Document:

<PAGE>

                                                                  EXHIBIT 10.5.2

                      FIRST AMENDMENT TO SUBLEASE AGREEMENT

         This First Amendment to Sublease Agreement (this "Amendment") is made
and entered into as of July 3, 2003, between Amazon.com Holdings, Inc., a
Delaware corporation ("Sublandlord") and Blue Nile, Inc., a Delaware corporation
("Subtenant").

                                    RECITALS:

         A.       Sublandlord and Subtenant entered into that certain Sublease
Agreement dated May 22, 2003 with respect to certain premises (the "Leased
Premises") located in the Opus Center South Building (the "Building") in
Seattle, Washington. The Leased Premises and the Building are more fully
described in EXHIBIT A to this Sublease. The Sublease is in full force and
effect.

         B.       The parties have agreed that the Expansion Space described in
the Sublease shall be added to the Leased Premises, and that Subtenant may
construct improvements to the Expansion Space as a part of its initial
improvements to the Leased Premises, all subject to certain terms and
conditions.

         C.       Sublandlord and Subtenant now wish to amend the Sublease to
provide for the foregoing and for certain other matters, all as set forth below.

                                    AGREEMENT

In consideration of the mutual promises of the parties and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
the parties agree as follows:

1.       DEFINITIONS

The capitalized words used in this Amendment shall have the meanings ascribed to
them in the Sublease unless the context requires otherwise.

2.       SUBLEASE OF EXPANSION SPACE

         2.1      AMENDMENT TO SECTION 1.2. Section 1.2 of the Sublease is
amended to read in its entirety as follows:

         1.2      Expansion Space. The entire balance of the 9th floor of the
Building ("Expansion Space") shall be added to and become a part of the
Subleased Premises for all purposes under this Sublease on that date (i) which
is eighteen (18) months after the Sublease Commencement Date, or (ii) on which
Subtenant first uses the Expansion Space for any purpose whatsoever (other than
the purposes described in Section 1.5 or Section 6.1 below), whichever shall
first occur ("Expansion Effective Date"); provided, however, that (a) the
Security Deposit shall be increased by the sum of $5,901.75 (subject to
adjustment after the Subleased Premises and Expansion Space are measured
pursuant to Section 1.1), (b) there will be no abatements in Basic Rent for the
Expansion Space for time periods occurring prior to the Expansion Effective
Date, (c) the Subtenant Improvement Allowance for the Expansion Space will be a
prorated portion of the Subtenant Improvement Allowance provided pursuant to
Section 6.1 below stated

                                       1.
<PAGE>

on a per square foot basis, based upon the total number of months that the
Expansion Space will be a part of the Subleased Premises as compared to the
total number of months of the Sublease Term, (d) the Subtenant Improvement
Allowance for the Expansion Space will be paid at the time and in the manner set
forth in Section 6.1 below, and (e) Sublandlord will not pay Moving Expenses
with respect to the Expansion Space. The following example is for purposes of
clarification of the manner in which the Subtenant Improvement Allowance will be
calculated for the Expansion Space: Assuming that the Expansion Space is 4,000
Square Feet of Rentable Area and that it becomes a part of the Subleased
Premises at the commencement of the 19th month of the Sublease Term, and
assuming that the Sublease Term is 93 months, then the total available allowance
stated on a per square foot basis would be 75/93 times $58.50 (the Subtenant
Improvement Allowance stated in Section 6.1). Subject to the terms and
conditions of Section 6.1, Sublandlord hereby assigns to Subtenant the right to
receive from Landlord a portion of the Improvement Allowance equal to $30 per
square foot of the Rentable Area in the Expansion Space; the remaining allowance
amount will be provided by Sublandlord as Additional Allowance. The total
Subtenant Improvement Allowance for the Expansion Space shall be included for
purposes of calculating the Early Termination Fee pursuant to Section 2.2.

         2.2      DELETION OF SECTION 1.3. Section 1.3 of the Sublease is
deleted in its entirety.

         2.3      AMENDMENT TO SECTION 1.4. Section 1.4 of the Sublease is
amended by deleting the first six words of that Section, so that the first
sentence of Section 1.4 reads as follows:

         At any time after the expiration of the forty-eighth (48th) month of
the Sublease Term ("Adjacent Floor RFO Date"), Subtenant will have a right of
first offer to sublease any space that Sublandlord intends to sublease on a
floor that is adjacent to a floor on which Subtenant is already subleasing space
from Sublandlord, subject to the pre-existing rights of other subtenants of the
Building as of the Adjacent Floor RFO Date.

3.       INITIAL SUBTENANT IMPROVEMENTS FOR EXPANSION SPACE

The second paragraph of Section 6.1 of the Sublease shall be amended to read in
its entirety as follows:

         At Subtenant's option, Subtenant may build out its initial improvements
to the Expansion Space ("Expansion Space Improvements") at the same time as, and
as a part of, construction of Subtenant's Improvements to the initial Subleased
Premises, subject to the terms of this Sublease concerning approval of all of
Subtenant's Improvements by Landlord and Sublandlord. The Expansion Space shall
he measured pursuant to Section 1.1 above upon completion of the Expansion Space
Improvements. Subtenant shall have no right whatsoever to use, appropriate or
otherwise enjoy the benefit of the Expansion Space Improvements prior to the
Expansion Effective Date except that Subtenant, its agents, employees and
invitees will have the right at all times prior to the Expansion Effective Date
to walk through the Expansion Space to jet to and from other parts of the
Subleased Premises. The Subtenant Improvement Allowance (both the Base
Improvement Allowance and the Additional Allowance) and the Architectural
Allowance with respect to the Expansion Space shall be paid to Subtenant thirty
(30) days after the Expansion Effective Dale, provided, however, that (a)
Subtenant shall have provided to Sublandlord, immediately upon completion of
construction of the Expansion Space Improvement, valid invoices for completion
of all of the Expansion Space Improvements, whether or not the

                                       2.
<PAGE>

Expansion Effective Date shall have occurred, and (b) the Subtenant Improvement
Allowance will be immediately revoked during the existence of any Event of
Default (as defined in the Prime Lease) under this Sublease that remains uncured
or that is no longer susceptible of cure in accordance with the terms of this
Sublease.

4.       REVOCABLE LICENSE TO USE GENERATOR

The parties acknowledge that the Building is served by a backup power generator
owned by Landlord and that Sublandlord has certain rights to use the generator
pursuant to the Prime Lease. Sublandlord agrees that Subtenant may install such
wires, lines and appurtenances as may be reasonably necessary in Order to
connect to the generator to serve the Subleased Premises (subject to the terms
of this Sublease concerning approval of all of Subtenant's Improvements by
Landlord and Sublandlord), and may use a portion of the capacity of the
generator as described in the report of Cochrane Electrics dated May 30, 2003 (a
copy of has been received by each party) (the "Revocable License"). Subtenant
shall install a protection device between the building electrical supply and any
devices owned by Subtenant with sufficient buffering capacity to protect
Subtenant's devices from variances in electrical supply. Sublandlord or Landlord
may revoke the Revocable License on written notice given to Subtenant no less
than five (5) days prior to the effective date of the revocation. No later than
the effective date of the revocation Subtenant shall disconnect its service from
the generator, and Subtenant shall promptly thereafter remove all wires, lines
and appurtenances that were installed by or on behalf of Subtenant in order to
connect to and use the generator, and shall repair any damage caused by the
installation or removal of those wires, lines and appurtenances. Neither
Sublandlord nor Landlord makes any representations or warranties as to the
available capacity of the generator or the adequacy of the generator to meet
Subtenant's needs. Neither Sublandlord nor Landlord shall have any liability to
Subtenant with respect to the generator and Subtenant releases any and all
claims it may have against either of them in the event the generator fails to
supply adequate electricity to Subtenant's equipment.

5.       LANDLORD'S CONSENT

The effectiveness of this Amendment is expressly conditioned upon Landlord's
written consent given in substantially the form attached to this Amendment as
Exhibit B within thirty (30) days of the date of this Amendment. The additional
funds required pursuant to Section 2.1 of this Amendment in order to increase
the Security Deposit shall be tendered to Sublandlord within 5 business days
after receipt of Landlord's consent.

6.       EXHIBITS

         The following Exhibits attached to this Amendment are incorporated into
and made a part of it by this reference:

         EXHIBIT A                     Subleased Premises and Legal
                                       Description
         EXHIBIT B                     Landlord's Consent

7.       RATIFICATION

                                       3.
<PAGE>

Except as specifically amended by this Amendment, the Sublease is ratified and
confirmed.

                                       4.
<PAGE>

         Executed in duplicate as of the date first written above.

                                       SUBLANDLORD:

                                       AMAZON.COM HOLDINGS, INC.

                                       By:  /s/ Mark Peek
                                          --------------------------------------
                                       Name:    Mark Peek
                                            ------------------------------------
                                       Title:  VP
                                             -----------------------------------

                                       SUBTENANT:

                                       BLUE NILE, INC.

                                       By: /s/ Mark Vadon
                                          --------------------------------------
                                       Name:   Mark Vadon
                                            ------------------------------------
                                       Title: CEO
                                             -----------------------------------

                                       5.
<PAGE>

STATE OF WASHINGTON          )
                             ) ss.:
COUNTY OF KING               )

         On this 21st day of July, 2003, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared Mark S. Peek, to me known to be the person who signed as VP
of Amazon.com Holdings, Inc., the corporation that executed the within and
foregoing instrument, and acknowledged 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 he was duly elected, qualified and acting as
said officer of the corporation, that he was authorized to execute said
instrument and that the seal affixed, if any, is the corporate seal of said
corporation.

         IN WITNESS WHEREOF I have hereunto set my hand and official seal the
day and year first above written.

                                         /s/ Reese Elaine Kolsky
                                       -----------------------------------------
                                       (Signature of Notary)

                                             Reese Elaine Kolsky
                                       -----------------------------------------
                                       (Print of stamp name of Notary)

                                       NOTARY PUBLIC in and for the State
                                       of Washington, residing at Seattle.
                                       My appointment expires: 5/9/07.

                                       6.
<PAGE>

STATE OF WASHINGTON          )
                             ) ss.:
COUNTY OF KING               )

         On this 7th day of July, 2003, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared Mark Vadon, to me known to be the person who signed as CEO
of Blue Nile, Inc., the corporation that executed the within and foregoing
instrument, and acknowledged 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 he was duly elected, qualified and acting as said officer of
the corporation, that he was authorized to execute said instrument and that the
seal affixed, if any, is the corporate seal of said corporation.

IN WITNESS WHEREOF I have hereunto set my hand and official seal the day and
year first above written.

                                         /s/ Sandra J. Wong
                                       -----------------------------------------
                                       (Signature of Notary)

                                             Sandra J. Wong
                                       -----------------------------------------
                                       (Print of stamp name of Notary)

                                       NOTARY PUBLIC in and for the State
                                       of Washington, residing at Kenmore.
                                       My appointment expires: 10/5/03.

                                       _________________________________________
                                       (Signature of Notary)

                                       _________________________________________
                                       (Print of stamp name of Notary)

                                       NOTARY PUBLIC in and for the State
                                       of Washington, residing at _____________.
                                       My appointment expires: ________________.

                                       7.
<PAGE>

                              EXHIBIT A TO SUBLEASE

                    SUBLEASED PREMISES AND LEGAL DESCRIPTION

                                       8.
<PAGE>

                                Legal Description

"Property" means, collectively, subject to Section 3.7, the Building and all
other improvements to the Landlord's Unit in which the Building is located.

"Union Station Condominium" means Union Station, a condominium, recorded in
Volume 15 of Condominiums, pages 37-45, according to the amended and restated
declaration thereof recorded under King County Recording No. 9811171094 and any
amendments thereto, including and together with those certain easements for
support, utilities, equipment and improvements, elevators, access and
telecommunications links as set forth therein; situated in the City of Seattle,
County of King, State of Washington.

"Unit" means Unit 4 of Union Station Condominium.

                                       9.
<PAGE>

                       FLOOR PLAN POCKET SPACE - 3289 USF
                       SCALE: FIT TO PAGE

                       7/17/03

                                  [FLOOR PLAN]

<PAGE>

                              EXHIBIT B TO SUBLEASE

                               LANDLORD'S CONSENT

         The undersigned, Landlord under the Prime Lease (as defined in the
foregoing Sublease Agreement dated as of May 22, 2003, by and between Amazon.com
Holdings, Inc. and Blue Nile, Inc.), hereby consents, as contemplated in Article
13 of such Prime Lease, to the foregoing Amendment on the express condition that
nothing in this consent is intended to relieve, release, discharge or otherwise
affect the liability of Sublandlord or Original Tenant from the performance of
their respective obligations to Landlord under the Prime Lease and they shall
remain fully liable under the Prime Lease to perform all of the obligations of
the "Tenant" under the Prime Lease.

Notwithstanding the foregoing, Landlord agrees that the Improvement Allowance
payable by Landlord under the Prime Lease with respect to the Expansion Space
Improvements (as that term is defined in the foregoing Amendment) shall be paid
in accordance with the terms of the First Amendment to the Prime Lease at the
time described in Section 3 of the foregoing Amendment.

This Consent shall apply only to this Amendment and shall not be deemed to be
either (a) a consent to any other amendment to the sublease or (b) a release
from or waiver of the obligation to obtain Landlord's consent in the event of
any future amendment to the sublease.

         This consent represents the entire agreement of Landlord with respect
to the foregoing Amendment and shall be binding upon and inure to the benefit of
Subtenant, Sublandlord, Original Tenant, and Landlord and their respective
successors and assigns.

         Nothing in this Consent, the Amendment or the Sublease shall be deemed
to obligate Landlord to perform any obligations under the Prime Lease for the
benefit of Subtenant. This Consent is issued on the understanding that nothing
contained in the Amendment, the Sublease or this Consent and no direct
relationship between Landlord and Subtenant including, without limitations, the
provisions of Section 4.3 of the Sublease, shall modify, expand or enlarge
Landlord's obligations under the Prime Lease nor release Sublandlord or Original
Tenant from any of their obligations thereunder.

Dated this 29 day of July, 2003.

                                       SEATTLE UNION STATION II, LLC,
                                       a Washington limited liability company

                                       By: /s/ Joseph D. Weinstein
                                          --------------------------------------

                                        Joseph D. Weinstein, Asst Secy of MIG
                                       Corp., its Manager

                                      10.
<PAGE>

                  ORIGINAL TENANT'S CONSENT AND ACKNOWLEDGMENT

         Original Tenant hereby consents to the foregoing Amendment and ratifies
and affirms that Original Tenant remains liable under the Prime Lease as a
principal and not as a surety notwithstanding execution of the foregoing
Amendment or any course of conduct or dealings between Subtenant and Tenant and
nothing contained herein and no such course of conduct or dealings shall
relieve, release, discharge or otherwise affect the liability of Original Tenant
for the performance of Sublandlord's and Original Tenant's obligations to
Landlord under the Prime Lease.

Agreed to and accepted this 11 day of July, 2003.

                                       AMAZON.COM, INC.

                                       By: /s/ Cayce Roy
                                          --------------------------------------
                                       Name:   Cayce Roy
                                       Title: VP

                                      11.<PAGE>

                                                                  EXHIBIT 10.6.1

1.       BASIC LEASE TERMS

         A.       DATE OF LEASE: June 28, 2001

         B.       TENANT: Blue Nile, Inc., a Delaware corporation
                  Trade Name:
                  Address (Leased Premises): 5907 Fourth Ave. S., Seattle,
                   WA 98134
                  Building Unit:____________________

                  Address (For Notices):
                  At the Premises.
                  Attention:________________________
                  Telephone:________________________
                  Facsimile:________________________

                  With copy to:
                  Blue Nile, Inc.
                  2025 First Avenue, Suite 300
                  Seattle WA 98121
                  Attention: Chief Operating Officer
                  Telephone: (206) 336-6700
                  Facsimile: (206) 336-6750

         C.       LANDLORD: Gull Industries Inc., a Washington corporation
                  Address (For Notices): P.O. Box 24687, Seattle, WA 98124
                  Attention: William T. Vivian
                  Telephone: (206) 624-5900
                  Facsimile: (206) 624-5412
                  or to such other place as Landlord may from time to time
                  designate by written notice to Tenant.

         D.       TENANT'S USE OF PREMISES: General office and uses related to a
                  wholesale and/or retail jewelry fulfillment center, including
                  but not limited to, shipping, receiving, warehousing and
                  manufacturing of high-end jewelry products.

         E.       PREMISES AREA: Approximately 9,400 Rentable Square Feet

         F.       PROJECT AREA: Approximately 27,200 Rentable Square Feet

         G.       TERM OF LEASE: The term ("Term") of this Lease shall commence
                  on the Commencement Date as set forth in Section 3 and shall
                  terminate on the last day of the sixtieth (60th) full calendar
                  month after the Commencement Date (the "Expiration Date"). The
                  anticipated date for the Commencement Date is August 24, 2001.

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

<PAGE>

<TABLE>
<CAPTION>
Period                                 Rent/RSF/Year
------                                 -------------
<S>                                    <C>                         <C>
Commencement Date - Month 12               $9.50                   7441.67/MO
Month 13 - Month 24                       $10.00                   7833.33/MO
Month 25 - Month 36                       $10.50                   8225.00/MO
Month 37 - Month 48                       $11.00                   8616.67/MO
Month 49 - Month 60                       $12.00                   9400.00/MO
</TABLE>

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

         J.       SECURITY DEPOSIT: See Section 6.

         K.       BROKER(S): Tenant's Broker: Larry Blackett, Kidder Mathews
                  Senger; Landlord's Broker: Bob Hartsell, Hallwood

         L.       GUARANTOR(S): None.

         M.       EXHIBITS:

                    Exhibit A - The Premises
                    Exhibit B - The Project
                    Exhibit C - Landlord's Work and Work Letter Agreement
                    Exhibit D - Rules and Regulations
                    Exhibit E - Tenant Sign Criteria
                    Exhibit F - Additional Utilities or Services [if applicable]
                    Exhibit G - Permitted Substances
                    Exhibit H - Location of Reserved Parking Stalls

2.       PREMISES/COMMON AREAS/PROJECT.

         A.       PREMISES. Landlord leases to Tenant the premises described in
                  Section 1 and in Exhibit A (the "Premises"), located in this
                  project described on Exhibit B (the "Project"). By entry on
                  the Premises, Tenant acknowledges that it has examined the
                  Premises and accepts the Premises in their present condition,
                  subject to any Landlord's Work required under this Lease.
                  Landlord's Work shall consist of such work, if any, as is
                  specifically identified as Landlord's construction
                  responsibility under Exhibit C. Unless otherwise identified in
                  the punchlist or otherwise in written notice from Tenant to
                  Landlord prior to the dates specified below, Landlord's Work
                  shall be deemed approved by Tenant in all respects on the date
                  Tenant begins to move its personal property into the Premises.
                  Prior to the Commencement Date, Landlord shall schedule with
                  Tenant an inspection of Landlord's Work. Following such
                  inspection, Landlord's architect shall prepare a "punch list"
                  (as such term is used in the construction industry) of such
                  Landlord's Work. The existence of defects of a nature commonly
                  found on a punchlist shall not postpone the date of
                  substantial completion of Landlord's Work or result in a delay
                  or abatement of Tenant's obligation to pay rent or give rise
                  to a damage claim against Landlord. Landlord shall use
                  reasonable best efforts to complete all items on the punch
                  list within thirty (30) days after preparation thereof.

                                       2.
<PAGE>

         B.       COMMON AREAS. As used in this Lease, "Common Areas" shall mean
                  all portions of the Project not leased or demised for lease to
                  specific tenants. During the Lease Term, Tenant and its
                  licensees, invitees, customers and employees shall have the
                  non-exclusive right to use the public portions of the Common
                  Areas, including all parking areas, landscaped areas,
                  entrances, lobbies, elevators, stairs, corridors, and public
                  restrooms in common with Landlord, other Project tenants and
                  their respective licensees, invitees, customers and employees.
                  Landlord shall at all times have exclusive control and
                  management of the Common Areas and no diminution thereof shall
                  be deemed a constructive or actual eviction or entitle Tenant
                  to compensation or a reduction or abatement of rent. Landlord
                  in its discretion may increase, decrease or change the number,
                  locations and dimensions of any Common Areas and other
                  improvements shown on Exhibit A which are not within the
                  Premises, so long as the same does not materially interfere
                  with Tenant's use and enjoyment of and access to the Premises
                  and parking rights hereunder.

         C.       PROJECT. Landlord reserves the right in its sole discretion to
                  modify or alter the configuration or number of buildings in
                  the Project so long as the same does not materially interfere
                  with Tenant's use and enjoyment of and access to the Premises
                  and parking rights hereunder, and provided further that upon
                  such modification or alteration, the Project Area as set forth
                  in Section 1(f) shall be adjusted to reflect such modification
                  or alteration.

         D.       RENTABLE SQUARE FOOTAGE. Within ninety (90) days after the
                  Commencement Date of this Lease, Landlord shall cause its
                  architect to compute (with copy to Tenant) the Rentable Square
                  Footage of the Premises and the Project to be computed in
                  accordance with American National Standard Z65.1-1996 Method
                  of Measuring Floor Space in Office Buildings as published by
                  the Building Owners and Managers Association, as amended from
                  time to time, and this Lease shall be deemed amended to
                  incorporate such measurement.

3.       TERM. The Commencement Date listed in Section I of this Lease
         represents an estimate of the Commencement Date. This Lease shall
         commence on the estimated Commencement Date if tenant improvement work
         required of Landlord pursuant to this Lease ("Landlord's Work") is
         substantially completed (as that term is used in the construction
         industry) by such date and Tenant has had at least 75 days access to
         the premises for construction of Tenant's Work (which access may
         require coordination with Landlord's Work), but otherwise the
         Commencement Date shall be first to occur of the following events (i)
         the date on which Landlord notifies Tenant that Landlord's Work is
         substantially complete, and Tenant has had at least 75 days access to
         the premises for construction of Tenant's Work (which access may
         require coordination with Landlord's Work), (ii) the date on which
         Tenant takes possession or commences beneficial occupancy of the
         Premises, or (iii) if substantial completion of Landlord's Work is
         delayed due to Tenant's failure to perform its obligations under this
         Lease, then the date determined by Landlord as the date upon which
         Landlord's Work would have been substantially completed, and Tenant has
         had at least 75 days access to the premises for construction of
         Tenant's Work (which access may require coordination with Landlord's

                                       3.
<PAGE>

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

4.       RENT

         A.       BASE MONTHLY RENT. Tenant shall pay Landlord monthly base rent
                  in the initial amount in Section 1 which shall be payable
                  monthly in advance on the first day of each and every calendar
                  month ("Base Monthly Rent") provided, however, the first
                  month's Base Monthly Rent (in the estimated amount of $7,441)
                  is due and payable upon execution of this Lease.

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

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

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

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

                                       4.
<PAGE>

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

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

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

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

                                       5.
<PAGE>

                           (f)      Notwithstanding any other provision of this
                           Lease to the contrary, Landlord agrees that Expenses
                           as defined in Section 4(b) shall not include: leasing
                           commissions, attorneys' fees, costs, disbursements,
                           and other expenses incurred in connection with
                           leasing, renovating, or improving space for tenants
                           or other occupants or prospective tenants or other
                           occupants of the Project; the cost of any service
                           sold to any tenant (including Tenant) or other
                           occupant for which Landlord receives reimbursement as
                           an additional charge or rental over and above the
                           basic rent and escalations payable under the lease
                           with that tenant; any depreciation on the Project;
                           capital additions except as provided in subsection
                           (d) above; overhead profit increments paid to
                           Landlord's subsidiaries or affiliates for management
                           or other services on or to the building or for
                           supplies or other materials to the extent that the
                           cost of the services, supplies, or materials exceeds
                           the cost that would have been paid had the services,
                           supplies, or materials been provided by unaffiliated
                           parties on a competitive basis; all interest, loan
                           fees, and other carrying costs related to any
                           mortgage or deed of trust or related to any capital
                           item not chargeable as an Expense, and all rental and
                           other payable due under any ground or underlying
                           lease, or any lease for any equipment ordinarily
                           considered to be of a capital nature unless the
                           purchase of such equipment would have been chargeable
                           as an Expense (and except janitorial equipment which
                           is not affixed to the Project); any compensation paid
                           to clerks, attendants, or other persons in commercial
                           concessions operated by Landlord; advertising and
                           promotional expenditures; any costs, fines, or
                           penalties incurred due to violations by Landlord of
                           any governmental rule or authority, this Lease or any
                           other lease in the Project, or due to Landlord's
                           gross negligence or willful misconduct; the cost of
                           correcting any building code or other violations
                           which were violations prior to the Commencement Date
                           of this Lease; the cost of containing, removing, or
                           otherwise remediating any contamination of the
                           Project (including the underlying land and ground
                           water) by any toxic or hazardous materials
                           (including, without limitation, asbestos and "PCB's")
                           where such contamination was present as of the
                           Commencement Date or was brought onto the Project
                           thereafter by Landlord, its employees or contractors;
                           management costs to the extent they exceed management
                           costs charged for similar facilities in the area;
                           costs for sculpture, paintings, or other objects of
                           art (and insurance thereon or extraordinary security
                           in connection therewith); wages, salaries, or other
                           compensation paid to any executive employees above
                           the grade of building manager.

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

                                       6.
<PAGE>

                  3)       MONTHLY PAYMENT OF EXPENSES. Tenant shall pay to
                  Landlord, monthly in advance, as Additional Rent, one-twelfth
                  (1/12) of the Annual Estimate of Tenant's Share of Expenses
                  beginning on the date Tenant takes possession of the Premises.
                  As soon as practical following each calendar year, Landlord
                  shall prepare an accounting of actual Expenses incurred during
                  the prior calendar year and such accounting shall reflect
                  Tenant's Share of Expenses. If the Additional Rent paid by
                  Tenant under this Section 4(b)(3) during the preceding
                  calendar year was less than the actual amount of Tenant's
                  Share of Expenses, Landlord shall so notify Tenant and Tenant
                  shall pay such amount to Landlord within 30 days of receipt of
                  such notice. Such amount shall be deemed to have accrued
                  during the prior calendar year and shall be due and payable
                  from Tenant even though the term of this Lease has expired or
                  this Lease has been terminated prior to Tenant's receipt of
                  this notice. Tenant shall have thirty (30) days from receipt
                  of such notice to contest the amount due, failure to so notify
                  Landlord shall represent final determination of Tenant's Share
                  of Expenses. If Tenant's payments were greater than the actual
                  amount, then such overpayment shall be credited by Landlord to
                  Tenant's Share of Expenses due under this Section 4(b)(3).

         C.       RENT WITHOUT OFFSET AND LATE CHARGE. As used herein, "Rent"
                  shall mean all monetary sums due from Tenant to Landlord. All
                  Base Monthly Rent shall be paid by Tenant to Landlord without
                  prior notice or demand in advance on the first day of every
                  calendar month, at the address shown in Section 1, or such
                  other place as landlord may designate in writing from time to
                  time. Whether or not so designated, all other sums due from
                  Tenant under this Lease shall constitute "Additional Rent",
                  payable without prior notice or demand when specified in this
                  Lease, but if not specified, then within thirty (30) days of
                  demand. All Rent shall be paid without any deduction or offset
                  whatsoever. All Rent shall be paid in lawful currency of the
                  United States of America. Proration of Rent due for any
                  partial month shall be calculated by dividing the number of
                  days in the month for which Rent is due by the actual number
                  of days in that month and multiplying by the applicable
                  monthly rate. Tenant acknowledges that late payment by Tenant
                  to Landlord of any Rent or other sums due under this Lease
                  will cause Landlord to incur costs not contemplated by this
                  Lease, the exact amount of such cost being extremely difficult
                  and impracticable to ascertain. Such costs include, without
                  limitation, processing and accounting charges and late charges
                  that may be imposed on Landlord by the terms of any
                  encumbrance or note secured by the Premises. Therefore, if any
                  Rent or other sum due from Tenant is not received when due,
                  Tenant shall pay to Landlord an additional sum equal to 10% of
                  such overdue payment. Landlord and Tenant hereby agree that
                  such late charge represents a fair and reasonable estimate of
                  the costs that Landlord will incur by reason of any such late
                  payment and that the late charge is in addition to any and all
                  remedies available to the Landlord and that the assessment
                  and/or collection of the late charge shall not be deemed a
                  waiver of any other default. Additionally, all such delinquent
                  Rent or other sums, plus this late charge, shall bear interest
                  at the rate of 18 percent per annum. If the interest rate
                  specified in this Lease is higher than the rate permitted by
                  law, the interest rate is hereby decreased to the maximum
                  legal interest rate permitted by law. Any payments of any kind

                                       7.
<PAGE>

                  returned for insufficient funds will be subject to an
                  additional handling charge of $25.00, and thereafter, Landlord
                  may require Tenant to pay all future payments of Rent or other
                  sums due by money order or cashier's check.

5.       PREPAID RENT. [intentionally omitted -- See Section 4(a) for first
         month's rent]

6.       LETTER OF CREDIT.

         A.       LETTER OF CREDIT. Tenant shall, within fifteen (15) days after
                  the date of full execution of this Lease and in accordance
                  with this Section 6, (i) cause a Letter of Credit in the
                  amount of Fifty Thousand Dollars ($50,000) (the "Letter of
                  Credit") to be issued by the L/C Bank in favor of Landlord,
                  and its successors, assigns and transferees and will cause
                  delivery of such letter of credit to Landlord.

         B.       INTENTIONALLY OMITTED.

         C.       MAINTENANCE OF LETTER OF CREDIT. Tenant will cause the Letter
                  of Credit to remain in full force and effect during the entire
                  Term and thereafter until the earlier of the date Landlord
                  acknowledges Tenant has completed all restoration obligations
                  under the lease or 60 days after expiration or earlier
                  termination of the Lease. The specific requirements for the
                  Letter of Credit and the rights of Landlord to make draws
                  thereon will be as set forth in this Section 6. Subject to
                  this Section 6, but anything else in this Lease to the
                  contrary notwithstanding, all of Tenant's rights and all of
                  Landlord's obligations under this Lease are strictly
                  contingent on Tenant's causing the Letter of Credit to remain
                  in full force and effect during the entire Term.

         D.       PAYMENT AND HOLDING OF DRAW PROCEEDS. Immediately upon, and at
                  any time or from time to time after, the occurrence of any one
                  or more Draw Events, Landlord will have the unconditional
                  right to draw on the Letter of Credit, in the full amount
                  thereof or in any lesser amount or amounts as Landlord may
                  determine, in its sole and absolute discretion, in accordance
                  with this Section 6. Upon the payment of Landlord of the Draw
                  Proceeds, Landlord will hold the Draw Proceeds in its own name
                  and for its own account, without liability for interest, and
                  as security for the performance by Tenant of Tenant's
                  covenants and obligations (theretofore or thereafter arising)
                  under this Lease, and will be entitled to use and apply any
                  and all of the Draw Proceeds from time to time solely to
                  compensate Landlord hereunder. Among other things, it is
                  expressly understood that the Draw Proceeds will not be
                  considered an advance payment of Basic Rent or Additional Rent
                  or a measure of Landlord's damages resulting from any Event of
                  Default hereunder (past, present or future). Further,
                  immediately upon the occurrence of any one or more Draw
                  Events, Landlord may, from time to time and without prejudice
                  to any other remedy, use the Draw Proceeds (whether from a
                  contemporaneous or prior draw on the Letter of Credit) to the
                  extent necessary to make good any arrearages of Basic Rent or
                  Additional Rent, to pay to Landlord any and all amounts to
                  which Landlord is entitled in connection with the pursuit of
                  any one or more of its remedies hereunder, and to compensate
                  Landlord for any

                                       8.
<PAGE>

                  and all other damage, injury, expense or liability caused to
                  Landlord by any and all such Events of Default. Any delays in
                  Landlord's draw on the Letter of Credit or in landlord's use
                  of the Draw Proceeds will not constitute a waiver by Landlord
                  of any of its rights hereunder with respect to the Letter of
                  Credit or the Draw Proceeds. Following any such application of
                  the Draw Proceeds, Tenant will either pay to Landlord on
                  demand the cash amount so applied in order to restore the Draw
                  Proceeds to the fall amount thereof immediately prior to such
                  application or cause the Letter of Credit to be replenished to
                  its full amount thereunder. Landlord will not be liable for
                  any indirect, consequential, special or punitive damages
                  incurred by Tenant arising from a claim that Landlord violated
                  the bankruptcy code's automatic stay in connection with any
                  draw by Landlord of any Draw Proceeds, Landlord's liability
                  under such circumstances being limited to the reimbursement of
                  direct costs as and to the extent expressly provided in this
                  Section 6. Nothing in this Lease or in the Letter of Credit
                  will confer upon Tenant any property rights or interests in
                  any Draw Proceeds; provided, however, that upon the expiration
                  or earlier termination of this Lease, and so long as there
                  then exist no Draw Events or Event of Default hereunder,
                  Landlord agrees to return any remaining unapplied balance of
                  the Draw Proceeds then held by Landlord, and the Letter of
                  Credit itself (if and to the extent not previously drawn in
                  full) to Tenant.

         E.       TRANSFERABILITY. If Landlord transfers its interest in the
                  Project during the Term, Landlord may transfer the Letter of
                  Credit and any and all Draw Proceeds then held by Landlord to
                  the transferee and thereafter will have no further liability
                  with respect to the Letter of Credit or the Draw Proceeds,
                  including, without limitation, any liability for the return of
                  the Letter of Credit, so long as the transferee has assumed
                  all of Landlord's obligations under this Lease accruing after
                  the date of transfer. Tenant is responsible for any and all
                  fees or costs (whether payable to the L/C Bank or otherwise)
                  in order to effect such transfer of the Letter of Credit.

         F.       ADDITIONAL TERMS. In addition to compliance with the other
                  terms and conditions of this Section 6, the Letter of Credit
                  shall provide as follows:

                  In the event that you receive, prior to the expiration date
                  herein set forth, any payment (from a source other than drafts
                  drawn under this Letter of Credit) for invoices on the
                  debtor's account and within ninety (90) days after receipt of
                  said payment (i) a petition is filed by or against (Account
                  Debtor) with a United States Bankruptcy Court; (ii) (Account
                  Debtor) is the subject of any other proceeding, voluntary or
                  involuntary, which under applicable State or Federal law could
                  result in the return of such payment, then the expiration date
                  hereof shall automatically be extended to a date that is one
                  hundred twenty (120) days after the date of such filing,
                  assignment or proceeding and, if this Letter of Credit has
                  previously expired, our obligations hereunder shall be
                  reinstated up to the amount of such payment only, but in no
                  event more than (face amount) in aggregate.

         G.       APPLICABLE DEFINITIONS.

                                       9.
<PAGE>

         "DRAW EVENT" means each of the following events:

                  (1)      the occurrence of any one or more of the following:
                  (i) Tenant's filing of a petition under any chapter of the
                  Bankruptcy Code, or under any federal, state or foreign
                  bankruptcy or insolvency statute now existing or hereafter
                  enacted, or Tenant's making a general assignment or general
                  arrangement for the benefit of creditors, (ii) the filing of
                  an involuntary petition under any chapter of the Bankruptcy
                  Code, or under any federal, state or foreign bankruptcy or
                  insolvency statute now existing or hereafter enacted, or the
                  filing of a petition for adjudication of bankruptcy or for
                  reorganization or rearrangement, by or against Tenant (or its
                  guarantor hereunder) and such filing not being dismissed
                  within 60 days, (iii) the entry of an order for relief under
                  any chapter of the Bankruptcy Code, or under any federal,
                  state or foreign bankruptcy or insolvency statute now existing
                  or hereafter enacted, (iv) the appointment of a "custodian,"
                  as such term is defined in the Bankruptcy Code (or of an
                  equivalent thereto under any federal, state or foreign
                  bankruptcy or insolvency statute now existing or hereafter
                  enacted), for Tenant, or the appointment of a trustee or
                  receiver to take possession of substantially all of Tenant's
                  assets located at the Premises or of Tenant's interest in this
                  Lease and possession not being restored to Tenant within 60
                  days, or (v) the subjection of all or substantially all of
                  Tenant's assets located at the Premises or of Tenant's
                  interest in this Lease to attachment, execution or other
                  judicial seizure and such subjection not being discharged
                  within 60 days; or

                  (2)      the failure of Tenant, not less than 30 days prior to
                  the stated expiration date of the Letter of Credit then in
                  effect, to cause an extension, renewal or replacement issuance
                  of the Letter of Credit, at the reduced amount, if any,
                  applicable under Section 6, to be effected, which extension,
                  renewal or replacement issuance will be made by the L/C Bank,
                  and, except as expressly provided in Section 6, will otherwise
                  meet all of the requirements of the initial Letter of Credit
                  hereunder, which failure will be an Event of Default under
                  this Lease; or

                  (3)      the failure of Tenant to make when due any payment of
                  Basic Rent, of any monthly installment of any Additional Rent,
                  or pay any other monetary obligation within three days after
                  the amount is due; or

                  (4)      the failure by Tenant to pay any amount due hereunder
                  within 10 days after the amount is due; or

                  (5)      the breach by Tenant of any non-monetary obligation
                  hereunder which is not cured within 30 days after notice of
                  the default from Landlord, which notice may be in the form of
                  a proof of claim in the event of a bankruptcy filing, provided
                  that if such failure cannot with due diligence by cured within
                  30 days, Tenant will have the right to cure the default if
                  Tenant commences such cure promptly and within the 30 day
                  period and thereafter diligently and prosecutes such cure to
                  completion.

                                      10.
<PAGE>

         "DRAW PROCEEDS" means the proceeds of any draw or draws made by
                  Landlord under the Letter of Credit, together with any and all
                  interest accruing thereon.

         "L/C BANK" means Union Bank, as agent of GE Capital Corporation, or any
                  other United States bank or other financial institution which
                  is approved by Landlord in Landlord's reasonable discretion.

         "LETTER OF CREDIT" means that certain irrevocable Letter of Credit, in
                  the amounts set forth in Section 6, issued by the L/C Bank, as
                  required under Section 6 and, if applicable, as extended,
                  renewed, replaced or modified from time to time in accordance
                  with this lease, which Letter of Credit will be in a form
                  reasonably acceptable to Landlord. Any Letter of Credit
                  provided hereunder shall state that the beneficiary thereunder
                  must submit with any draw request a signed and dated statement
                  worded as follows with the instructions in brackets therein
                  complied with: "The undersigned, an authorized representative
                  of [insert beneficiary name] hereby certifies that a Draw
                  Event has occurred under the terms of the lease between Gull
                  Industries, as landlord, and Tenant dated [insert date]
                  relating to the premises located at 5907 Fourth Ave. S.,
                  Seattle, Washington."

7.       USE OF PREMISES AND PROJECT FACILITIES. Tenant shall use the Premises
         solely for the purposes set forth in Section 1 and for no other purpose
         whatsoever without obtaining the prior written consent of Landlord,
         which shall not be unreasonably withheld so long as Tenant's proposed
         use meets Landlord's then-existing use criteria for the Project and
         complies with all applicable zoning regulations. Except as provided in
         writing in this Lease, Tenant acknowledges that neither Landlord nor
         any agent of Landlord has made any representation or warranty with
         respect to the Premises or with respect to the suitability of the
         Premises or the Project for the conduct of Tenant's business, nor has
         Landlord agreed to undertake any modification, alteration or
         improvement to the Premises or the Project. Tenant acknowledges that
         Landlord may from time to time, at its sole discretion, make such
         modifications, alterations, deletions or improvements to the Project as
         Landlord may deem necessary or desirable, without compensation or
         notice to Tenant, so long as the same does not materially interfere
         with Tenant's use and enjoyment of the Premises and the Common Areas of
         the Project nor with Tenant's parking rights hereunder. Tenant shall
         promptly comply with all laws, ordinances, orders and regulations
         affecting the Premises and the Project, including, without limitation,
         the rules and regulations attached hereto as Exhibit D and any
         reasonable modifications to these rules and regulations as Landlord may
         adopt from time to time. Tenant acknowledges that, except for
         Landlord's obligations pursuant to Section 13, Landlord's Work and the
         Tenant Improvements, Tenant is solely responsible for ensuring that the
         Premises comply with any and all governmental regulations applicable to
         Tenant's conduct of business on the Premises, and that Tenant is solely
         responsible for any alterations or improvements that may be required by
         such regulations, now existing or hereafter adopted. Tenant shall not
         do or permit anything to be done in or about the Premises or bring or
         keep anything in the Premises that will in any way increase the
         premiums paid by Landlord on its insurance related to the Project,
         unless Tenant agrees to reimburse Landlord for any increase directly
         related to Tenant's use, or which will in any way increase the premiums
         for fire or casualty insurance carried by

                                      11.
<PAGE>

         other tenants in the Project. Tenant will not perform any act or carry
         on any practices that may injure the Premises or the Project; that may
         be a nuisance or menace to other tenants in the Project; or that shall
         in any way materially interfere with the quiet enjoyment of such other
         tenants. Tenant shall not use the Premises for sleeping, washing
         clothes, cooking (except for preparation of employee meals) or the
         preparation, or manufacture or mixing of anything that might emit any
         reasonably objectionable odor, noises, vibrations or lights onto such
         other tenants. If sound insulation is required to muffle noise produced
         by Tenant on the Premises, Tenant at its own cost shall provide all
         necessary insulation. Tenant shall not do anything on the Premises
         which will overload any existing parking or service to the Premises.
         Pets and/or animals of any type shall not be kept on the Premises,
         except for guide dogs to assist the physically disabled.

8.       HAZARDOUS SUBSTANCES; DISRUPTIVE ACTIVITIES

         a.       HAZARDOUS SUBSTANCES.

                  (1)      Presence and Use of Hazardous Substances. As used in
                  this Lease, "Hazardous Substances" shall mean anything which
                  may be harmful to persons or property, including, but not
                  limited to, materials designated as a "Hazardous Substance"
                  pursuant to Section 101 of the Comprehensive Environmental
                  Response, Compensation and Liability Act of 1980, as now or
                  hereafter amended, 42 USC 9601, et seq., or as a Hazardous
                  Substance, Hazardous Household Substance, Moderate Risk Waste
                  or Hazardous Waste under RCW 70.105 .010, or which is
                  regulated by any federal, state, or local law, statute,
                  ordinance or regulation pertaining to health, industrial
                  hygiene or the environment. Tenant shall not, without
                  Landlord's prior written consent, keep on or around the
                  Premises, Common Areas or Building, for use, disposal,
                  treatment, generation, storage or sale, any Hazardous
                  Substances except such Hazardous Substances as are commonly
                  used in general administrative office operations and those
                  which are listed on Exhibit G attached hereto and a made a
                  part hereof ("Permitted Substances"). Tenant shall have the
                  right to periodically update the list of Permitted Substances
                  by provided written notice thereof to Landlord for Landlord's
                  consent in Landlord's discretion. With respect to any
                  Hazardous Substance, Tenant shall:

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

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

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

                                      12.
<PAGE>

                           satisfactory to Landlord of Tenant's compliance with
                           the applicable government regulations;

                           (iv)     Allow Landlord or Landlord's agent or
                           representative to come on the Premises in conformance
                           with the entry rights and notice requirements
                           specified in Section 22 to check Tenant's compliance
                           with all applicable governmental regulations
                           regarding Hazardous Substances, provided that
                           Landlord shall use reasonable means to minimize
                           interference with the Tenant's use of the Premises;

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

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

                  (2)      If Landlord has reasonable cause to believe that
                  Tenant is not in compliance with this Section 8, then any and
                  all costs incurred by Landlord and associated with Landlord's
                  monitoring of Tenant's compliance with this Section 8,
                  including Landlord's reasonable attorneys' fees and costs,
                  shall be Additional Rent and shall be due and payable to
                  Landlord immediately upon demand by Landlord.

         B.       CLEANUP COSTS, DEFAULT AND INDEMNIFICATION.

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

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

                  (3)      Upon Tenant's default under this Section 8, in
                  addition to the rights and remedies set forth elsewhere in
                  this Lease, Landlord shall be entitled in addition to all
                  other rights and remedies under this Lease to recover any and
                  all damages associated with the default, including, but not
                  limited to cleanup costs and charges, civil and criminal
                  penalties and fees, loss of business and sales by

                                      13.
<PAGE>

                  Landlord and other tenants of the Building arising from
                  Tenant's default under this Section 8, any and all damages and
                  claims asserted by third parties which arise from Tenant's
                  default under this Section 8, and Landlord's reasonable
                  attorneys' fees and costs.

         C.       DISPOSAL OF WASTE.

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

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

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

         D.       Disruptive Activities. Tenant shall not:

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

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

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

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

                                      14.
<PAGE>

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

9.       SIGNAGE. All signage installed by Tenant shall comply with rules and
         regulations set forth by Landlord as may be modified from time to time.
         Current rules and regulations relating to signs are described on
         Exhibit E [PLEASE PROVIDE FOR REVIEW]. Tenant shall have the right to
         install window blinds or screens within the Premises. Tenant shall
         place no stickers, signs, lettering, banners or advertising or display
         material on or near exterior windows or doors if such materials are
         visible from the exterior of the Premises, without Landlord's prior
         written consent. Any material violating this provision may be destroyed
         by Landlord without compensation to Tenant.

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

11.      PARKING. Landlord grants to Tenant and Tenant's customers, suppliers,
         employees and invitees, a right to use forty (40) stalls in the
         designated parking areas in the Project for the use of full-sized
         passenger automobiles during the term of this Lease. Of the total 40
         stalls which Tenant is entitled to use, those stalls which are located
         within the first three (3) rows of parking adjacent to the Premises and
         south of the demising wall of the Premises as identified on Exhibit H
         hereto shall be made available to Tenant on a reserved, exclusive basis
         at no extra charge to Tenant. Landlord reserves the right at any time
         to grant non-exclusive use to other tenants with respect to the
         unreserved stalls within the parking area, to promulgate rules and
         regulations relating to the use of such parking areas, including
         reasonable restrictions on parking by tenants and employees, to
         designate specific spaces for the use of any tenant, and to make
         changes in the parking layout from time to time, so long as the same
         does not reduce the number of parking stalls which Tenant is entitled
         to use and the new location of such stalls is in reasonably close
         proximity to the Premises and accomplishes the security purpose of the
         three row reservation. Employees of Tenant shall have the right to park
         their vehicles on an overnight basis where necessitated by the work
         schedules of such employees. Any vehicle violating any vehicle
         regulation adopted by Landlord and posted in the parking area is
         subject to removal at the owner's expense.

12.      UTILITIES; SERVICES. Subject to the next paragraph, Landlord shall
         furnish the Premises with electricity for Tenant's use as set forth in
         Section 1(d), including lighting and low power usage for office
         machines and light manufacturing, and water for restroom facilities.
         From 7:00 a.m. to 6:00 p.m. on weekdays and 9:00 a.m. to 1:00 p.m. on
         Saturday, excluding legal holidays ("Normal Business Hours"), Landlord
         shall furnish the Premises with heat and air conditioning services as
         required, in Landlord's reasonable judgment, for the comfortable use
         and occupancy of the Premises. Landlord shall provide further services
         (such as janitorial services and trash disposal) if Landlord and Tenant
         specifically agree to such additional services and identify such
         services with specificity on Exhibit F hereto [SUBJECT TO DISCUSSION].
         If requested by Tenant, Landlord shall furnish heat and air
         conditioning services at times other than Normal Business

                                      15.
<PAGE>

         Hours, and supplements to Exhibit F special services, and Tenant shall
         pay for such additional services as additional rent at such reasonable
         rates as Landlord may establish from time to time.

         Tenant has examined the existing electrical and mechanical systems and
         is familiar with their capacities. If Tenant requires any additional
         capacity, Tenant shall install such additional capacity as part of the
         Tenant Improvements pursuant to Exhibit C (which cost shall be paid
         pursuant to Section 7 of Exhibit C). If, in Landlord's reasonable
         estimation, Tenant's usage of electrical or mechanical systems exceeds
         the consumption of spaces jointly metered or maintained with the
         Premises, Landlord may specially allocate to Tenant the actual cost of
         such excess consumption, and Tenant shall pay Landlord in advance, as
         additional rent, on the first day of each month during the Term, the
         amount reasonably estimated by Landlord as the cost of such excess
         consumption. Landlord shall be entitled to install and operate, at
         Tenant's cost, a monitoring/metering system in the Premises to measure
         the added demands on electricity and the HVAC systems resulting from
         such equipment and lights, and from Tenant's HVAC requirements during
         other than Normal Business Hours. Tenant acknowledges that Landlord
         shall have sole control over the determination of what utility
         providers serve the Project, and Landlord shall have no obligation to
         give access or easement rights or otherwise allow onto the Project any
         utility providers except those approved by Landlord in its discretion.
         If, for any reason, Landlord permits Tenant to purchase utility
         services from a provider other than Landlord's designated compan(ies),
         such provider shall be considered a contractor of Tenant and Tenant
         shall indemnify defend and hold Landlord harmless from such provider's
         acts and omissions while in, or in connection with their services to,
         the Building or Project in accordance with the terms and conditions of
         Article 15. In addition, Tenant shall allow Landlord to purchase such
         utility service from Tenant's provider at Tenant's rate or at such
         lower rate as can be negotiated by the aggregation of Landlord's
         tenants' requirements for such utility.

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

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

         Landlord may provide such security for the Project as it deems
         appropriate. Landlord understands that Tenant will independently be
         providing security for the Premises. During other than Normal Business
         Hours, Landlord may restrict access to the Project in accordance with
         the Project's security system. Except to the extent caused by the gross

                                      16.
<PAGE>

         negligence or willful misconduct of Landlord, its agents or
         contractors, Landlord shall not be liable to Tenant for injury to
         Tenant's agents, employees, customers or invitees, or for losses due to
         theft or burglary, or for damages done by unauthorized persons in the
         Project.

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

14.      ALTERATIONS. Other than Landlord's Work and Tenant's Work, which shall
         be governed by the Work Letter, Tenant shall not make any alterations
         to the Premises, or to the Project, including any changes to the
         existing landscaping, without Landlord's prior written consent, which
         consent shall not be unreasonably withheld, conditioned or delayed.
         Notwithstanding the foregoing, Tenant shall have the right to make
         alterations and improvements to the Premises without Landlord's consent
         (but only after having provided not less than 15 days prior written
         notice to Landlord) where the same (i) will not materially affect the
         structural components of the building in which the Premises is located
         or the building systems, and (ii) will not exceed the cost of $10,000.
         If Landlord gives its consent to alterations, Landlord may post notices
         of non-responsibility in accordance with the laws of the state in which
         the premises are located. Tenant may, at the time of requesting
         Landlord's consent to alterations, further request in writing that
         Landlord elect, at the time of granting consent, whether such
         alterations must be removed upon termination of the Lease. If Tenant so
         requests, Landlord shall make such election at the time of granting
         consent to the alteration (or if no consent is required, then within
         fifteen days of Tenant's request). Failure of Landlord to respond to
         Tenant's request shall be deemed an election that the alteration need
         not be removed on termination of this Lease. Any alterations made shall
         remain on and be surrendered with the Premises upon expiration or
         termination of this Lease, except that Landlord may, within 30 days
         before or 30 days after expiration of the term, elect to require Tenant
         to remove any alterations which Tenant may have made to the Premises
         except such alterations as Tenant has received consent to leave as
         provided above. If Landlord elects to require removal of an alteration,
         at its own cost Tenant shall restore the Premises to the condition
         designated by Landlord in its election, before the last day of the term
         or within 30 days after notice of its election is given, whichever is
         later.

                                      17.
<PAGE>

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

15.      RELEASE AND INDEMNITY.

         A.       INDEMNITY. Except to the extent caused by the gross negligence
                  or willful misconduct of Landlord, its agents, employees or
                  contractors, Tenant shall indemnify, defend (using legal
                  counsel acceptable to Landlord) and save Landlord and its
                  property manager harmless from all claims, suits, losses,
                  damages, fines, penalties, liabilities and expenses (including
                  Landlord's personnel and overhead costs and reasonable
                  attorneys fees and other costs incurred in connection with
                  claims, regardless of whether such claims involve litigation
                  but excluding consequential damages such as lost profits)
                  resulting from any actual or alleged injury (including death)
                  of any person or from any actual or alleged loss of or damage
                  to, any property arising out of or in connection with (i)
                  Tenant's occupation, use or improvement of the Premises, or
                  that of its employees, agents or contractors, or (ii) any act
                  or omission of Tenant, its officers, agents or employees in or
                  about the Premises. Tenant agrees that the foregoing indemnity
                  specifically covers actions brought by its own employees. This
                  indemnity with respect to acts or omissions during the term of
                  this Lease shall survive termination or expiration of this
                  Lease. The foregoing indemnity is specifically and expressly
                  intended to, constitute a waiver of Tenant's immunity under
                  Washington's Industrial Insurance Act, RCW Title 51, to the
                  extent necessary to provide Landlord with a full and complete
                  indemnity from claims made by Tenant and its employees, to the
                  extent provided herein. Tenant shall promptly notify Landlord
                  of casualties or accidents occurring in or about the Premises.

                  Except to the extent caused by the gross negligence or willful
                  misconduct of Tenant, its agents, employees or contractors,
                  Landlord shall indemnify, defend and save Tenant harmless from
                  all claims, suits, losses, damages, fines, penalties,
                  liabilities and expenses (including reasonable attorneys fees
                  and other costs incurred in connection with claims, regardless
                  of whether such claims involve litigation but excluding
                  consequential damages such as lost profits) resulting from any
                  actual or alleged injury (including death) of any person or
                  from any actual or alleged loss of or damage to, any property
                  to the extent caused by (i) the activities of Landlord during
                  improvement of the Premises or Project, or the activities of
                  its employees, agents or contractors or (ii) any act or
                  omission of Landlord, its officers, agents or employees in the
                  Common Areas. Landlord agrees that the

                                      18.
<PAGE>

                  foregoing indemnity specifically covers actions brought by its
                  own employees. This indemnity with respect to acts or
                  omissions during the term of this Lease shall survive
                  termination or expiration of this Lease. The foregoing
                  indemnity is specifically and expressly intended to,
                  constitute a waiver of Landlord's immunity under Washington's
                  Industrial Insurance Act, RCW Title 51, to the extent
                  necessary to provide Tenant with a full and complete indemnity
                  from claims made by Landlord and its employees, to the extent
                  provided herein.

                  LANDLORD AND TENANT ACKNOWLEDGE THAT THE INDEMNIFICATION
                  PROVISIONS OF SECTION 8 AND THIS SECTION 15 WERE SPECIFICALLY
                  NEGOTIATED AND AGREED UPON BY THEM.

         B.       RELEASE. Tenant hereby fully and completely waives and
                  releases all claims against Landlord for any losses or other
                  damages sustained by Tenant or any person claiming through
                  Tenant resulting from any accident or occurrence in or upon
                  the Premises, including but not limited to: any defect in or
                  failure of Project equipment; any failure to make repairs; any
                  defect, failure, surge in, or interruption of Project
                  facilities or services; any defect in or failure of Common
                  Areas; broken glass; water leakage; the collapse of any
                  Building component; or any act, omission or negligence of
                  co-tenants, licensees or any other persons or occupants of the
                  Building, provided only that the release contained in this
                  Section 15(b) shall not apply to claims for actual damage to
                  persons or property (excluding consequential damages such as
                  lost profits) resulting directly from Landlord's breach of its
                  express obligations under this Lease which Landlord has not
                  cured within a reasonable time after receipt of written notice
                  of such breach from Tenant.

                  Notwithstanding any other provision of this Lease, and to the
                  fullest extent permitted by law, Tenant hereby agrees that
                  Landlord shall not be liable for injury to Tenant's business
                  or any loss of income therefrom, whether such injury or loss
                  results from conditions arising upon the Premises or the
                  Project, or from other sources or places including, without
                  limitation, any interruption of services and utilities or any
                  casualty, or from any cause whatsoever, including, Landlord's
                  negligence, and regardless of whether the cause of such injury
                  or loss or the means of repairing the same is inaccessible to
                  Landlord or Tenant. Tenant may elect, at its sole cost and
                  expense, to obtain business interruption insurance with
                  respect to such potential injury or loss.

         C.       LIMITATION ON INDEMNITY. In compliance with RCW 4.24.115 as in
                  effect on the date of this Lease, all provisions of this Lease
                  pursuant to which Landlord or Tenant (the "Indemnitor") agrees
                  to indemnify the other (the "Indemnitee") against liability
                  for damages arising out of bodily injury to Persons or damage
                  to property relative to the construction, alteration, repair,
                  addition to, subtraction from, improvement to, or maintenance
                  of, any building, road, or other structure, project,
                  development, or improvement attached to real estate, including
                  the Premises, (i) shall not apply to damages caused by or
                  resulting from the sole

                                      19.
<PAGE>

                  negligence of the Indemnitee, its agents or employees, and
                  (ii) to the extent caused by or resulting from the concurrent
                  negligence of (a) the Indemnitee or the Indemnitee's agents or
                  employees, and (b) the Indemnitor or the Indemnitor's agents
                  or employees, shall apply only to the extent of the
                  Indemnitor's negligence; PROVIDED, HOWEVER, the limitations on
                  indemnity set forth in this Section shall automatically and
                  without further act by either Landlord or Tenant be deemed
                  amended so as to remove any of the restrictions contained in
                  this Section no longer required by then applicable law.

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

16.      INSURANCE. Landlord shall maintain, or cause to be maintained, standard
         fire and extended coverage insurance on the Project (excluding
         leasehold improvements by Tenant in excess of those standard for the
         building and Tenant's property) in amounts considered by Landlord to be
         reasonable and customary. The insurance required to be obtained by
         Landlord may be obtained by Landlord through blanket or master policies
         insuring other entities or properties owned or controlled by Landlord.

         Tenant shall, throughout the term of this Lease and any renewal hereof,
         at its own expense, keep and maintain in full force and effect, a
         policy of commercial general liability (occurrence form) insurance,
         including contractual liability (including Tenant's indemnification
         obligations under this Lease) insuring Tenant's activities upon, in or
         about the Premises or the Project, against claims of bodily injury or
         death or property damage or loss with a combined single limit of not
         less than One Million Dollars ($1,000,000) per occurrence and Three
         Million Dollars ($3,000,000) in the aggregate, with such increases in
         limits as Landlord may from time to time require consistent with
         insurance requirements of institutional landlords in similar projects
         in the area. If Tenant manufactures on the Premises consumer goods
         using any materials supplied by Landlord (including but not limited to
         water supplied as part of utilities to the Premises), Tenant's
         insurance shall include products liability insurance in the amounts
         specified for the commercial general liability insurance.

         Tenant shall further, throughout the term of this Lease and any renewal
         thereof, at its own expense, keep and maintain in full force and
         effect, what is commonly referred to as "Special Cause of Loss" or
         "Special" coverage insurance (excluding earthquake and flood) on
         tenant's leasehold improvements in an amount equal to one hundred
         percent (100%) of the replacement value thereof with a coinsurance
         waiver. The proceeds from any such policy shall be used by Tenant for
         the restoration of Tenant's improvements or alterations. As used in
         this Lease, "tenant's leasehold improvements" shall mean any
         alterations, additions or improvements installed in or about the
         Premises by or with Landlord's permission or otherwise permitted by
         this Lease, whether or not the cost thereof was paid for by Tenant.

                                      20.
<PAGE>

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

         Each party hereto waives all rights of recovery, claims, actions or
         causes of actions arising in any manner in its (the "Injured Party's")
         favor and against the other party for loss or damage to the Injured
         Party's property located within or constituting a part or all of the
         Project, to the extent the loss or damage: (a) is covered by the
         Injured Party's insurance; or (b) would have been covered by the
         insurance the Injured Party is required to carry under this Lease,
         whichever is greater, regardless of the cause or origin, including the
         sole, contributory, partial, joint, comparative or concurrent
         negligence of the other party. All insurance carried by either Landlord
         or Tenant covering the losses and damages described in this section
         shall provide for such waiver of rights of subrogation by the Injured
         Party's insurance carrier to the maximum extent that the same is
         permitted under the laws and regulations governing the writing of
         insurance within the state in which the building is located. Both
         parties hereto are obligated to obtain such a waiver and provide
         evidence to the other party of such waiver. The waiver set forth in
         this section shall be in addition to, and not in substitution for, any
         other waivers, indemnities or exclusions of liability set forth in this
         Lease.

17.      DESTRUCTION. If during the term, the Premises or Project are more than
         30% destroyed from any cause, or rendered inaccessible or unusable from
         any cause, Landlord may, in its sole discretion, terminate this Lease
         by delivery of notice to Tenant within 30 days of such event without
         compensation to Tenant. If in Landlord's estimation, the Premises
         cannot be restored within 90 days following such destruction, the
         Landlord shall notify Tenant and Tenant may terminate this Lease by
         delivery of notice to Landlord within 30 days of receipt of Landlord's
         notice. If neither Landlord nor Tenant terminates this Lease as
         provided above, then Landlord shall commence to restore the Premises in
         compliance with then existing laws and shall complete such restoration
         with due diligence. In such event, this Lease shall remain in full
         force and effect, but there shall be an abatement of Base Monthly Rent
         and Tenant's Share of Expenses between the date of destruction and the
         date of completion of restoration, based on the extent to which
         destruction interferes with Tenant's use of the Premises.

                                      21.
<PAGE>

18.      CONDEMNATION.

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

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

19.      ASSIGNMENT OR SUBLEASE. Tenant shall not assign or encumber its
         interest in this Lease or the Premises or sublease all or any part of
         the Premises or allow any other person or entity (except Tenant's
         authorized representatives, employees, invitees, or guests) to occupy
         or use all or any part of the Premises without first obtaining
         Landlord's consent which shall not be unreasonably withheld for tenants
         meeting Landlord's

                                      22.

<PAGE>

         then-existing standards for creditworthiness and use. No assignment or
         sublease shall release Tenant from the obligation to perform all
         obligations under this Lease. Any assignment, encumbrance or sublease
         without Landlord's written consent shall be voidable and at Landlord's
         election, shall constitute a default. If Tenant is a partnership, a
         withdrawal or change, voluntary, involuntary or by operation of law of
         any partner, or the dissolution of the partnership, shall be deemed a
         voluntary assignment. If Tenant consists of more than one person, a
         purported assignment, voluntary or involuntary or by operation of law
         from one person to the other shall be deemed a voluntary assignment. If
         Tenant is a corporation, any dissolution, merger, consolidation or
         other reorganization of Tenant, or sale or other transfer of a
         controlling percentage of the capital stock of Tenant, or the sale of
         at least 25% of the value of the assets of Tenant shall be deemed a
         voluntary assignment. The phrase "controlling percentage" means
         ownership of and right to vote stock possessing at least 25% of the
         total combined voting power of all classes of Tenant's capital stock
         issued, outstanding and entitled to vote for election of directors.
         This Section 19 shall not apply to corporations the stock of which is
         traded through an exchange or over the counter. Seventy-five (75%) of
         all rent received by Tenant from its subtenants in excess of the Rent
         payable by Tenant to Landlord under this Lease, or any sums to be paid
         by an assignee to Tenant in consideration of the assignment of this
         Lease after deducting therefrom brokers' commissions, reasonable
         attorneys' fees and costs for improving the Premises for such
         subtenants or assignee (said costs to be amortized, without interest,
         over the term of the sublease or remaining term of the Lease, as
         applicable), shall be paid to Landlord. If Tenant requests Landlord to
         consent to a proposed assignment or subletting, Tenant shall pay to
         Landlord, whether or not consent is ultimately given, $100 or
         Landlord's reasonable attorney's fees, not to exceed $ 1,000, incurred
         in connection with such request, whichever is greater.

         No interest of Tenant in this Lease shall be assignable by involuntary
         assignment through operation of law (including without limitation the
         transfer of this Lease by testacy or intestacy). Each of the following
         acts shall be considered an involuntary assignment: (a) if Tenant is or
         becomes bankrupt or insolvent, or institutes proceedings under the
         Bankruptcy Act in which Tenant is the bankrupt; or if Tenant is a
         partnership or consists of more than one person or entity, if any
         partner of the partnership or other person or entity is or becomes
         bankrupt or insolvent, or makes an assignment for the benefit of
         creditors; or (b) if a writ of attachment or execution is levied on
         this Lease; or (c) if in any proceeding or action to which Tenant is a
         party, a receiver is appointed with authority to take possession of the
         Premises. An involuntary assignment shall constitute a default by
         Tenant and Landlord shall have the right to elect to terminate this
         Lease, in which case this Lease shall not be treated as an asset of
         Tenant.

         Notwithstanding anything to the contrary contained in this Lease,
         provided that the net worth of the succeeding entity is not less than
         75% of the net worth of Tenant, Tenant may assign this Lease or sublet
         the Premises, or any portion thereof, without Landlord's consent, to
         any entity which controls, is controlled by, or is under common control
         with Tenant; to any entity which results from a merger of,
         reorganization of, or consolidation with Tenant; to any entity engaged
         in a joint venture with Tenant; or to any entity which acquires
         substantially all of the stock or assets of Tenant, as a going concern,
         with respect to the business that is being conducted in the Premises
         (hereinafter each a "Permitted

                                      23.

<PAGE>

         Transfer"). In addition, a sale or transfer of the capital stock of
         Tenant shall be deemed a Permitted Transfer if (1) such sale or
         transfer occurs in connection with any bona fide financing or
         capitalization for the benefit of Tenant, or (2) Tenant is or becomes a
         publicly traded corporation. Landlord shall have no right to terminate
         the Lease in connection with, and shall have no right to any sums or
         other economic consideration resulting from any Permitted Transfer.

20.      EVENT OF DEFAULT. The occurrence of any of the following shall
         constitute a default by Tenant: (a) a failure to pay Rent or other
         charge when due, provided that Landlord shall not exercise any of its
         rights under this Section 20(a) until Landlord has given Tenant notice
         of such default and a cure period of three (3) days from receipt of
         such notice, and Tenant has failed to pay such rent or other charge or
         establish the entry system within such cure period; (b) abandonment and
         vacation of the Premises (failure to occupy and operate the Premises
         for ten consecutive days while in monetary default under this Lease
         shall be conclusively deemed an abandonment and vacation); or (c)
         failure to perform any other provision of this Lease, provided that
         Landlord shall not exercise any of its rights under this Section 20(c)
         until Landlord has given Tenant notice of such default and a cure
         period of thirty (30) days from receipt of such notice, and Tenant has
         failed to cure such default within such cure period, provided further
         that if more than thirty (30) days are required to complete such
         performance, the cure period shall not be deemed to have run so long as
         Tenant commences to cure such default within the thirty (30) day period
         and thereafter diligently pursues its completion. The notice required
         by this Section is intended to satisfy any and all notice requirements
         imposed by law on Landlord and is not in addition to any such
         requirement.

21.      LANDLORD'S REMEDIES. If an Event of Default by Tenant occurs, Landlord
         shall have the following remedies. (These remedies are not exclusive;
         they are cumulative and in addition to any remedies now or later
         allowed by law): Landlord may terminate Tenant's right to possession of
         the Premises at any time. No act by Landlord other than giving notice
         to Tenant shall terminate this Lease. Acts of maintenance, efforts to
         relet the Premises, or the appointment of a receiver on Landlord's
         initiative to protect Landlord's interest under this Lease shall not
         constitute a termination of Tenant's right to possession. Upon
         termination of Tenant's right to possession, Landlord has the right to
         recover from Tenant: (1) the worth of the unpaid Rent that had been
         earned at the time of termination of Tenant's right to possession; (2)
         the worth of the amount of the unpaid Rent that would have been earned
         after the date of termination of Tenant's right to possession less the
         amount that Tenant proves Landlord should be able to earn during such
         period net of all releasing costs; (3) any other amount, including but
         not limited to, expenses incurred to relet the Premises, court,
         attorney and collection costs, necessary to compensate Landlord for all
         detriment caused by Tenant's default. "The Worth," as used for Item (1)
         in this Paragraph 21 is to be computed by allowing interest at the rate
         of 12 percent per annum. If the interest rate specified in this Lease
         is higher than the rate permitted by law, the interest rate is hereby
         decreased to the maximum legal interest rate permitted by law. "The
         Worth" as used for Item (2) in this Paragraph 21 is to be computed by
         discounting the amount at the discount rate of the Federal Reserve Bank
         of San Francisco at the time of termination of Tenant's right of
         possession.

                                      24.

<PAGE>

22.      ENTRY ON PREMISES. Landlord and its authorized representatives shall
         have the right to enter the Premises at all reasonable times on
         reasonable prior notice (provided that no notice shall be required in
         an emergency) for any of the following purposes: (a) to determine
         whether the Premises are in good condition and whether Tenant is
         complying with its obligations under this Lease; (b) to do any
         necessary maintenance and to make any restoration to the Premises or
         the Project that Landlord has the right or obligation to perform; (c)
         to post "for sale" signs at any time during the term, to post "for
         rent" or "for lease" signs during the last 90 days of the Term, or
         during any period while Tenant is in default; (d) to show the Premises
         to prospective brokers, agents, buyers or persons interested in
         purchasing the Project, at any time during the Term, or to prospective
         tenants interested in leasing the Premises during the last 90 days of
         the Term; or (e) to repair, maintain or improve the Project and to
         erect scaffolding and protective barricades around and about the
         Premises, and to do any other act or thing necessary for the safety or
         preservation of the Premises or the Project; provided, however, with
         respect to each of subclauses (a) through (e) above, Landlord agrees
         that any entry into the Premises will be limited to accomplishment of
         tasks set forth in Landlord's notice, and Landlord shall use
         commercially reasonable best efforts not to prevent entry to the
         Premises or otherwise interfere with Tenant's use and enjoyment of the
         Premises and Project, and Landlord shall diligently perform the
         relevant work or task to completion. Tenant shall have the right to
         have a representative present during any entry within the Premises by
         Landlord. Notwithstanding the foregoing, in the event that Landlord
         requires access to the Premises during any time period when no Tenant
         representative is available and Landlord reasonably believes that a
         condition exists within any portion of the Premises, which condition
         poses an immediate threat of harm to any person or property (i.e., an
         "emergency"), Tenant hereby instructs Landlord to use whatever force
         and means are reasonably necessary to gain access to the Premises.
         Except to the extent caused by Landlord's gross negligence or willful
         misconduct (and in any event excluding consequential damages such as
         lost profits), Landlord shall not be liable in any manner for any
         inconvenience, disturbance, loss of business, nuisance or other damage
         arising out of Landlord's entry onto the Premises as provided in this
         Section 22. Except as otherwise set forth in this Lease, Tenant shall
         not be entitled to an abatement or reduction of Rent if Landlord
         exercises any rights reserved in this Section 22. Without limiting any
         other requirement of Landlord herein, Landlord shall conduct its
         activities on the Premises in a commercially reasonable manner so as to
         limit inconvenience, annoyance or disturbance to Tenant to the maximum
         extent practicable.

23.      SUBORDINATION; ESTOPPEL CERTIFICATE.

         a.       SUBORDINATION. Without the necessity of any additional
                  document being executed by Tenant for the purpose of effecting
                  a subordination, and at the election of Landlord or any
                  mortgagee or any beneficiary of a Deed of Trust with a lien on
                  the Project or any ground lessor with respect to the Project,
                  this Lease shall be subject and subordinate at all times to
                  (a) all ground leases or underlying leases which may now exist
                  or hereafter be executed affecting the Project, and (b) the
                  lien of any mortgage or deed of trust which may now exist or
                  hereafter be executed in any amount for which the Project,
                  ground leases or underlying leases, or Landlord's interest or
                  estate in any of said items is specified as security. In the

                                      25.

<PAGE>

                  event that any ground lease or underlying lease terminates for
                  any reason or any mortgage or Deed of Trust is foreclosed or a
                  conveyance in lieu of foreclosure is made for any reason,
                  Tenant shall, notwithstanding any subordination, attorn to and
                  become the Tenant of the successor in interest to Landlord, at
                  the option of such successor in interest. Tenant covenants and
                  agrees to execute and deliver, upon demand by Landlord and in
                  the form requested by Landlord any additional documents
                  evidencing the priority or subordination of this Lease with
                  respect to any such ground lease or underlying leases or the
                  lien of any such mortgage or Deed of Trust. Notwithstanding
                  the foregoing, Tenant shall not be required to subordinate its
                  interest under this Lease unless (a) such subordination does
                  not materially increase Tenant's obligations, or materially
                  decrease its rights under this Lease, and (b) Landlord first
                  obtains from the holder of the mortgage, deed of trust, or
                  other instrument of security to which this Lease is to become
                  subordinated a written agreement that provides substantially
                  the following: "As long as Tenant performs its obligations
                  under this Lease, Tenant shall not be disturbed in its quiet
                  enjoyment under this Lease by any foreclosure of, deed given
                  in lieu of foreclosure of, or sale under the encumbrance, or
                  steps or procedures taken under the encumbrance."

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

24.      NOTICE. Any notice, demand or request required hereunder shall be given
         in writing to the party's facsimile number or address set forth in
         Section 1 hereof by any of the following means: (a) personal service;
         (b) electronic communication, whether by telex, telegram or facsimile
         with electronic confirmation; (c) overnight courier; or (d) registered
         or certified, first class mail, return receipt requested. Such
         addresses may be changed by notice to the other parties given in the
         same manner as above provided. Any notice,

                                      26.

<PAGE>

         demand or request sent pursuant to either subsection (a) or (b) hereof
         shall be deemed received upon such personal service or upon dispatch by
         electronic means with electronic confirmation of receipt. Any notice,
         demand or request sent pursuant to subsection (c) hereof shall be
         deemed received on the business day immediately following deposit with
         the overnight courier and, if sent pursuant to subsection (d), shall be
         deemed received forty-eight (48) hours following deposit in the U.S.
         mail. Tenant hereby appoints as its agent to receive the service of all
         dispossessory or distraint proceedings and notices thereunder the
         person in charge of or occupying the Premises at the time, and, if no
         person shall be in charge of occupying the same, then such service may
         be made by attaching the same on the main entrance of the Premises.

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

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

                                      27.

<PAGE>

         disposition of Tenant's personal property. Tenant shall be liable to
         Landlord for Landlord's cost for storage, removal or disposal of
         Tenant's personal property.

         If Tenant, with Landlord's consent, remains in possession of the
         Premises after expiration or termination of the term, or after the date
         in any notice given by Landlord to Tenant terminating this Lease, such
         possession by Tenant shall be deemed to be a month-to-month tenancy
         terminable as provided under Washington law, by either party. All
         provisions of this Lease, except those pertaining to term and Rent,
         shall apply to the month-to-month tenancy. During any holdover term,
         Tenant shall pay Base Monthly Rent in an amount equal to 150% of Base
         Monthly Rent for the last full calendar month during the regular term
         plus 100% of Tenant's share of Expenses pursuant to Section 4(b)(3). If
         Tenant fails to surrender possession of the Premises upon termination
         or expiration of this Lease and if Tenant does not obtain Landlord's
         written consent to Tenant's continued occupancy, then Tenant shall be
         deemed a trespasser and shall be liable to Landlord for all damages
         sustained by Landlord as a result thereof, together with Base Rate at a
         rate double the Latest Rate.

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

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

29.      MISCELLANEOUS PROVISIONS.

         a.       TIME OF ESSENCE. Time is of the essence of each provision of
                  this Lease.

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

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

         d.       COMMISSIONS. Each party represents that it has not had
                  dealings with any real estate broker, finder or other person
                  with respect to this Lease in any manner, except for the
                  broker(s) identified in Section 1. Landlord shall pay a
                  commission,

                                      28.

<PAGE>

                  to be divided equally among the brokers, of Five Percent of
                  Base Monthly Rent for the first 60 months, to be paid one-half
                  on lease execution and one-half on occupancy. Each party shall
                  be responsible for, and indemnify the other party against, any
                  additional sums claimed by its broker. Landlord and Tenant
                  recognize that it is possible that they may hereafter make
                  additional agreements regarding further extension or renewal
                  of this Lease or a new lease or leases for all or one or more
                  parts of the Premises or other space in the Project for a term
                  or terms commencing after the Commencement Date of this Lease.
                  Landlord and Tenant recognize that it is also possible that
                  they may hereafter modify this Lease to add additional space
                  or to substitute space as part of the Premises. If any such
                  additional agreements, new leases or modifications to this
                  Lease are made, Landlord shall not have any obligation to pay
                  any compensation to any real estate broker or to any other
                  third person engaged by Tenant to render services to Tenant in
                  connection with negotiating such matters, regardless of
                  whether under the circumstances such person is or is not
                  regarded by the law as an agent of Landlord.

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

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

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

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

                                      29.

<PAGE>

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

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

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

         l.       CLEAN AIR ACT. Tenant acknowledges that Landlord has not made
                  any portion of the Premises or the Building accessible for
                  smoking in compliance with WAC 296-62-12000. If Tenant wishes
                  to make any portion of the Premises accessible for smoking,
                  Tenant shall make all improvements necessary to comply with
                  all applicable governmental rules and regulations. Tenant
                  acknowledges that the indemnity contained in Section 15 of the
                  Lease includes, but is not limited to

                                      30.

<PAGE>

                  claims based on the presence of tobacco smoke as a result of
                  the activities of Tenant, its employees, agents, or guests.

30.      OPTION TO RENEW. Tenant is granted the right to extend the term of this
         Lease beyond the expiration date of the initial term for one period of
         sixty (60) months (the "Extended Term"). Tenant may not exercise its
         Extension Right if it is then in default beyond any applicable cure
         period or if it has ever been in default beyond any applicable cure
         period more than two (2) times in any twelve (12) month period. Tenant
         may exercise its Extension Right by delivering written notice thereof
         to Landlord not later than one hundred eighty (180) days prior to the
         expiration of the initial term. In the Extended Term, all terms and
         conditions of this Lease shall apply, except (i) the Work Letter
         Agreement shall not apply, and (ii) the Base Monthly Rent for the
         Extended Term shall be ninety-five percent (95%) of the Fair Market
         Rent for a similar lease and term for similarly situated and improved
         space, provided that in no event shall the Base Monthly Rent for the
         Extended Term be less than the Base Monthly Rent for the last month of
         the initial term. Extension Rights shall apply to all of the Premises
         then under lease to Tenant. Tenant's Extension Right is personal and
         may not be exercised by any assignee or sublessee other than an
         affiliate of Tenant or a successor by merger or consolidation.

         The term "Fair Market Rent" for the purposes of this Lease shall mean
         the annual amount per rentable square foot that Lessor has accepted in
         current, new comparable transactions in the Project for comparable
         space, for a comparable period of time, with improvements comparable to
         those existing in the Premises on the date Tenant exercises its
         Extension Right (or with such restoration as Tenant would be required
         to make upon termination of the Lease, if such would increase the Fair
         Market Rent) from non-expansion, non-renewal and non-equity tenants, or
         if there are not a sufficient number of current comparable transactions
         in the Project, what a willing, comparable, new, non-expansion,
         non-renewal, non-equity tenant would pay, and a willing, comparable
         landlord of a comparable building would accept under the transaction as
         further defined above.

         If Landlord and Tenant are not able to agree on the Fair Market Rent
         component for the Extended Term within thirty days after Tenant's
         notice of election to renew, then such Fair Market Rent shall be
         determined as follows. Landlord and Tenant shall each select an
         appraiser with at least ten years experience in the SODO/Dwamish area.
         If the two appraisers are unable to agree within ten days after their
         selection, they shall select a similarly qualified third appraiser (the
         "Neutral Appraiser"). Within twenty days after selection of the Neutral
         Appraiser, the three appraisers shall simultaneously exchange
         determinations of Fair Market Rent. If the lowest appraisal is not less
         than ninety percent (90%) of the highest appraisal, then the three
         appraisals shall be averaged and the result shall be the Fair Market
         Rent. If the lowest appraisal is less than ninety percent (90%) of the
         highest appraisal, then the Fair Market Rent shall be deemed the rent
         set forth in the appraisal submitted an appraiser appointed by a party
         that is closest in dollar amount to the appraisal submitted by the
         Neutral Appraiser.

31.      AMERICANS WITH DISABILITIES ACT. Tenant shall be responsible for
         compliance with any requirements of the Americans with Disabilities Act
         of 1990 ("ADA") that may be imposed as a result of the Tenant's Work or
         Tenant Improvements

                                      31.

<PAGE>

         constructed pursuant to the Work Letter Agreement. Landlord shall be
         responsible, at Landlord's expense, for the cost of remedying any
         violations of the ADA existing as of the Commencement Date, except that
         the cost of constructing the Tenant Improvements and Tenant's Work
         shall be paid in compliance with the Work Letter. Landlord hereby
         assumes responsibility for compliance with post-Commencement Date
         amendments or reinterpretations of the ADA relating to the Common
         Areas, and the cost of such compliance shall be an Expense. Tenant
         shall be responsible for ensuring that its Tenant's Work and Tenant
         Improvements do not cause violations of the ADA and for compliance with
         post-Commencement Date amendments or reinterpretations of the ADA
         relating to the Premises.

32.      BUILDING CODES. Landlord shall be responsible, at Landlord's expense,
         for the cost of remedying any violations of the such building codes
         existing as of the Commencement Date except such violations as may be
         created by Tenant's construction of Tenant's Work and Tenant
         Improvements. Landlord hereby assumes responsibility for compliance
         with post-Commencement Date amendments or reinterpretations of the
         applicable building codes relating to the Common Areas, and the cost of
         such compliance shall be subject to Section 4(b). Tenant acknowledges
         that with respect to Landlord's obligations pursuant to Sections 31 and
         32, Landlord shall be entitled to contest any notices of violation, and
         shall not be obligated to make any alterations or improvements until so
         ordered by the applicable governmental entities, and any contested
         matters have been finally resolved.

                                      32.

<PAGE>

Landlord:         GULL INDUSTRIES, INC.

                  By:   /s/ William T. Vivian
                      -------------------------------
                      Its VICE PRESIDENT

                  By:   /s/ Robert L. Paquin
                      -------------------------------
                      Its COO

Tenant:           BLUE NILE, INC.

                  By:________________________________
                     Its

                  By:________________________________
                     Its

STATE OF WASHINGTON                 )
                                    ) ss
COUNTY OF KING                      )

         I certify that I know or have satisfactory evidence that William T.
Vivian is the person who appeared before me, and said person acknowledged that
he signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the Vice President of Gull Industries to be
the free and voluntary act of such party for the uses and purposes mentioned in
the instrument.

         Dated: 6/28/01

                                                   /s/ Janine Michele Wilson
                                             -----------------------------------
                                                          (Signature)

                                                     Janine  Michele Wilson
                                             -----------------------------------
                                                          (Print Name)

                                             Notary Public, in and for the State
                                             of Washington, residing at Kent
                                             My Commission Expires 9/1/01

                                      33.

<PAGE>

STATE OF WASHINGTON                 )
                                    ) ss
COUNTY OF KING                      )

         I certify that I know or have satisfactory evidence that Robert L.
Paquin is the person who appeared before me, and said person acknowledged that
he signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the Chief Operating Officer of Blue Nile Inc.
to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.

         Dated: 6/28/01

                                                  /s/ Janice Michele Wilson
                                             -----------------------------------
                                                         (Signature)

                                                   Janice Michele Wilson
                                             -----------------------------------
                                                       (Print Name)

                                             Notary Public, in and for the State
                                             of Washington, residing at Kent
                                             My Commission Expires 9/1/01

                                      34.

<PAGE>

                                    EXHIBIT A

                                    PREMISES

                             [KEY PLAN & EXIT PATH]

<PAGE>

                                    EXHIBIT B

                                     PROJECT

<PAGE>

                                    EXHIBIT C
                               LANDLORD'S WORK AND
                              WORK LETTER AGREEMENT
                      [LANDLORD CONSTRUCTING IMPROVEMENTS]

         This Work Letter Agreement is part of that certain Lease ("Lease") by
and between Gull Industries, Inc. ("Landlord") and Blue Nile, Inc. ("Tenant").

         This Work Letter Agreement shall govern the initial improvements to the
Premises.

         Capitalized terms used but not defined herein shall have the meanings
set forth in the Lease.

                             1. TENANT IMPROVEMENTS.

         Reference herein to "Tenant Improvements" shall include all work to be
done in the Premises pursuant to the Tenant Improvement Plans described in
Paragraph 3 below, including, but not limited to, partitioning, doors, ceilings,
floor coverings, wall finishes (including paint and wall covering), electrical
(including lighting, switching, telephones, outlets, etc.), plumbing, heating,
ventilating and air conditioning, fire protection, cabinets and other millwork.
The parties specifically contemplate that the Tenant Improvements will include:
Security bars on skylight windows on east and west end of 18 foot high portion
of space, floor to roof partition to the extent it does not presently exist
along demising wall, enclosure of shop area, painting of entire Premises, new
ceiling, energy efficient lighting, and new floor covering throughout space
(areas of both VCT and industrial carpeting will be used). "Landlord's Work", as
referenced in the Lease, shall consist of the Tenant Improvements constructed by
Landlord pursuant to this Work Letter Agreement. The parties recognize that in
addition, Landlord may construct (at its expense) earthquake bracing and/or a
new roof, which work shall not be Landlord's Work and shall not be charged as a
Tenant Improvement but which shall be coordinated with construction of the
Tenant Improvements.

                          2. TENANT IMPROVEMENT PLANS.

         Tenant shall deliver final working drawings and specifications by JPC
Architects to Landlord at the time Tenant signs the Lease. Such final working
drawings and specifications shall have been approved by Tenant for use as the
"Tenant Improvement Plans." The "Tenant Improvement Plans" must be consistent
with Landlord's' standard specifications (the "Standards") for tenant
improvements for the Building, as the same may be changed from time to time by
Landlord. Landlord, with Tenant's cooperation, shall cause changes to be made in
the Tenant Improvement Plans only as necessary to obtain the building permit. No
further changes to the Tenant Improvement Plans may be made without the prior
written approval from both Landlord and Tenant, and then only after agreement by
Tenant to pay any excess costs resulting from the design and/or construction of
such changes.

                                      37.

<PAGE>

                      3. NON-STANDARD TENANT IMPROVEMENTS.

         Landlord shall permit Tenant to deviate from the Standards for the
Tenant Improvements; provided that (a) the deviations shall not be of a lesser
quality than the Standards; (b) the total lighting for the Premises shall not
exceed 1.65 watts per rentable square foot; (c) the deviations conform to
applicable governmental regulations and necessary governmental permits and
approvals have been secured; (d) the deviations do not require building service
beyond the level normally provided to other tenants in the Building and do not
overload the floors; and (e) Landlord has reasonably determined that the
deviations are of a nature and quality that are consistent with the overall
objectives of the Landlord for the Building.

                                4. FINAL PRICING.

         Landlord shall deliver final pricing to Tenant within 14 days after
execution of the Lease and receipt of approved Tenant Improvement Plans. Tenant
shall have the right to timely review of the cost components and approval of the
final pricing. Said approval shall be provided by Tenant to Landlord within 72
hours of Tenant's receipt of the final pricing.

                             5. COMPLETION SCHEDULE.

         Landlord shall deliver a time table for completion of the installation
of the Tenant Improvements to be constructed in the Premises, and Commencement
Date for the Lease Term, to the Tenant within 14 days after execution of the
Lease and receipt of approved Tenant Improvement Plans. Tenant shall then have
the right to timely review of the time components and approval of the final
schedule. Said approval shall be provided by Tenant to Landlord within 72 hours
of receipt Tenant's of the final schedule.

                     6. CONSTRUCTION OF TENANT IMPROVEMENTS.

         Landlord shall enter into a construction contract with its contractor
for the installation of the Tenant Improvements in accordance with the Tenant
Improvement Plans. Landlord shall cause the Tenant Improvements to be
constructed in a good and workmanlike manner in accordance with the Tenant
Improvement Plans. Landlord shall be solely responsible to interpret Tenant
Improvement Plans and shall supervise the completion of such work and shall use
its commercially reasonable best efforts to secure substantial completion of the
work in accordance with the Completion Schedule. Landlord shall not be liable
for any direct or indirect damages as a result of delays in construction beyond
Landlord's reasonable control, including, but not limited to, acts of God,
inability to secure governmental approvals or permits, governmental
restrictions, strikes, availability of materials or labor or delays by Tenant
(or its architect or anyone performing services on behalf of Tenant).

                 7. PAYMENT OF COST OF THE TENANT IMPROVEMENTS.

a. Landlord hereby grants to Tenant an allowance ("Tenant Allowance") of up to
Ten Dollars ($10.00) per Rentable Square Foot of the Premises, which is
initially estimated as Ninety-Four Thousand Dollars ($94,000) and shall be
reconciled upon final measurement of the Premises.

                                      38.

<PAGE>

b.       (Subsection Intentionally Omitted)

c.       The Tenant Allowance shall be used only for:

         (1)      Payment of the cost of preparing the space plan and the final
working drawings and specifications, including mechanical, electrical, plumbing
and structural drawings and of all other aspects of the Tenant Improvement
Plans. The Tenant Allowance will not be used for the payment of extraordinary
design work not included within the scope of Landlord's building standard
improvements or for payments to any other consultants, designers or architects
other than Landlord's architect and/or space planner.

         (2)      The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements.

         (3)      Construction of the Tenant Improvements (specifically
excluding, however, earthquake bracing and/or a new roof), including, without
limitation, the following:

                  (a)      Installation within the Premises of all partitioning,
         doors, floor coverings, ceilings, wall coverings and painting, millwork
         and similar items.

                  (b)      All electrical wiring, lighting fixtures, outlets and
         switches, and other electrical work to be installed within the
         Premises.

                  (c)      The furnishing and installation of all duct work,
         terminal boxes, diffusers and accessories required for the completion
         of the heating, ventilation and air conditioning systems within the
         Premises, including the cost of meter and key control for after-hour
         air conditioning.

                  (d)      Any additional Tenant requirements including, but not
         limited to, odor control, special beating, ventilation and air
         conditioning, noise or vibration control or other special systems.

                  (e)      All fire and life safety control systems such as fire
         walls, sprinklers, halon, fire alarms, including piping, wiring and
         accessories installed within the Premises.

                  (f)      All plumbing, fixtures, pipes and accessories to be
         installed within the Premises.

                  (g)      Testing and inspection costs.

                  (h)      Contractor's fees, including but not limited to any
         fees based on general conditions.

         (4)      All other costs to be expended by Landlord in the construction
of the Tenant Improvements, including those costs incurred by Landlord for
construction of elements of the Tenant Improvements in the Premises.

                                      39.

<PAGE>

         (5)      Notwithstanding the above, the Tenant allowance may not be
used for the vault or work inside or to the exterior thereof, cabling and
security system constructed as Tenant's Work pursuant to Section 8 below or for
earthquake bracing and/or a new roof.

d.       The cost of each item shall be charged against the Tenant Allowance. In
the event that the cost of installing the Tenant Improvements, as established by
the final pricing schedule approved by Tenant and the construction contract
approved by Tenant (including any change orders required to deal with plan
inconsistencies or deficiencies or unanticipated conditions or changes requested
by Tenant), shall exceed the Tenant Allowance, the excess shall be paid or
bonded by Tenant to Landlord prior to the commencement of construction of the
Tenant Improvements.

e.       (Subsection Intentionally Omitted)

f.       (Subsection Intentionally Omitted)

g.       Any unused portion of the Tenant Allowance shall be retained by
Landlord.

                                8. TENANT'S WORK.

         Tenant Improvements shall not include Tenant's vault (which shall be a
six-sided vault), Tenant's cabling or Tenant's security system (collectively
"Tenant's Work"). Tenant may, simultaneous with construction of the Tenant
Improvements contract for Tenant's Work, provided that (i) all such construction
shall be pursuant to the approvals and requirements of Section 14 of the Lease,
and (ii) Tenant shall coordinate Tenant's Work with the Tenant Improvements so
as to prevent the Tenant's Work from causing any delay in construction of the
Tenant Improvements.

                                      40.

<PAGE>

                                    EXHIBIT D
                              RULES AND REGULATIONS

   TO BE DEVELOPED SUBJECT TO TENANT'S REASONABLE REVIEW AND APPROVAL OF RULES
         AND REGULATIONS SIMILAR TO THOSE COMMONLY FOUND IN PROJECTS OF
                              THIS TYPE IN THE AREA

                                      41.

<PAGE>

                                    EXHIBIT E
                                  SIGN CRITERIA

   TO BE DEVELOPED SUBJECT TO TENANT'S REASONABLE REVIEW AND APPROVAL OF SIGN
             CRITERIA SIMILAR TO THOSE COMMONLY FOUND IN PROJECTS OF
                              THIS TYPE IN THE AREA

                                      42.

<PAGE>

                                    EXHIBIT F
                        ADDITIONAL UTILITIES OR SERVICES
                                 [IF APPLICABLE]

                                      43.

<PAGE>

                                    EXHIBIT G
                              PERMITTED SUBSTANCES

Propane tanks, oxygen tanks, acid-based rhodium plating solution, sulphuric
acid, and rhodium sulfate.

                                      44.

<PAGE>

                                    EXHIBIT H
                               PRESERVED PARKINGS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]