Document:

[LOGO] INVESTISSEMENT                                       FILE NUMBER: D100331
       QUEBEC

BETWEEN:           INVESTISSEMENT-QUEBEC, an entity legally incorporated under
                   Section 1 of the Loi sur Investissement-Quebec et sur
                   Garantie-Quebec (L.Q. 1998, Chapter 17), having its head
                   office at 1200 de l'Eglise Road, suite 500, Sainte-Foy,
                   province of Quebec, GIV 5A3 and an office at 393 St. James
                   Street, Suite 500, Montreal, province of Quebec, H2Y 1N9,
                   herein represented and acting through Mr. Guy Leblanc,
                   director, financial incentives,

                   (hereafter designated as "the Society"),

AND:               ACI TELECENTRICS INC., an entity incorporated under the laws
                   of the State of Minnesota, U.S.A., having its head office at
                   3100 West Lake St., Suite 300,Minneapolis, MN 55416, herein
                   represented and acting through Mr. Dana Olson, its Chief
                   operating officer, pursuant to a resolution adopted by its
                   board of directors' meeting dated March 23, 2000, a copy of
                   which is herein enclosed.

                   (hereafter designated as "the Applicant").

WHEREAS the Applicant intends to realize a project of creation of a Call Centre
in Sherbrooke, province of Quebec, as described in section 2.1 (hereafter
referred as the "Project");

WHEREAS the Applicant has filed with the Society an application in order to
obtain a financial contribution to help the realisation of the Project;

WHEREAS the Society may grant a financial contribution pursuant to the
Regulation governing the Private Investment and Job Creation Fund (adopted by
the order-in-Council number 530-97 of April 23, 1997) (hereafter referred to as
the "Fund"), as amended from time to time;

WHEREAS the Society was authorised on April 7, 2000 by the Vice Prime Minister
and Minister of Economy and Finance to grant a financial contribution to the
Applicant for the purposes of the Project in accordance with the terms and
conditions of the Fund and those described herein;

WHEREAS the Society is willing to grant the Applicant a financial contribution
and the Applicant is willing to accept it, under the terms and conditions of the
Fund and those described herein;

THEREFORE, the parties agree as follows:

1.  THE AGREEMENT

    1.1 This financial contribution agreement, constitutes the entire agreement
        entered into between the parties (the "Agreement") when the Applicant
        has met the condition set out in section 12.

    1.2 The Agreement cancels and replaces any verbal or written agreement,
        principal or accessory, which may have been entered into at any time
        concerning the Project.

    1.3 The terms and expressions used herein have the meaning that may be
        attributed to them pursuant to the Fund unless a particular meaning is
        given to them in this agreement.

Initials: Investissement-Quebec [ILLEGIBLE]       Applicant [ILLEGIBLE]
                                -----------                 -----------
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2.  THE PROJECT

    2.1 The Project consists of the implementation of a Contact Centre in
        Sherbrooke, Province of Quebec to service the direct marketing needs of
        the insurance, financial, publishing, telecommunications and other
        industries. It will involve the creation of 600 new permanent jobs, an
        investment of $1,800,000 in capital expenditures (the "capital
        expenditures") for the initial 100 seats within the Contact Centre.

    2.2 The Applicant declares that it has started the Project on March 15th,
        2000 and undertakes to complete it no later than March 14th ,2002.

    2.3 The parties to this Agreement agree that the Project for which the
        Financial Contribution (as defined hereafter) is granted will cover the
        capital expenditures and the financing as below:

<TABLE>
<CAPTION>

---------------------------------------------------------------------------- ------------------------------------------------
                            PROJECT (IN 000 $)                                                  FINANCING
---------------------------------------------------------------------------- ------------------------------------------------
          ITEM                      TOTAL                  ELIGIBLE
                                    COSTS                    COSTS
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
<S>                                 <C>                      <C>                      <C>                      <C>
Equipment                           1800                     1800                     Cash flow                1800
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
                                    1800                     1800                                              1800
-------------------------- ------------------------ ------------------------ ------------------------ -----------------------
</TABLE>

3.    DISBURSEMENT OF THE FINANCIAL CONTRIBUTION

      3.1   Subject to the Applicant not being in default under the terms hereof
            and subject to the other provisions of the Contract, the Corporation
            hereby agrees to pay the Applicant a total amount not exceeding
            $3,900,000 (the "Financial Contribution") consisting of $6,500 for
            each Job created, as defined in section 5.2, during the Project
            implementation period, for a maximum of 600 Jobs.

4.    APPLICANT'S REPRESENTATIONS

      4.1   ACI Telecentrics Inc. is an entity incorporated under the laws of
            the State of Minnesota, U.S.A.; it declares to be in good standing
            under all applicable laws and not subject to any covenant or
            prohibition that would be violated by the implementation of this
            Project.

5.    TERMS OF PAYMENT

      5.1   The Society agrees to pay the Applicant the Financial Contribution
            for the Jobs that will be created by the Applicant during the
            Project implementation period, according to the following terms and
            conditions:

            5.1.1 The request for the first payment of the Financial
                  Contribution shall be submitted to the Corporation after the
                  end of a three-month period the "QUARTER") following the
                  Project commencement date. This request shall cover permanent
                  Jobs created by the Applicant from the beginning of the
                  Project to the end of the Quarter and shall be submitted along
                  with a certificate issued by an officer of the Applicant
                  containing the names, social insurance numbers, hiring and
                  termination dates, annual wages and nature of the new Jobs
                  created by the Applicant under the Project during that
                  Quarter.

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            5.1.2 This first payment to which the Applicant may be entitled
                  shall be made twenty eight (28) days after the end of the
                  first Quarter, provided the Applicant has submitted a request
                  that meets all the conditions stipulated herein.

            5.1.3 The second payment to which the Applicant may be entitled
                  shall be made 60 days after the end of the second Quarter,
                  provided the Applicant has submitted a request that meets all
                  the conditions stipulated herein.

            5.1.4 For any subsequent Quarter in which the Applicant creates
                  Jobs, the Applicant shall be entitled to receive an additional
                  portion of the Financial Contribution upon submission of a
                  request consistent with subsection 5.1.1. The payment for any
                  such request shall be made nine (9) months after the end of
                  each subsequent Quarter, the Financial Contribution pertinent
                  to all Jobs created during the last six (6) months of the
                  Project will be paid 18 months after the Applicant submits its
                  claim for these jobs.

            5.1.5 Any request concerning Jobs created during a given Quarter
                  received more than nine months after the end of the Quarter in
                  question shall be deemed inadmissible and shall nullify the
                  Applicant's right to receive the Financial Contribution for
                  Jobs created during that Quarter.

            5.1.6 Apart from the certificate required from the Applicant under
                  subsection 5.1.1, any request for payment of the Financial
                  Contribution shall be submitted along with a progress report
                  on the Project.

            5.1.7 The final request for payment of the Financial Contribution
                  shall be submitted along with a certificate from the
                  Applicant's external auditors attesting that the 600 Jobs have
                  been created and maintained.

      5.2   For the purposes of the Project, a Job means any permanent Job
            worked for a minimum of 30 hours a week, 40 weeks a year.

      5.3   No Job of the Applicant existing in Quebec before March 15th, 2000
            that is eliminated by the Applicant shall be considered a Job by the
            Corporation for the purposes of this Contract.

      5.4   Any Job for which the Applicant requests payment of a Financial
            Contribution and which is transferred from an affiliated company
            located outside Canada may be considered a Job eligible for a
            Financial Contribution by the Corporation, provided the said Job was
            held at the outset by a non-resident of Canada and the Applicant
            attests in writing that the latter had become a resident of Canada
            under applicable Canadian tax laws by the date he started working in
            the Applicant's company.

      5.5   If, before the Company pays the Financial Contribution to the
            Applicant in accordance with subsection 5.1 for a Job contemplated
            in subsection 5.4, this Job is no longer held by a Canadian resident
            at any time whatsoever for a period of at least three consecutive
            months, the Applicant agrees to immediately notify the Corporation
            thereof in writing, and the latter shall reduce the amount of the
            Financial Contribution it has to pay to the Applicant for the Jobs
            for which it has received a request for payment of the Financial
            Contribution by the specific amount for this disallowed Job.

      5.6   Prior to any payment of a Financial Contribution, the Applicant
            shall submit to the Society a written request along with all
            vouchers reasonably required by the Society, proving to the
            satisfaction of the Society that the Applicant has met all the
            conditions to be entitled to receive this payment.

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6.    OTHER CONDITIONS PERTAINING TO THE FINANCIAL CONTRIBUTION

      6.1   For the purposes of this section, "PAYROLL" means the amount of
            gross wages, excluding fringe benefits, paid for all Jobs for which
            the Applicant has received a Financial Contribution.

      6.2   The Society will pay $6,500 per Job created in the first 12 months
            of the Project. At the end of this 12-month period the Society will
            have the right to review the Applicant's average annual salary
            amount. If this amount is less than $24,653, then the Society will
            divide the actual salary amount generated into $24,653 to determine
            a percentage of salary achieved. If less than 100% of the $24,653,
            the Society has the right to apply this percentage (i.e. $24,000
            average salary divided by $24,653 = 97.3%) against the $6,500 grant
            amount and pay this revised grant amount for Jobs created in year
            two. (97.3% x $6,500 = $6,325). If the Applicant receives a reduced
            grant amount in year two and is able to increase salaries and
            achieve an average of $24,653 at the end of the Project or March 14,
            2002, then the Society agrees to pay the difference held back in
            year two to the Applicant by June 15, 2002.

      6.3   The Applicant agrees to maintain in the Province of Quebec every new
            Job created for which the Applicant receives a financial
            contribution under this Contract, for a minimum period of two years
            from the date of its creation.

      6.4   If, during this two-year period, a Job for which the Applicant
            receives a Financial Contribution is abolished permanently or
            temporarily for a period of at least three consecutive months, the
            Society reserves the right to apply a proportionate amount of the
            Financial Contribution already paid for any such Job abolished for
            the stated period toward the replacement of another equivalent
            position. The proportionate amount is defined as the number of
            months remaining in the 24-month Job existence requirement at the
            time of Job abolishment, divided by 24 months.

      6.5   The Applicant shall submit to the Society, within 120 days of the
            end of any fiscal period during the entire term of the Contract, a
            certificate from its external auditors attesting to the number of
            Jobs created by the Applicant over the preceding fiscal year, the
            number of Jobs created and maintained on a cumulative basis since
            the Project start-up date and the amount of total Payroll for the
            preceding fiscal year for the Jobs for which the Applicant has
            received a Financial Contribution from the Society.

7.    OTHER GOVERNMENT ASSISTANCE

      7.1   The Applicant declares that it has neither requested nor received
            from the Government of Quebec or any of its departments or agencies,
            any contribution whatsoever for the purposes of this Project, other
            than the Financial Contribution, and other than any contribution
            from the Canadian Federal government.

      7.2   As soon as the Applicant is aware of the amount of any contribution
            receivable contemplated in subsection 7.1, the Applicant agrees to
            notify the Society forthwith in writing, if it has not done so
            already, and the Society may then decrease the amount of the
            Financial Contribution by the amount of the additional contribution
            to be received by the Applicant.

      7.3   If, following the full payment of the Financial Contribution, the
            Applicant receives the unpaid balance of a Financial Contribution
            contemplated in subsections 7.1 or 7.2 or any other Financial
            Contribution whatsoever from the Government of Quebec or one of its
            departments or agencies for the purposes of this Project, the
            Applicant shall notify the Society forthwith in writing; the Society
            may then demand that the Applicant refund part of the Financial
            Contribution equal to the amount of the additional Financial
            Contribution received, not exceeding the amount of the Financial
            Contribution received

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8.    THE APPLICANT'S OBLIGATIONS

      8.1   For the entire duration of the contract, the Applicant undertakes to
            each of the following:

            8.1.1.  to provide promptly and at its own expenses all reports
                    related to the progress and the results of the Project and
                    the Applicant's business as reasonably required by the
                    Society;

            8.1.2.  to grant to any authorised representative of the Society on
                    a prior and reasonable notice and during normal business
                    hours, a reasonable access to its premises, accounting
                    record and other document related to the Project, in order
                    to inspect and evaluate the progress and the results of the
                    Project;

            8.1.3.  to provide the Society, within 120 days of each fiscal
                    year-end as long as the contract is applicable, a copy of
                    its audited annual financial statements. The Applicant will
                    also provide, as soon as possible, the non-audited interim
                    quarterly financial statements. The Society undertakes not
                    to disclose the information contained in the mentioned
                    annual and quarterly financial statements, except in the
                    case of regular administration of the Contract or in the
                    event the Society may be required to act otherwise by a law
                    or a ruling by a competent tribunal;

            8.1.4.  to take all the required measures to its status and legal
                    capacity in good order and to advise the Society of any
                    deficiency;

            8.1.5.  to take all the required measures in order to complete the
                    Project within the deadline provided in section 2.2;

            8.1.6.  to advise the Society without delay of any fact or any event
                    that may compromise the complete achievement of the Project
                    before the contract expires;

            8.1.7.  not to modify, without the prior written consent of the
                    Society which will not be refused without valid reason, the
                    Project with regard to its control, its costs, its
                    financing, its fullness, its completion date, its location
                    or any of its components;

            8.1.8.  not to take significant material decisions which may
                    compromise the total or partial completion of the Project or
                    the Applicant's capacity to complete it;

            8.1.9.  to make available at all times to the persons who will fill
                    the Jobs all the necessary equipment with up-to-date
                    technology

            8.1.10. to comply with all the laws and regulations applicable to
                    the Applicant and to advise the Society of any deficiency
                    that may affect the completion of the Project or its
                    undertakings described in this agreement.

      8.2.  Each time that the prior written consent of the Society is required,
            the Applicant accepts that the consent may be subject to any
            reasonable condition that the Society may require from the Applicant
            in order to protect its rights in accordance with this agreement and
            to ensure the completion of the Project.

9.    SUPERIOR FORCE

      9.1   In the event the Applicant cannot, before the end of the contract
            comply with the obligation set out in this agreement due to superior
            force, the Applicant should advise the Society in writing within 10
            business days of the date the Applicant is aware of the
            circumstances directly related the superior force ("Notice of
            superior force"). The Society shall inform the Applicant of its
            agreement or non-agreement in writing within 30 business days of
            receipt of the written Notice of Superior Force. If the Society does
            not respond in writing back to the Applicant within 60 business
            days, then the Notice of superior force is agreed to by the Society.

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      9.2   The Applicant will, in the Notice of superior force, advise the
            Society of the nature of the circumstances, its presumed duration
            and the measures that it intends to take in order to minimise the
            consequences of the circumstances outside one's control over its
            obligation with regard to the Society pursuant to this agreement.

      9.3   The Applicant will, from the receipt of the notice of agreement or
            from the expiry of the 60-business-day period set out in the
            previous section, be free of its obligations to the Society for the
            period during which the Applicant is unable to meet its obligations.

      9.4   If the Society advises the Applicant that it does not agree with the
            Notice of superior force, the parties will meet within 10 business
            days to negotiate in good faith in order to conclude a reasonable
            agreement concerning the Applicant's obligations to the Society
            pursuant to this Agreement.

10.   DEFAULTS

      10.1  For the entire term of this Agreement, the following situations,
            without limitation, shall constitute one or several defaults of the
            Applicant:

            10.1.1  The Applicant declares bankruptcy or becomes insolvent, is
                    put into receivership or relies on any law in effect with
                    respect of bankrupt or insolvent debtors;

            10.1.2  an order is issued or a resolution adopted regarding
                    liquidation of the Applicant, or the Applicant is dissolved;

            10.1.3  the Applicant ceases to do business in Quebec, or interrupts
                    its complete operations in Quebec;

            10.1.4  Society's decision to grant financial assistance was based
                    on false or misleading information provided by the Applicant
                    which has a significant impact on the project

            10.1.5  according to the Society, one or several important change(s)
                    was (were) made to the Project before September 23, 1999;

            10.1.6  The Society, acting reasonably, is of the opinion that the
                    Applicant has not carried out the Project promptly and,
                    among other things, has failed to respect the time limits
                    stipulated in the Agreement, unless, the circumstances of
                    such a situation belongs to a superior force;

            10.1.7  the Applicant is in default to fulfil its obligations under
                    the terms and conditions of the Agreement;

            10.1.8  there has been a significant deterioration in the financial
                    or economic risks of the business of the Applicant so that
                    the completion and the operation of the Project may be
                    jeopardised during the entire term of the Agreement;

            10.1.9  the Applicant does not create a minimum of 50 Jobs by March
                    14, 2002.

      10.2  In case of default of the Applicant, the Society must first notify
            the Applicant it is in default and allows the Applicant a thirty
            (30)-business day remedy period. If the Applicant remedies the
            situation in a reasonable manner within this remedy period, then the
            default modification will become null and void. If the Applicant
            does not remedy the situation in a reasonable manner within this
            remedy period, then Investissement-Quebec may pursue the following
            remedies, separately or concurrently:

            10.2.1  suspend the disbursement of the Financial Contribution for
                    an indeterminate duration; and/or

            10.2.2. ask for the reimbursement of the Financial Contribution
                    received in whole or in part only if Applicant is in default
                    according to sub-paragraph 10.1.3, 10.1.4 or 10.1.9;1

            10.2.3. cancel the undisbursed portion of the Financial Contribution
                    in whole or in part.

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10.   COMMITMENT FEE

      10.1  The present offer is subject to the payment, as at the date of the
            first disbursement of the financial contribution of a management fee
            (referred herein as the("COMMITMENT FEE") of $19,500 plus applicable
            federal tax on goods and services and the Quebec sales tax, herein
            referred respectively as GST and PST.

      10.2  The commitment fee is to be paid to Investissement-Quebec and is not
            refundable totally or partially in any circumstances.

      10.3  The deposit of the commitment fee does not create any right in favor
            of the Applicant and does not oblige the Society in any way to
            disburse any portion of the financial contribution; these rights and
            obligations will only be created in the event that all the terms and
            conditions mentioned in this agreement be met.

      10.4  For information purposes, the Society has the registration number
            GST 128621661 RT with the federal government and the registration
            number TVQ 1013387857 TQ 0001 with the government of Quebec.

11.   TERM OF THE AGREEMENT

      11.1  The effective date of this Agreement concerning the obligations of
            the Society is the date on which the Society receives a duly
            executed copy of the Agreement. This Agreement will terminate three
            years after the date of hiring of the last of the 600 Jobs covered
            by this Agreement.

12.   GENERAL CONDITIONS

      12.1  By accepting the terms and conditions of the Agreement, the
            Applicant declares that it has not entered into any major
            contractual covenant with respect to this Project prior to filing
            the application for financial assistance, except for the covenants
            already declared to Investissement-Quebec.

      12.2  An original of this duly executed Agreement shall be returned by the
            Applicant to the Society within 30 days of the date that it is
            issued to the address below, failing which it shall become null and
            void.

      12.3  None of the Members of the Quebec National Assembly or the
            Parliament of Canada shall be allowed to participate in this
            Agreement or to gain an advantage therefrom.

      12.4  This Agreement may not be transferred, except with the Society's
            prior written consent, which shall not be unreasonably withheld.

      12.5  The Project submitted must comply with all requirements stipulated
            in the applicable provincial and federal laws and regulations,
            including, without limitation, those regarding the environment.

      12.6  The Applicant agrees to indemnify and save harmless the parties,
            their trustees and their employees from any claim by a third party
            with respect to or as a result of the implementation of the Project.

      12.7  The Applicant further acknowledges that the financial contribution
            does not constitute an association for the purpose of establishing a
            partnership or a joint venture nor create any trustee relationship
            between the Society and The Applicant.

      12.8  Should any modification whatsoever be necessary during the term of
            this Agreement, the Applicant shall submit a written request to that
            effect to the Society. The latter shall inform the Applicant of its
            decision in writing within 30 business days of receipt of the
            written request. If the Society does not respond in writing back to
            the Applicant within 60 business days, then the modification is
            accepted.

      12.9  The Applicant agrees to inform the Society without delay of any
            material changes or any event likely to have a major impact on the
            costs, realization or nature of the Project.

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      12.10 The Applicant has the legal capacity and the power necessary to
            operate its business and execute the Agreement.

      12.11 This Agreement shall be governed by and construed according to the
            applicable laws of the Province of Quebec and in particular
            according to the provisions 0.1: the Funds; the parties agree that
            the Superior Court of the Province of Quebec and the courts of
            appeal shall have the sole jurisdiction to hear any litigation
            resulting from the Agreement.

      12.12 All amounts expressed in dollars in the Agreement are quoted in the
            legal currency of Canada.

      12.13 For the purposes of the Agreement, the expression "business day"
            means any day during which the offices of the Society are open for
            business in Montreal and in Quebec City.

13.   ANNOUNCEMENTS AND CEREMONIES

      13.1  Unless it advises otherwise, the Applicant hereby agrees to make a
            public announcement by way of a press release describing the name,
            the address, the type of business, the estimated cost of the
            Project, the amount and the type of the financial contribuiton as
            well as a brief description of the Project.

      13.2  The Applicant will advise the Society in writing of the date on
            which the public announcement shall be made and the Applicant shall
            keep the Agreement confidential until such date, subject to the
            requirements of US Securities laws.

      13.3  In the event that the Applicant does not make any official
            announcement concerning the Project, the Society may by itself,
            following a written five-day advice to the Applicant, make such
            official announcement by way of a press release containing the
            information mentioned in section 14.1.

      13.4  The Applicant shall inform the Society in writing, at least 14 days
            in advance, of any official ceremony to be held with respect to the
            Project.

      13.5  The Applicant hereby agrees that representatives of the government
            of Quebec and of the Society may participate in any official
            ceremony related to the Project.

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AND THE PARTIES LN THIS AGREEMENT HAVE SIGNED ON THE DATE AND AT THE PLACE
MENTIONED OPPOSITE THEIR RESPECTIVE SIGNATURE.

Signed in Montreal, April 11, 2000.

INVESTISSEMENT-QUEBEC

By:               /s/ Guy LeBlanc
          -------------------------------
                     Signature

                    GUY LEBLANC
          -------------------------------
              Name in capital letters

          DIRECTOR - FINANCIAL INCENTIVES
          -------------------------------
                       Title

Signed in Minneapolis, Minnesota, April 20, 2000.

ACI TELECENTRICS INC.

By:               /s/ Dana Olson
          -------------------------------
                    Signature

                   DANA OLSON
          -------------------------------
              Name in capital letters

                       COO
          -------------------------------
                      Title

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D100331 - ACI TELECENTRICS INC.                                    PAGE 10 DE 10
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                           EXTRACT FROM THE MINUTES OF

                        A BOARD OF DIRECTORS' MEETING OF

                              ACI TELECENTRICS INC.

ACI TELECENTRICS INC., hereafter referred to as "the company", held at its head
office, on _________________________________

It is unanimously resolved that the company:

1)   accepts the offer of financial contribution that Investissement-Quebec has
     granted as at _____________________ by way of a financial contribution of
     $3,900,000 in accordance with the terms and conditions described in the
     said offer;

2)   authorizes Mister Dana Olson, chief operating officer, and the latter is
     herein authorized to accept on behalf of the company the said offer of
     financial contribution in accordance with the terms and conditions herein
     described and to sign all documents necessary or relevant in order to apply
     the current resolution;

This copy constitutes a true copy of the resolution adopted by the directors of
ACI TELECENTRICS INC. at its meeting held on _________________________

Signed on ________________________________

__________________________________________
          Signature

__________________________________________
     Name of the secretary<PAGE>

                                                                    EXHIBIT 10.7

                        TOLLING AND STANDSTILL AGREEMENT

                  This Tolling and Standstill  Agreement  ("Agreement")  is made
and  entered  as of  June  20,  2000,  by and  between  Suburban  Water  Systems
("Suburban"),  and Aerojet-General Corporation ("Aerojet"),  who may be referred
to collectively as the "Parties".

I.       RECITALS
         --------

         WHEREAS, as the result of the discovery of contaminated groundwater in
the Main San Gabriel Valley Groundwater Basin (the "Basin"), a critical source
of drinking water for San Gabriel Valley residents, the United States
Environmental Protection Agency (EPA) placed four areas of the Basin on the
National Priorities List; and

         WHEREAS, Suburban owns and operates drinking water extraction wells in
the Basin; and

         WHEREAS, Suburban asserts that it has incurred costs and suffered
damages as a result of the groundwater contamination in the Basin; and

         WHEREAS, Suburban has identified Aerojet and others as parties who may
have caused or contributed to the groundwater contamination in the Basin; and

         WHEREAS, Suburban and Aerojet wish to enter into a tolling and
standstill agreement with respect to any claims the Parties may have arising
from the groundwater contamination existing in the Basin;

         THEREFORE, the Parties, for good and sufficient consideration hereto
acknowledged, agree as follows:

II.      TOLLING AGREEMENT
         -----------------

         In accordance with this agreement Aerojet hereby agrees to toll the
running of any statutes of limitation and any other statute, law, rule of
principle of equity with
<PAGE>

similar effect (collectively "Statutes of Limitation") with respect to any and
all rights, claims, causes of action, counterclaims, third party claims, cross
claims and defenses Suburban may have or wish to assert against Aerojet which
are alleged to have occurred as the result of a release or releases of
substances, including the perchlorate ion and NDMA, which originated in any part
from property in the Basin which Aerojet has currently or formerly used or owned
that have impacted or threaten to impact Suburban's right and ability to extract
groundwater from the Basin (the "Claims"). With respect to contaminants other
than the perchlorate ion or NDMA, Aerojet is tolling the running of the Statute
of Limitations only with respect to its several share of alleged claims or
damage in proportion of its percentage contribution to said claims or damage, as
shown by the evidence. This Agreement shall commence on June 20, 2000, and
continue until such time as this Agreement is terminated pursuant to paragraph
VI of this Agreement (the "Tolling Period"). Aerojet agrees that the Tolling
Period shall be excluded from all computations of any limitations period
applicable to the Claims. Aerojet agrees that it shall waive and shall not
plead, assert, or otherwise raise any Statute of Limitation or any other time
related defense otherwise applicable to the Claims, to the extent such
limitations period or other time related defense is tolled by this Agreement, as
a bar to or other limitation on any Claim.

III.     NO WAIVER
         ---------

         The Parties, and each of them, do not waive and expressly reserve any
and all rights, claims, causes of action, counterclaims, cross claims, third-
party claims, and/or defenses, including but not limited to, any statute of
limitation, except as to the Tolling Period. This Agreement has no effect on any
and all rights, claims, causes of action, counterclaims, cross claims, third
party claims, or defenses already barred, tolled, or otherwise extinguished as
of June 20, 2000.

                                       2
<PAGE>

IV.      STANDSTILL AGREEMENT
         --------------------

         Suburban agrees to refrain from filing a lawsuit against Aerojet based
on or arising out of the Claims until such time as this Agreement is terminated.

V.       PARTIES COVERED
         ---------------

         In addition to Suburban and Aerojet, this Agreement shall inure to the
benefit of, and be binding upon, any and all parent companies, subsidiary
companies, holding companies, affiliates, corporate predecessors or corporate
successors, officers, directors, agents or representatives of each of the
Parties.

VI.      TERMINATION
         -----------

         Either Aerojet or Suburban may withdraw from the Agreement by giving at
least 30 days advanced written notice. The 30 days advanced written notice will
begin to run upon receipt of notice by certified mail, return receipt requested,
to the following:

         NOTICES TO SUBURBAN:
         Daniel N. Evans
         Vice President, CFO
         Suburban Water Systems
         1211 E Center Court Drive
         Covina, CA 91724-3603

         WITH A COPY TO:
         Mary Hulett
         Ragsdale Liggett
         2840 Plaza Place, Suite 400
         Raleigh, NC 27612

         NOTICES TO AEROJET:
         Robert Anderson
         Vice President, Deputy General Counsel
         Aerojet-General Corporation
         P.O. Box 13222
         Sacramento, CA  95813-6000

         WITH A COPY TO:
         Peter R. Taft
         Munger, Tolles & Olson
         355 S. Grand St. 35/th/ Floor
         Los Angeles, CA 90071

                                       3
<PAGE>

VII.     EXCLUSIVE AGREEMENT
         -------------------

         No other agreement, expressed or implied, oral or written, has been
made by and among Suburban, on the one hand, and Aerojet, on the other hand,
concerning tolling any applicable statute of limitations or suspending any
litigation based on or arising out of the claims. This Agreement is executed
without reliance and promise, warranty, or representation by any party or any
representative of any party other than those expressly contained in this
Agreement. This Agreement may be amended only by a written instrument signed by
the Parties.

VIII.    NO ADMISSION
         ------------

         The Parties agree that the sole purpose of the Agreement is to toll any
applicable statutes of limitation or other time related defense and to forestall
imminent litigation with regard to the Claims. The execution of this Agreement
shall in no way operate as an admission of liability or responsibility by the
Parties. Additionally, nothing contained in this Agreement shall be admissible
as evidence in any court, administrative, or alternative dispute resolution
proceeding, except as to the issue of the tolling of any statute of limitation
or any other time related defense.

IX.      CONSTRUCTION
         ------------

         This Agreement shall be construed and interpreted according to the laws
of the State of California.

X.       COUNTERPARTS
         ------------

         This Agreement may be executed in counterparts, and the counterparts,
when fully executed by each of the Parties, shall constitute one and the same
Agreement. Signatures sent by fax shall be deemed originals and treated in all
respects as originals.

                                       4
<PAGE>

XI.      AUTHORITY
         ---------

         The persons executing this Agreement represent and warrant that they
each have the express authority, right and power to execute this Agreement and
to bind the party on whose behalf they sign.

                                       5
<PAGE>

                                   SIGNATURES
                                   ----------

Dated: June 20, 2000                              /s/ DANIEL N. EVANS
       -------------                              ----------------------------
                                                  Suburban Water Systems

Dated: June 20, 2000                              /s/ PETER R. TAFT
       -------------                              ----------------------------
                                                  Aerojet-General Counsel

                                       6

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