Document:

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                                                                   Exhibit 10.26

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                          BERNARD DEVELOPMENT COMPANY

                     STANDARD FORM MULTIPLE OCCUPANCY LEASE

                                     (NET)

                                    -------

                                     LEASE

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Lessor:         BDC Preston Properties One Limited Partnership

Lessee:         COST-U-LESS, INC.

Dated as of:    4/27/00, 2000
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            A. DEFINED TERMS. TABLE OF CONTENTS, EXHIBITS, PREMISES
                         AND LANDLORD'S RESERVED RIGHTS

A-1. Defined Terms.

Landlord:               BDC PRESTON PROPERTIES ONE LIMITED PARTNERSHIP, a
                        Washington limited partnership

Landlord's Address:     8150 304th Avenue S. E..
                        Preston, Washington 98050

Tenant:                 Cost-U-Less. Inc.
                        a Washington Corporation

Tenant's Address:       8160 - 304th Avenue SE..
                        Preston, Washington 98050

Building:               Building 3

Premises:               Approximately 14,447.5 total square feet. Of the
                        14,447.5 SF, 10,495 SF is mezzanine office, 798 SF is
                        mezzanine warehouse, 123 SF is 1/2 back office entrance
                        area, 1,533 SF is 74% of the total Corridor Walkway
                        area, l,069 SF is 74% of the mezzanine office common
                        area, and 429.5 SF is 1/3 of the first floor office
                        common area. These square footages are scaled and
                        measured best efforts, and are not intended to be
                        precise.

Premises Address:
 Street:                304th Avenue SE.,
 City and State:        Preston, Washington 98050
 County:                King County

Term:                   June 1, 2000 through December 31, 2003 (43) months

Tenant's On-site
Representatives:        J. Thomas Bernard

Scheduled Term
Commencement Date:      June 1, 2000

Initial Fixed Rent:     See Exhibit E for further explanation.

Per Year:               ($161,714.40) One Hundred Sixty-one Thousand Seven
                        Hundred Fourteen and 40/100's dollars.

Per Month:              ($13,476.20) Thirteen Thousand Four Hundred Seventy-six
                        and 2O/100's dollars.

Rent Increases:         June 1, 2002 Then existing Fixed Rent increases five
                        percent (5%).

Lease Reservation
Deposit:                $13,476.20
                        Lease Reservation Deposit will be applied to first
                        month's Rent, due upon Lease signature.

Security Deposit:       $13,476.20 Due upon Lease signature.

Tenant's Share of
Real Property Taxes:    (.58%) See Exhibit E for explanation of calculations.

Tenant's Share of
Operating Expenses:     (.58%) See Exhibit E for explanation of calculations.

Tenant's Share of
Insurance:              (.58%) See Exhibit E for explanation of calculations.

Permitted Uses:         General office use.

Date of Recordation of
 Declaration of
 Covenants, Conditions
 and Restrictions       August 11, 1989, under King County Recorder's Number
                        8908110455, as further amended under (CC&R's) and
                        Amendments thereto Lot Line Adjustment dated March 20,
                        1992 and recorded under King County Recorder's number
                        For Preston Industrial Park 930212-1000 and 930212-9002
                        as may be revised from time to time

Delinquency Rate:       Fourteen percent (14%) per year compounded/pro-rata on
                        a daily basis.

A-2.  Table of Contents.                                                    Page

      A. Defined Terms, Table of Contents, Exhibits, Premises,
            Common Areas and Landlord's Reserved Rights                  1
      B. Landlord's Improvements                                         2
      C. Term                                                            2
      D. Rent                                                            3
      E. Real Property Taxes                                             3

      F  Insurance                                                       3

      G. Operating Expenses, Repairs and Maintenance                     4

      H. Alterations                                                     4

      I. Utilities and Easements                                         4

      J. Use of Premises                                                 4

      K. Damage and Destruction                                          5

      L. Eminent Domain                                                  5
      M. Default                                                         6
      N. Assignment and Subletting                                       6
      O. Estoppel Certificate, Attornment and Subordination              7
      P. Miscellaneous                                                   7

A-3. Exhibits. The following Exhibits are attached to the Lease and incorporated
herein by reference thereto.

      Exhibit A -      Property and Site Plans
      Exhibit B -      Base Building Description
      Exhibit C -      Description and Location of Tenant Improvements
      Exhibit D -      Estoppel Certificate
      Exhibit E -      Rent, Tenant's Share of Operating Costs, and Percentage
                       of Utility Expertise Calculations
      Exhibit F -      Parking

A-4. Premises. Landlord hereby leases to Tenant, subject to the provisions of
this Lease, the Premises in the Building as shown on Tenant's Floor Plan in
Exhibit C. extending from the top surface of the subfloor to the bottom surface
of ceilings and inside the
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perimeter walls and windows but excluding the Common Area, as hereinafter
defined, and any other portion of the Property, as hereinafter defined. The
Building and the Lot, as hereinafter defined, shall hereinafter be referred to
as the "Property."

A-5. Common Area. Tenant may, as appurtenant to the Premises and subject to
rules made by Landlord of which Tenant is given notice, use the following areas
(collectively "Common Area") in common:

            (a) Building Common Area. The stairways, elevators, lobbies,
accessways, and when necessary for Tenant to satisfy its repair and maintenance
obligations under Article G-2 any passageways thereto and the pipes, ducts,
conduits, wires and appurtenant equipment serving the Premises;

            (b) Floor Common Area. If the Premises include less than the entire
rentable area of any floor, the lobbies, hallways, toilets, refuse facilities
and other common facilities designated by Landlord for the common use of all
tenants of the Building; and

            (c) Lot Common Area. Lot Common Area includes the exterior walkways,
sidewalks, landscaped areas and driveways necessary for access to the Building
and parking spaces located on the real properly upon which the Building is
located ("Lot") and all other areas of the property exterior of the Buildings
not leased or assigned to a specific Tenant. Such real property is lot common
areas described and depicted in Exhibit A.

A-6. Landlord's Reserved Rights. Provided landlord does not unnecessarily
interfere with Tenant's use of the Premises, Landlord reserves the right to
enter the Premises to undertake the following without Tenant's approval:

            (a) Building Changes. To install, use, maintain, repair, relocate
and replace pipes, ducts, conduits, wires and appurtenant meters and equipment
included in the Premises or outside the Premises;

            (b) Boundary Changes. To change or modify the boundary lines of the
Lot;

            (c) Common Area Changes. To install, use, maintain, repair, alter or
relocate and replace any Common Areas; provided, however, that substitutions
shall be substantially equivalent or better in quality;

            (d) Repairs, Maintenance and Alterations. To repair and maintain
the Building and make alterations thereto as deemed necessary or desirable by
Landlord; and

            (e) Changes to CC&R's. To make changes to the CC&R's for the
Preston Industrial Park.

                           B. LANDLORD'S IMPROVEMENTS

B-1. (a) preliminary Plans. N / A
     (b)   Final Plans. N / A

B-2. Construction. See Exhibit C for a detailed description.

B-3. Failure to Complete Construction. N/A

B-4. Changes in Plans. N/A

B-5. Construction Representative. N / A

B-6. Completion and Delivery. N / A

B-7. Early Entry. With the prior written consent of Landlord, Tenant may prior
to the Commencement Date, as defined in Article C, at Tenant's sole risk and
subject to Article B-2, enter the Premises and install trade fixtures and
equipment in the Building; provided, however, that (a) Tenant's early entry
shall not interfere with construction of the Building or cause labor
difficulties; (b) Tenant shall execute an indemnity agreement in favor of
Landlord in form and substance evidence of insurance satisfactory to Landlord;
and (c) Tenant shall pay utility charges reasonably allocated by Landlord to
Tenant. Tenant shall not use the Premises for storage of inventory or otherwise
do business without the express prior written consent of Landlord.

                                    C. TERM

                  The Term shall commence on the earliest of the following dates
                  ("Commencement Date"):

                  (i)   Commencement Date: June 1, 2000

                                    D. RENT

D-1. Fixed Rent. Tenant shall pay Landlord the Fixed Rent in advance upon the
first day of each calendar month of the Term at Landlord's Address, or at such
other place designated by Landlord, without prior demand and without deduction,
offset or counterclaim. If the Term commences or ends on a day other than the
first day of a calendar month, Tenant shall pay on the Commencement Date or
first day of the last calendar month a pro rata portion of the Fixed Rent
prorated on a per diem basis with respect to the portion of the fractional
calendar month included in the Term.

D-2. Additional Rent. All monies required to be paid by Tenant hereunder
including, without limitation, payments for Real Property Taxes and Operating
Expenses, shall be considered additional rent ("Additional Rent"). Tenant shall
pay Additional Rent within five (5) days after written notice from Landlord.
"Rent" shall mean Fixed Rent and Additional Rent.

D-3. Interest and Late Charge. If any installment of Rent is not paid promptly
when due, such amount shall bear interest at the maximum rate permitted by law
from the date on which said payment shall be due until the date on which
Landlord shall receive said payment regardless of whether or not a notice of
default or notice of termination has been given by Landlord. In addition, Tenant
shall pay Landlord a late charge of five percent (5%) of the amount delinquent.
Landlord and Tenant recognize that the damage which Landlord shall suffer as a
result of Tenant's failure to pay Rent is difficult to ascertain, said late
charge being the best estimate of the damage which Landlord shall suffer in the
event of Tenant's late payment. This provision shall not relieve Tenant of
Tenant's obligation to pay Rent at the time and in the manner herein specified.

D-4. Security Deposit. Upon execution of this Lease, Tenant shall deposit the
Security Deposit, if any, in cash with Landlord. The Security Deposit shall
secure Tenant's obligation to (a) pay Rent; (b) maintain the Premises and repair
damages thereto; (c) surrender the Premises to Landlord in clean condition and
good repair upon termination of this Lease; and (d) discharge Tenant's other
obligations hereunder. Landlord may use and commingle the Security Deposit with
other funds of Landlord. If Tenant fails to perform any of Tenant's obligations
hereunder, Landlord may, but without obligation, apply all or any portion for
the Security Deposit toward fulfillment of Tenant's unperformed obligations. If
Landlord does so apply any portion of the Security Deposit, Tenant shall, upon
demand by Landlord, immediately pay Landlord sufficient cash to restore the
Security Deposit to the full original amount. The Security Deposit shall not
bear interest. Upon termination of this Lease, if Tenant has performed Tenant's
obligations hereunder, Landlord shall return the Security Deposit to Tenant. If
Landlord transfers Landlord's rights under this Lease, Landlord may deliver the
Security Deposit or whatever portion remains to the transferee, whereupon
Landlord shall be released from any further liability to Tenant with respect to
the Security Deposit.

D-5. Prepaid Rent. Upon execution of this Lease, Tenant shall pay Landlord the
Prepaid Rent, which Landlord shall apply against the first Fixed Rent when due
in the Term of this Lease.

Page 2
BDC Standard Industrial Lease Form/1988
(Rev. 5/30/97)
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                             E. REAL PROPERTY TAXES

E-l. Tenant's Obligations. Tenant shall pay Landlord Tenant's Share of Real
Property Taxes multiplied by the sum of the following: all real estate taxes and
other taxes relating to the Premises, Building and Lot (collectively
"Property") assessments, governmental charges, fees and levies, general and
special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind
and nature for public Improvements, services or benefits (collectively "Real
Property Taxes") and all other fees or taxes which may be levied in lieu of any
of the above, which are assessed, levied, confirmed, imposed or become a lieu
upon the Property, or become payable during the Term; provided, however, that:

            (a) Any Real Property Taxes shall be prorated between Landlord and
Tenant so Tenant shall pay that proportion which the part of such period within
the Term bears to the entire period; and

            (b) Any sum payable by Tenant, which would not otherwise be due
until after the date of the termination of this Lease, shall be paid by Tenant
to Landlord upon such termination.

E-2. Limitation. Nothing contained in this Lease shall require Tenant to pay any
franchise, corporate, estate, inheritance, succession or transfer tax of
Landlord, or any income, profits or revenue tax or charge, upon the net income
of Landlord; provided, however, that if under the laws of the United States
Government or the state in which the Property is located, or any political
subdivision thereof, a tax or excise on rent, or any other tax however
described, is levied or assessed by any such political body against Landlord on
account of rentals payable to Landlord from the Property, Tenant shall pay
Tenant's proportionate share of such tax or excise on rent as Tenant's
proportionate share is reasonably determined by Landlord.

E-3. Personal Property Taxes. Prior to delinquency, Tenant shall pay all taxes
and assessments levied upon trade fixtures, inventories and other personal
property located on the Property and Tenant shall provide Landlord copies of
receipts for payment of all such taxes and assessments.

                                  F. INSURANCE

F-1. Property. Landlord shall procure and maintain with respect to the Building
a policy or policies of All Risk of Physical Loss insurance with extended
coverage endorsement attached, including vandalism and malicious mischief
coverage, and any other endorsements required by the holder of any fee or
leasehold mortgage in an amount equal to at least eighty percent (80%) of the
full replacement value of the Building and improvements owned by Landlord at the
time of loss, which shall include replacement cost new, debris removal and
demolition thereof.

F-2. Liability. Tenant shall, at Tenant's sole expense, maintain in full force a
policy or policies of comprehensive public insurance, written by an insurance
company approved by Landlord and in the form customary to the locality in which
the Premises are located, insuring Tenant's activities and those of Tenant's
employees, agents, licensees and invitees with respect to the Property against
loss, damage or liability for personal injury or death of any person or loss or
damage to property occurring on the Premises in amounts of not less than:

            (a)   Personal injury per person: Two Million and No/100 Dollars
                  ($2,000,000.00);

            (b)   Personal injury per occurrence: Two Million and No/100 Dollars
                  ($2,000,000.00); and

            (c)   Property damage: Five Hundred Thousand and No/100 Dollars
                  ($500,000.00).

If Tenant has in full force and effect a blanket policy of liability insurance
with the same coverage for the Premises as described above, as well as coverage
of other Premises and properties of Tenant, or in which Tenant has some
interest, such blanket insurance shall satisfy the requirements hereof.

F-3. Rental Abatement Insurance. Landlord shall maintain in full force and
effect rental abatement insurance against abatement or loss of Rent in case of
fire or other casualty, in an amount at least equal to the amount of the Rent
payable by Tenant during one (1) year next ensuing, as reasonably determined by
Landlord.

F-4. Insurance Certificates. Tenant shall furnish to Landlord on the
Commencement Date, and thereafter within thirty (30) days prior to the
expiration of each such policy, certificates of insurance issued by the
insurance carrier of each policy of insurance carried by Tenant pursuant hereto.
Each certificate shall expressly provide that such policies shall not be
cancelable or subject to reduction of coverage or otherwise be subject to
modification except after thirty (30) days prior written notice to the parties
named as insureds in this Article F-4 Landlord, Landlord's successors and
assigns, and any nominee of Landlord holding any interest in the Premises,
including, without limitation, any ground lessor and the holder of any fee or
leasehold mortgage, shall be named as insureds under each policy of insurance
maintained by Tenant.

F-5. Tenant's Failure. If Tenant fails to maintain any insurance required in
this Lease, Tenant shall be liable for all losses and costs resulting from said
failure. Nothing herein shall be a waiver of any of Landlord's rights and
remedies under any other article of this Lease or at law or equity.

F-6. Waiver of Subrogation. All policies of property and liability insurance
which either party obtains in connection with the Premises shall include a
clause or endorsement denying the insurer any rights of subrogation against the
other party. Each party waives any rights of recovery against the other for
injury or loss due to hazards covered by insurance to the extent of the proceeds
recommend therefrom.

F-7. Indemnification of Landlord. Tenant shall indemnify and hold Landlord amid
the Premises harmless from and against (a) all liabilities, penalties, losses,
damages, costs and expenses, demands, causes of action, claims or judgments in
connection with any injury to persons or damage to property as a result of any
accident or other occurrence occasioned by any act or omission of Tenant.
Tenant's officers, employees, agents, servants, subtenants, concessionaires,
contractors, or visitors, or arising from the use, maintenance, occupation or
operation of the Premises; and (b) all legal costs and charges, including
actual attorneys' fees, in connection with such matters and the defense of any
action arising out of the same or in discharging the Premises from any and all
liens, charges or judgments which may accrue or be placed thereon by reason of
any act or omission of Tenant; provided, however, that Tenant shall not
indemnify Landlord for any injury or damage arising as the result of Landlord's
willful misconduct.

F-8. Earthquake and Flood Insurance. Landlord may maintain with respect to the
Building a policy of earthquake/volcanic action and flood and/or surface water
insurance, including rental value insurance against abatement or loss of rent in
the case of damage or loss covered under such earthquake/volcanic and flood
and/or surface water insurance, in an amount at least equal to the amount of
Rent payable by Tenant during the one (1) year next ensuing, as reasonably
determined by Landlord.

                 G. OPERATING EXPENSES, REPAIRS AND MAINTENANCE

G-1. Operating Expenses. Tenant shall pay Landlord Tenant's Share of Operating
Expenses multiplied by the amount of all expenses which Landlord incurs for
Operating Expenses. "Operating Expenses" shall include insurance premiums for
insurance under Articles F-1, F-3 and F-8 and all reasonable and necessary
expenses incurred by Landlord for time operation, cleaning, maintenance,
painting, repair and management of the Property, including without limitation,
the Common Area, roof and walls, except for structural repair of the bearing
walls. This paragraph shall not be construed as a promise or obligation of
Landlord in operate, clean, maintain, paint, repair or manage the Property
except as expressly set forth in this Lease. See Exhibit E for details.

G-2. Tenant Repairs and Maintenance. Tenant shall, at Tenant's sole expense,
keep and maintain the Premises, including subfloors and floor coverings,
interior plumbing, electrical wiring, fixtures and equipment in good repair and
in a clean and safe condition, and repair and/or replace any and all of the
foregoing in a good and workmanlike manner as needed; provided, however, that
casualties covered by insurance coverage shall be excepted in the extent of
proceeds received. Tenant shall, at Tenant's sole expense, immediately replace
all broken glass in the Building with glass equal to the specification and
quality of the original glass. Tenant shall, at Tenant's sole expense, enter a
regularly scheduled preventative maintenance/service contract with a maintenance
contractor for servicing all hot water, heating and air conditioning systems and
equipment in the Premises, using the contractor that Landlord selects

Page 3
BCD Standard Industrial Lease Form/1998
(Rev. 5/30/97)
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to service all tenants in the project. Tenant's portion of this cost will be a
pro-rata percentage (as determined by Landlord) of that expense related to
contiguous office area, and all costs related to Tenant's warehouse area. Tenant
shall, at Tenant's sole expense, repair any area damaged by Tenant, Tenant's
agents, employees and visitors, provided that Tenant obtains Landlord's prior
approval with respect to the method and quality of such repair. Tenant will pay
approximately two thirds of janitorial and other related operating expenses for
the ground floor rest-room and adjoining hallway area and approximately one half
of janitorial and other related operating expenses for the front lobby. Tenant
is responsible for the janitorial service in the Leased Premises. See Exhibit E
for details.

G-3. Landlord Repairs and Maintenance. Landlord shall, at Landlord's expense,
after written notice from Tenant, repair in a prompt and diligent manner any
damage to structural portions of the bearing walls of the Premises; provided,
however, that if such damage is caused by an act or omission of Tenant, then
such repairs shall be at Tenant's sole expense, payable to Landlord. There shall
be no abatement of Rent during the performance of such work. Landlord shall not
be liable to Tenant for injury or damage that may result from any defect in the
construction or condition of the Premises, nor for any damage that may result
from Interruption of Tenant's use of the Premises during any repairs by
Landlord. Tenant waives any right to repair at the expense of Landlord under any
Regulation, as hereinafter defined, now or hereafter in effect.

G-4. Inspection of Premises. After first notifying Tenant, Landlord may enter
the Premises during reasonable times, by use of Landlord's key to the Building
in order to inspect the same, to inspect the performance by Tenant of the terms
and conditions hereof, to affix reasonable signs and displays and to show the
Premises to prospective purchasers, tenants and lenders. Provided, however, In
the event of an emergency Landlord may enter the Premises at any time and
without giving Tenant prior notice. There shall be no abatement of Rent for any
such entry of the Premises.

G-5. Liens. Tenant shall promptly pay and discharge all claims for labor
performed, supplies furnished and services rendered at the request of Tenant and
shall keep the Premises free of all mechanics' and materialmen's liens in
connection therewith. Landlord shall have the right to post on the Premises, or
in the immediate vicinity thereof, notices of non-responsibility for any
construction, alteration or repair by Tenant on the Premises as provided for in
Articles G-2 and H. If any such lien is filed, Landlord may, but shall not be
required to, take such action as may be necessary to remove such lien, and
Tenant shall pay Landlord such amounts expended by Landlord together with
interest thereon at the maximum legal rate from the date of expenditure.

                                 H. ALTERATIONS

            Future improvements or alterations of the Premises (beyond
Landlord's Tenant Improvements) requested by Tenant to be performed (but are
not obligated to be performed) by Landlord at Tenant's sole expense and
following the signing of an approval and restoration agreement between Tenant
and Landlord. Alternatively, after obtaining Landlord's written consent in each
instance, all required permits and approvals, and after providing Landlord with
insurance and indemnification required by Landlord (all at no expense or cost to
Landlord), Tenant, at Tenant's sole expense, may install necessary trade
fixtures, equipment and furniture and may also install or modify non-structural
and fixed improvements in the Premises, provided that such items installed or
modified leave the Premises restorable to its prior condition without structural
damage to the Building or other fixed tenant improvements. Landlord reserves the
right to approve or disapprove curtains, draperies, shades, paint and other
interior improvements visible from outside the Premises on wholly aesthetic
grounds. Any fixed improvements by Tenant must be submitted for Landlord's
written approval and approved by Landlord prior to installation or Landlord
may remove or replace such items and restore the Premises at Tenant's sole
expense. Trade fixtures, equipment and furniture installed by Tenant shall
remain Tenant's property and shall be removed by Tenant prior to expiration of
the Term or earlier termination of this Lease. Tenant's installation or
modification of improvements in the Premises shall provide that such
improvements are installed and are removable without structural damage to the
Building or its tenant improvements. Tenant shall record a Notice of Completion
with the County Auditor and also provide a copy of the recorded document to
Landlord. Tenant shall, at Tenant's cost, provide Landlord with a set of
"as-built" updated drawings for any tenant improvement or modification work
which Tenant undertakes. Prior to expiration of the Term or earlier termination
of this Lease, Landlord shall, in Landlord's sole discretion, determine whether
some or all of Tenant's alterations are to be restored to the prior condition,
and whether some or all temporary improvements are to be removed. 0n or before
expiration of the Term or earlier termination of this Lease, Landlord shall
notify Tenant which of Tenant's alterations and improvements are to remain and
which are to be removed or restored. Tenant shall, at Tenant's sole expense,
remove and restore all remaining improvements to their condition prior to
Tenant's alteration, except those improvements which Landlord has elected to
retain without restoration. Those improvements which Landlord elects to retain
shall become Landlord's property. On expiration of the Term or earlier
termination of this Lease, temporary or fixed improvements which Landlord elects
to have removed shall remain Tenant's property and shall be removed by Tenant
prior to expiration of the Term or earlier termination of this Lease. Tenant
shall assume the risk of damage to any of Tenant's fixtures. Tenant shall
repair, at Tenant's sole expense, all damage to the Premises and/or Building
caused by the installation or removal of Tenant's trade fixtures, equipment,
furniture, temporary, or fixed improvements. If Tenant fails to remove the
foregoing items and restore the Premises to its prior condition before
termination of this Lease as required by Landlord, Landlord may keep and use
those improvements and materials or remove any of them and cause them to be
stored or sold in accordance with applicable law, all at Tenant's sole expense.

                           I. UTILITIES AND EASEMENTS

I-1. Utilities. Tenant shall promptly pay all charges for heat, sewer, septic
system, water, natural gas, telephone, cable, data transmission, propane,
garbage/solid waste, electricity and any other utilities used or consumed on the
Premises. Landlord shall not be liable to Tenant for interruption in or
curtailment of any utility service, nor shall any such interruption or
curtailment constitute constructive eviction or grounds for rental abatement. If
any such utilities are not separately metered, Tenant shall pay a pro-rata
share, based on use, as determined by Landlord. See Exhibit E for details.

I-2.Easements. Landlord may grant, revise or relocate easements on the Lot and
dedicate for public or private use portions of the Lot without Tenant's consent;
provided that no such grant, revision, dedication or relocation shall
substantially prohibit Tenant's reasonable use of the Premises. Upon Landlord's
demand, Tenant shall execute, acknowledge and deliver to Landlord documents,
instruments, maps and plans necessary to effectuate Tenant's covenants
hereunder.

                               1. USE OF PREMISES

J-1. General. The Premises shall be used for the Permitted Uses, consistent with
the Declaration of Covenants, Conditions and Restrictions, as listed under A-1.
Defined Terms. By entering the Premises, Tenant accepts the Premises in the
condition existing as of the date of such entry, subject to all applicable
municipal, county, state and federal statutes, laws and ordinances, including
zoning ordinances and regulations governing and relating to the use, occupancy
and possession of the Premises (collectively "Regulations"). Tenant shall, at
Tenant's sole expense, comply with all Regulations now in force or which may
hereafter be in force relating to the Premises and the use of the Premises, and
Tenant shall secure any permits therefor. Furthermore, Tenant agrees, by
Tenant's entry, that Tenant has conducted an investigation of the Premises and
the acceptability of the Premises for Tenant's use, to the extent that such
investigation might affect or influence Tenant's execution of this Lease. Tenant
acknowledges that Landlord has made no representations or warranties in
connection with the physical condition of the Premises or Tenant's use of the
same upon which Tenant has relied directly or indirectly for any purpose. Tenant
shall not commit waste, interfere with any other tenants in the Building,
overload the floors or structure of the Building, subject the Premises to any
use which would damage the Premises or raise or violate any insurance coverage
required by this Lease or take any action that would impair parking or alter
parking spaces.

J-2. Signs. Any sign placed by Tenant on the Premises, except in the interior of
time Building, shall contain only Tenant's name and no advertising material. No
sign shall be placed on the Premises without Landlord's written approval of
the location, material, size, design and content thereof nor without Tenant's
obtaining any necessary permit therefor. If Landlord installs a sign for Tenant,
Tenant shall reimburse Landlord for any costs incurred by Landlord within five
(5) days of demand by Landlord. Tenant shall remove any sign upon termination of
this Lease and shall return the Premises to their condition prior to the
placement of said sign at Tenant's expense.

Page 4
BCD Standard Industrial Lease Form/1998
(Rev. 5/30/97)
<PAGE>

Landlord reserves the sole right to condition, restrict or prohibit sign
placement, location, materials, color, content, or lighting on wholly aesthetic
grounds when such signs are to be placed or are visible from outside of the
Premises.

J-3. Key/Lock. Tenant shall, at all times, (at Tenant's own expense) key all or
Tenant's exterior and interior door locks to fit Landlord's project Grand Master
key and Building 3 Master key system.

J-4. Parking Access. Landlord shall not be liable to Tenant nor shall this Lease
be affected if any parking is impaired by moratorium, initiative, referendum or
regulation. Any monetary obligations imposed or required by government
authorities relative to parking rights or transportation related fees or charges
with respect to the Premises or use of the Premises shall be considered as
Operating Expenses and shall be paid by Tenant under Article G. Costs shall be
allocated between Tenants either as their percentage share of Operating
expenses, or otherwise, according to the basis for which the obligation is
imposed or required by government authorities, as determined by Landlord. See
Exhibit F for details.

J-5. Environmental Regulations. Tenant shall not cause any hazardous wastes,
toxic substances or related materials (collectively "Hazardous Materials") to be
used, generated, stored or disposed of on, under or about, or transported to or
from, the Property (collectively "Hazardous Materials Activities") without first
receiving Landlord's written consent, which may be withheld for any reason
whatsoever and which may be revoked at any time, and then only in compliance
(which shall be at Tenant's sole cost and expense) with all applicable
Regulations and using all necessary and appropriate precautions. Landlord shall
not be liable to Tenant for any Hazardous Materials Activities by Tenant,
Tenant's employees, agents, contractors, licensees or invitees. Tenant shall
indemnify, defend with counsel acceptable to Landlord and hold Landlord harmless
from and against any claims, damages, costs and liabilities arising out of
Tenant's Hazardous Materials Activities on, under or about the Property.
Landlord shall not be liable to Tenant regardless of whether or not Landlord has
approved Tenant's Hazardous Materials Activities. For the purposes of this
Article J-4, Hazardous Materials shall include but not be limited to substances
defined as "hazardous substances" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended. 42
U.S.C. Sec. 9061 et seq.; Hazardous Materials Transportation Act, 49 U.S.C.
Sec., 1802; and Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et
seq.; and those substances defined as "hazardous materials and wastes" in the
Revised Code of Washington (RCW) and the Washington Administrative Code (WAC),
and in the regulations adopted and publications promulgated pursuant to said
laws; and under ordinances, rules and regulations of time local governments with
jurisdiction over this Property.

                            K. DAMAGE AND DESTRUCTION

K-1. Reconstruction. If the Building is damaged or destroyed, Landlord shall,
except as hereinafter provided, diligently repair or rebuild the Building to
substantially the condition in which the Building existed immediately prior to
such damage or destruction, provided that insurance is available to pay one
hundred percent (100%) or more of the cost of such restoration, excluding the
deductible amount. Tenant shall repair any damage which is estimated in good
faith by Landlord to be less then the deductible amount under any applicable
insurance policy of Landlord; provided, however, that such deductible amount
shall not exceed Ten Thousand Dollars ($10,000.00). Landlord shall reimburse
Tenant upon written demand for expenses incurred by Tenant in such repair work
to the extent of any proceeds received by Landlord from the insurance described
in Article F-1. Landlord shall not be obligated to repair any improvements made
or paid for by Tenant.

K-2. Rent Abatement. Rent shall be abated proportionately, but only to time
extent of any proceeds received by Landlord from rental abatement described in
Article F-3, during period when, by reason of such damage or destruction.
Landlord reasonably determines that there is substantial interference with
Tenant's use of the Premises, having regard to the extent to which Tenant may be
required to discontinue Tenant's use of time Premises. Such abatement shall
commence upon such damage or destruction and end upon substantial completion by
Landlord of the repair or reconstruction which Landlord is obligated or
undertakes to do. If Landlord reasonably determines that continuation of
business is not practical permitting reconstruction, Fixed Rent shall abate to
the extent of proceeds from rental abatement insurance until reconstruction is
substantially completed or until business is totally or partially resumed,
whichever occurs earlier.

K-3. Option to Terminate. If the Building is damaged or destroyed to the extent
that Landlord determines that the Building cannot, with reasonable diligence, be
fully repaired or restored by Landlord within one hundred eighty (180) days
after the date of the damage or destruction, the sole right of both Landlord and
Tenant shall be the option to terminate this Lease. Landlord's determination
with respect to the extent of damage or destruction shall be conclusive on
Tenant. Landlord shall notify Tenant of Landlord's determination, in writing,
within thirty (30) days after the date of the damage or destruction. If Landlord
determines that the Building can be fully repaired or restored within the one
hundred eighty (180) day period, or if Landlord determines that such repair or
restoration cannot be made within said period but neither party elects to
terminate within thirty (30) days from the date of said determination, this
Lease shall remain in full force and effect and Landlord shall diligently repair
and restore time damage as soon as reasonably possible.

K-4. Uninsured Casualty. In the event the Building is damaged or destroyed and
is not fully covered by the insurance proceeds received by Landlord under the
insurance policies required under Article F-1, Landlord may terminate this Lease
by written notice to Tenant given within thirty (30) days after the date of
notice to Landlord that said damage or destruction is not so covered. If
Landlord does not elect to terminate this Lease, the Lease shall remain in full
force and effect, and time Building shall be repaired and rebuilt in accordance
with the provisions for repair set forth in Article K-1.

K-5. Waiver. With respect to any damage or destruction which Landlord is
obligated to repair or may elect to repair under the terms of this Article K,
Tenant waives all rights to terminate this Lease pursuant to rights otherwise
presently or hereafter accorded by law to tenants.

                                I. EMINENT DOMAIN

L-l. Total Condemnation. If all of the Premises is condemned by eminent domain,
inversely condemned or sold in lieu of condemnation, for any public or
quasi-public use or purpose ("Condemned"), this Lease shall terminate as of the
date of title vesting in such proceeding, and Rent shall be adjusted to the
date of termination. Tenant shall immediately notify Landlord of any such
occurrence.

L-2. Partial Condemnation. If any portion of the Premises is Condemned, and such
partial condemnation renders the Premises unusable for Tenant's business, as
reasonably determined by Landlord, or if a substantial portion of the Building
is Condemned as reasonably determined by Landlord, this Lease shall terminate as
of the date of title vesting in such proceeding and Rent shall be adjusted to
the date of termination. If such partial condemnation does not render the
Premises unusable for the business of Tenant or less than a substantial portion
of the Building is Condemned, Landlord small promptly restore the Premises to
the extent of any condemnation proceeds recovered by Landlord, less the portion
thereof lost in such condemnation, and this Lease shall continue in full force
and effect except that after the date of such title vesting the Fixed Rent shall
be adjusted, as reasonably determined by Landlord. Landlord shall reasonably
adjust Tenant's Share of Operating Expenses.

L-3. Landlord's Award. If the Premises are wholly or partially Condemned,
Landlord shall be entitled to the entire award paid for such condemnation,
subject to the provisions of Article L-4, and Tenant waives any claim to any
part of the award from Landlord or the condemning authority.

L-4. Tenant's Award. Tenant shall have the right to recover from the condemning
authority, but not from Landlord, such compensation as may be separately awarded
to Tenant in connection with costs in removing Tenant's merchandise, furniture,
fixtures, leasehold improvements and equipment to a new location.

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<PAGE>

L-5. Temporary Condemnation. In the event of a temporary condemnation of the
Premises, as reasonably determined by Landlord, this Lease shall remain in
effect and Tenant shall receive any award made for such condemnation. If a
temporary condemnation remains in effect at the expiration or earlier
termination of this Lease, Tenant shall pay Landlord the reasonable cost of
performing any obligations required of Tenant by this Lease with respect to the
surrender of the Premises, and upon such payment Tenant shall be excused from
such obligations. If a temporary condemnation is for a period which extends
beyond the Term, this Lease shall terminate as of the date of occupancy by the
condemning authority, the award shall be distributed as provided in Articles L-3
and L-4 and Rent shall be adjusted to the date of such occupancy. Provided,
however, that any claim by Tenant, except with respect to the amortized cost of
trade fixtures and improvements owned by Tenant, which are not removable, shall
be subject and subordinate to the claim of the beneficiary of any deed of trust
or mortgage.

L-6. Delivery at Documents. From time to time upon Landlord's written request,
Tenant shall immediately execute and deliver to Landlord all instruments
required to effectuate the provisions of this Article L.

                                   M. DEFAULT

M-l. Events of Defaults. The Occurrence of any of the following events shall
constitute an "Event of Default" by Tenant with or without notice from Landlord:

            (a) Abandonment. Abandonment of the Premises;

            (b) Payment. Failure to pay Rent due hereunder on the date when due,
the failure continuing for a period of five (5) days after payments are due;

            (c) Performance. Default in the performance of Tenant's covenants,
agreements and obligations hereunder, except default in the payment of Rent, the
default continuing for thirty (30) days after written notice thereof from
Landlord;

            (d) Assignment. A general assignment by Tenant for the benefit of
creditors:

            (e) Bankruptcy. The filing of a voluntary petition by Tenant or the
filing of an involuntary petition by any of Tenant's creditors seeking the
rehabilitation, liquidation or reorganization of Tenant under any law relating
to bankruptcy, insolvency or other relief of debtors other than the bankruptcy
proceeding in which Tenant is now engaged;

            (f) Receivership. The appointment of a receiver or other custodian
to take possession of substantially all of Tenant's assets or this leasehold,

            (g) Insolvency, Dissolution Etc. Tenant's insolvency or inability to
pay Tenant's debts, or failure generally to pay Tenant's debts when due; or any
court entering a decree or order directing the winding up or liquidation of
Tenant or of substantially all of Tenant's assets; or Tenant taking any action
toward the dissolution or winding up of Tenant's affairs or the cessation or
suspension of Tenant's use of the Premises; or

            (h) Attachment. Attachment, execution or other judicial seizure of
substantially all of Tenant's assets or this leasehold.

M-2. Landlord's Remedies, a. Abandonment. If Tenant abandons the Premises, at
Landlord's option this Lease shall continue in effect. Landlord shall not be
deemed to terminate this Lease other than by written notice of termination from
Landlord as set forth below, and Landlord shall have all of the remedies of a
Landlord provided for herein and by the laws of the State of Washington.

            b. Termination. Following the occurrence of any Event of Default,
Landlord shall have the right, as long as the default continues, to terminate
this Lease by written notice to Tenant setting forth: (i) the default; (ii) the
requirements to cure it; and (iii) a demand for possession, which shall be
effective either three (3) days after it is given or upon expiration of the time
specified in Article M-1 hereinabove, whichever occurs later.

            c. Possession. Following termination under Subarticle M-2b above,
without prejudice to other remedies Landlord may have by reasons of Tenant's
default or of such termination, Landlord may (i) peaceably re-enter the Premises
upon voluntary surrender by Tenant or remove Tenant therefrom and any other
persons occupying the Premises, using such legal proceedings as may be
available; (ii) repossess the Premises or relet the Premises or any part thereof
for such term (which may be for a term extending beyond the Term), at such
rental and upon such other terms and conditions as Landlord in Landlord's sole
discretion shall determine, with the right to make reasonable alterations and
repairs to the Premises; and (iii) remove all personal property therefrom.

            d. Recovery. Following termination under Subarticle M-2b above,
Landlord shall have all the rights and remedies of a Landlord provided by the
laws of the State of Washington. The amount of damages Landlord may recover
following termination under Subarticle M-2b above shall include the worth at the
time of the award of the amount by which time unpaid Rent for the balance of
the Term after the time of award exceeds the amount of rental loss Tenant proves
could be reasonably avoided.

            e. Additional Remedies. In addition to the foregoing remedies and so
long as this Lease is not terminated, Landlord shall have the right to remedy
any default of Tenant, to maintain or improve the Premises without terminating
this Lease, to incur expenses on behalf of Tenant in seeking a new subtenant, to
cause a receiver to be appointed to administer the Premises and new or existing
subleases and to add to the Rent payable hereunder all of Landlord's reasonable
costs in so doing, with interest at time maximum rate permitted by law from time
date of such expenditure until time same is repaid.

            f. Other. If Tenant causes or threatens to cause a breach of any of
the covenants, terms or conditions contained in this lease, Landlord shall be
entitled to obtain all sums held by Tenant, by any trustee or in any account
provided for herein, to enjoin such breach or threatened breach and to invoke
any remedy allowed at law, in equity, by statute or otherwise as though
re-entry, summary proceedings and other remedies were not provided for in this
Lease.

            g. Cumulative. Each right and remedy of Landlord provided for in
this Lease or now or hereafter existing at law, in equity, by statute or
otherwise shall be cumulative and shall not preclude Landlord from exercising
any other rights or remedies provided for in this Lease or now or hereafter
existing at law or equity, by statute or otherwise.

            h. Indemnification. Nothing in this Article M affects the right of
Landlord to indemnification by Tenant in accordance with Article F-7 for
liability arising from personal injuries or property damage prior to the
termination of this Lease.

                          N. ASSIGNMENT AND SUBLETTING

N-1. Approval. Tenant shall not assign, mortgage, pledge or otherwise transfer
this Lease, in whole or in part, nor sublet or permit occupancy by any party
other than Tennant of all or any part of the Premises, without the prior written
consent of Landlord in each instance; provided, however, that Tenant shall have
the right to assign or sublet this Lease to any parent, subsidiary or affiliated
entity of Tenant. Landlord may withhold Landlord's consent to any assignment or
subletting, provided the withholding is not done unreasonably, This Lease may
not be assigned by operation of law. Any purported assignment or subletting
contrary to the provisions hereof without Landlord's prior written consent shall
be void. The consent by Landlord to any assignment or subletting shall not
constitute a waiver of the necessity for such consent to any subsequent
assignment or subletting.

N-2. Landlord Option. a. Right to Cancel. In connection with any proposed
assignment or sublease, Landlord shall have an option to cancel and terminate
this Lease if the request is to assign the Lease or to sublet all of the
Premises; or, if the request is to sublet a portion of the Premises only, to
cancel and terminate this Lease with respect to such portion. Landlord may
exercise said option in writing within thirty (30) days after Landlord's receipt
from Tenant of such request, and in each case such cancellation or termination
small occur as of the date set forth in Landlord's notice of exercise of such
options, which small not be less than sixty (60) days nor more than one hundred
twenty (120) days following the giving of such notice. Any such request by
Tenant shall state the name, principal contact, address and telephone number of
the proposed assignee or sublessee.

            b. Cancellation. If Landlord exercises Landlord's option to cancel
this Lease or any portion thereof, Tenant shall surrender possession of this
Premises, or the portion thereof which is the subject of the option, as the
case may be, on the date set forth in such notice in accordance with the
provisions of this Lease relating to surrender of the Premises at the expiration
of the Term. If this Lease is canceled as to a portion of the Premises only,
Rent after the date of cancellation shall be abated on a pro rata basis, as
determined by Landlord.

            c. Noncancellation. If Landlord does not exercise Landlord's option
to cancel this Lease pursuant to the foregoing provisions, Landlord may withhold
Landlord's consent to such assignment or subletting, provided such consent is
not unreasonably withheld.

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N-3. Bonus Rental. If Tenant receives rent or other consideration for any
assignment or sublease in excess of the Rent, or in case of the sublease of a
portion of the Premises, in excess of such Rent that is fairly allocable to such
portion, as determined by Landlord, after appropriate adjustments to assure that
all other payments required hereunder are appropriately taken into account,
Tenant shall pay Landlord fifty (50%) of the difference between each such
payment of rent or other consideration and the Rent required hereunder.

N-4. Scope. If this Lease is (a) assigned, (b) the underlying beneficial
interest of Tenant is transferred or (c) the Premises or any part thereof is
sublet or occupied by anyone other than Tenant, Landlord may collect rent from
the assignee, subtenant or occupant and apply the net amount collected to the
Rent herein reserved and apportion any excess rent so collected in accordance
with the terms of Article N-3; provided that no such assignment, subletting,
occupancy or collection shall be deemed a waiver of this covenant, or the
acceptance of the assignee, subtenant or occupant as tenant, or a release of
Tenant from the further performance by Tenant of covenants on the part of Tenant
herein contained. No assignment or subletting shall affect the continuing
liability of Tenant (which, following assignment, small be joint and several
within the assignee), and Tenant small not be released from performing any of
the terms, covenants and conditions of this Lease.

N-5. Release. Whenever Landlord conveys any interest in the Premises, Landlord
shall be automatically released from further performance of the covenants of
this Lease, and from all further liabilities, obligations, costs, expenses,
demands, causes of action, claims and judgments connected with this Lease. The
effective date of Landlord's release shall be the date the assignee executes an
assumption of such assignment. If requested, Tenant shall execute a form of
release and such other documentation as may be required to further effect the
provisions of this Article N-5. This Lease and each of the Lease's covenants and
conditions shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, successors, assignees and legal
representatives, subject to the provisions hereof. Any successor or assignee of
Tenant who accepts an assignment of this Lease or enters into possession
hereunder shall thereby be bound by the provisions hereof. Any successor or
assignee of Tenant who accepts an assignment of this Lease or enters into
possession hereunder the provisions hereof. Nothing herein contained shall be
deemed to give a right of assignment to Tenant without the prior written consent
of landlord, which consent of assignment may be witheld for any reason or for no
reason.

N-6. Holding Over. If Tenant, or any of Tenant's successor or assigns holds over
the Premises or any part thereof after expiration of the Term, unless otherwise
agreed to in writing by Landlord, such holding over shall constitute a tenancy
from month to month only, at a rent equal to the Fixed Rent in effect
immediately prior to such holding over plus fifty percent (50%) of the Fixed
Rent. This Article N-6 shall not be construed as Landlord's permission for
Tenant to hold over.

N-7 Waiver. Tenant waives notice of any default of any assignee or sublessee and
agrees that Landlord may, at Landlord's option, proceed against Tenant without
having taken action against or joined such assignee or sublessee, except that
Tenant shall have the benefit of any indulgences, waivers and extensions of time
granted to any such assignee or sublessee.

N-8 Termination of Extension Options, if any. Except as provided below.
notwithstanding anything to the contrary contained in this Lease, Tenant shall
not enter into any sublease or assignment other than for a term equal to or less
than the then current term of this Lease. No such assignment or sublet by Tenant
shall entitle the assignee or sublessee to occupy the Premises for a term
greater than the term then currently in effect. No assignee or sublessee shall
have the right to exercise extension options (if any) under this Lease. However,
if an option to extend has been exercised but the extended term has not
commenced on the date of such assignment or sublet, Landlord shall elect, in
Landlord's sole discretion whether or not to extend the Term of this Lease to
include such extention period. Tenant shall request such determination and
Landlord shall notify Tenant of its determination in the manner provided for in
Article N-2a above.

             O. ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION

0-1. Estoppel Certificate. Within ten (10) days after request by Landlord,
Tenant shall deliver, in recordable form, an estoppel certificate in the form
attached hereto as Exhibit D, to any proposed mortgagee, purchaser or Landlord.
Tenant's failure to deliver said statement in such time period shall be
conclusive upon Tenant that (a) this Lease is in full force and effect, without
modification except as may be represented by Landlord; (b) there are no uncured
defaults in Landlord's performance and Tenant has no right of offset,
counterclaim or deduction against Rent hereunder; and (c) no more than one
period's Fixed Rent has been paid in advance. Landlord reserves the right to
substitute a different form of estoppel certificate in place of the estoppel
certificate attached hereto as Exhibit D.

O-2. Attornment. Tenant shall, if requested, in the event of (a) a foreclosure
proceeding; (b) the exercise of the power of sale under any mortgage or deed of
trust made by Landlord, Landlord's successors or assigns which encumbers the
Premises, or any part thereof; or (c) the termination of a ground lease, attorn
to the purchaser upon such foreclosure, sale or grant of a deed in lieu of
foreclosure and recognize such purchaser as Landlord under this Lease.

O-3. Subordination. The rights of Tenant hereunder are subject and subordinate
to the lien of any mortgage or lien resulting from any other method of
financing or refinancing, now or hereafter in force against the Premises, and
to all advances made upon the security thereof; provided, however, that
notwithstanding such subordination, so long as Tenant is not in default under
this Lease, this Lease shall not be terminated or subject to termination by
trustee's sale, action to enforce the security or proceeding or action in
foreclosure. If requested, Tenant shall execute whatever documentation may be
required to further effect the provisions of this Article O-3.

                                P. MISCELLANEOUS

P-1 Waiver. No waiver by either party of any default or breach of any covenant
by the other party hereunder shall be implied from any ommission by such party
to take action on account of such default if such default persists or is
repeated, and no express waiver shall affect any default other than the default
specified in the waiver and then said waiver shall be operative only for the
time and to the extent therein stated. Waivers of any covenant, term or
condition contained herein by either party shall not be construed as a waiver of
any subsequent breach of the same covenant, term or condition. The consent or
approval by either party to any act of the other party requiring further consent
or approval by such party shall not be deemed to waive or render unnecessary
such party's consent or approval to any subsequent similar acts. No waiver by
either party of any provision under this Lease shall be effective unless in
writing and signed by such party. Landlord's acceptance of full or partial
payment of Rent during the continuance of any breach of this lease shall not
constitute a waiver of any such breach of this Lease. Efforts by Landlord to
mitigate damages caused by Tenant's breach of this Lease shall not be construed
as a waiver of Landlord's right to recover damages under Article M.

P-2. Financial Statements. Within ten (10) days after Landlord's written
request, Tenant shall deliver to Landlord current audited financial statements
of Tenant for the most recently completed federal income tax year of Tenant.

P-3. Accord and Satisfaction. No payment by Tenant of a lesser amount than the
Rent nor any endorsement on any check or letter accompanying any check or
payment as Rent shall be deemed an accord and satisfaction of full payment of
Rent, and Landlord may accept such payment without prejudice to landlord's right
to recover the balance of such Rent or to pursue other remedies.

P-4. Limitation of Landlord's Liability. The obligations of Landlord under this
Lease are not personal obligations of the individual partners, directors,
officers and shareholders of Landlord, and Tenant shall look solely to the
Premises for satisfaction of any liability and shall not look to other assets of
Landlord nor seek recourse against the assets of the individual partners,
directors, officers and shareholders of Landlord.

P-5. Entire Agreement. This Lease sets forth all covenants, agreements,
conditions and understandings between Landlord and Tenant concerning the
Premises, and there are no covenants, agreements, conditions or understandings,
either oral or written, between Landlord and Tenant other than as set forth
herein. No alteration, amendment, change or addition to this Lease shall be
binding upon Landlord and Tenant unless in writing and signed by both Landlord
and Tenant.

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<PAGE>

P-6. Time. Time is of the essence of this Lease.

P-7. Attorneys' Fees. In any action which Landlord or Tenant brings to enforce
its respective rights hereunder, the unsuccessful party shall pay all costs
incurred by the prevailing party including actual attorneys' fees, to be fixed
by the court, and said costs and attorneys' fees shall be a part of the judgment
in said action.

P-8. Captions and Article Letters. The captions, article letters and table of
contents appearing in this Lease are inserted as a matter of convenience and in
no way define or limit the provisions of this Lease.

P-9. Severability. If any provision of this Lease or the application of any such
provision, shall be held by a court of competent jurisdiction to be invalid,
void or unenforceable to any extent, the remaining provisions of this Lease and
the application thereof shall remain in full force and effect and shall not be
affected, impaired or invalidated.

P-10. Applicable Law and Venue. This Lease shall be construed and enforced in
accordance with the laws of the State of Washington. Venue of any action arising
out of this Agreement shall be had in the Superior Court in King County; the
parties consent to jurisdiction of such court, agree not to commence suit in
any other court or jurisdiction, and that if suit be brought in any other
jurisdiction, the same shall be removed promptly to Superior Court in King
County.

P-11. Examination of Lease. Submission of this Lease to Tenant does not
constitute an option to lease, and this Lease is not effective otherwise until
execution and delivery by both Landlord and Tenant.

P-12. Notices. All notices to be given hereunder shall be in writing and mailed
postage prepaid by certified or registered mail, return receipt requested, or
delivered by personal delivery to Landlord's Address and Tenant's Address, or to
such other place as Landlord or Tenant may designate in a written notice given
to the other party. Notices shall be deemed served five (5) days after the date
of mailing.

P-13. Non-Recordation of Lease. Tenant shall not without prior written consent
of Landlord, record this Lease in the real estate records of King County, or
elsewhere.

P-14. Guaranty of lease: N/A

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

"Landlord"                                          "Tenant"

BDC PRESTON PROPERTIES ONE LIMITED PARTNERSHIP      COST-U-LESS
a Washington limited partnership                    a Washington Corporation

By Bernard Development Company,
a Washington corporation                            By J. Jeffrey Meder
Its General Partner                                   --------------------------
                                                          Corporate Officer

By /s/ J. Thomas Bernard,                           J. Jeffrey Meder
   -----------------------------------              ----------------------------
       J. Thomas Bernard                                     Print Name

                                                    Pres. & CEO
                                                    ----------------------------
                                                               Title

STATE OF WASHINGTON     )
                        ) ss.
COUNTY OF KING          )

      THIS IS TO CERTIFY that on this 27th day of April, 2000, before me, the
undersigned, a notary public in and for the State of Washington, duly
commissioned and sworn personally appeared J. Jeffrey Meder, to me known to be
the President CSO of Cost-U-Less, Inc., a Washington Corporation, that executed
the within and foregoing instrument, and acknowledged the said instrument to be
the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that said individual was
authorized to execute said instrument.

      WITNESS my hand and official seal the day and year in this certificate
first above written.

                        /s/ Kellie L. Ramsey
                        -------------------------------------------------
                        Notary Public in and for the State of Washington,
                        residing at Bellevue
                                    -------------------------------------
                        My appointment expires: 1-19-2002
                                                -------------------------

STATE OF WASHINGTON     )
                        ) ss.
COUNTY OF KING          )

      THIS IS TO CERTIFY that on this 9th day of May, 2000, before me, the
undersigned, a notary public in and for the State of Washington, duly
commissioned and sworn personally appeared J. THOMAS BERNARD, to me known to be
the President of Bernard Development Company, a Washington Corporation, to me
known to be the general partner of BDC Preston Properties One Limited
Partnership, a Washington limited partnership, that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation for the uses and purposes therein
mentioned, and on oath stated that said individual was authorized to execute
said instrument.

      WITNESS my hand and official seal the day and year in this certificate
first above written.

                        /s/ ARLINE M. CASTER
                        -------------------------------------------------
                        Notary Public in and for the State of Washington,
                        residing at Preston, Washington
                                    -------------------------------------
                        My appointment expires: Feb-4, 2004
                                                -------------------------

===================================
           Notary Public
        State of Washington
          ARLINE M. CASTER
My Appointment Expires Feb. 4, 2004
===================================

Page 8
BCD Stadard Industrial Lease Form/1998
(Rev. 5/3(1/97)
<PAGE>

                                   EXHIBIT A

                            PROPERTY AND SITE PLAN

                BDC PRESTON PROPERTIES ONE LIMITED PARTNERSHIP
            LEGAL DESCRIPTION FOR REAL PROPERTY AND ACCESS EASEMENT

The land referred to in this commitment is located in the County of King, State
of Washington, and described as follows:

REAL PROPERTY
-------------

Beginning on the Easterly margin of the former Burlington Northern (Seattle,
Lake Shore and Eastern) Railway Company right of way, as the same was
established by instrument recorded October 10, 1891 under Recording No. 86431 at
its intersection with the North line of the South 50 feet of the Southeast
Quarter of Section 29, Township 24 North, Range 7 East, W.M., in King County,
Washington;

THENCE South 88 degrees 35 minutes 57 seconds East along the North line of said
South 50 feet 1123.30 feet to the East line of the Southeast Quarter of said
Section 29;

THENCE South 01 degree 14 minutes 03 seconds West along said East line 50.00
feet to the section corner common to Sections 28, 29, 32 and 33 of said Township
24 North, Range 7 East;

THENCE South 03 degrees 53 minutes 50 seconds East along the East line of the
Northeast Quarter of Section 32 of said Township 24 North, Range 7 East, 555.32
feet to the North line of a parcel of land conveyed to B.M. Gallagher by
Correction Deed filed under Recording No. 4538652;

THENCE North 88 degrees 35 minutes 57 seconds West along the North line of said
Gallagher deed 209.00 feet;

THENCE South 03 minutes 53 minutes 50 seconds East along the West line of said
Gallagher Deed 209.00 feet;

THENCE South 88 degrees 35 minutes 57 seconds East along the South line of said
Gallagher Deed 209.00 feet to the East line of the Northeast Quarter of said
Section 32;

THENCE South 03 degrees 53 minutes 50 seconds East along said line 2.26 feet to
the South line of the North 23 acres of the Northeast Quarter of the Northeast
Quarter of said Section 32;

THENCE North 88 degrees 35 minutes 57 seconds West along said South line 1117.21
feet to the Easterly margin of said former Burlington Northern Railway Company
right of way;

THENCE North 02 degrees 34 minutes 17 seconds East along said former Burlington
Northern right of way 332.04 feet to a point of curvature concave to the West
having a radius of 1307.00 feet;

THENCE Northerly along said curve and former right of way margin through a
central angle of 21 degrees 32 minutes 11 seconds an arc length of 491.28 feet
to the point of beginning and terminus of this description.

ACCESS EASEMENT
---------------

Together with a non-exclusive easement for ingress and egress over those
portions of the Northeast Quarter of the Northeast Quarter of Section 32,
Township 24 North, Range 7 East, W.M., in King County, Washington, described as
follows:

Commencing at the intersection of the North line of the ingress, egress, and
utilities easement conveyed by O'dell Crittenden under King County Recording No.
8504160805 with the West margin of that certain tract of land which was formerly
the Northern Pacific Railway Company right-of-way as it was conveyed October 10,
1891, by deed filed in Book 130 of Deeds at Page 567, records of King County,
Washington;

THENCE South 88 degrees 28 minutes 26 seconds East along the Northerly line
margin of said easement 20.00 feet to the West line of the East 30 feet of said
former Northern Pacific Railway Company right-of-way and the true point of
beginning for this description;

THENCE continuing South 88 degrees 28 minutes 26 seconds East along the
Northerly margin of said easement 56.27 feet;

THENCE North 02 degrees 24 minutes 17 seconds East parallel with the Easterly
margin of said former Northern Pacific Railway Company right-of-way 28.85 feet
to a point of tangent curvature concave to the West, having a radius of 75.00
feet;

THENCE Northwesterly along said curve through an arc of 25 degrees 58 minutes 38
seconds an arc length of 34.00 feet to a point of reverse curvature with a curve
of radius 185.00 feet;

THENCE Northerly along said curve through an arc of 25 degrees 58 minutes 38
seconds, an arc length of 83.88 feet to the Easterly margin of said former
railway right-of-way;

THENCE North 02 degrees 24 minutes 17 seconds East along said Easterly margin
228.68 feet to a point of tangent curvature concave to the East having a radius
of 180.00 feet;

THENCE Northerly along said curve through an arc of 42 degrees 11 minutes 38
seconds, an arc length of 132.56 feet to the Southerly line of the North 23
acres of the Northeast Quarter of the Northeast Quarter of said Section 32;

THENCE North 88 degrees 35 minutes 57 seconds West along said line 76.66 feet to
the West line of the East 30 feet of said former railway right-of-way;

THENCE South 02 degrees 24 minutes 17 seconds West along said West line 491.83
feet to the true point of beginning;

ALSO, over the North 100 feet of the West 20 feet of that portion of the former
Northern Pacific Railway Company right-of-way as it was deeded October 10, 1891,
in Book 130 of deeds at Page 567, records of King County, Washington, lying
Southerly of the North 23 acres of the Northeast Quarter of the Northeast
Quarter of Section 32, Township 24 North, Range 7 East of the Willamette
Meridian in King County, Washington;

ALSO, over the West 76.27 feet of the South 30 feet of Lot 1 and the West 76.27
feet of the North 30 feet of Log 3; all in Shurt Plat No. 787033, recorded under
receiving No. 8810180798, in the Northeast Quarter of Section 32, Township 24
North, Range 7 East, W.M., in King County, Washington.

                                   EXHIBIT A
                            Property and Site Plan
                                  Page 1 of 2

<PAGE>

                                   EXHIBIT B

                         BASE BUILDING AND DESCRIPTION

BASE BUILDING DESCRIPTION (includes Building 3 revision):

Three building industrial development, designed to accommodate large and medium
sized distribution and manufacturing companies. Each building is tilt-up
concrete construction, with 60' X 60' column spacing. Building 3 includes an
Early Suppression/Fast Response (ESFR) Fire Sprinkling System permitting
exceptional performance and flexibility for high pile storage, Buildings 1 and 2
each have a hydraulically calculated fire sprinkler system with .39 gpm
capacity; accommodating High Pile Storage. Each building has a five and
one-half-inch-thick concrete floor with a 2,500 lb./square foot compacted earth
subgrade and 3,000 lb./square inch concrete strength. The smooth finished
concrete floor is treated with a single coat high gloss clear sealer and
hardener. Base building lighting for Building 3 includes high output/400 watt
metal halide light fixtures with industrial reflectors, installed at 30 foot
centers with 24 foot row spacing (substantially exceeding 10-15 foot candles at
+ 30" off finished floor), plus 4' x 8' double dome skylights (opaque in
buildings 1 and 2, clear in Building 3), 3 per 60' x 120' or 140' building bay).
Building interior concrete walls and columns are painted white. All glass entry
areas are designed for possible future second floor mezzanine office
installation. The white cap sheet roof is insulated with under-roof R-19
fiberglass insulation, covered with nonflammable white plastic sheeting in
Building 3, metal foil backing in Buildings 1 and 2. The Building 3 roof system
is combination wide-span open steel bar joist truss and steel beam system, with
a 1/2" Oriented Strand Board deck and a three-ply 20-year bondable built-up
fiberglass roofing. Buildings 1 and 2 have a long span wood truss roof
structure. Pre-installed 150 KVA/480 volt/three-phase electrical transformer at
each Building 1 and 2, and a 300 KVA transformer at Building 3.

Electrical service cable into the electrical room in Buildings 1 and 2 has a
capacity capability of 600 amps at 480 volts/three-phase, with potential to
double the service to 1,200 amps. Building 3 has a 2,400 amp 277/480 volt
3-phase service to the electrical room. Individual electrical meter connection
locations for each tenant are included inside each building electrical room. An
initial empty 2" or 3" under-slab electrical conduit distribution to each
20-foot glass frontage office entry area will handle at least an individual 200
amp/480 volt-three-phase electric service capacity. Building 3 has five of these
tenant electric service conduits upgraded to accommodate a 500 amp electric
service. Off-site telephone service line connection to the building
electrical/telephone room is included. In addition, a fiber optic telephone
service line system is available from Pacific Telephone, Inc. (PTI), further
telephone service upgrading is available through one or the other of the
following, or a combination: Foreign Exchange line to a U.S. West Exchange, a
long distance carrier connection, or use of the adjoining SanMar microwave
telephone system (pre-connected by conduit and connected directly to AT&T).
Tenants can also install their own computerized telephone selection device (if
desired) to automatically choose the lowest rate cost route for each call.
Overhead domestic water distribution (2" line) and under-slab sanitary sewer is
also included, distributed to each office entry area in the buildings as part of
base building construction. A high capacity on-site septic sewer system is
installed. Buildings 1 & 2 have a 25' to 28' minimum clear height below the 44"
deep roof truss structure, and Building 3 has a 32 to 37 foot minimum clear
height. This special roof structure allows possible second floor mezzanine deck
throughout the building and also allows possible High Pile Storage/stacking
considerably higher than ordinary 24 and for 32-foot clear height industrial
buildings, with minimum or no extra cost or expanse in most cases (verify each
case). Building exteriors are painted. Dock high truck doors are 10' x 10', have
a 48" dock, and a continuous overhead truck door canopy. Drive-in truck doors
are 14'W x 15'H. The site is landscaped and has underground landscape sprinklers
with automatic controllers for the well landscaped site. Exterior building and
site lighting is included. All trucking and driveway areas are paved with extra
heavy-duty asphaltic concrete paving, the site layout and building is designed
for smooth traffic flow and efficient heavy use trucking/distribution, as well
as substitute automobile parking in truck apron areas for manufacturing
companies, the sanitary septic system cannot accommodate toxic, hazardous waste,
or materials other than ordinary disposal of human sewage waste materials. Any
special polluting process water or fatty materials must be disposed of by use of
a special added holding tank and periodic trucking to an off-site Metro disposal
location or otherwise specially treated for on-site septic disposal.

                                   EXHIBIT B
                           Base Building Description
                                  Page 1 of 2

<PAGE>

                                   EXHIBIT B

                           BASE BUILDING DESCRIPTION

                               [GRAPHIC OMITTED]

                              [LAYOUT OF BUILDING]

                                   EXHIBIT B
                           Base Building Description
                                  Page 2 of 2

<PAGE>

                                   EXHIBIT C

                DESCRIPTION AND LOCATION OF TENANT IMPROVEMENTS

Landlord will, at Landlord's cost, separate and construct the common area
improvements.

Cost-U-Less has requested their desire to Lease the common hallway and balcony
on the south side of the atrium. Landlord will, at Landlord's cost, install the
fire rated demising wall adjacent to the atrium. Cost-U-Less is responsible for
the cost of removing the existing re-light wall and installing a wire mesh type
ceiling, and lights, over the balcony area to be used as the lunch area
expansion. There is no ceiling now over the 200 SF balcony area.

Tenant has indicated a desire to wall off the warehouse mezzanine storage area.
Landlord approves and requires installation of a seven foot high chain link
fence with barged wire around the top parameter separating the mezzanine from
the adjoining warehouse space, including a fire rated office access door, all at
Tenant's cost.

The remainder of the Premises is leased in an "as is" condition.

Any other added tenant improvements are subject to Landlord approval and are at
Tenant's sole cost and expense.

Tenant may add or modify existing office tenant improvements, subject to
Landlord's specific advance written conditional approval. Landlord's building
standards all apply.

NOTE:  THE OUTDOOR STORAGE OF MATERIALS, WASTE OR OTHER ITEMS IS NOT PERMITTED
       UNLESS OTHERWISE SPECIFIED IN THIS EXHIBIT. TENANT IS RESPONSIBLE FOR THE
       GENERAL CLEANLINESS FOR THAT PORTION OF THE COMMON AREA ADJACENT TO
       TENANT'S PREMISES INCLUDING PARKING AREAS, TRUCK LOADING AREAS, WALKWAYS
       AND RAMPS, LANDSCAPE AREAS AND THE COMMON AREA IN FRONT OF AND IN BACK OF
       THE PREMISES.

NOTE:  OWNER RESERVES THE RIGHT TO CHANGE OR MODIFY ANY AND ALL BASE BUILDING
       AND SITE IMPROVEMENTS, PROVIDED THAT A SIMILAR OPERATING AND FUNCTIONAL
       RESULT IS PROVIDED TO TENANT WITH NO RESULTING INCREASE IN TENANT'S LEASE
       RATE. LANDLORD RESERVES THE RIGHT TO MANAGE PARKING WITHIN THE PROJECT;
       AND CAN ALLOCATE, ASSIGN AND CONTROL PARKING AND CAN CREATE, DELETE AND
       RESTRIPE PARKING STALLS TO MEET THE CHANGING NEEDS OF THE PROJECT
       INCLUDING ADDING PARKING STALLS IN FRONT OF UNUSED TRUCK BAYS AND OTHER
       LOCATIONS IN THE PROJECT.

                                   EXHIBIT C
                Description and Location of Tenant Improvements
                                  Page 1 of 4

<PAGE>

                                   EXHIBIT C

                DESCRIPTION AND LOCATION OF TENANT IMPROVEMENTS

                          Building 3 Corridor Walkway

                               [GRAPHIC OMITTED]

                              [LAYOUT OF BUILDING]

                                    EXHIBIT C
                Description and Location of Tenant Improvements
                                  Page 4 of 4

<PAGE>

                                   EXHIBIT D

                              ESTOPPEL CERTIFICATE

_______________
_______________
_______________
_______________

                Re: Lease dated_______________
                ("Lease") by and between BDC Preston Properties One Limited
                Partnership (Landlord") and Cost-U-Less, Inc., ("Tenant").

Gentlemen:

            Reference is made to the above-described Lease in which the
undersigned is the Tenant. We understand that __________________("___________")
is accepting an assignment of Landlord's rights under the Lease as security for
an obligation in the amount of _________Dollars ($_________); and we hereby, as
a material inducement for you to loan said amount to Landlord, represent that:

      1. The Lease is for a term of ______(__) years, commencing on ______, 19__
and ending _________ (__) years thereafter; and the Lease covers the real
property ("Premises") described in Exhibit 1, attached hereto and incorporated
herein by reference thereto, the Premises being part of certain real property
("Property"), located in the City of ________________ County of _____________,
State of _____________ and more particularly described in Exhibit 2, attached
hereto and incorporated herein by reference thereto. A true and correct copy of
the Lease is attached hereto as Exhibit 3 and incorporated herein by reference
thereto.

      2. There are no modifications, amendments, supplements, arrangements, side
letters or understandings, oral or written, of any sort, modifying, amending,
altering, supplementing or changing the terms of the Lease.

      3. The Lease is in full force and effect, and the Lease has been duly
executed and delivered by, and is a binding obligation of, the Tenant as set
forth therein.

      4. The undersigned acknowledges (a) that rent on the Lease has been paid
up to and including ____________, 19__, (b) that monthly rent during the
________ (__) years of the term of the Lease is _______________ Dollars
($________) per month and (c) that rent has not been paid for any period after
_______, 19__ and shall not be paid for a period in excess of one (1) month in
advance.

      5. The improvements on the Premises are free from defects in design,
materials and workmanship; and the improvements meet all governmental
requirements, including, but not limited to, zoning and environmental
requirements.

      6. The Lease is not in default, and Landlord has performed the obligations
required to be performed by Landlord under the terms thereof through the date
hereof.

      7. The Lease shall be subordinate to a Deed of Trust on the Premises and
an assignment of Landlord's interest in the Lease given by Landlord to
__________; and in the event of a merger of Landlord and Tenant in any manner,
the interest of Tenant and Landlord shall not merge; and _________ is a third
party beneficiary of such Agreement.

      8. Landlord and Tenant agree not to modify, amend, terminate or otherwise
change the Lease without prior written consent, which may be withheld at sole
discretion.

      9. In the event of a default by Landlord under any of the terms provision
of the Lease, Tenant shall give adequate notice to ______________________ and
sufficient time to cure sure default.

Date: _______, 19__

Very truly yours,

"Tenant"

________________________
a_______________________

________________________

Its:

AGREED AND CONSENTED TO:

"Landlord"

BDC PRESTON PROPERTIES ONE LIMITED PARTNERSHIP
  By Bernard Development Company
     Its General Partner

      ______________________________
By      J. Thomas Bernard
        Its President

                                   EXHIBIT D
                              Estoppel Certificate
                                  Page 1 of 1

<PAGE>

                                   EXHIBIT E

                    Rent and Utility Percentage Calculations

RENT

Notes:
   C/A   = Common Area Shared with other tenants
   NNN   = Operating Expenses, Insurance, REal estate Taxes, etc. calculated on
   ground floor only.

                            Initial          Initial             Initial
Area                    Square Footage    Rent Rate/SF/Mo.    Monthly Rent

2nd Floor Office            10,320            $1.00            $10,320.00
2nd Floor Added Hallway        175            $1.25                218.75
74% 2nd Ofc Common Area      1,069            $1.00              1,069.00
74% Corridor Walkway         1,533              .50(cents)         766.50
Whse Mezz Storage              798              .65(cents)         518.70
1/3 1st Floor Common Area      429.5          $1.00                429.50
1/2 Back Stair Entrance Com-   123             1.25                153.75
                            -----------                        ----------
    mon Area                14,447.5 SF   Total Fixed Rent     $13,476.20
                                       + NNN (using 2000 Budget)   222.55
                                                               ----------
                                                               $13,698.75

NNN on Ground Floor SF Only
---------------------------
Back Stair Entrance Area        123
74% 1st Fl Corridor Walkway     955
1/3 1st Fl Common Area         429.5
                             -------
                             1,507.5 sf

1,507.5 sf / 259.580 sf (project total ground floor sf) = .0058 or .58%

(2000 Estimated Project Budget = $462,402 X .58% / = $222.55) (Adjusted
Annually)

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

UTILITY-EXPENSE PERCENTAGE

Note: The warehouse gas and electrical tenant utilities currently tied in with
the office area utilities will be separately metered and connected at no cost to
Tenant, leaving the entire office area separately metered.

The contiguous first and second floor office section of Building 3 shall have
the utility meters established in Landlord's or any tenant's name as designated
by Landlord, with that tenant's responsibility to pay the monthly utility costs
directly to the utility companies, then prepare monthly utility costs directly
to the utility companies, then prepare monthly utility reimbursement billings to
each tenant using shared office utilities, billed at the percentages shown
below. Included in the monthly reimbursement billings to the perspective tenants
shall be a copy of the utility bill and the overall reimbursement calculations
for each tenant.

Total office area, including first and second floor, is 33,825 sf. Cost-U-Less'
percentage of electricity and gas utility usage costs is 40%. The 33,825 sf does
not include the workout area in calculating the percentage split. Utilities in
the workout area are included in the utility billing for the total first and
second floor area. [The work out area is not separately metered].

36%  West Coast's (or others)   11,823    (1/2 back stair entry included)
     1/3 1st Flr  C/A              429.5
                                --------
                                12,252.5 sf

40%  Cost-U-Less                10,495
     74% 2nd Fl. C/A             1,069
     74% Corridor                1,533
     Back Stair Entrance Area      123
     1/3 1st Fl, C/A               429.5
                                --------
                                13,649.5 sf (does not include the warehouse
                                            mezzanine)

                                   EXHIBIT E
                    Rent and Utility Percentage Calculations
                                  Page 1 of 2

<PAGE>

                                   EXHIBIT E

                   Rent and Utility Percentage Calculations

24%    Modus Media (or others)      6,578.5     (includes first and second
                                                  floor offices)
       26% 2nd Fl. C/A                376
       26% Corridor                   539
       1/3 1st Fl. C/A                429.5
                                   --------
                                    7,923  sf
                                   --------
                                   33,825

Note:  Other tenants may be substituted for West Coast or Modus Media, with
costs treated similarly.

MAINTENANCE AND JANITORIAL
--------------------------

Costs for tenant area maintenance and replacements and supplies for office
common areas office (including, but not limited to HVAC) will be managed and
billed in the same fashion as tenant utilities.

Janitorial, electrical and plumbing expenses in the Common Areas will be managed
and billed in the same fashion as tenant utilities except the individual shares
will be divided in equal shares between Cost-U-Less, Modus and West Coast
tenants occupying this Building 3 first and second floor office area. The
current split is 1/3 of the cost for each of these three tenants.

Elevator inspection and maintenance costs shall be divided in equal shares
between each mezzanine office tenant (one half for Cost-U-Less/one half for
Modus Media), managed and billed by a tenant designated by Landlord.

Other tenants or tenant combinations may substitute for Modus spaces with Costs
treated similarly.

                                   EXHIBIT E
                   Rent and Utility Percentage Calculations
                                  Page 2 of 2
<PAGE>

                                   EXHIBIT F

                                    PARKING

Tenant is allowed up to 10 parking stalls in the "primary areas" and up to 36
parking stalls in the "secondary areas" as marked below on the site sketch. In
addition, there are to be 4 unmarked visitor parking stalls allocated in the
primary areas.

No Parking is reserved. Tenant's employee's shall only park in the two
designated parking areas marked as "primary" and "secondary". No vehicles owned
or operated by employees of Tenant may park in any other location. These
locations are not exclusive. There is no Tenant reserved parking. Other tenants,
subtenants, and their guests may also park in these locations.

Tenant shall provide either left rear window color coded parking stickers or
rear view mirror hanging parking tickets identifying employees assigned parking
area, "primary" or "secondary". Tenant shall provide Landlord a continuing
current list of those employee's name, vehicle description, color, license plate
numbers and corresponding parking stickers or tickets identification numbers.

Tenant is responsible for the enforcement of this parking requirement. If Tenant
fails to enforce parking or if Tenant's enforcement is not effective in limiting
the location and quantity of its parking, Landlord may enforce and contract for
Tenant's parking monitoring at Tenant's sole added expense. Tenant shall enforce
such parking if, and, as requested by Landlord. Parking areas and rules may be
changed by Landlord as provided in Exhibit C.

As a common tenant courtesy, all employees shall refrain from parking at the
front entrance to a neighbor or other tenant.

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

        P = Primary Parking Areas       S = Secondary parking Areas

                               [GRAPHIC OMITTED]

                              [LAYOUT OF BUILDING]

                                   EXHIBIT F
                                    Parking
                                  Page 1 of 1<PAGE>

                                                                   EXHIBIT 10.20

*Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.

                                                                [EXECUTION COPY]

                            DISTRIBUTION AGREEMENT

     This Distribution Agreement (this "Agreement"), is made effective as of
                                        ---------
November 9, 2000 (the "Effective Date"), between Data Critical Corporation, a
                       --------------
Delaware corporation ("Data Critical"), and Medtronic Physio-Control, Corp., a
                       -------------
Washington corporation (together with its subsidiaries, "Medtronic").
                                                         ---------

                                  Background

     Data Critical develops, markets, manufactures and sells wireless enabled
communication products and services for medical devices. Medtronic manufactures
and sells medical devices and related services and products. The parties
mutually desire to appoint Medtronic as the exclusive distributor of certain of
Data Critical's products and services.

     Therefore, the parties agree as follows:

1    Definitions.

     1.1  "Affiliate" of a person or entity is another person or entity that
           ---------
          owns or controls directly or indirectly such person or entity, any
          person or entity that controls or is controlled by or is under common
          control with such person or entity, and each of person or entity's
          senior executive officers, directors, partners and, for any entity
          that is a limited liability company, that entity's managers and
          members.

     1.2  "Derivative Work" shall mean a work that is based on one or more
           ---------------
          Products, such as a revision, modification, translation, abridgment,
          condensation, expansion, or any other form in which such preexisting
          works or any part thereof may be recast, transformed, or adapted, and
          which, if prepared without authorization of the owner of the copyright
          in such Product, would constitute a copyright infringement. For the
          purposes of this Agreement, a Derivative Work shall also include any
          compilation that incorporates such a Product.

     1.3  "Documentation" shall mean user manuals and other written materials
           -------------
          that relate to a particular Product, including materials useful for
          design (for example, logic manuals, flow charts, and principles of
          operation), and machine-readable text or graphic files subject to
          display or printout and product specifications.

     1.4  "End User" shall mean any third party that obtains a unit of Product
           --------
          solely for its own internal business purposes and not for further
          distribution or resale; provided that solely for purposes of the
                                  --------
          Minimum End User Requirements,

<PAGE>

          "End Users" shall include any stocking distributor of Medtronic. For
          the avoidance of doubt, "End User" shall not include any OEM.

     1.5  "End User Warranty" shall mean Data Critical's original warranty, if
           -----------------
          any, provided in the End User license provided with the Products, as
          set forth in Annex G.
                       -------

     1.6  "Extended Service Contract" is defined in Section 4.4.2.
           -------------------------

     1.7  "Intellectual Property Rights" shall mean, collectively, worldwide
           ----------------------------
          Patents, Trade Secrets, Copyrights, Trademarks, mask work rights,
          moral rights, trade names, rights in trade dress, and all other
          intellectual property rights and proprietary rights, whether arising
          under the laws of the United States or any other state, country or
          jurisdiction and all application and registration interests in and to
          any of the foregoing, and also including all rights or causes of
          action for infringement or misappropriation of any of the foregoing.
          For purposes of this Agreement: (a) "Patents" shall mean all patent
                                               -------
          rights and all right, title, and interest in all letters patent or
          equivalent rights and applications, including provisional
          applications, for letters patent or rights, industrial and utility
          models, industrial designs, petty patents, patents of importation,
          patents of addition, certificates of invention, and other government
          issued or granted indicia of invention ownership, including any
          reissue, extension, division, continuation, or continuation-in-part
          applications throughout the world; (b) "Trade Secrets" shall mean all
                                                  -------------
          right, title, and interest in all trade secrets and trade secret
          rights arising under common law, state law, federal law, or laws of
          foreign countries; (c) "Copyrights" shall mean all copyrights, and all
                                  ----------
          other literary property and authorship rights, and all right, title,
          and interest in all copyrights, copyright registrations, certificates
          of copyright and copyrighted interests throughout the world; and (d)
          "Trademarks" shall mean all right, title, and interest in all
           ----------
          trademark, service mark, trade name, and trade dress rights arising
          under the common law, state law, federal law, and laws of foreign
          countries, and all right, title, and interest in all trademark,
          service mark, trade name, and trade dress applications and
          registrations interests throughout the world.

     1.8  "Manufacturing and Design Documentation" shall mean materials, media,
           --------------------------------------
          and know-how of Data Critical or Medtronic, including materials and
          media created by third-party contractors, suppliers, or licensors
          acting at the request of Data Critical or Medtronic, specifically for
          use in the manufacture and design of Products or the production of
          improvements, including drawings, routings, bills of materials,
          schematics, circuit diagrams, specifications, and test documents.

     1.9  "Market" shall mean any hospital, hospital body, hospital department
           ------
          or the functions performed by any of the foregoing. For clarity's
          sake, "Market" shall not include clinics not affiliated with
          hospitals, nursing homes and extended care facilities.

                                       2
<PAGE>

     1.10 "Master Agreement" shall mean that certain agreement, dated as of May
           ----------------
           31, 2000, between Medtronic and Data Critical, a copy of which is
           attached hereto as Annex H.
                              -------

     1.11  "Minimum End User Requirements " shall mean Medtronic's obligation to
            -----------------------------
           sell to End Users an aggregate amount of Products having an aggregate
           Transfer Price equal to at least [*].

     1.12  "Minimums" shall mean the minimum quarterly aggregate Transfer Price
            --------
           requirements set forth on Annex C (as modified from time to time in
                                     -------
           accordance with Section 6.2), for which Medtronic is obliged to
           purchase a minimum amount of Products (or any shortfall thereof)
           pursuant to Section 3.3.1 and to pay for pursuant to Section 5.2.1.

     1.13  "Network Products" is defined in Section 3.2.4.
            ----------------

     1.14  "New Product" shall mean new versions of a Product that contain
            -----------
           significant enhancements or new functionality, and any standard Data
           Critical product that is a wired or wireless alarm notification
           product designed for use in the Market and that is not an existing
           Product, and in each case any related Documentation.

     1.15  "Original Equipment Manufacturer" or "OEM" shall mean a party that
            -------------------------------      ---
           has a written agreement with Data Critical to market, promote, sell,
           offer, use, bundle or distribute, directly or indirectly, one or more
           Data Critical products, including the Products, (i) in connection
           with one or more of such party's products, and (ii) bearing labeling
           or indicia which clearly identifies the Data Critical products
           (including the Products) as products of such OEM, and not of Data
           Critical or any third party.

     1.16  "Parent" shall mean Medtronic, Inc. or any of its successors or
           -------
           assigns.

     1.17  "Part" shall mean any component, part, accessory for, or, to the
            ----
           extent Data Critical charges therefor, any Updates of, a Product.

     1.18  "Pre-Existing Contract" shall mean those bookings by Data Critical
            ---------------------
           prior to January 2001 still requiring installation by Medtronic after
           January 1, 2001.

     1.19  "Products" shall mean the wired or wireless alarm notification
            --------
           systems and products currently identified in Annex A hereto as the
                                                        -------
           same may be amended from time to time to add New Products that the
           Joint Review Committee determines shall be subject to this Agreement
           in accordance with Section 6.2, together with any Updates. The term
           "Products" shall not include any Parts except for purposes of Section
           2.1.2.

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     1.20  "Software" shall mean any software that is embedded in or supplied in
            --------
           connection with any Product, together with any Updates.

     1.21  "Software License" shall mean, for each unit of StatView Product, a
            ----------------
           license for the StatView system for a single bed to which such
           StatView Product may be attached.

     1.22  "Subdistributors" is defined in Section 3.1.2.
            ---------------

     1.23  "Territory" shall mean the worldwide Market (exclusive of the
            ---------
           "Territory" as defined in the Master Agreement); provided, that
                                                            --------
           subject to the Master Agreement, nothing in this agreement shall
           convey any rights to Medtronic to market, promote, sell, offer for
           sale, have sold or offered for sale, use, bundle or otherwise
           distribute directly or indirectly Data Critical's products (including
           the Products) outside of the Territory.

     1.24  "Transfer Price" shall mean, for any Product, the price of such
            --------------
           Product as set forth in Annex B, as amended from time to time
                                   -------
           pursuant to Section 6.3.

     1.25  "Updates" shall mean new versions, including maintenance releases,
            -------
           and localizations and translations thereof, of a Product that contain
           bug fixes, error corrections and minor enhancements, but not
           containing significant enhancements or new functionality, and any
           related Documentation.

2  Distributorship and License.

     2.1  Exclusivity
          -----------

          2.1.1 Distribution. Subject to the terms and conditions of this
                ------------
                Agreement and pursuant to the license granted in Section 2.1.2,
                Data Critical hereby appoints Medtronic as Data Critical's
                exclusive distributor for the marketing, promotion, sale, offer,
                use and other distribution in the Territory of (a) Products and
                (b) Software for bundled use with such Products.

          2.1.2 License. Subject to the terms and conditions of this Agreement,
                -------
                Data Critical hereby grants to Medtronic the exclusive license,
                without right to sublicense (except as specifically provided in
                Sections 3.1.2 and 3.1.7 below), to market, promote, sell,
                offer, use and otherwise distribute in the Territory (a)
                Products and (b) Software for bundled use with such Products.

     2.2  Minimum End User Requirements.
          -----------------------------

          2.2.1 Failure to Achieve Minimum End User Requirements. If Medtronic
                 ------------------------------------------------
                fails to sell Products to End Users in amounts sufficient to
                achieve its

                                       4
<PAGE>

                Minimum End User Requirements for [*], and has not cured such
                failure within [*], then [*], the following shall occur:

                (a)  subject to subparagraph (d) below, the appointment of
                     Medtronic as distributor under Section 2.1.1. and the
                     license granted under Section 2.1.2 shall remain exclusive;

                (b)  subject to subparagraph (d) below, Medtronic shall continue
                     be obligated to comply with its Minimums;

                (c)  Medtronic shall have the right to sell any unsold inventory
                     held in stock; provided, that at Data Critical's sole
                                    --------
                     discretion and request, Medtronic shall return inventory to
                     Data Critical at such inventory's original Transfer Price;
                     and

                (d)  [*]

     2.2.2      Understanding on Basis for Minimums. Medtronic's first-year
                -----------------------------------
                Minimums are based, in part, on the following:

                (a) Data Critical represents and warrants that, to the best of
                    its knowledge, [*]provided by Data Critical to Medtronic, as
                    attached in Annex M, have been prepared in good faith and
                                -------
                    are not materially misleading in the light of the
                    circumstances under which they were prepared.

                (b) Data Critical represents and warrants that it is unaware of
                    any fact or circumstance specific to Data Critical's
                    business that would materially adversely affect Data
                    Critical's business as currently conducted.

                (c) Data Critical's timely completion of the projected Product
                    roll-out as set forth in Annex A.
                                             -------

                (d) [*]

                The parties agree that any breach or inaccuracy of the above
                representations, warranties or assumptions shall not be deemed a
                breach of this Agreement, but instead will give rise to a good
                faith renegotiation of the Minimums.

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2.3  Limitations to Exclusivity
     --------------------------

     2.3.1  Exclusions. Notwithstanding Section 2.1, Data Critical retains the
            ----------
            right to distribute the Products and Software to:

            [*]

2.3.2  Internal and Affiliate Use.  Data Critical shall retain the right to use,
       --------------------------
       modify, have incorporated in other products, reproduce, and have
       reproduced Products in the Territory for its own internal use, for the
       purposes of research and development, and for the benefit of (and sale,
       lease, or other transfer to) any subsidiary or affiliate of Data
       Critical; provided, however, that Data Critical shall ensure that each
                 --------  -------
       such subsidiary or affiliate complies and agrees in writing to comply
       with the terms of this Agreement. The failure of such subsidiary or
       affiliate to comply with any term of this Agreement shall be considered a
       material breach of this Agreement by Data Critical only to the extent
       that the failure of Data Critical to comply with such term would be a
       material breach of this Agreement.

2.4  Technology Exclusivity.  [*].
     ----------------------

2.5  Change of Control.  For purposes of this Section 2.5, "Change of Control"
     -----------------                                      -----------------
     shall mean, with respect to any person or entity, (i) a merger,
     consolidation, amalgamation or other similar transaction with an Acquiror
     whereby the direct or indirect shareholders of such person or entity
     immediately before such transaction cease to own at least a majority of the
     outstanding capital stock of such person or entity entitled to vote for the
     directors of such person or entity, or (ii) a sale of all or substantially
     all of the assets of such person or entity to an Acquiror. For purposes of
     this Section 2.5, an "Acquiror" shall mean any person or entity and its
                           --------
     Affiliates other than Data Critical, Medtronic, the Parent or a subsidiary
     of either that is the successor entity in respect of a Change of Control.

      (a) In the event of a Change of Control of Data Critical involving an
          Acquiror that directly competes in the medical device market with
          Medtronic, then (i) Medtronic shall have the right to elect to
          terminate this Agreement by written notice delivered to Data Critical
          within ten (10) days of Medtronic's receipt of notice of such Change
          of Control, and upon such election shall have no further obligations
          with respect to its Minimum End User Requirements  and Minimums, and
          (ii) the Acquiror shall have the right to elect to terminate this
          Agreement effective six (6) months after such Change of Control by
          written notice delivered to Medtronic within ten (10) days of such
          Change of Control, provided that the appointment of Medtronic as
                             --------
          distributor under Section 2.1.1 and the license granted under

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          Section 2.1.2 shall be non-exclusive and Medtronic shall have no
          further obligations with respect to its Minimum End User Requirements
          and Minimums during such six-month period.

      (b) In the event of a Change of Control of Data Critical involving an
          Acquiror that does not directly compete in the medical device market
          with Medtronic, then this Agreement shall continue in full force and
          effect unless Medtronic reasonably determines, based on commercially
          reasonable standards, that such Change of Control will result in
          significant commercial harm to Medtronic, in which event Section
          2.5(a) shall control.

      (c) In the event of a Change of Control of either Medtronic or the Parent
          involving an Acquiror that is either a vendor of Data Critical listed
          in Annex A or directly competes in the medical device market with Data
             -------
          Critical, then Data Critical shall have the right to elect to
          terminate this Agreement effective six (6) months after such Change of
          Control by written notice delivered to Medtronic within ten (10) days
          after Data Critical's receipt of notice of such Change of Control.

      (d) In the event of a Change of Control of either Medtronic or the Parent
          involving any other Acquiror, then this Agreement shall continue in
          full force and effect in all respects.

      Any termination of this Agreement pursuant to and in accordance with this
      Section 2.5 shall not be deemed a breach of this Agreement by either
      party, provided it shall not affect or diminish Medtronic's Minimums in
             --------
      respect of an period prior to termination of this Agreement.

3  Distribution Services.

   3.1  Medtronic Responsibilities.  Medtronic shall perform its obligations
        --------------------------
under this Section 3.1 in a professional and commercially reasonable manner.

        3.1.1  Marketing and Distribution Obligations.  Medtronic shall use its
               --------------------------------------
               best commercially reasonable efforts to market, promote, and
               distribute the Products. This obligation shall include without
               limitation the use of mailings, telemarketing programs,
               advertising, seminars, and other customary marketing techniques.
               Should Medtronic enter into any agreement, understanding or
               arrangement with any manufacturer or third party supplier of
               networked monitoring equipment, Medtronic shall not offer
               preferential pricing to the End User specifically for any Network
               Product. For the sake of clarity, nothing in this Agreement shall
               prohibit or restrict Medtronic from (a) entering into any such
               agreement, understanding or arrangement, or (b) bundling Products
               with other products and charging an aggregate price for such
               bundle.

                                       7
<PAGE>

                     Notwithstanding the foregoing, Medtronic shall promptly
                     notify Data Critical of its entering into such agreement,
                     and Data Critical shall have the right, at its election by
                     written notice to Medtronic at any time within thirty (30)
                     days after receipt of such notice, to terminate this
                     Agreement effective six (6) months after the date of such
                     notice (it being understood that such election of
                     termination shall not affect Medtronic's Minimums for such
                     six-month period).

               3.1.2 Subdistributors.  Subject to the restrictions in the
                     ---------------
                     following sentence, Medtronic shall be entitled to market,
                     promote, sell, offer, use and otherwise distribute the
                     Products in the Territory through subdistributors and other
                     third-party intermediaries (collectively,
                     "Subdistributors"), provided, that Medtronic shall ensure
                                         --------
                     that each Subdistributor acknowledges in writing the terms
                     and conditions of this Agreement and its obligation to
                     comply with the same, and does not perform any act which,
                     if performed by Medtronic, would be a material breach of
                     this Agreement by Medtronic. Medtronic shall use the
                     Subdistributors identified in Annex E and, from time to
                                                   -------
                     time, any other Subdistributors that do not market or
                     distribute products that compete directly with the
                     Products, in each case as approved by Data Critical (such
                     approval not to be unreasonably withheld); provided that
                                                                --------
                     Medtronic shall promptly deliver to Data Critical an
                     amended Annex E that sets forth the identity and address of
                             -------
                     each such additional Subdistributor.

               3.1.3 Inclusion in the Exchange. Subject to the restrictions set
                     -------------------------
                     forth in Section 3.1.1, as Medtronic is a participant in
                     the Global Healthcare Exchange, Medtronic shall use its
                     best efforts to include all of the Products it distributes,
                     as soon as is reasonably practical, in the Global
                     Healthcare Exchange.

               3.1.4 Inclusion in National Accounts Contracts.  Subject to the
                     ----------------------------------------
                     restrictions set forth in Section 3.1.1, Medtronic shall
                     include the Products that it distributes on the contracts
                     with its National Accounts and/or Hospital Buying Groups as
                     soon as is reasonably practical.

               3.1.5 Installation.  Exclusive of the training and support
                     ------------
                     described in Section 3.2.3, and in addition to the
                     obligations described in Section 4.3, Medtronic shall
                     exclusively provide all installation services and field
                     services in connection with each Product previously or
                     hereafter distributed by or for Data Critical (including by
                     Medtronic) at levels at or above those that Data Critical
                     generally offered with respect to the same or similar
                     products prior to the Effective Date. Data Critical shall
                     have no obligations to provide any installation services
                     directly to End Users. In addition:

                                       8
<PAGE>

           (a) Medtronic shall provide all reasonable ongoing Product and
               Software (including Updates of each) and other training (e.g.,
               sales or technical training) to maintain a reasonable number of
               Medtronic sales and training representatives at a level
               sufficient to fulfill its duties under this Agreement.  Such
               training shall include and cover, as applicable, and without
               limitation, the functionality, use, operation, and limitations of
               the Products and Software; Product and Software installation,
               testing, inspection, and monitoring; and Product and Software
               trouble shooting, maintenance, repair, and support.  Each party
               shall bear its own costs and expenses associated with developing
               and conducting such training; and

           (b) Medtronic shall maintain a qualified service capability, furnish
               24-hour, toll free, customer service support to End Users for the
               Products.

     3.1.6 Labeling and Proprietary Rights Notices.  Medtronic shall not alter
           ---------------------------------------
           the labeling set forth on those Products provided to Medtronic by
           Data Critical. Medtronic shall not remove, obscure or fail to
           reproduce any copyright or other proprietary notices incorporated on
           or in any such products by Data Critical or as otherwise required by
           Data Critical. Notwithstanding the foregoing, Medtronic shall have
           the right, subject to Data Critical's reasonable approval, to affix
           or place its own labels and indicia on the Products.

     3.1.7 Reports; Sales Forecasts.  Within ten (10) business days after the
           ------------------------
           end of each calendar month during the term of this Agreement,
           Medtronic shall provide Data Critical with a written report on the
           prior months' sales, in a form to be mutually agreed upon by the
           parties during the Transition Period or as determined by the Joint
           Review Committee from time to time.

     3.1.8 Import and Export Requirements.  Medtronic shall, at Data Critical's
           ------------------------------
           cost, register and maintain any import and export licenses and
           permits that may be required due to the sale or other distribution of
           the Products pursuant to this Agreement in any country in which Data
           Critical has directed and/or authorized Medtronic to market, promote,
           sell, offer, use or otherwise distribute the Product, which
           authorization shall not be unreasonably denied; provided, that
                                                           --------
           Medtronic may enter any other country in the Territory without Data
           Critical's consent after obtaining full regulatory compliance for any
           applicable Products at Medtronic's sole cost and expense. Unless
           otherwise required by applicable law, the licenses and permits shall
           be obtained in Data Critical's name; provided, that, if Medtronic
                                                --------
           registers and maintains such licensed and permits at its cost, then
           such licenses and permits (but not any interest in any

                                       9
<PAGE>

                Intellectual Property Rights of Data Critical) shall be in
                Medtronic's name and shall be Medtronic's property. Medtronic,
                at its cost, shall pay, customs charges and duty fees that may
                be required due to the sale or other distribution of the
                Products by Medtronic. Medtronic acknowledges that any
                obligation of Data Critical to provide Products under this
                Agreement, and any obligation of Medtronic to market, promote,
                sell, offer, use or otherwise distribute the Products, shall be
                subject in all respects to all United States laws and
                regulations governing the license and delivery of technology and
                products abroad by persons subject to the jurisdiction of the
                United States. Medtronic shall not export, directly or
                indirectly, any Products or related information without first
                obtaining all required licenses and approvals from the
                appropriate government agencies. Without limiting the foregoing,
                Medtronic agrees that it shall not, without authorization of the
                United States Office of Export Licensing, export, re-export, or
                otherwise deliver any Products (i) into (or to a national or
                resident of) any other country to which the United States has
                embargoed goods; or (ii) to anyone on the United States Treasury
                Department's list of Specially Designated Nationals or the
                United States Commerce Department's Table of Deny Orders.

          3.1.9 Sublicensing of Software; End User License.
                ------------------------------------------

                (a)  Medtronic understands and acknowledges that all Software is
                     licensed by Data Critical and not sold. Medtronic shall
                     sublicense End Users to use the Software solely for such
                     End Users' internal business purposes and solely in
                     combination with the applicable Product purchased by such
                     End User. Each such sublicense shall be granted in a End
                     User license agreement acceptable to (and approved by) Data
                     Critical, but that at a minimum expressly provides that:
                     (i) Data Critical may terminate such End User license
                     agreement upon written notice of failure by such End User
                     to comply with the terms of such End User license
                     agreement, (ii) within five (5) days after termination of
                     such End User license agreement, such End User shall remove
                     the Software from such product and destroy such Software or
                     return it to Data Critical at such End User's expense, and
                     (iii) Data Critical shall be a third party beneficiary of
                     the End User license agreement, and the provisions of such
                     End User license agreement shall be enforceable by both
                     Data Critical and Medtronic. Such End User license
                     agreement shall form a part of the applicable purchase
                     agreement by End User for the applicable Product, or shall
                     otherwise be fully executed and in the possession of
                     Medtronic prior to distribution of the applicable Product
                     to the End User.

                                      10

<PAGE>

                         (b)  Medtronic shall cause its sales and installation
                              staff to refrain from making, offering, stating or
                              otherwise communicating any representation or
                              warranty in respect of any Product or Software
                              that is not contained in the End User Warranty.
                              Medtronic shall obtain from each End User an
                              acknowledgement of the limitations of the End User
                              Warranty and the limited nature of the
                              representations and warranties made by Data
                              Critical in respect of the Products.

               3.1.10    Additional Restrictions. Medtronic may not, directly or
                         -----------------------
                         through any person or entity, in any form or manner,
                         copy, distribute, reproduce, incorporate, use or allow
                         access to the Products, including without limitation
                         the Software, or modify, prepare Derivative Works of,
                         decompile, reverse engineer, disassemble or otherwise
                         attempt to derive source code or object code from the
                         Software, except as explicitly permitted under this
                         Agreement or otherwise agreed in writing. Medtronic
                         understands and agrees that, without Data Critical's
                         prior written consent with respect to each specific
                         instance, it is not authorized under this Agreement to
                         engage in rentals, leases, time-sharing or (with
                         respect to the Software) "silver master" sales (i.e.,
                         customer may reproduce software) of Products, or to
                         sublicense Products to End Users or other third parties
                         on a site license or enterprise license basis.

               3.1.11    Audit Rights. Medtronic shall maintain full and
                         ------------
                         complete records of distribution of Products by it or
                         its Subdistributors and records of prices charged to
                         End Users for Product installation and support, for at
                         least three (3) years after the distribution of such
                         Products. Such records shall constitute Confidential
                         Information of Medtronic. Data Critical shall be
                         entitled, (a) no more than twice per year, to review,
                         and (b) no more than once per year, to audit, such
                         books and records upon thirty (30) days written notice
                         in order to confirm the accuracy of the amounts paid or
                         payable. Any such audit and review shall be performed
                         at Data Critical's expense during normal business hours
                         and at the offices of Medtronic or its attorneys;
                         provided, that the entire reasonable cost of such audit
                         --------
                         and review shall be paid solely by Medtronic if such
                         audit or review, as applicable, reveals an underpayment
                         by Medtronic of more than five percent (5%) of the
                         amounts payable by Medtronic to Data Critical in any
                         six-month period. The auditor shall sign a
                         confidentiality agreement reasonably acceptable to
                         Medtronic; provided, that the auditor and Medtronic
                                    --------
                         will use best efforts to disclose all information to
                         Data Critical necessary for a full and complete audit
                         of sales of Products by Medtronic in accordance with
                         this Section 3.1.11.

               3.1.12    Reporting. Medtronic shall provide Data Critical with
                         ---------
                         prompt written notification of any complaints about any
                         of the Products that are made

                                       11
<PAGE>

                         by End Users, any problems with such Products or their
                         use by End Users, and any material malfunctions or
                         failures of the Products of which Medtronic becomes
                         aware. Such written notification shall be the property
                         of Data Critical, and shall be considered to be part of
                         Data Critical's Confidential Information. Nothing in
                         this Section shall operate to convert Confidential
                         Information of Medtronic to Confidential Information of
                         Data Critical.

               3.1.13    Comply with Law. Medtronic shall comply in all material
                         ---------------
                         respects with all applicable laws, the failure to
                         comply with which would have a materially adverse
                         effect on its ability to perform hereunder or the
                         realization by Data Critical of the benefit of its
                         bargain under this Agreement.

          3.2  Duties of Data Critical. Data Critical shall perform its
               -----------------------
               obligations under this Section 3.2 in a professional and
               reasonable manner.

               3.2.1     Product Manufacture. Data Critical or its licensed
                         -------------------
                         agent shall manufacture the Products, Software and
                         Parts in conformity with their Manufacturing and Design
                         Documentation and this Agreement, and sell, provide,
                         and ship such in new, undamaged condition. Data
                         Critical or its licensed agent shall continue to
                         manufacture and make the Parts available to Medtronic
                         for purchase hereunder or otherwise transfer the
                         appropriate technology and know-how to Medtronic, free
                         of charge and without prohibitions on use for such
                         manufacturing and availability purposes, to facilitate
                         Medtronic's manufacture thereof, in each case for a
                         period of five (5) years after any termination or
                         expiration of this Agreement or, in the case of
                         government supply contracts, as otherwise required by
                         law. The prices payable by Medtronic for all Parts
                         shall be [*].

               3.2.2     Promotional Materials. Data Critical will provide such
                         ---------------------
                         sales literature, advertising materials, promotional
                         plans, and other information, programs, and sales
                         support as the parties mutually agree are appropriate
                         to assist Medtronic in fulfilling Medtronic's duties
                         under this Agreement.

               3.2.3     Training and Support. Data Critical and Medtronic will
                         --------------------
                         mutually agree during the Transition Period upon an
                         initial training program for the Products listed in
                         Annex A as of the Effective Date. Each party shall bear
                         -------
                         its own costs and expenses associated with developing
                         and conducting such initial Product training. With
                         respect to any New Product (but specifically excluding
                         current Products as of the Effective Date), Data
                         Critical will provide all reasonable initial and other
                         training (e.g., sales or technical training) to train a
                         reasonable number of

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                                       12
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                         Medtronic sales and training representatives to enable
                         their training of their employees at a level sufficient
                         to fulfill its duties under this Agreement. Such New
                         Product training shall include and cover, as
                         applicable, and without limitation, the functionality,
                         use, operation, and limitations of the New Products and
                         related Software; New Product and related Software
                         installation, testing, inspection, and monitoring; and
                         New Product and related Software trouble shooting,
                         maintenance, repair, and support. each party shall bear
                         its own costs and expenses associated with developing
                         and conducting such New Product training.

               3.2.4     Service. Data Critical will maintain a qualified
                         -------
                         service capability, furnish 24-hour, toll free,
                         customer service support to Medtronic for the Products
                         described on Annex L, as modified from time to time but
                                      -------
                         in any event shall include StatView and FlexView (the
                         "Network Products"), and provide reasonable warranty
                          ----------------
                         and non-warranty repairs for such Network Products, at
                         Medtronic's and any End User's request. Such warranty
                         repairs and service on and to the Network Products
                         shall be performed by Data Critical or its licensed
                         agents, and made available to Medtronic and the End
                         User, in compliance with the End User Warranty. Non-
                         warranty repairs and services will be made available to
                         Medtronic and the End Users in a commercially
                         reasonable manner on the same rates and terms as those
                         services are available to Data Critical's customers
                         generally.

               3.2.5     Comply with Law. Data Critical shall comply in all
                         ---------------
                         material respects with all applicable laws, the failure
                         to comply with which would have a materially adverse
                         effect on its ability to perform hereunder or the
                         realization by Medtronic of the benefit of its bargain
                         under this Agreement.

               3.2.6     Development of Products. It is understood that it is
                         -----------------------
                         the intent of Data Critical to develop new and
                         innovative in-hospital alarm notification products and
                         technologies beyond those set forth in Annex A.
                                                                -------

               3.2.7     Correct Product Defects. Data Critical shall establish
                         -----------------------
                         and enforce a corrective and preventative action
                         procedure allowing for the timely correction of product
                         defects and to ensure performance in compliance with
                         the Products' specifications.

               3.2.8     Maintain Partnerships. Data Critical shall use best
                         ---------------------
                         commercially reasonable efforts to develop and maintain
                         partnerships with OEMs for the Products.

                                       13
<PAGE>

          3.3  Supply of Products.
               ------------------

               3.3.1  Orders. Medtronic shall initiate purchases under this
                      ------
                      Agreement by submitting written purchase orders to Data
                      Critical. Such orders shall state radio frequencies (if
                      applicable), unit quantities, unit descriptions, requested
                      delivery dates, and shipping instructions. In the event
                      that Medtronic has not achieved its Minimums for any
                      calendar quarter by the tenth (10th) business day prior to
                      the end of such calendar quarter, then Medtronic shall
                      submit a written purchase order in accordance with this
                      Section 3.3.1 for that amount of units of Product and/or
                      Software Licenses as the parties mutually agree will be
                      required to be shipped in order for Medtronic to achieve
                      (and Data Critical to be paid) the full amount of the
                      Minimums for the entire quarter; provided, that if the
                                                       --------
                      parties cannot agree by the fifth (5th) business day prior
                      to the end of such calendar quarter, the shortfall shall
                      be made up with shipments of Software Licenses. Data
                      Critical shall ship the Products subject to such deemed
                      purchase order no later than five (5) business days prior
                      to the end of such quarter in accordance with this Section
                      3.3. No purchase order shall be binding upon Data Critical
                      until accepted by Data Critical in writing. Data Critical
                      shall accept or reject orders in whole or in part within
                      five (5) business days of its receipt thereof from
                      Medtronic. Partial shipment of an order shall not
                      constitute acceptance of the entire order. In the event
                      that Data Critical is unable to fill an accepted purchase
                      order in accordance with the schedule set forth therein,
                      Data Critical shall use commercially reasonable efforts to
                      fill such order on an allotment or scheduled release
                      basis. This Agreement shall govern all orders placed by
                      Medtronic for the Products. No terms on purchase orders,
                      invoices or like documents produced by Medtronic or Data
                      Critical shall alter or add to the terms of this
                      Agreement.

               3.3.2  Cancellations. Medtronic shall have no right to cancel
                      -------------
                      Product orders after shipment of such Products by Data
                      Critical.

               3.3.3  Lead Times. Data Critical shall deliver units of Products
                      ----------
                      on the earlier of the agreed-upon shipment date or thirty
                      (30) days after receipt of a purchase order by Data
                      Critical; provided, however, Data Critical shall provide
                                --------  -------
                      Medtronic with written notification of delays in shipment.

               3.3.4  Packing, Shipping. All units of Products shipped by Data
                      -----------------
                      Critical to Medtronic or an End User under this Agreement
                      shall be packaged in Data Critical's standard containers,
                      or, at Medtronic's expense, in accordance with
                      instructions provided by Medtronic, and shall be shipped
                      to Medtronic's address set forth above, or to an address
                      specified in Medtronic's purchase order. Unless otherwise
                      requested by Medtronic and agreed to in writing by Data
                      Critical, such units of Products shall be shipped by Data
                      Critical in conformance with the

                                       14
<PAGE>

                      Company's standard shipping procedures. Shipment shall be
                      F.O.B. Data Critical's Bothell, Washington facility or
                      other licensed facility, as applicable. Title and risk of
                      loss shall pass to Medtronic at the F.O.B. location (the
                      "Delivery Point"). All customs duties, freight, insurance
                       --------------
                      and other shipping expenses from the Delivery Point, as
                      well as any other special packing expenses requested by
                      Medtronic, shall be borne by Medtronic. Subject to Section
                      3.1.8, Medtronic agrees to satisfy all import formalities
                      pertaining to shipment of units of the Products to
                      destinations outside the United States.

               3.3.5  Inspection and Acceptance. Medtronic shall have fifteen
                      -------------------------
                      (15) working days (the "Inspection Period") after delivery
                                              -----------------
                      to visually inspect and test each Product, New Product or
                      Part shipped to Medtronic for patent defects. If Medtronic
                      determines that any Product, Software or Part is patently
                      defective, non-conforming, or does not comply with the
                      terms of this Agreement, Medtronic may reject such by
                      notifying Data Critical in writing of such rejection and
                      requesting a Returned Material Authorization ("RMA")
                                                                     ---
                      number; provided, that such written notification and
                              --------
                      request for an RMA number must be sent by Medtronic before
                      the expiration of the Inspection Period. Data Critical
                      shall promptly provide the RMA number after its receipt of
                      such request by Medtronic. Within ten (10) days of receipt
                      of the RMA number, Medtronic shall return the defective
                      Products, Software or Part to Data Critical, at Data
                      Critical's cost, in the same condition as at the time of
                      delivery to Medtronic, in the same or equivalent shipping
                      container, and with a written description of the defect.
                      Data Critical shall promptly confirm or deny the defect.
                      If Data Critical confirms the defect, Medtronic shall not
                      be required to remit payment for such, or Data Critical
                      shall promptly refund the amount received from Medtronic
                      for such, as applicable, unless Data Critical promptly
                      replaces such Product, Software or Part with a new
                      conforming replacement, at which time full payment shall
                      be made for such unit on a net thirty (30) days basis.

          3.4  Regulatory Matters; Product Recalls. Each party shall maintain
               -----------------------------------
               all records and documentation required by all applicable foreign,
               U.S. federal, state and local laws and regulations relating to
               the Products. Medtronic shall provide Data Critical with such
               reports as may be required by 21 CFR (S)821. All costs of any
               regulatory matters or actions related to Data Critical's status
               as manufacturer of the Products and all costs of any recall of
               the Products shall be borne by Data Critical, except in instances
               where such costs arise in countries in which Medtronic owns a
               license or permit pursuant to the first proviso in Section 3.1.8
               (excluding, however, any costs caused by a failure of Products to
               perform in accordance with specifications). Medtronic shall
               provide all other reasonable assistance reasonably requested by
               Data Critical in connection with any recall action, at Data
               Critical's expense.

                                       15
<PAGE>

     3.5  End User Credit. Medtronic shall bear full liability to Data Critical
          ---------------
          for all extensions of credit to End Users in connection with any
          lease, license or purchase of a Product.

     3.6  Device Tracking. During the Transition Period, Medtronic and Data
          ---------------
          Critical shall mutually agree on a device tracking plan.

4  Transition Period; Warranty and Service Support.

     4.1  Transition Period. During the period commencing on the Effective Date
          -----------------
          and ending on December 31, 2000 (the "Transition Period"), the parties
                                                -----------------
          shall undertake to negotiate in good faith each item set forth in
          Annex J, which Annex J will be mutually agreed upon and delivered by
          -------        -------
          the parties no later than two weeks after the Effective Date.

     4.2  Employees.
          ---------

          4.2.1  [*].

          4.2.2  [*].

          4.2.3  Employee Intentions. Data Critical covenants and agrees that it
                 -------------------
                 shall [*].

          4.2.4  Personnel Records. Following the Effective Date, Data Critical
                 -----------------
                 shall provide Medtronic with copies of personnel records of all
                 Data Critical's employees who have accepted employment with
                 Medtronic and have executed written releases authorizing
                 release of such data.

          4.2.5  Nonsolicitation of Employees. For a period of [*] shall not,
                 ----------------------------
                 without the prior written consent of [*].

          4.2.6  Absence of Litigation. Data Critical is not subject to any
                 ---------------------
                 order of, consent decree, settlement agreement or other similar
                 written agreement with, or to the knowledge of Data Critical,
                 overtly threatened investigation by, any governmental entity,
                 or any judgment, order, writ, injunction, decree or award of
                 any governmental entity or arbitrator, including, without
                 limitation, cease-and-desist or other orders, in each case with
                 respect to the employees identified on Annex F.
                                                        -------

          4.2.7  Labor Matters. Data Critical represents and warrants that it is
                 ------------
                 not a party to any collective bargaining agreement or other
                 labor union contract applicable to the employees identified on
                 Annex F.
                 -------

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     4.2.8  Noncompete Agreements. Data Critical represents and warrants that,
            ---------------------
            to its knowledge, none of the employees identified on Annex F are
                                                                  -------
            subject to any secrecy or noncompetition agreement or any other
            agreement or restriction of any kind with any party other than Data
            Critical, that would impede the ability of such employee to carry
            out fully the activities currently performed by such employee in
            furtherance of the business of Medtronic.

     4.2.9  Indemnification. Data Critical shall indemnify and hold harmless
            ---------------
            Medtronic and Medtronic's Affiliates, and their respective officers,
            directors, employees and insurers, from and against any and all
            costs, damages, claims or liabilities (including but not limited to
            reasonable attorneys fees) that have arisen or may arise out of the
            employment of the employees identified on Annex F by Data Critical,
                                                      -------
            excluding however any such costs, damages, claims or liabilities
            that arise out of Medtronic's employment or termination of such
            employees or a breach of this Agreement by Medtronic.

     4.2.10 Data Critical Employee Retention. Data Critical shall retain certain
            --------------------------------
            sales, marketing and implementation specialists to support
            Medtronic's marketing efforts in connection with its obligations
            hereunder. The number, identity and terms of employment of such Data
            Critical employees shall be determined by Data Critical in its
            commercially reasonable judgment.

     4.2.11 [*].

4.3  Data Critical Installation Backlog. Medtronic assumes and agrees to
     ----------------------------------
     perform, in a timely and coordinated fashion commencing on January 2, 2001,
     all initial product installation and field service obligations of Data
     Critical under the Pre-Existing Contracts, subject to the provisions of
     this Agreement and of the Pre-Existing Contracts. Data Critical shall
     provide to Medtronic all system components required for such initial
     product installation in a timely fashion and in a quantity sufficient for
     Medtronic to perform its obligations under this Section 4.3. Medtronic
     shall charge a standard labor rate no less favorable than the lowest labor
     rate charged by Medtronic for similar amounts of work (but in no case more
     than [*]) for installation by Medtronic of the Pre-Existing Contracts. Data
     Critical shall invoice the End User under each Pre-Existing Contract the
     amounts for installation set forth in such contract, or Data Critical's
     then current installation charges, as applicable, and remit an appropriate
     amount to Medtronic upon Data Critical's receipt thereof.

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4.4  Warranty.
     --------

     4.4.1  Provision of Warranty Services. Data Critical shall provide (a)
            ------------------------------
            warranty support directly to End Users of Data Critical's Network
            Products pursuant to the terms and conditions of the End User
            Warranty, which Data Critical shall provide with each such Network
            Product, (b) warranty support directly to Medtronic with respect to
            Products other than Network Products on the terms and conditions of
            the End User Warranty, and (c) any Extended Service Contract sold to
            such End User by Medtronic pursuant to Section 4.4.2. In the event
            that field service is required to fulfill Data Critical's warranty
            obligations, Medtronic shall provide such services for Data Critical
            and Data Critical shall pay Medtronic a standard labor rate no less
            favorable than the lowest labor rate charged by Medtronic for
            similar amounts of work (but in no case more than [*]).

     4.4.2  Extended Warranty. In addition to the warranty support under the End
            -----------------
            User Warranty, End Users of Data Critical's Network Products may
            obtain extended warranty services consisting of 24-hour telephone
            support from Data Critical ("Additional Support") by entering into a
                                         ------------------
            separate extended service contract with Medtronic (an "Extended
                                                                   --------
            Service Contract"). Medtronic shall inform each End User of the
            ----------------
            availability of such Additional Support, and may sell Additional
            Support to an End User pursuant to an Extended Service Contract
            obtained by Medtronic from Data Critical for such End User.
            Medtronic shall promptly forward to Data Critical (i) such Extended
            Service Contract after it is executed by such End User, and [*].
            Payment of such fee by Medtronic to Data Critical shall be due
            within thirty (30) days after the End User enters into such Extended
            Service Contract.

4.5  Service Support. Data Critical and Medtronic shall provide joint service
     ---------------
     support to End Users on terms and conditions to be agreed upon by the
     parties during the Transition Period, but in no event materially lower than
     on a level commensurate with Data Critical policies in effect on the
     Effective Date and as are provided by Data Critical to Medtronic.

4.6  Demonstration and Support Equipment. Medtronic may purchase from Data
     -----------------------------------
     Critical, at Medtronic's sole discretion, some or all of Data Critical's
     current demonstration and support equipment owned by Data Critical at their
     depreciated book values (as such materials and equipment and the values
     thereof are more fully set forth in the bill of sale relating thereto).
     With respect to any marketing materials, demonstration and support
     equipment leased by Data Critical, Data Critical shall use its best
     commercial efforts to assign such leases to Medtronic as soon as
     practicable after the Effective Date. Data

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      Critical shall, at its cost, use all commercially reasonable efforts to
      provide Medtronic with adequate supplies of product demonstration and
      other marketing materials on an annual basis, as reasonably requested by
      Medtronic, to be used by Medtronic for demonstration and marketing
      purposes and not resale. Such materials, to the extent they include
      Products, shall not count towards Medtronic's Minimums or Minimum End User
      Requirements under this Agreement. If the parties mutually agree that
      additional demonstration equipment is required, Medtronic may, once per
      year, purchase such at Data Critical's cost.

4.7   Consents and Further Assurances. The parties' respective obligations to
      -------------------------------
      assign and assume the obligations described in this Section 4 shall be
      subject to the parties' obtaining any required third party consents. The
      parties shall cooperate to obtain such third party consents. Each party
      shall cooperate reasonably with the other and shall execute such further
      instruments, documents and agreements, as shall reasonably be requested,
      to better evidence and reflect the transactions described in this
      Agreement and to carry into effect the intents and purposes of this
      Section 4.7.

5 Prices, Fees and Payment.

  5.1 Distribution Payments. Medtronic shall pay to Data Critical [*]. Data
      ---------------------
      Critical shall submit an invoice to Medtronic upon shipment of Products to
      Medtronic or its End Users. The invoice shall state the amount to be paid
      by Medtronic for all Products [*].

  5.2 Minimums.
      --------

      5.2.1  Notwithstanding the foregoing, Medtronic agrees to purchase, pay
             for and take delivery of (either for its own account or for the
             account of End Users) Products (including, as appropriate, Software
             Licenses) each quarter having an aggregate Transfer Price equal to
             the amounts set forth in Annex C (as modified from time to time
                                      -------
             pursuant to Section 6.2) as required under Section 3.3.1.

      5.2.2  To the extent that the actual aggregate dollar amount paid by
             Medtronic pursuant to Section 5.1 [*].

  5.3  Warranty Fees. Medtronic shall pay to Data Critical the applicable fees
       -------------
set forth in Section 4.4.2 above within thirty (30) days of the end of the month
in which such fees accrue; provided, that Data Critical shall have first right
                           --------
to any End User warranty fee payments received by Medtronic in satisfaction of
Medtronic's payment obligations pursuant to Section 4.4.2.

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<PAGE>

5.4  Payment and Reports. Except as otherwise specified in this Agreement or as
     -------------------
     otherwise agreed between the parties in writing, all payments hereunder
     shall be in United States dollars in immediately available funds. Each such
     payment shall be accompanied by a report setting forth in reasonable detail
     the basis for calculation of such payment, except as otherwise agreed
     between the parties in writing.

5.5  Taxes. All prices, fees and other payments are exclusive of any export,
     -----
     withholding, federal, state and local taxes, duties or excises other than
     taxes based on Data Critical's net income. If Data Critical pays any taxes,
     duties or excises which are not included in the fees charged for a Product,
     Data Critical shall itemize such taxes, duties or excises as a separate
     item on its invoices to Medtronic, and Medtronic shall reimburse Data
     Critical for such taxes, duties or excises; provided, that Medtronic shall
                                                 --------
     not be required to make any such reimbursement if it provides a valid tax
     exemption certificate to Data Critical prior to shipment.

5.6  Late Payments. All amounts which are not timely paid by Medtronic as
     -------------
     required by this Agreement shall be subject to a late charge equal to one
     and one-half percent (1.5%) per month (or, if less, the maximum allowed by
     applicable law). In the event that any payment due hereunder is overdue,
     Data Critical reserves the right to suspend performance until such
     delinquency is corrected.

6  Joint Review Committee.

   6.1  Establishment and Makeup. Data Critical and Medtronic will form a joint
        ------------------------
        committee (the "Joint Review Committee") comprised of two
                        ----------------------
        representatives from Data Critical and two representatives from
        Medtronic. Each party shall freely appoint and remove its
        representatives; [*].

   6.2  Meetings and Duties. The Joint Review Committee shall meet no less than
        -------------------
        once every six calendar months, commencing on January 15, 2001;
        provided, that the Joint Review Committee shall meet as often as
        --------
        necessary during the Transition Period. The Joint Review Committee shall
        discuss and negotiate in good faith the following topics: [*]; (iii) a
        review of Medtronic's and Data Critical's performance of their
        respective obligations under Sections 3; (iv) the proposed addition of
        New Products to the scope of this Agreement and, to the extent so added,
        the Minimums and Transfer Prices thereof; and (v) any other topic
        proposed by any member of the Joint Review Committee.

   6.3  Transfer Pricing. Any adjustment to the Transfer Price of a Product as
        ----------------
        agreed by Joint Review Committee (a) shall be determined based on
        historical aggregate purchase prices (inclusive of installation prices)
        for any Product to the End Users and other relevant commercial factors,
        and (b) shall take effect

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<PAGE>

          only with respect to orders placed by Medtronic from and after the
          first day of the second calendar quarter, and shall stay in effect for
          the next four calendar quarters, subject to adjustments as reasonably
          requested by either party to take into account any supply shortages,
          component cost increases or similar market events and disruptions.

     6.4  Minimums and Minimum End User Requirements.  The Joint Review
          -------------------------------------------
          Committee shall not amend Annex C, modify the Minimums or otherwise
                                    -------
          adjust Medtronic's Minimum End User Requirements hereunder in a
          manner that [*].

     6.5  Voting. The Joint Review Committee shall act by majority vote; all
          ------
          four members must vote on every matter that is determined by majority
          vote. In the event of a voting tie, then the matter shall be
          determined by the mutual agreement of the Chief Executive Officer or
          Chief Financial Officer of each of Medtronic and Data Critical, acting
          reasonably and in good faith; provided, that neither executive
                                        --------
          representative may be a member of the Joint Review Committee and that
          Medtronic's executive representative may not also sit on Data
          Critical's board of directors. In the event that such executive
          officers cannot agree within fifteen (15) days of submission of the
          matter, then the parties shall seek binding arbitration under the
          auspices of the American Arbitration Association. Such arbitration
          shall take place in Seattle, Washington under a single arbitrator
          mutually agreed to by the parties, and shall be concluded within sixty
          (60) days of the end of the prior 15-day period.

7    Marketing, Promotion and Partner Relationships.

     7.1  Mutual Obligations.  Each of Data Critical and Medtronic, when and
          ------------------
          where commercially appropriate in each party's good faith discretion,
          shall promote the other's products and services in order to foster
          commercial relationships and contacts with each other's customers and
          contacts, and other potential marketing prospects. Such promotion
          shall include, but shall not be limited to, using each other's name
          and brand in its advertising and marketing literature, providing
          mutual marketing and support at industry trade shows, and co-branding
          products that incorporate or utilize both parties' Intellectual
          Property Rights.

     7.2  End User Information.  All data, identifying characteristics and
          --------------------
          similar information generated by any Product or transmitted to either
          party by any End User (the "End User Information") shall remain, as
                                      --------------------
          between Data Critical and Medtronic, the sole and exclusive property
          of Data Critical; except whereby the information was generated solely
          by a Medtronic product, in which case such information is also owned
          by Medtronic. Subject to the foregoing, Medtronic hereby assigns all
          its rights, title and interest in and to the End User Information to
          Data Critical. Neither Medtronic nor any other person shall have any
          right to keep, sell, offer to sell, or otherwise use such End User
          Information without the

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          prior written consent of Data Critical, which consent shall be
          withheld in Data Critical's sole discretion.

8    Intellectual Property Rights.

     8.1  Proprietary Rights.  Except as expressly set forth in this Agreement,
          ------------------
          Data Critical and/or its licensors shall retain all Intellectual
          Property Rights in the Products and in all Derivative Works of the
          Products. The Associated Software is licensed but not sold under this
          Agreement, and all right, title and interest in and to the same,
          including without limitation all Intellectual Property Rights in the
          same, shall remain with Data Critical and/or its licensors, except as
          expressly licensed in this Agreement. Medtronic shall retain, and
          nothing in this Agreement shall entitled Data Critical to, any right,
          title or interest, of any nature whatsoever, in the Intellectual
          Property of Medtronic and all Derivative Works thereof.

     8.2  License and Restrictions.  Each party hereby grants to the other party
          ------------------------
          a non-exclusive right and license to use such of the granting party's
          logos, trademarks, service marks, trade names and trade dress (for
          purposes of this Section 8, collectively "Trademarks") that the
                                                    ----------
          granting party provides to the other party under this Agreement,
          solely in connection with the distribution and promotional obligations
          of the grantee party under this Agreement, and subject to the
          provisions of this Agreement. Neither party shall use any of a
          granting party's Trademarks on any product or service or on any
          promotional or marketing materials, without first submitting to the
          granting party a sample of any such materials, which the granting
          party shall have the right to approve or refuse within thirty (30)
          days of receipt of the same. The granting party shall not unreasonably
          withhold or delay its approval, and such approval shall be deemed to
          have been given unless written notice of refusal is given by the
          granting party within such thirty (30) day period.

     8.3  Ownership.  Each party shall retain all right, title and interest in
          ---------
          and to its Intellectual Property Rights, except for the limited rights
          expressly set forth herein. All goodwill associated with the use of a
          party's Intellectual Property Rights shall inure to the benefit of
          such party.

9    Confidentiality. Confidential Information that is disclosed or created
     under this Agreement shall be governed by the Confidentiality Agreements
     between the parties, dated as of January 24, 2000 and July 10, 2000
     ("Confidentiality Agreements"), the terms of which are incorporated by this
       --------------------------
     reference as if set forth herein in their entirety, and copies of which are
     attached as Annex I. In the event of a conflict between the Confidentiality
                 -------
     Agreements and this Agreement, the applicable provision(s) of this
     Agreement shall govern. Notwithstanding any other provision of this
     Agreement or of the Confidentiality Agreements, the parties' respective
     obligations with respect to Confidential Information shall survive the
     expiration or earlier termination of this Agreement for a period of no less
     than five (5) years after

                                       22
<PAGE>

     the date of such expiration or termination, and shall be fully binding on
     the parties during such period.

10   Warranties and Disclaimer.

     10.1 Warranties by Data Critical.  Data Critical represents, warrants and
          ---------------------------
          covenants to Medtronic that:

          10.1.1  Data Critical has the full power, right and authority to enter
                  into this Agreement and to perform its obligations hereunder;

          10.1.2  Data Critical is the owner or licensee of sufficient right,
                  title and interest in the Intellectual Property Rights
                  provided by Data Critical or used or incorporated by Data
                  Critical in the Products, and which may be necessary for Data
                  Critical to rightfully perform its obligations under this
                  Agreement; and

          10.1.3  Data Critical is the owner or licensee of sufficient right,
                  title and interest in the materials, media, and know-how of
                  Data Critical, including materials and media created by third-
                  party contractors, suppliers, or licensors acting at the
                  request of Data Critical, specifically for use in the
                  manufacture and design of Products, including drawings,
                  routings, bills of materials, schematics, circuit diagrams,
                  specifications, and test documents. In addition to its
                  obligations set forth in Section 11, Data Critical shall
                  indemnify, defend and hold harmless Medtronic and its
                  Affiliates, and their respective officers, directors,
                  employees, agents and insurers, from and against any damages,
                  claims, costs and expenses, including without limitation
                  reasonable attorney's fees, that arise, in whole or in part,
                  from the infringement or interference of any of the Products,
                  New Products, Parts, Affiliated Software, or any components,
                  or assemblies of any of the foregoing, with any Intellectual
                  Property Rights of any third party.

     10.2 Warranties by Medtronic. Medtronic represents, warrants and covenants
          -----------------------
          to Data Critical that:

          10.2.1  Medtronic has the full power, right and authority to enter
                  into this Agreement and to perform its obligations hereunder;

          10.2.2  Medtronic is the owner or licensee of sufficient right, title
                  and interest in the Intellectual Property Rights provided by
                  Medtronic or which are necessary for Medtronic to rightfully
                  perform its obligations to grant the rights granted by it
                  under this Agreement;

                                       23
<PAGE>

          10.2.3  Medtronic has obtained the rights to the Intellectual Property
                  Rights provided by Medtronic hereunder in writing from its
                  officers, employees and third parties, including independent
                  contractors, and subcontractors, to assign, license,
                  sublicense, transfer or grant any and all the rights and
                  licenses conveyed under this Agreement by Medtronic;

     10.3 Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND TO
          ----------
          THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY DISCLAIMS
          ALL WARRANTIES, EXPRESS AND IMPLIED, WITH RESPECT TO THE INTELLECTUAL
          PROPERTY RIGHTS, PRODUCTS AND SERVICES PROVIDED UNDER OR IN CONNECTION
          WITH THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THE IMPLIED
          WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, EVEN
          IF SUCH PARTY IS ADVISED OF SUCH PURPOSE, AGAINST INFRINGEMENT,
          UNINTERRUPTED SERVICE AND ERROR-FREE SERVICE.

11   Indemnification.  Each party (the "Indemnifying Party") shall indemnify,
                                        ------------------
     defend and hold the other party (the "Indemnified Party") and its
                                           -----------------
     directors, employees and agents harmless from and against all damages,
     claims, costs and expenses, including without limitation reasonable
     attorney's fees, and losses (individually and collectively, a "Claim") to
                                                                    -----
     the extent arising out of or relating to: (i) the breach or alleged facts
     that if true would constitute a breach by the Indemnifying Party or its
     agents of this Agreement, including without limitation any warranty
     contained in this Agreement, (ii) the Indemnifying Party's or its agents'
     business operations, or (iii) any negligence or willful misconduct in the
     performance by the Indemnifying Party or its agents of the services to be
     performed by such party hereunder; or (iv) any defect, negligence or
     willful misconduct in the design, manufacturing or installation of any
     product or equipment hereunder to the extent caused by the Indemnifying
     Party or its agents; provided, however, that the Indemnified Party must (a)
                          --------  -------
     give the Indemnifying Party prompt written notice of such Claim, (b)
     reasonably cooperate with the Indemnifying Party at the Indemnifying
     Party's request and expense, in the defense and/or settlement of such
     Claim, and (c) give the Indemnifying Party the right to control the defense
     or settlement of such Claim, except that the Indemnifying Party shall not
     enter into any settlement that affects the Indemnified Party's rights or
     obligations without the Indemnified Party's prior express written approval,
     which shall not be unreasonably withheld or delayed.

12   Limitation of Liability. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
     UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY
     CONSEQUENTIAL, INCIDENTAL, INDIRECT OR PUNITIVE DAMAGES IN CONNECTION WITH
     THIS AGREEMENT, OR THE INTELLECTUAL PROPERTY RIGHTS, PRODUCTS OR SERVICES
     DESCRIBED OR CONTEMPLATED HEREIN, INCLUDING

                                       24
<PAGE>

     WITHOUT LIMITATION DAMAGES FOR LOSS OF PROFITS OR REVENUES, OR THE COST OF
     PROCUREMENT OF SUBSTITUTE GOODS AND/OR SERVICES, REGARDLESS OF THE LEGAL OR
     EQUITABLE BASIS FOR SUCH DAMAGES, WHETHER IN CONTRACT, TORT OR OTHERWISE,
     EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES;
     PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT APPLY FOR THE
     --------  -------
     BENEFIT OF THE BREACHING PARTY IN THE CASE OF ANY BREACH OF THE PROVISIONS
     OF THIS AGREEMENT RELATING TO CONFIDENTIALITY.

13   Term and Termination.

     13.1 Term.  The initial term of this Agreement shall commence on the
          ----
          Effective Date and shall continue thereafter for a period of three (3)
          years, unless earlier terminated in accordance with this Section 13 or
          Sections 2.2.1. or 2.4. Thereafter, the term of this Agreement shall
          automatically renew for successive one (1) year terms unless and until
          either party gives written notice of non-renewal within ninety (90)
          days of the end of the then-current term.

     13.2 Termination for Cause.  Either party may terminate this Agreement by
          ---------------------
          written notice to the other party if such other party is in material
          breach of this Agreement (including any of the exhibits hereto) and
          has failed to cure such breach within thirty (30) days of written
          notice thereof from the first party; provided, that such written
                                               --------
          notice describes such breach in reasonably sufficient detail to enable
          the breaching party to identify the breach.

     13.3 Termination for Insolvency and Related Events.  This Agreement shall
          ---------------------------------------------
          terminate, without notice, (i) upon the institution by or against
          either party of insolvency, receivership or bankruptcy proceedings or
          any other similar proceedings, (ii) upon either party's making an
          assignment for the benefit of creditors, or (iii) upon either party's
          dissolution or ceasing to do business.

     13.4 Effect of Termination.  Upon any expiration or termination of this
          ---------------------
          Agreement, each party shall promptly return to the other party or
          destroy, at such other party's written instruction, all Confidential
          Information of the other party (except that information necessary to
          provide ongoing support obligations to End Users under agreements
          existing as of the date of termination) and shall certify such
          complete return and/or destruction in writing. All units of Products
          in Medtronic's and its Subdistributors' possession at the time of
          termination or expiration of this Agreement shall be promptly returned
          to Data Critical at Medtronic's expense. Notwithstanding the
          foregoing, Medtronic, and its Subdistributors, shall have the right to
          (i) sell their inventories of Products and Software existing on the
          effective date of termination or expiration, (ii) to continue to
          service parties who purchased or otherwise acquired Products or
          Software during the term of this Agreement, (iii) to fulfill
          contractual obligations entered into prior to the effective date of
          termination or

                                       25
<PAGE>

          expiration. In the event of any termination of this Agreement prior to
          the end of any quarter, Medtronic's Minimums shall be calculated on a
          pro rata basis for the portion of such quarter during which this
          Agreement remains in effect, and any payment owing by Medtronic to
          Data Critical pursuant to such Sections shall be paid on the date of
          termination of this Agreement.

     13.5 Survival.  The provisions of Sections 3.1.6, 3.1.8, 3.1.11, 3.1.14,
          --------
          3.2.5, 3.4, 3.5, 4.2.5, 4.2.9, 5.5, 5.6, 6.5, 7.2, 8.1, 8.3, 9, 11,
          12, 13.4, 13.5 and 14 and any other provisions which by their nature
          should survive, shall survive any expiration or termination of this
          Agreement.

14   Miscellaneous.

     14.1 Amendments and Waivers.  Any term of this Agreement may be amended or
          ----------------------
          waived only with the written consent of the parties or their
          respective permitted successors and assigns. Any amendment or waiver
          effected in accordance with this Section 14.1 shall be binding upon
          the parties and their respective successors and assigns.

     14.2 Governing Law, Jurisdiction and Venue.  This Agreement shall be
          -------------------------------------
          governed by and construed in accordance with applicable U.S. federal
          law and the laws of the State of Washington, without regard to
          conflict of laws principles and without regard to the United Nations
          Convention on Contracts for the International Sale of Goods. Each of
          the parties hereby consents to the exclusive jurisdiction and venue of
          the state and federal courts located in and serving King County,
          Washington.

     14.3 Independent Contractors. Each party is and at all times shall be an
          -----------------------
          independent contractor of the other party in all matters relating to
          this Agreement, and nothing in this Agreement shall be construed to
          create any other relationship. Each party and its employees are not
          employees or agents of the other party for any purposes and have no
          power or authority, whether apparent, actual, ostensible or otherwise,
          to bind or commit the other party in any way.

     14.4 Notice.  Any notice required or permitted under this Agreement shall
          ------
          in writing and shall be delivered in person or by means evidenced by a
          written confirmation to the applicable party at the address set forth
          on the signature page below or to such other address as such party
          provides by giving notice in accordance with this section. Notices
          shall be effective only upon receipt.

     14.5 Severability.  If any provision of this Agreement is held to be
          ------------
          invalid, void or illegal, it shall be severed from this Agreement and
          shall not affect, impair or invalidate any other provision, and it
          shall be replaced, if practicable, by a provision which comes closest
          to such severed provision in language and intent without being
          invalid, void or illegal.

                                       26
<PAGE>

     14.6  Assignment and Binding Effect.  Other than as permitted pursuant to
           -----------------------------
           Section 2.5, neither this Agreement nor any of the rights or
           obligations hereunder may be transferred or assigned by either party
           without the prior express written consent of the other party, and any
           purported transfer or assignment in violation of this section shall
           be void. This Agreement shall be binding upon and inure to the
           benefit of each of the parties and their respective permitted
           successors and assigns.

     14.7  Attorneys' Fees.  The prevailing party in any action to enforce this
           ---------------
           Agreement shall be entitled to recover reasonable costs and expenses
           in connection therewith including without limitation reasonable
           attorneys' fees and expenses.

     14.8  Cumulative of Remedies.  All remedies available to either party for
           ----------------------
           breach of this Agreement are cumulative and may be exercised
           concurrently or separately, and the exercise of any one remedy shall
           not be deemed an election of such remedy to the exclusion of any
           other remedy.

     14.9  Force Majeure.  Nonperformance of either party (except for the
           -------------
           payment of amounts due hereunder) shall be excused while and to the
           extent that performance is rendered impossible by strike, fire,
           flood, earthquake, governmental action, or any other reason where
           failure to perform is beyond the reasonable control of the
           nonperforming party.

     14.10 Construction of Agreement.  Each party has cooperated in the drafting
           -------------------------
           and preparation of this Agreement and no principles of construction
           shall be applied against either party on the basis that such party
           drafted this Agreement.

     14.11 Headings and Titles.  The headings and titles of the sections of this
           -------------------
           Agreement are for convenience only and shall not in any way affect
           the interpretation of this Agreement.

     14.12 No Implied Waiver.  No right under this Agreement or breach hereof
           -----------------
           waived except in writing signed by the parties hereto. The failure of
           either party to require performance of any provision of this
           Agreement shall not be construed as a waiver of such party's rights
           to insist on performance of such provision or any other provision at
           some other time.

     14.13 Integration and Modification.  This Agreement, together with the
           ----------------------------
           attached, constitute the entire agreement and understanding between
           the parties regarding the subject matter addressed herein and
           supersedes and replaces all prior negotiations, understandings and
           agreements, proposed or otherwise, whether written or oral,
           concerning the subject matter hereof. This Agreement may not be
           modified or varied except by a written document signed by both of the
           parties.

                                       27
<PAGE>

     14.14 Counterparts.  This Agreement may be executed in counterparts, each
           ------------
           of which shall be deemed an original, but all of which taken together
           shall constitute one and the same instrument. Facsimile signatures
           shall be deemed originals.

                           [signature page follows]

                                       28
<PAGE>

     The parties have caused their duly authorized representatives to execute
  and deliver this Distribution Agreement as of the Effective Date.

Data Critical Corporation                  Medtronic Physio-Control, Inc.

By: /s/ Jeffrey S. Brown                   By: /s/ David W. Shelton
    -----------------------------------        ---------------------------------

Name: Jeffrey S. Brown                     Name: David W. Shelton
      ---------------------------------          -------------------------------

Title: President/CEO                       Title: Executive Vice President
       --------------------------------           ------------------------------

Address: 19820 North Creek Parkway,        Address: 11811 Willows Road NE
         ------------------------------             ----------------------------

#100, Bothell, Washington  98011           Redmond, WA  98052
---------------------------------------    -------------------------------------

Tel: (425) 482-7050                        Tel: (425) 867-4554
     ----------------------------------         --------------------------------

Fax: (425) 283-7010                        Fax: (425) 867-4202
     ----------------------------------         --------------------------------

                                       29
<PAGE>

                               TABLE OF CONTENTS

Annexes
-------

Annex A   -   Products
Annex B   -   Transfer Prices
Annex C   -   Minimums
Annex D   -   Current OEMs and Agreements
Annex E   -   Subdistributors
Annex F   -   Employees and Compensation Plan
Annex G   -   End User Warranty
Annex H   -   Master Agreement
Annex I   -   Confidentiality Agreements
Annex J   -   Transition Plan
Annex K   -   Historical Sales of Products
Annex L   -   Network Products
Annex M   -   Sales Lead Sheets

                                       30

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