless from all claims, suits,
losses, damages, fines, penalties, liabilities and expenses (including
Landlord's 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

                                      -12-
<PAGE>

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 negligent or willful 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, the Buildings or the Land.

          (b)  Landlord's Indemnity.  Except as otherwise provided in this
Section 14, Landlord shall indemnify, defend and save Tenant, its partners,
officers, agents, employees and contractors, harmless from all claims, suits,
losses, damages, fines, penalties, liabilities and expenses (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) Landlord's
breach of its obligations hereunder, or (ii) any negligent or willful act or
omission of Landlord or any officer, agent, employee, guest or invitee of
Landlord, or of any such entity, in or about the Premises, the Buildings or the
Land.

          (c)  General Indemnity Provisions.  The indemnities in Sections 14(a)
and 14(b) above are intended to specifically cover actions brought by the
indemnifying party's own employees, and with respect to acts or omissions during
the term of this Lease shall survive termination or expiration of this Lease.
Such indemnities are specifically and expressly intended to constitute waivers
by the indemnifying party of its immunity, if any, under Washington's Industrial
Insurance Act, RCW Title 51, to the extent necessary to provide the other party
with a full and complete indemnity from claims made by the indemnifying party
and its employees, to the extent of their negligence. Tenant shall promptly
notify Landlord of casualties or serious accidents occurring in or about the
Premises. If losses, liabilities, damages, liens, costs and expenses covered by
either party's indemnity are caused by the sole negligence of the other party or
by the concurrent negligence of both Landlord and Tenant, their employees,
agents, invitees and licensees, then the indemnifying party shall indemnify the
other only to the extent of the indemnifying party's own negligence or that of
its officers, agents, employees, guests or invitees. LANDLORD AND TENANT
ACKNOWLEDGE THAT THE INDEMNIFICATION PROVISIONS OF SECTION 12 AND THIS SECTION
14 WERE SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.

          (d)  Release of Claims.  Except as provided in Section 14(b) above,
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 equipment;
any failure to make repairs; any defect, failure, surge in, or interruption of
facilities or services; any defect in or failure of Common Areas; broken glass;
water leakage; the collapse of any component of any Building; or any act,
omission or negligence of co-tenants, licensees or any other persons or
occupants of the Buildings.

     SECTION 15.  Insurance.

          (a)  Tenant's Insurance.  Tenant shall, at its own expense, maintain
comprehensive or commercial general liability insurance with broad form and stop
gap endorsements with combined single limits of $2,000,000, for property damage
and loss and for

                                      -13-
<PAGE>

personal injuries (including death), to insure and indemnify both Landlord and
Tenant against claims, demands, losses, damages, liabilities and expenses
arising out of or in connection with the use, operation, occupancy or condition
of the Premises and Tenant's operations in and about the Premises. Landlord
shall have the right to periodically review the appropriateness of such limits
in view of inflation and/or changing industry conditions and, no more frequently
than once every three (3) years during the Lease Term, to require a reasonable
increase in such limits no more frequently than annually, upon ninety (90) days
prior written notice. Landlord, any Lender designated by Landlord, and any
agents of Landlord designated by Landlord (such as the Buildings' property
manager), shall be named as additional insureds and shall be furnished with a
certificate of insurance on request. Each policy of insurance shall provide
Landlord and all other additional insureds with no less than ten (10) days prior
written notice of any cancellation, expiration, non-renewal or modification.
During the Lease Term, Tenant shall also maintain at its own expense insurance
covering its furniture, fixtures, equipment and inventory and all improvements
which it makes to the Premises in an amount equal to the full replacement cost
thereof, against fire and such other perils as are covered by an all risk policy
including plate glass coverage and coverage for sprinkler leakage.

          (b)  General Insurance Requirements.  All insurance required of Tenant
under this Lease shall (a) be issued by insurance companies authorized to do
business in the State of Washington and otherwise acceptable to Landlord; (b) be
issued as a primary policy, or under a blanket policy, not contributing with and
not in excess of coverage which Landlord may carry; (c) in the case of the
liability policy, contain a contractual liability coverage endorsement covering,
or other evidence that such policy covers, Tenant's indemnification duties under
this Lease to the fullest extent insurable; and (d) have deductibles reasonably
acceptable to Landlord. Tenant shall deliver to Landlord prior to the
Commencement Date, and thereafter not less than ten (10) days before the
expiration dates of any expiring policies of insurance, and from time to time
thereafter within ten (10) days after written request from Landlord,
certificates of insurance evidencing the insurance coverages required of Tenant
pursuant to this Paragraph 15. In no event shall the limits of any such policies
be considered as limiting the liability of Tenant under this Lease. If Tenant
does not deliver to Landlord certificates of insurance as required above,
Landlord may charge Tenant a $200.00 noncompliance fee. If Tenant fails to
maintain any insurance required of it under this Section 15, Landlord may do so,
and Tenant shall reimburse Landlord for the full expense thereof upon demand.

          (c)  Landlord's Insurance.  Throughout the Lease Term, Landlord shall
maintain such property and liability insurance coverages as are customarily
maintained by owners of buildings similar in age, location and construction to
the Buildings, and such additional insurance as any Lender may reasonably
require, and the cost of all such insurance shall be considered an Operating
Cost.

          (d)  Waiver of Subrogation.  Neither Landlord nor Tenant shall be
liable to the other party or to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage to any building,
structure or tangible personal property of the other occurring in or about the
Premises, Land or the Buildings, even though such loss or damage might have been
occasioned by the negligence of such party, its agents or employees, if such
loss or damage is covered by insurance benefiting the party suffering such loss
or damage or was required

                                      -14-
<PAGE>

to be covered by insurance under terms of this Lease. Each party shall use its
best efforts to cause each insurance policy obtained by it to contain the waiver
of subrogation clause. Notwithstanding the foregoing, no such release shall be
effective unless a party's insurance policy or policies expressly permit such a
release or contain a waiver of the carrier's right to be subrogated.

     SECTION 16.  Assignment or Subletting.

          (a)  Consent Required.  Tenant shall not sublet or encumber the whole
or any part of the Premises, nor shall this Lease or any interest thereunder be
assignable (for security purposes or otherwise) or transferable, voluntarily or
involuntarily, by operation of law or by any process or proceeding of any court
or otherwise without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. In determining whether to consent to a proposed
assignment or subletting, Landlord may consider any commercially reasonable
basis for approving or disapproving the proposed subletting or assignment,
including without limitation any of the following: (i) the experience or
business reputation of the proposed assignee or sublessee, (ii) whether the
clientele, personnel or foot traffic which will be generated by the business of
the proposed assignee or sublessee is consistent in Landlord's opinion with the
businesses of other tenants of the Buildings, (iii) notwithstanding that Tenant
or others may remain liable under this Lease, whether the proposed assignee or
sublessee has a net worth and financial strength and credit record satisfactory
to Landlord, and (iv) whether the use of the Premises by the proposed assignee
or sublessee will be substantially the same as the use of the Premises by
Tenant, or whether such use is consistent with the businesses of other tenants
then occupying the Buildings, and whether such use will violate or create any
potential violation of any laws or a breach or violation of any other lease or
agreement by which Landlord is bound. Any assignment or sublease without
Landlord's prior written consent, at Landlord's option, shall be void. No
assignment or sublease shall release Tenant from primary liability hereunder.
Each assignment and sublease shall be by an instrument in writing in form
satisfactory to Landlord. The granting of consent to a given transfer shall not
constitute a waiver of the consent requirement as to future transfers. Tenant
shall also pay all legal fees and other costs incurred by Landlord in connection
with Landlord's consideration of Tenant's request for approval of assignments or
subleases, including assignments for security purposes. Tenant shall deliver to
Landlord with its request for Landlord's approval of a proposed assignment or
subletting a fee of $500.00 which shall be credited against the fees and costs
payable by Tenant pursuant to the preceding sentence.

          (b)  Recapture Right.  In lieu of giving its consent to a proposed
assignment or subletting, Landlord may terminate the Lease as to the portion of
the Premises affected by the action for which Landlord's consent is requested
and recover possession thereof from Tenant within twenty (20) days following
written notice thereof to Tenant.  All costs incurred by Landlord in separating
the remainder of the Premises from the area so retaken shall be paid by Tenant
as Additional Rent.

          (c)  Additional Consideration.  If Tenant assigns its interest in this
Lease or sublets the Premises, Tenant shall pay to Landlord any and all
consideration received by Tenant for such assignment or sublease, whether such
additional consideration is in the form of rent in excess of the Base Rent
and/or Additional Rent payable by Tenant under this Lease, cash payments or
otherwise; however, such additional consideration shall be reduced by any
reasonable costs and

                                      -15-
<PAGE>

expenses (including brokerage fees and tenant improvement costs) incurred by
Tenant in connection with the sublease or assignment.

          (d)  Entities.  If Tenant is a corporation, then any transfer of this
Lease by merger, consolidation or liquidation, or any direct or indirect change
in the ownership of, or power to vote the majority of, Tenant's outstanding
voting stock, shall constitute an assignment for the purposes of this Lease. If
Tenant is a partnership, then a change in general partners in or voting or
decision-making control of the partnership shall also constitute an assignment.

          (e)  Assignment by Landlord.  If Landlord sells or otherwise transfers
the Buildings, such purchaser or transferee shall be deemed to have assumed
Landlord's obligations hereunder, and Landlord shall thereupon be relieved of
all liabilities hereunder arising thereafter, but this Lease shall otherwise
remain in full force and effect and Tenant shall attorn to Landlord's successor.

     SECTION 17.  Destruction.

          (a)  Partial Destruction.  If the Premises are rendered partially
untenantable by fire or other insured casualty, and if the damage is repairable
within ninety (90) days from the date of the occurrence (with the repair work
and preparations therefore to be done during regular working hours on regular
work days), Landlord shall repair the Premises with due diligence, to the extent
of the insurance proceeds available, and the monthly minimum rental shall be
abated in the proportion that the untenantable portion of the Premises bears to
the whole thereof for the period from the date of the casualty to the completion
of the repairs, unless the casualty results from Tenant's negligence or its
breach of the terms hereof. If thirty percent (30%) or more of the rentable area
of the Buildings is destroyed or damaged, regardless of whether the Premises are
damaged, Landlord may terminate this Lease as of the date of such damage or
destruction by giving notice to Tenant within thirty (30) days thereafter of the
election so to do.

          (b)  Total Destruction.  If the Premises are completely destroyed by
fire or other casualty, or if they are damaged by uninsured casualty, or by
insured casualty to such an extent that the damage cannot be repaired within
sixty (60) days of the occurrence, Landlord shall have the option to restore the
Premises or to terminate this Lease on thirty (30) days written notice,
effective as of any date not more than sixty (60) days after the occurrence. If
this Section becomes applicable, Landlord shall advise Tenant within thirty (30)
days after such casualty whether Landlord elects to restore the Premises or to
terminate this Lease. If Landlord elects to restore the Premises, it shall
commence and prosecute the restoration work with diligence. For the period from
the date of the casualty until completion of the repairs (or the date of
termination of this Lease, if Landlord elects not to restore the Premises), the
monthly minimum rent shall be abated in the same proportion that the
untenantable portion of the Premises bears to the whole thereof, unless the
casualty results from Tenant's negligence or its breach of its obligations under
this Lease. If the Premises are totally damaged or destroyed, and the repairs to
the Premises have not been completed within nine (9) months after the damage or
destruction (subject to delays such as force majeure delays which are beyond
Landlord's control), Tenant shall have the right to terminate this Lease by
written notice given to Landlord within thirty (30) days after the end of the
foregoing nine (9)

                                      -16-
<PAGE>

month period, provided Landlord does not complete the repairs prior to the date
Tenant delivers its termination notice to Landlord.

          (c)  Limitation.  Except as otherwise provided in this Lease, Landlord
shall not be liable to Tenant for destruction or damage to any of Tenant's
property including fixtures, equipment or other improvements, or for damages or
compensation for inconvenience, loss of business or disruption arising from
repairs or restoration of any portion of the Buildings or the Premises.

     SECTION 18.  Eminent Domain.

          (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 Rent 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 a taking of any part of the Premises by Eminent Domain renders the
remainder thereof unusable for the business of Tenant, in the reasonable
judgment of Landlord, this Lease, at the option of either party, may 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
Rent 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 Rent 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 except as provided below, 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.

                                      -17-
<PAGE>

     SECTION 19.  Default by Tenant.

          (a)  Definition.  If (i) Tenant vacates or abandons the Premises, (ii)
fails to pay Base Rent or Additional Rent, or make any other payment required of
Tenant under this Lease on the date such rent or payment is due, (iii) Tenant
violates or breaches or fails to keep or perform any covenant, term or condition
of this Lease other than those requiring the payment of rent or otherwise
requiring Tenant to make payments pursuant to this Lease, or (iv) Tenant or any
Guarantor files or is the subject of a petition in bankruptcy, or if a trustee
or receiver is appointed for Tenant's or any guarantor's assets, or if Tenant or
a guarantor makes an assignment for the benefit of creditors, or if Tenant or a
guarantor is adjudicated insolvent, Tenant shall be deemed in default under this
Lease. With respect to a default under (ii) above, Tenant shall have five (5)
days after written notice of the default to remedy or cure its default. With
respect to a default under (iii) above, Tenant shall have twenty (20) days after
written notice from Landlord to remedy or cure the default; however, if the
default cannot reasonably be cured within such twenty (20) day period, and
Tenant commences the cure within the twenty (20) day period, and Tenant
thereafter diligently prosecutes the cure to completion in good faith, such
twenty (20) day period shall be extended for such period of time as is
reasonably necessary for Tenant to cure the default, but in no event more than
an additional sixty (60) days. The foregoing notice and cure provisions shall be
inclusive of and not in addition to the notices and cure periods provided for in
RCW 59.12, as now or hereafter amended, or any legislation in lieu or
substitution thereof.

          (b)  Remedies.  If Tenant defaults and fails to cure the default
within the applicable cure period, if any, Landlord shall have the following
rights and remedies, at its option, which shall be cumulative and not exclusive,
and which shall be in addition to and not in lieu of any other rights or
remedies available to Landlord at law or in equity, or elsewhere in this Lease:
(i) to declare the Lease Term ended and reenter the Premises and take possession
thereof and remove all persons therefrom, and Tenant shall have no further claim
thereon or hereunder; (ii) to cure such default on Tenant's behalf and at
Tenant's cost and expense and charge Tenant as Additional Rent for all costs and
expenses incurred by Landlord in effecting the cure; (iii) without declaring
this Lease terminated, to reenter the Premises and occupy the whole or any part
thereof for and on account of Tenant and collect any unpaid rentals and other
charges, which have become payable, or which may thereafter become payable; (iv)
even though it may have reentered the Premises, to thereafter elect to terminate
this Lease and all of the rights of Tenant in or to the Premises.

          (c)  Reentry.  If Landlord reenters the Premises under option (iii) of
Section 19(b), Landlord shall not be deemed to have terminated this Lease or the
liability of Tenant to pay any Rent thereafter accruing as it becomes due, or to
have terminated Tenant's liability for damages under any of the provisions
hereof, by any such reentry or by any action, in unlawful detainer or otherwise,
to obtain possession of the Premises, unless Landlord shall have notified Tenant
in writing that it has so elected to terminate this Lease, and Tenant shall be
liable for and reimburse Landlord upon demand for all costs and expenses of
every kind and nature incurred in retaking possession of the Premises and all
other losses suffered by Landlord as a consequence of Tenant's default. In the
event of any entry or taking possession of the Premises, Landlord shall have the
right, but not the obligation, to remove therefrom all or any part of the
personal property located therein and may place the same in storage at a public
warehouse at the expense and risk of Tenant.

                                      -18-
<PAGE>

          (d)  Termination.  If Landlord elects to terminate this Lease pursuant
to the provisions of options (i) or (iv) of Section 19(b), Landlord may recover
from Tenant as damages, the following: (i) the worth at the time of award of any
unpaid Rent which had been earned at the time of such termination; plus (ii) the
worth at the time of award of the amount by which the unpaid Rent which would
have been earned after termination until the time of award exceeds the amount of
the Rent loss Tenant proves could have been reasonably avoided; plus (iii) the
worth at the time of award of the amount by which the unpaid Rent for the
balance of the term after the time of award exceeds the amount of the Rent loss
that Tenant proves could be reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, including but not
limited to, any costs or expenses incurred by Landlord in retaking possession of
the Premises, including reasonable attorneys' fees therefor; maintaining or
preserving the Premises after such default; preparing the Premises for reletting
to a new tenant, including repairs or alterations to the Premises for such
reletting; leasing commissions; and any other costs necessary or appropriate to
relet the Premises; and (v) such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by the laws of the State of
Washington. As used in items (i) and (ii) of this Section 19(d), the "worth at
the time of award" shall be computed by allowing interest at the interest rate
specified in Section 6 of this Lease. As used in item (iii) above, the "worth at
the time of award" shall be computed by using the then applicable discount rate
quoted by the Federal Reserve Bank of San Francisco or its successor. For
purposes of this Section 22 only, the term "rent" shall be deemed to be the Base
Rent and all Additional Rent and other sums required to be paid by Tenant
pursuant to the terms of this Lease.

          (e)  Adequate Security.  If a petition is filed by or against Tenant
or Guarantor under any provision of the Bankruptcy Code or successor act, Tenant
agrees that it shall be obligated to post a cash bond with Landlord equal to six
(6) months Base Rent and Additional Rent, to provide Landlord with adequate
security for Tenant's performance of its obligations under this Lease.

          (f)  Landlord's Remedies Cumulative; Waiver.  Landlord's rights and
remedies hereunder are not exclusive, but cumulative, and Landlord's exercise of
any right or remedy due to a default or breach by Tenant shall not be deemed a
waiver of, or alter, affect or prejudice any other right or remedy which
Landlord may have under this Lease or by law or in equity. Neither the
acceptance of rent nor any other acts or omissions of Landlord at any time or
times after the happening of any event authorizing the cancellation or
forfeiture of this Lease shall operate as a waiver of any past or future
violation, breach or failure to keep or perform any covenant, agreement, term or
condition hereof or to deprive Landlord of its right to cancel or forfeit this
Lease, upon the written notice provided for herein, at any time that cause for
cancellation or forfeiture may exist, or be construed so as at any future time
to estop Landlord from promptly exercising any other option, right or remedy
that it may have under any term or provision of this Lease.

     SECTION 20.  Default by Landlord; Lender Protection.

          (a)  Default by Landlord.  Landlord shall be in default if Landlord
fails to perform its obligations under this Lease within twenty (20) days after
its receipt of notice of nonperformance from Tenant; provided that if the
default cannot reasonably be cured within the

                                      -19-
<PAGE>

twenty (20) day period, Landlord shall not be in default if Landlord commences
the cure within the twenty (20) day period and thereafter diligently pursues
such cure to completion.

          (b)  Notice to Lender.  Notwithstanding anything to the contrary in
this Lease, Landlord shall not be in default under any provision of this Lease
unless written notice specifying such default is given to Landlord and to any
Lender who has been identified to Tenant in writing as a party to whom notice
must be sent. Any Lender of Landlord entitled to notice pursuant to the
preceding sentence shall have the right to cure any default on behalf of
Landlord within the later of (a) thirty (30) days after receipt of such notice,
or (b) thirty (30) days after the expiration of any cure period provided to
Landlord pursuant to this Lease; provided, if such default cannot reasonably be
cured within such thirty (30) day period, the Lender shall be entitled to such
additional time as may be reasonably necessary to cure the default, if within
the thirty (30) day period the Lender commences and thereafter diligently
pursues the actions necessary for the Lender to cure such default by Landlord
(including, if possession of the Premises is necessary to cure the default,
commencing such judicial or nonjudicial proceedings as may be necessary for the
Lender or a receiver to take possession of the Premises). So long as a Lender is
diligently taking the actions reasonably necessary for it to cure Landlord's
default, Tenant shall not exercise its remedies for Landlord's default under
this Lease.

     SECTION 21.  Attorneys' Fees.  If either party retains the services of an
attorney in connection with enforcing the terms of this Lease, or if suit is
brought for the recovery of the Base Rent or Additional Rent due under this
Lease or for the breach of any covenant or condition of this Lease or for the
restitution of the Premises to Landlord and/or eviction of Tenant during the
term of this Lease or after the expiration thereof, the substantially prevailing
party therein will be entitled to recover from the other party the substantially
prevailing party's reasonable attorneys' fees, witness fees and other court
costs incurred in connection therewith.

     SECTION 22.  Access by Landlord.  Landlord and its agents shall have the
right to enter the Premises at any time upon reasonable prior notice to Tenant
to examine the same, and to show them to prospective purchasers, lenders or
tenants, and to make such repairs, alterations, improvements, additions or
improvements to the Premises or Buildings as Landlord may deem necessary or
desirable; provided, in an emergency or perceived emergency or to provide normal
services (such as janitorial and security services) to the Premises, and no
advance notice shall be required.  If Tenant is not personally present to permit
entry and an entry is necessary in an emergency, Landlord may enter the same by
master key or may forcibly enter the same, without rendering Landlord liable
therefor.  Nothing contained herein shall be construed to impose upon Landlord
any duty of repair or other obligation not specifically stated in this Lease.
Tenant shall change the locks to the Premises only through Landlord and upon
paying Landlord for all costs related thereto.

     SECTION 23.  Holding Over.  Unless otherwise agreed in writing by Landlord,
any holding over by Tenant after the expiration of the term hereof consented to
in advance in writing by Landlord shall be construed as a tenancy from month-to-
month on the terms and conditions set forth herein, except the Base Rent shall
be the Base Rent agreed to by Landlord and Tenant.  Any such holdover tenancy
may be terminated by either party upon thirty (30) days written notice to the
other party.  If Tenant fails to surrender the Premises upon the termination of
this Lease, without the prior

                                      -20-
<PAGE>

written consent of Landlord, Tenant shall indemnify, defend and hold harmless
Landlord from all losses, damages, liabilities and expenses resulting from such
failure, including, without limiting the generality of the foregoing, any claims
made by any succeeding tenant arising out of such failure. Any holding over by
Tenant after the expiration of the Lease Term without Landlord's consent shall
be deemed a tenancy at will, terminable at any time by Landlord, at a rental
rate equal to one and one-half (1-1/2) times the Base Rent and Additional Rent
payable by Tenant during the last month rent is payable by Tenant pursuant to
this Lease.

     SECTION 24.  Subordination; Estoppel Certificates.

          (a)  Subordination.  This Lease shall be automatically subordinate to
all of Landlord's mortgages, deeds of trust, or ground leases which heretofore
and hereafter affect the Premises, the Buildings or the Land, to any and all
advances made or to be made thereunder, to the interest on the obligations
secured thereby, and to all renewals, modifications, consolidations,
replacements or extensions thereof. This subordination shall be self operative,
and no further instrument of subordination shall be necessary to effect such
subordination; nevertheless, within fifteen (15) days after receiving a written
request from Landlord, Tenant shall execute such additional instrument of
subordination as may be required by Landlord (or its lenders or ground lessors)
if such instrument of subordination provides so long as Tenant is not in default
hereunder beyond any applicable cure period in this Lease, Tenant shall have
continued enjoyment of the Premises free from any disturbance or interruption by
reason of any foreclosure of any such deed of trust, mortgage or the exercise of
any remedies by the lessor under any such ground lease. In the event of sale or
foreclosure of any such mortgage or deed of trust, or exercise of the power of
sale thereunder, or in the event of a transfer in lieu of foreclosure, or in the
event a ground lessor acquires the Landlord's interests in the Buildings, Tenant
shall attorn to the purchaser (or transferee) of the Buildings at such
foreclosure or sale and recognize such purchaser (or transferee) as Landlord
under this Lease if so requested by such purchaser (or transferee). Such
attornment shall be self operative and no further instruments need be executed
to effect such attornment. If any lender elects to have this Lease superior to
its mortgage or deed of trust and gives notice of its election to Tenant, then
this Lease shall thereupon become superior to the lien of such mortgage or deed
of trust, whether this Lease is dated or recorded before or after the mortgage
or deed of trust.

          (b)  Estoppel Certificates.  As a material inducement to Landlord to
enter into this Lease, Tenant covenants that it shall, within fifteen (15) days
of the receipt thereof, acknowledge and deliver to Landlord an estoppel
certificate in such form as may be requested by Landlord from time to time,
certifying, to the extent true, that (i) Tenant shall be in occupancy, (ii) this
Lease is unmodified and in full force and effect, or if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications, (iii) Base Rent and Additional Rent have been paid only
through a certain specified date, (iv) Tenant has no offsets, defenses or claims
against Landlord, and (v) such other matters as Landlord may reasonably request.
Tenant's failure to deliver an estoppel certificate within the fifteen (15) day
period shall be deemed its confirmation of the accuracy of the information
supplied by Landlord to the prospective lender or purchaser. Tenant acknowledges
and agrees that Landlord and others will be relying and are entitled to rely on
the statements contained in such estoppel certificates.

                                      -21-
<PAGE>

     SECTION 25.  Financial Information.  Within fifteen (15) days after a
written request by Landlord, Tenant will provide Landlord with its most
currently issued forms 10-Q, 10-K or 8-K; provided, however, if Tenant has not
issued such documents then Tenant shall provide Landlord with its most current
financial statement, prepared in accordance with generally accepted accounting
principles, consistently applied, or such other accounting practices as may be
reasonably acceptable to Landlord, and certified as true and correct by the
president or chief financial officer of Tenant. Any such information which is
not available to the general public shall be treated confidentially.

     SECTION 26.  Liability of Landlord.  Tenant shall look solely to rents,
issues and profits from the Buildings for the satisfaction of any judgment or
decree against Landlord, whether for breach of the terms hereof or arising from
a right created by statute or under common law. Tenant agrees that no other
property or assets of the Landlord or any partner in Landlord shall be subject
to levy, execution or other enforcement procedures for satisfaction of any such
judgment or decree; and no partner, shareholder or other holder of an ownership
interest in Landlord shall be sued or named as a party in any suit or action
(except as may be necessary to secure jurisdiction over the partnership).

     SECTION 27.  Parking.  Tenant and its visitors, agents and employees shall
be permitted to park in the parking lot serving the Buildings and located on the
Land, and Tenant understands that parking spaces shall not be reserved but on a
first-in basis; however, Landlord agrees to mark eighteen (18) parking stalls at
the south end of the parking lot as reserved for the exclusive use of Tenant and
its employees and visitors. Two (2) of such parking stalls shall be located at
the south end of the Buildings and shall be marked as reserved for the use of
Tenant's retail customers. Tenant acknowledges that Landlord neither accepts nor
assumes any responsibility or obligation to exclude from the parking stalls
reserved for Tenant's exclusive use the vehicles of persons or entities other
than Tenant and its employees and visitors. In addition, Tenant shall not, at
any time, park or permit the parking of any vehicles or visitor parking in any
part of the parking areas which are restricted or designated as reserved for the
exclusive use of any other tenant or tenants of the Buildings, or in driveways,
loading areas, access areas, crosswalks, entrance areas, exit areas or in any
other manner which would in any way restrict and/or hamper the flow of traffic.
In utilizing parking areas and spaces, all vehicles shall be parked at the
owner's own risk and it is specifically understood and agreed that the Landlord
shall not be liable in any way for any injury to person or property or loss by
theft or damage or otherwise of said vehicles or the contents thereof or from
any other cause whatsoever. Vehicles may be moved in order to permit Landlord to
examine the parking areas and spaces and to make such repairs, replacements and
improvements as Landlord may deem necessary and reasonably desirable in
accordance with and subject to the terms, conditions and covenants of this
Lease. Without the prior approval of Landlord, no vehicles may be parked for
more than twenty four (24) hours. Landlord reserves the right to tow away any
vehicle in violation of the rules or regulations promulgated by Landlord with
respect to the parking areas.

     SECTION 28.  Miscellaneous.

          (a)  Quiet Enjoyment.  If Tenant fully complies with and promptly
performs all of the terms, covenants and conditions of this Lease on its part to
be performed, it shall have quiet

                                      -22-
<PAGE>

enjoyment of the Premises throughout the Lease Term, subject, however, to
matters of record on the day hereof and to those matters to which this Lease may
be subsequently subordinated.

          (b)  Notices.  Any notices required in accordance with any of the
provisions herein shall be in writing and delivered personally, or mailed by
registered or certified mail to the parties at the addresses set forth in
Section l above, or to such other address as a party shall from time to time
designate in writing by notice given pursuant to this Section 28(b). If Tenant
is a partnership, any notice required or permitted hereunder may be given by or
to any one partner thereof with the same force and effect as if given by or to
all thereof. If mailed, a notice shall be deemed received three (3) days after
the postmark affixed on the envelope by the United States Post Office.

          (c)  Successors or Assigns.  All of the terms, conditions, covenants
and agreements of this Lease shall be binding upon and subject to Section 16
above, benefit Landlord, Tenant and their respective heirs, administrators,
executors, successors and assigns, and upon any person or persons coming into
ownership or possession of any interest in the Premises by operation of law or
otherwise.

          (d)  Tenant Authority and Liability.  Tenant warrants that this Lease
has been duly authorized, executed and delivered by Tenant, and Tenant has the
requisite power and authority to enter into this Lease and perform its
obligations hereunder. Tenant covenants to provide Landlord with evidence of its
authority and the authorization of this Lease upon request. All persons and
entities named as Tenant herein shall be jointly and severally liable for
Tenant's liabilities, covenants and agreements under this Lease.

          (e)  Brokers' Commission.  Tenant represents that it has not dealt
with any broker, agent or finder in connection with this Lease other than the
brokers listed in Section 1 of this Lease, if any, and Tenant agrees to
indemnify and hold Landlord harmless from all damages, judgments, liabilities,
claims and expenses (including attorneys' fees) arising out of or in connection
with any claim or demand of any other broker, agent or finder with whom Tenant
has dealt for any commission or fee alleged to be due in connection with its
participation in the procurement of Tenant or the negotiation of this Lease.

          (f)  Partial Invalidity.  If any court determines that any provision
of this Lease or the application thereof to any person or circumstance is, to
any extent, invalid or unenforceable, the remainder of this Lease, or
application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each other term, covenant or condition of this Lease shall be valid and be
enforced to the fullest extent permitted by law.

          (g)  Recording.  Tenant shall not record this Lease nor a memorandum
of this Lease without the prior written consent of Landlord.

          (h)  Force Majeure.  Neither party shall be deemed in default under
this Lease for failing to perform its duties or obligations under this Lease if
such failure is due to causes beyond its reasonable control, including but not
limited to acts of God, acts of civil or military authorities, fires,

                                      -23-
<PAGE>

floods, windstorms, earthquakes, strikes or labor disturbances, civil commotion,
delays in transportation, governmental delays or war; provided, nothing in this
Section 28(h) shall limit or otherwise modify or waive Tenant's obligation to
pay Base Rent and Additional Rent as and when due pursuant to the terms of this
Lease.

          (i)  Name of Buildings.  Landlord may change the name of the Buildings
at any time. Any such change shall not require amendment of this Lease or affect
in any way Tenant's obligations under this Lease, and except for the name
change, all terms and conditions of this Lease shall remain in full force and
effect.

          (j)  Headings.  The section headings used in this Lease are used for
purposes of convenience and do not alter or limit in any manner the content of
the sections. Whenever appropriate from the context, the use of any gender shall
include any other or all genders, and the singular shall include the plural, and
the plural shall include the singular.

          (k)  Execution by Landlord and Tenant; Approval of Lender.  Landlord
shall not be deemed to have made an offer to Tenant by furnishing Tenant with a
copy of this Lease with particulars inserted. No contractual or other rights
shall exist or be created between Landlord and Tenant until all parties have
executed this Lease and, if specified in writing by Landlord, until it has been
approved in writing by a Lender and fully executed copies have been delivered to
Landlord and Tenant. Tenant agrees to make such changes herein as may be
reasonably requested by a Lender, so long as such changes do not increase Base
Rent and Additional Rent due from Tenant or otherwise materially alter Tenant's
rights or obligations hereunder.

          (l)  Transportation Management Programs; Recycling.  Tenant shall
cooperate with Landlord in meeting the objectives and complying with the terms
and conditions of any transportation management plan now or hereafter instituted
by any governmental authority and applicable to the Buildings. Landlord will
provide Tenant with notice of any such transportation plan now or hereafter in
effect. In addition, Tenant will cooperate with and participate in any and all
recycling programs now or hereafter in place with respect to the Buildings,
whether or not governmentally mandated, if all tenants of the Buildings are
requested to participate.

          (m)  Fully Net Lease.  Tenant acknowledges that this Lease is intended
to be a "fully net" lease and that Landlord shall have no obligation to make any
expenditures in connection with this Lease or to maintain or repair the Premises
or any part thereof, except as specifically stated in this Lease, and Landlord
shall be entitled to the payment of rent and other sums under this Lease without
deduction, expense or charge whatsoever relating to the Premises and the
operation, management, use or occupation of the Premises.

          (n)  Entire Agreement; Applicable Law.  This Lease and the attached
exhibits set forth the entire agreement of Landlord and Tenant concerning the
Premises and the Buildings, and there are no other agreements or understanding,
oral or written, between Landlord and Tenant concerning the Premises or the
Buildings. Any subsequent modification or amendment of this Lease shall be
binding upon Landlord and Tenant only if reduced to writing and signed by them.
This Lease shall be governed by, and construed in accordance with the laws of
the State of Washington.

                                      -24-
<PAGE>

     DATED as of the day and year first indicated above.

                                      LANDLORD:

                                      INTERBAY ONE, L.L.C., a Washington limited
                                      liability company


                                      By /s/ Theodore M. Johnson, Jr.

                                         Its  Co-Managing Member

                                      TENANT:

                                      PhotoWorks, INC., a Washington corporation


                                      By /s/ L. Cashmore Bond

                                         Its  Chief Financial Officer

                                      -25-
<PAGE>

STATE OF WASHINGTON )
                    ) ss.
COUNTY OF KING      )

     On this 4th day of February, 2000, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn
personally appeared Theodore M. Johnson, Jr., known to me to be the Co-Managing
Member of INTERBAY ONE, L.L.C., the limited liability company that executed the
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said limited liability company, for the purposes
therein mentioned, and on oath stated that he/she was authorized to execute said
instrument.

     I certify that I know or have satisfactory evidence that the person
appearing before me and making this acknowledgment is the person whose true
signature appears on this document.

     WITNESS my hand and official seal hereto affixed the day and year in the
certificate above written.

                                       /s/ Brigitte Koeberle
                                       Signature

                                       Brigitte Koeberle
                                       Print Name
                                       NOTARY PUBLIC in and for the State of
                                       Washington, residing at Auburn.
                                       My commission expires 12-15-00.

                                      -26-
<PAGE>

STATE OF WASHINGTON )
                    ) ss.
COUNTY OF KING      )

     On this 3rd day of February, 2000, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn
personally appeared Loran Cashmore Bond, known to me to be the CFO (Interim) of
PhotoWorks, Inc., the corporation that executed the foregoing instrument, and
acknowledged the said instrument to be the free and voluntary act and deed of
said corporation, for the purposes therein mentioned, and on oath stated that
he/she was authorized to execute said instrument.

     I certify that I know or have satisfactory evidence that the person
appearing before me and making this acknowledgment is the person whose true
signature appears on this document.

     WITNESS my hand and official seal hereto affixed the day and year in the
certificate above written.

                                       /s/ Linda Marie Clay
                                       Signature

                                       Linda Marie Clay
                                       Print Name
                                       NOTARY PUBLIC in and for the State of
                                       Washington, residing at Redmond.
                                       My commission expires 11-7-03.

                                      -27-
<PAGE>

                                   EXHIBIT A
                                   ---------

                           LEGAL DESCRIPTION OF LAND


Lots 10 through 43, inclusive, Block 113, Gilman's Addition to the City of
Seattle, according to the plat thereof recorded in Volume 5 of Plats, Page 93,
in King County, Washington;

TOGETHER WITH the north half of vacated West Bertona Street adjoining said Lots
26, 27 and 28;

AND TOGETHER WITH the vacated portion of Thorndyke Avenue adjoining said Lots 28
to 43, and the north half of Bertona Street on the east, vacated by Ordinance
No. 75262  which attached to said premises by operation of law;

EXCEPT that portion of said Block 113 and of vacated Bertona Street lying
westerly of a line parallel with and 20 feet easterly of the westerly line of
said Block 113.
<PAGE>

                                  EXHIBIT C-1

                                SHELL CONDITION
                                LANDLORD'S WORK


Landlord shall perform the following work to the Premises, at Landlord's
expense, and deliver the Premises in the following condition prior to
Commencement Date:

EXTERIOR IMPROVEMENTS

1.  Complete striping of parking lot per site plan.

2.  Touch up paint on exterior walls as required.

3.  Repair/Repaint east windows inside and out.

4.  Replace South & West facing windows with new low "E" energy efficient &
    acoustically designed window system.

5.  Install new main entry doors & windows per plan.

6.  Install new entry doors & windows @ SE corner of Building 1.

7.  Install new exterior stair & entry door on West wall for access from
    Building 1 to West parking area.

8.  Install new security lighting at West wall of Building 1.

INTERIOR IMPROVEMENTS

1.  Demising walls complete to roof structure, taped, sanded & ready for tenant
    paint.

2.  Inside face of exterior walls (CMU) to be patched and painted building
    standard.

3.  Ceiling wood decking, beams and existing piping to be painted building
    standard.

4.  Floor repaired and leveled ready to accept Tenant raised flooring system
    (SMED or equal) and other Tenant finishes/materials where appropriate.

5.  Center columns to have plaster repaired, primed ready for Tenant paint.
6.  New guard rail system to be installed along open areas. Design to be
    compatible with Tenant design and final stair locations.

7.  2 stairs (in each Tenant space if applicable) designed to coordinate with
    guard rail system and located to work with tenants interior design plan.

8.  Provide Men and Women restroom per code as show on plan.  Finishes to be
    compatible with Landlords standard improvements.

HEATING AND AIR CONDITIONING

1.  Provide and install a roof mounted multi-unit, gas heat/electric air
    conditioning system with a fresh air economizer on each unit. Note: system
    distribution to be provided in Tenant Improvement Work.

2.  The HVAC system capacity is designed to provide one unit per approximately
    3,400 SF of floor area, one thermostat per unit and one ton of cooling
    capacity per 350 SF of floor area.

3.  Units to be installed on roof with gas piping complete to tenant gas meter.

4.  Electrical disconnect provided on unit for connection to tenant electric
    panel.

5.  Supply and return plenums to be stubbed through roof.
<PAGE>

ELECTRICAL & TELEPHONE SYSTEM

1.  Electrical power for tenant available at a buss duct located in common
    electrical room to supply tenant meter and service of 110/208 volt 3 phase
    power to tenant panel(s). Design capacity as follows:

    Lighting          1.2 Watts/SF
    PC's              2.0 Watts/SF
    Non-PC's          1.0 Watts/SF
    Other/Future      0.5 Watts/SF
    HVAC Equipment    8.0 Watts/SF
      Total          12.7 Watts/SF

2.  Building standard fluorescent light fixtures (4 foot, 2 tube) above and
    below mezzanine to provide for typical office lighting levels in an open
    office configuration, connected to tenant panel.

3.  Building standard halide fixtures providing indirect up-lighting in all
    high-bay areas of building, based on an open office plan, connected to
    tenant panel.

4.  Exit signs where required per base building permit.

5.  Telephone closet provided in common area for termination of U.S. West main
    service to building and ready for tenant to extend to tenants premises.
<PAGE>

                                                                       EXHIBIT C

                               INTERBAY BUILDING
                               -----------------
                                   WORKLETTER
                                   ----------


     This Workletter is attached to and made a part of that certain Lease
between INTERBAY ONE, L.L.C. ("Landlord"), and PhotoWorks, INC. ("Tenant"). The
purpose of this Workletter is to set forth how the tenant improvements to the
Premises are to be constructed and designed, who will be responsible for
constructing and designing the tenant improvements, and who will pay for the
tenant improvements. Landlord and Tenant agree as follows:

     1.   Defined Terms.  Unless the context otherwise requires, terms used in
this Workletter shall have the same meanings as such terms in the Lease.  The
following capitalized terms shall have the meanings set forth below.

          "Architect" means a licensed architect selected by Landlord and
reasonably acceptable to Tenant.

          "Business Day" means any day other than a Saturday, Sunday or other
day on which United States national banks in Seattle, Washington are authorized
or required by law to be closed for business.

          "Construction Allowance" means $174,240.00.  The Construction
Allowance shall be used only to pay for actual Costs of the Work, except as
otherwise provided for in this Workletter.

          "Construction Contract" means the contract between Landlord and
Contractor for the construction and installation of the Tenant Improvements.

          "Contractor" means a licensed general contractor selected by Landlord
for purposes of completing the Tenant Improvements.

          "Costs of the Work" means all costs of completing the Work, including
the Contractor's fees and profits, a construction management fee to Landlord
equal to five percent (5%) of all other Costs of the Work, sales taxes, the fees
and charges of Architect's and other design professionals, insurance premiums,
permit fees, utilities, and all other costs incurred by Landlord or Tenant in
connection with the construction of the Tenant Improvements.

          "Interior Drawings" means all plans, specifications and drawings
necessary to construct the Tenant Improvements to the Premises, which shall
include all construction documents, and mechanical, electrical and plumbing
drawings necessary to construct the Tenant Improvements, which Interior Drawings
shall be prepared, subject to Landlord's approval, in accordance with Paragraph
2 of this Workletter.

<PAGE>

          "Ready for Occupancy" or "Substantial Completion" means complete to
the extent that Tenant may reasonably use and occupy the Premises for the
purpose for which the same were intended, subject to minor details of
construction and mechanical adjustments that remain to be completed by Landlord,
as evidenced by issuance of a Standard AIA Certificate of Substantial Completion
executed by the Architect and issuance of a certificate of occupancy (or other
governmental approval permitting the occupancy of the Premises by Tenant) by the
local governmental authority.

          "Shell Condition" means the condition of the Premises prior to the
installation of the Tenant Improvements, as more particularly described on
Exhibit C-1 attached.

          "Tenant Improvements" means those certain improvements to the Premises
over and above the Shell Condition, described in the Interior Drawings as the
same may be modified pursuant to Paragraph 5 below, including all items of Work,
including labor and materials, that are utilized directly or indirectly in
altering, repairing, improving, adding to, modifying or otherwise changing the
Premises.

          "Tenant's Representative" means the individual designated by Tenant as
its tenant improvement representative pursuant to Paragraph 7 of this
Workletter.

          "Work" means the design, permitting and construction of the Tenant
Improvements in accordance with the Interior Drawings.

     2.   Preparation and Approval of Interior Drawings.

          (a) Landlord shall cause the Interior Drawings to be prepared by
Architect and submitted to Tenant on or before ___________________.  Landlord
shall provide (or cause Architect to provide) Tenant with a complete set of the
Interior Drawings for Tenant's review and approval.  Tenant shall have two (2)
Business Days after receiving the Interior Drawings to approve the Interior
Drawings, or disapprove them and provide Landlord with its comments.  If Tenant
disapproves the Interior Drawings, Landlord shall promptly after receiving
Tenant's comments to cause Architect to revise and resubmit the Interior
Drawings to Tenant.  Tenant shall have two (2) Business Days after receiving the
revised Interior Drawings to either approve the revised Interior Drawings, or
disapprove the revised Interior Drawings and provide Landlord with its comments.
The process outlined in the preceding two sentences shall be repeated until
Landlord and Tenant have mutually agreed on the Interior Drawings; provided,
however, if after two revisions to the Interior Drawings pursuant to this
Paragraph 2(a), Landlord and Tenant have not agreed upon the Interior Drawings,
Landlord may terminate the Lease by written notice to Tenant, the Deposit shall
be returned to Tenant and thereafter neither party will have any liabilities or
obligations to the other party.

          (b) Tenant understands Landlord's review and approval of the Interior
Drawings pursuant to this Workletter are solely to protect the interests of
Landlord, and Landlord shall not be the guarantor nor responsible for the
correctness of the Interior Drawings, or responsible for the  compliance of the
Interior Drawings with applicable law.

<PAGE>

          (c)  Architect shall obtain all necessary permits, licenses and
approvals necessary for the construction of the Tenant Improvements.  Landlord
shall be responsible for paying all costs and charges of Architect in connection
with the Work including preparing and revising the Interior Drawings and
applying for and obtaining necessary permits, licenses and approvals.

     3.   Construction of Tenant Improvements.

          (a)  Promptly after Landlord and Tenant have reached agreement on the
Interior Drawings, Landlord will enter into the Construction Contract with
Contractor and will cause the Tenant Improvements to be constructed in
accordance with the Interior Drawings, as the same may be revised in accordance
with Paragraph 5 below.

          (b)  Prior to executing the Construction Contract, Landlord will
provide Tenant with the final construction budget of the Contractor for the
Work. If the estimated Costs of the Work (based on the executed Construction
Contract) exceed the amount of the Construction Allowance, Landlord will so
notify Tenant, and Tenant shall deposit the amount of the difference with
Landlord within five (5) Business Days after receiving such notice. Landlord
will pay the Costs of the Work from any funds so deposited by Tenant prior to
using any of the Construction Allowance. After any such funds deposited by
Tenant with Landlord have been used, Landlord will pay for the Costs of the Work
with the Construction Allowance until the full amount of the Construction
Allowance (and any portion of the Additional Allowance which Tenant has elected
to use) has been disbursed by Landlord. Thereafter, Tenant shall pay for all
remaining Costs of the Work, within five (5) Business Days after written notice
from Landlord of the amount due from Tenant. At the option of Landlord, amounts
payable by Tenant pursuant to this paragraph shall be paid directly to
Contractor or such other party as Landlord may designate in writing.

     4.   Acceptance of the Premises.

          (a)  Landlord will notify Tenant when the Tenant Improvements are
Ready for Occupancy. Within two (2) Business Days after receiving such notice,
and prior to move-in of any furniture, fixtures or equipment, Tenant shall
inspect the Premises for any deficiencies in the Work. A "punchlist" of all the
deficiencies in the Work shall be prepared and agreed upon by both Landlord and
Tenant. Landlord will correct defective items stated in the punchlist which are
the responsibility of Landlord or the Contractor. If Tenant does not so provide
Landlord with a punchlist prior to occupying the Premises, Tenant shall be
deemed to have accepted the Premises and the Tenant Improvements in their then
present condition, except for latent defects not reasonably discoverable upon an
inspection of the Premises. The existence of minor punchlist items shall not
postpone the Commencement Date of the Lease or result in a delay or abatement of
Tenant's obligation to pay rent or give rise to a damage claim against Landlord.
Landlord agrees to complete all punchlist items which are Landlord's or the
Contractor's responsibility within forty five (45) days after receiving the
final punchlist (or longer if reasonably necessary).

          (b)  Notwithstanding the estimated Commencement Date set forth in
Section 1 of the Lease, Tenant's obligation for the payment of rent under the
Lease shall not commence until the Premises are Ready for Occupancy; however, if
Substantial Completion of the Tenant

<PAGE>

Improvements is delayed because of delays caused by Tenant, then Tenant's
obligation to pay rent under the Lease, and the Lease Term, shall commence on
the date the Premises would have been Ready for Occupancy except for the delays
caused by Tenant, as reasonably determined by Architect. The phrase "delays
caused by Tenant" means any delay that Landlord may encounter in the performance
of the Work as a result of (i) delays resulting from changes in or additions to
the Interior Drawings or the Tenant Improvements which are requested by Tenant;
(ii) delays by Tenant in the timely submission of information (including the
Interior Drawings) required of Tenant pursuant to this Workletter, or the giving
of authorizations or approvals within any time limits set forth in this
Workletter; (iii) delays due to the postponement of any of the Work at the
request of Tenant; or (iv) delays otherwise attributable to the acts or
omissions of Tenant or its employees, agents or contractors, other than delays
in the Work requested by Landlord.

          (c)  If the entire Construction Allowance is not used to pay for Costs
of the Work, the unused amount may be used to reimburse Tenant for costs
actually incurred by Tenant in moving its furniture, fixtures and equipment to
the Premises, and the remainder, if any, will be credited against the Base Rent
and Additional Rent payable by Tenant for the third (3rd) full calendar month of
the Lease Term so long as Tenant is not then in default under this Lease.

     5.   Changes in Work. Tenant shall have the right to request, in writing,
changes to the Interior Drawings and to the Work, subject to Landlord's prior
approval.  Landlord shall notify Tenant in writing of any additional costs and
any construction delays attributable to such change and whether or not Landlord
approves or disapproves of the requested change. Landlord may condition its
approval of any change on receipt of written confirmation from Tenant within
three (3) Business Days after receiving Landlord's notice, that Tenant will pay
the additional cost of making the change and any costs Landlord will incur as a
result of any delays.  If Tenant fails to deliver Landlord written notice that
it still desires the requested change within such three (3) Business Day period,
Tenant shall be deemed to have withdrawn its request for the change.

     6.   Early Entry. With Landlord's prior written approval, Tenant and
Tenant's contractors shall have the privilege of entering into the Premises
prior to the Substantial Completion of the Tenant Improvements for purposes of
cable, telephone and furniture installation; provided that such entry or work
does not interfere with the construction of the Tenant Improvements by
Contractor.  All of the terms and provisions of the Lease (including those in
Sections 14 and 15) shall be applicable upon such early entry, except for those
provisions applicable to the commencement of the Lease Term and the payment of
Base Rent and Tenant's Share of Operating Expenses and Property Taxes pursuant
to Section 5 of the Lease.  Tenant shall be responsible for any damages to the
Building or the Premises caused by Tenant or Contractor as a result of such
early entry.

     7.   Tenant Improvement Representative.  Prior to the commencement of the
Work, Tenant shall designate in writing one individual who shall be the Tenant's
Representative during the Work.  Landlord and Contractor shall be entitled to
rely on the decisions of such person regarding the Work (and the decisions of
such person shall be binding upon Tenant) until Landlord and Contractor have
received written notice from Tenant that such person's authority has been
revoked.

<PAGE>

     8.  Additional Provisions.  This Workletter and the exhibits attached
hereto set forth the entire agreement of Landlord and Tenant with respect to the
completion of the Work.  Neither this Workletter nor any of the provisions
contained in this Workletter may be changed or waived, except by a written
instrument signed by both parties.  To the extent any of the terms or conditions
of this Workletter conflict with any of the terms or conditions of the Lease,
this Workletter shall control.
<PAGE>

                                   EXHIBIT D
                                   ---------

                            INTERBAY BUILDING SIGNS,
                              RULES & REGULATIONS


1.   Exterior Signs.  Tenant has the right to maintain one sign advertising its
     business on the exterior of the Premises.  Prior to the fabrication or
     installation of any sign, Tenant must submit sign specifications and
     drawings to Landlord for Landlord's review and written approval, which
     approval shall not be unreasonably withheld.  Landlord encourages quality
     signage on this property and reserves the right in its sole judgment to
     reject any signage that does not meet Landlord's standards for approval.
     The fabrication, installation and permits for this exterior sign shall be
     at Tenant's sole expense.

2.   Exterior Entry Signage; Signage on the glass adjacent to Tenant's major
     entrance shall be provided by Landlord at Landlord's expense (in vinyl) per
     sufficient artwork provided by Tenant.

3.   Non-Approved Signs;   Any signs which have been installed without consent
     by Landlord may be removed by Landlord and Tenant shall be responsible for
     the cost of the removal and any necessary repairs to the building.

4.   Window Coverings; Tenant's use of window coverings (if any) shall be
     limited to a levelor-type blind or alternate material provided however, the
     color and material are first approved in writing by Landlord.

5.   Trash: Tenant shall provide a dumpster or dumpsters for trash and shall
     place no trash outside of the building except in such dumpster. Dumpsters
     shall be placed in such places as approved in writing by Landlord.

6.   Outside Storage; No storage of materials, equipment or truck trailers is
     permitted outside of the building.

7.   Obstructions: The sidewalk, exits, entrance, parking lot and driveways
     shall not be obstructed by Tenant or used for any purpose other than that
     intended.

8.   Locks: Tenant shall not alter any lock or install any new or additional
     locks or bolts on any doors or windows without written consent of Landlord.

9.   Floor Loading/Defacing; Tenant shall not overload the floor of the Premises
     or in any way deface the Premises or any part thereof.

10.  Communication Wiring; Landlord will direct Tenant's technicians as to where
     and how telephone, computer and other communication wires are to be
     introduced. No boring or cutting for wires will be allowed without the
     consent of the Landlord. The location of

<PAGE>

     telephone and computer equipment affixed to the Premises shall be subject
     to the approval of Landlord.

11.  Smoking; The Interbay Building is a NON-SMOKING environment. Smoking is
     restricted to areas outside of the building, designated for smoking by the
     Landlord, and away from primary building entries.