Document:

Counterpart Lease

 

EXHIBIT 10.9

Dated 29th March 1996

MOATSTAR LIMITED

- and -

SPARKLING SPRING WATER UK LIMITED

- and -

SPARKLING SPRING WATER LIMITED

Counterpart L E A S E

relating to

Unit N Progress Road

Sands Industrial Estate

High Wycombe

Russell-Cooke Potter & Chapman

11 Old Square

Lincoln’s Inn

London WC2A 3TS

 

     THIS LEASE is made the 29th day of March One thousand nine hundred and
ninety-six BETWEEN the Landlord and the Tenant and the Surety whose respective
names and addresses are set out in the First Schedule

WITNESSETH:-

 

1     Definitions

IN this Lease unless the context otherwise requires the various expressions set
out below shall have the meaning or bear the interpretation there set out:-

	 	1.1	 	“The Landlord” shall include the immediate reversioner for
the time being
	 
	 	1.2	 	“The Tenant” shall include the person from time to time
entitled to the Term and the personal representatives of the Tenant
	 
	 	1.3	 	“The Estate” means the industrial estate and other
accommodation of which the Demised Premises forms part and all
common parts thereof situate at Progress Road High Wycombe
Buckinghamshire the extent of which is for the purposes of
identification shown edged blue on the Plan
	 
	 	1.4	 	“the Remainder of the Estate” means the Estate excluding the
Demised Premises
	 
	 	1.5	 	“The Demised Premises” means the premises described in the
Second Schedule
	 
	 	1.6	 	“The Plan” means the plan or plans annexed hereto
	 
	 	1.7	 	“The Contractual Term” means the term of years specified in
the First Schedule
	 
	 	1.8	 	“The Term” includes the Contractual Term and any period of
holding over or extension of the Contractual Term whether by statute
or common law
	 
	 	1.9	 	“Conduits” means and includes flues shafts ducts air
conditioning systems cisterns tanks water gas soil and waste water
pipes sewers and drains gutters downpipes and soakaways gullies
watercourses central heating systems boilers radiators pipes wires
and cables and other conducting media mains valves traps and
switches or any of them
	 
	 	1.10	 	“The Prescribed Rate” means interest at the rate of four per
centum above the base lending rate from time to time of National
Westminster 

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	 	 	 	Bank Plc calculated on a daily basis (such interest to
be compounded with rests at the usual quarter-days) during the
period from the date on which the expenditure is incurred or from
which the interest is expressed to run to date of payment as well
before as after any judgment and if such base rate shall for any
reason cease to be used or published then interest calculated by
reference to such other comparable commercial rate as the parties
may agree or in default of agreement as may be determined by an
independent person to be nominated in the absence of agreement by or
on behalf of the President for the time being of the Royal
Institution of Chartered Surveyors on the application of the
Landlord (and the fees of such person including the cost of his
appointment shall be borne equally by the Landlord and the Tenant
	 
	 	1.11	 	“The Insured Risks” means loss or damage by fire storm
tempest flood lightning explosion aircraft articles dropped from
aircraft riot civil commotion malicious damage impact bursting and
overflow of pipes or tanks or of other apparatus and such other
risks as the Landlord may deem desirable or expedient (subject to
such exclusions and limitations excesses as may be imposed by the
insurers) including loss of rent and service charge (if any)
hereunder for such number of years as the Landlord may deem
appropriate and architects’ surveyors’ and all other professional
fees and demolition clearance and similar expenses
	 
	 	1.12	 	“The Planning Acts” means and includes the Town and Country
Planning Act 1990 the Planning (Listed Buildings and Conservation
Areas) Act 1990 the Planning (Hazardous Substances) Act 1990 and the
Planning (Consequential Provisions) Act 1990 the Planning and
Compensation Act 1991 and all statutes referred to therein and all
statutes regulations and orders included by Clause 2.5 of this Lease
	 
	 	1.13	 	“Development” has the meaning given by Section 55 of the Town
and Country Planning Act 1990
	 
	 	1.14	 	“The Landlords Surveyor” means any person (being an associate
or fellow of the Royal Institution of Chartered Surveyors) or firm
(one at least of whose members shall be so qualified) including an
employee of the Landlord appointed by or acting for the Landlord to
perform the function of a surveyor for any purpose of this Lease
	 
	 	1.15	 	“VAT” means Value Added Tax or any other tax of a similar
nature (and unless otherwise expressly stated all references to rent
or other monies payable by the Tenant are exclusive of any VAT
charged or chargeable thereon)

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2     Interpretation

	 	2.1	 	Words importing the masculine gender shall where necessary be
construed as importing the feminine gender and words importing the
neuter gender shall where necessary be construed as importing the
masculine gender or the feminine gender as the case may be
	 
	 	2.2	 	Words importing the singular number only shall include the
plural number and vice versa and where there are two or more persons
included in the expression “the Landlord” “the Tenant” or “the
Surety” the covenants expressed to be made by the Landlord the
Tenant or the Surety shall be deemed to be made by such persons
jointly and severally
	 
	 	2.3	 	References to any right exercisable by the Landlord shall
where the context so admits include the exercise of such right by
any superior landlord and all persons authorised by the Landlord or
any superior landlord
	 
	 	2.4	 	In any case in which the consent or approval of the Landlord
is required under this lease the giving of such consent shall be
conditional upon the consent of any superior landlord being obtained
so far as may be required and the Landlord shall at the request and
cost of the Tenant use reasonable endeavours to obtain any such
consents or approvals whenever they may be required
	 
	 	2.5	 	Any reference to a statute or order in this lease shall
include from time to time throughout the Term any legislation
amending modifying replacing or re-enacting the same and any
regulations or orders made thereunder
	 
	 	2.6	 	Any covenant in this lease by the Tenant not to do an act or
thing shall be deemed to include an obligation not to agree or
suffer such act or thing to be done and to use best endeavours to
prevent such act or thing being done by another person
	 
	 	2.7	 	Any reference in this lease to parting with possession shall
be deemed to include sharing possession or parting with or sharing
occupation or holding the Demised Premises on trust for another
	 
	 	2.8	 	The clause schedule and paragraph headings in this Lease are
for ease of reference only and are not to be taken into account in
the construction or interpretation of the clause schedule or
paragraph to which they refer

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3     Demise

THE Landlord DEMISES to the Tenant the Demised Premises together with the
Rights but Subject To and Excepting and Reserving as mentioned in the Second
Schedule TO HOLD unto the Tenant for the Contractual Term PAYING yearly during
the Term the rent specified in the Third Schedule such rent to be paid by equal
quarterly payments in advance on the usual quarter days in every year or
proportionately for any fraction of a year the first of such payments to be
made on the execution hereof and in each case without deduction AND ALSO paying
in addition throughout the Term by way of further rent from time to time a sum
or sums of money equal to the amount which the Landlord may expend in effecting
or maintaining the insurance of the Demised Premises against loss or damage by
the Insured Risks and a due proportion of the amount which the Landlord may
expend in effecting or maintaining insurance of the common parts of the Estate
such proportion in the case of the insurance of the common parts of the Estate
to be conclusively determined by the Landlords Surveyor (save in the case of
manifest error) TOGETHER WITH all sums that may properly be demanded by the
insurance company in respect of increased premiums occasioned by the nature of
the occupation or business of the Tenant such further rent to be paid without
any deduction on demand and to be recoverable by distress in the same way as
rent in arrear

4     Tenant’s Covenants

THE Tenant COVENANTS with the Landlord to observe and perform the covenants and
stipulations set out in the Fourth Schedule

5     Landlord’s Covenants

THE Landlord COVENANTS with the Tenant to observe and perform the covenants and
stipulations set out in the Fifth Schedule

6     Provisos and Agreements

THE Landlord and the Tenant agree the provisions set out in the Sixth Schedule

7     Surety’s Covenants

THE Surety covenants with the Landlord to observe and perform the covenant set
out in the Seventh Schedule

IN WITNESS whereof the parties hereto have duly executed this Lease as a Deed
the day and year first above written

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[Map in original]

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THE FIRST SCHEDULE

The Parties

	 	 	 	 	 
	The Landlord	 	
:
	 	Moatstar Limited of 3 Bolney Gate Ennismore
Gardens London
SW7 1QW
	The Tenant	 	
:
	 	Sparkling Spring Water UK Limited of
	The Surety	 	
:
	 	Sparkling Spring Water Limited of
	The Contractual Term	 	
:
	 	11 years from 25th December 1995
	The Authorised User	 	
:
	 	A storage or distribution centre within
Class B.8 of the Schedule to the Town and
Country Planning (Use Clauses) Order 1987
together with ancillary offices and car
parking

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THE SECOND SCHEDULE

The Demised Premises

1     Demise

ALL THAT property known as Unit N Progress Road Sands Industrial Estate High
Wycombe Buckinghamshire the 18 car parking spaces adjacent thereto all of which
property is for the purposes of identification only shown edged red on the Plan
and the Landlords fixtures and fittings on the Demised Premises

2     Included Rights

TOGETHER WITH (in common with the Landlord and all others entitled to and
insofar as the Landlord is entitled to grant the same)

	 	2.1	the free and uninterrupted passage and running of water soil
gas electricity and telecommunications and all other services to and
from the Demised Premises in through and along such of the Conduits
which are now or may hereafter during the Term be in upon over or
under any adjoining or neighbouring property of the Landlord and
which serve the Demised Premises
	 
	 	2.2	the right to enter the Remainder of the Estate at all
reasonable times (on reasonable prior notice to the Landlord and to
the occupier thereof except in case of emergency) for the purposes
of carrying out the Tenants obligations in this Lease the Tenant
making good all damage to the Remainder of the Estate occasioned by
such entry or any works consequent thereon
	 
	 	2.3	the right of support shelter and protection for the Demised
Premises from the Remainder of the Estate as enjoyed at the date
hereof
	 
	 	2.4	At all times and for the purposes of access to and egress
from the Demised Premises but not for any other purpose to pass and
repass with or without vehicles over and along the roads shown
coloured brown blue and green on the Plan and on foot only over and
along the footpaths forming part of the common parts of the Estate
subject however to compliance by the Tenant with the following
conditions:-
	 

	 		2.4.1	The Tenant shall not use the said roads or
permit the same to be used by its servants or agents or
invitees for the parking of vehicles
	 
	 	 	2.4.2	The Tenant shall comply with such reasonable
directions as may from time to time be given by the Landlord
or any authorised 

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	 	representative of the Landlord for the
regulation and direction of traffic on the said roads
	 

	 	 	2.4.3	The Tenant shall ensure (so far as the Tenant is
reasonably able so to do) that no rubbish or litter is left on
the said roads or any part thereof and that no damage is
caused by its servants agents or licensees and that no
nuisance or annoyance or inconvenience is caused to the
landlord or to the owners or lessees or occupiers of the
Estate or nearby premises Provided Always that it is hereby
agreed and declared that if at any time during the Term and in
its absolute discretion the Landlord shall desire to alter or
stop up the said roads or any part or parts thereof the
Landlord shall have full right and liberty so to do subject to
the Landlord leaving available for use by the Tenant and its
servants agents or licensees reasonable means of access to the
Demised Premises
	 
	 	 	2.4.4	the benefit of the right at all times to a
supply of oil to the Demised Premises from the oil storage
tank and pumping station included in the demise of Unit J
Progress Road aforesaid through the Conduits connecting the
same to the Demised Premises subject to the Tenant paying to
the tenant or occupier for the time being of Unit J the cost
at normal market rates of supplying such oil based upon the
amount consumed as recorded by the check meter monitoring the
supply of oil to the Demises Premises

3     Rights to which Demise is subject

SUBJECT TO:-

	 	3.1	all easements and similar rights and privileges to which the
Demised Premises are now or may be subject
	 
	 	3.2	all obligations and other matters (except financial charges)
referred to in the Property and Charges Registers of the registered
property out of which this lease is granted or to all restrictive
and other covenants restrictions and obligations contained in the
title deeds of the unregistered property out of which this lease is
granted

4     Exceptions and Reservations

EXCEPTING AND RESERVING to the Landlord and its tenants servants and licensees
and the owners lessees and occupiers for the time being of the Remainder of the
Estate and any adjoining or neighbouring property of the Landlord and all other
persons from time to time having the like right:-

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	 	4.1	the free and uninterrupted passage and running of water soil
gas electricity telecommunications and other services to and from
the Remainder of the Estate and any such adjoining and neighbouring
property through the Conduits which now are or hereafter may during
the Term be in upon over or under the Demised Premises or any part
thereof together with a full right of entry to the Demised Premises
at all reasonable times for the purposes of installing adding to
inspecting maintaining cleansing renewing replacing and repairing
the Conduits the person or persons exercising such right making good
all damage to the Demised Premises occasioned by such entry or any
works consequent thereon
	 
	 	4.2	the right to enter the Demised Premises at all reasonable
times for the purposes of:-
	 

	 	4.2.1 	installing adding to inspecting maintaining
cleansing connecting to repairing replacing and removing the
Conduits
	 
	 	4.2.2	carrying out any works or doing anything
whatever comprised within the Landlords obligations in this
Lease
	 
	 	4.2.3	erecting scaffolding for the purpose of
repairing or cleaning the Estate notwithstanding that such
scaffolding may temporarily restrict the access to or
enjoyment of the Demised Premises
	 

	 	the person or persons exercising such rights making good all damage to
the Demised Premises occasioned by such entry or any works consequent
thereon
	 

	 	4.3	full right and liberty at any time or times to execute works
repairs and make erections upon or to erect upon rebuild reconstruct
modify or alter the Remainder of the Estate or any adjoining and
neighbouring property and to use the Remainder of the Estate and any
such adjoining and neighbouring property in such manner as it may
think fit notwithstanding that the access of light and air to the
Demised Premises or any part thereof may thereby be interfered with

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THE THIRD SCHEDULE

The Rents

1       Review Dates

	 	In this Schedule “Review Date” means the 25th day of December in the year
Two Thousand and One and “Review Period” means the period starting with
the Review Date up to the end of the Term

2       Yearly Rent

	 	The yearly rent shall be:

	 	2.1	from the date hereof until the 24th day of March 1997 the
rent of a peppercorn
	 
	 	2.2	from the 25th day of March 1997 until the Review Date the
rent of FIFTY TWO THOUSAND FIVE HUNDRED POUNDS (£52,500)
	 
	 	2.3	during the Review Period a rent equal to the rent previously
payable hereunder or such revised rent as may be ascertained as
herein provided whichever be the greater

3       Definition of Revised Rent

		
	 	Such revised rent for the Review Period may be agreed at any time between
the Landlord and the Tenant or (in the absence of agreement) determined
not earlier than the Review Date at the option of the Landlord either by
an arbitrator or by an independent valuer (acting as an expert and not as
an arbitrator) such arbitrator or valuer to be nominated in the absence
of agreement by or on behalf of the President for the time being of the
Royal Institution of Chartered Surveyors on the application of the
Landlord made not earlier than six months before the Review Date and so
that in the case of such arbitration or valuation the revised rent to be
awarded or determined by the arbitrator or valuer shall be such as he
shall decide should be the best yearly rent which would reasonably be
expected to become payable in respect of the Demised Premises after the
expiry of a rent free period of such length as would be negotiated in the
open market between a willing landlord and a willing tenant upon the
letting of the Demised Premises at the Review Date

	 	3.1	On the following assumptions:–
	 

	 	3.1.1	that the Demised Premises are fully fitted out
and equipped to the requirements of a willing tenant and
available for immediate occupation and use and that no work
has been carried out thereon 

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	 	 	by the Tenant its sub-tenants or
their predecessors in title which has diminished the rental
value of the Demised Premises and that in case the Demised
Premises have been destroyed or damaged they have been fully
restored
	 
	 	3.1.2	that the Demised Premises are available to let
by a willing landlord to a willing tenant (which expression
“willing tenant” shall for the avoidance of doubt include the
Tenant) as a whole without a premium but with vacant
possession and subject to the provisions of this lease (other
than the amount of the rent hereby reserved but including the
provisions for review of that rent) for a term equal to the
original term of this Lease commencing on the Review Date
	 
	 	3.1.3	that the covenants herein contained on the part
of the Tenant have been fully performed and observed
	 
	 	3.1.4	that if VAT is charged on rent under the Lease
every prospective willing tenant would be able to recover such
VAT in full

	 	AND having regard to open market rental values current at the Review Date

	 	3.2	But disregarding:–

	 	3.2.1	any effect on rent of the fact that the Tenant
its sub-tenants or their respective predecessors in title have
been in occupation of the Demised Premises
	 
	 	3.2.2	any goodwill attached to the Demised Premises by
reason of the carrying on at the Demised Premises of the
business of the Tenant its sub-tenants or their predecessors
in title in their respective businesses
	 
	 	3.2.3	any effect on rent attributable to the existence
at the Review Date of any physical improvement to the Demised
Premises or any part thereof carried out (with all consents
having been obtained where such consents are required from the
Landlord any Local Authority or any other statutory authority)
by the Tenant its sub-tenants or their respective predecessors
in title or other lawful occupier during the Term or during
any period of occupation prior thereto arising out of an agreement to
grant such Term Provided always that any effect on rent
attributable to the existence at the Review Date of any
physical improvement carried out in pursuance of an
obligation to the Landlord or its predecessors in title
including an obligation performed in 

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	 	 	compliance with clause
3 of the Fourth Schedule shall not be so disregarded
	 
	 	3.2.4	any effect on rent of the limitations on the use
or alienation of the Demised Premises contained in this Lease
	 
	 	3.2.5	insofar as permitted by law all restraints and
restrictions whatsoever relating to the recovery of rent
contained in any statute and any directions thereby given
relating to any method of determination of rent
	 
	 	3.2.6	any effect on rent of any obligation of the
Tenant arising under this Lease or any deed licence consent or
other instrument made by the Landlord at the request of the
Tenant to reinstate the Demised Premises to their condition or
design before the carrying out of any works thereto
	 
	 	3.2.7	any effect reducing the rent (but not
disregarding any effect increasing the rent) that may result
from the Landlord either having elected to waive the exemption
from VAT in respect of the Demised Premises or reserving the
right to do so

4       Conduct of Determination

IT IS PROVIDED AND AGREED in relation to the said revised rent:-

	 	4.1	in the case of a revised rent being determined by an arbitrator:

	 	4.1.1	the arbitration shall be conducted in accordance
with the Arbitration Acts 1950 to 1979 or any statutory
modifications or re-enactments thereof for the time being in
force
	 
	 	4.1.2	if the arbitrator shall die delay or become
unwilling or incapable of acting or if for any other reason
the President for the time being of the Royal Institution of
Chartered Surveyors or the person acting on his behalf shall
in his absolute discretion think fit he may by writing
discharge the arbitrator and appoint another in his place
	 
	 	4.1.3	if either the Landlord or the Tenant shall fail
to pay any costs awarded against it within twenty-one days of
such costs being demanded by the arbitrator then the other of
them shall be entitled to pay such costs and the amount so
paid shall be repaid on demand by the chargeable party

	 	4.2	In the case of a revised rent being determined by a valuer:–

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	 	4.2.1	the fees and expenses of the valuer including
the cost of his appointment shall be borne equally by the
Landlord and the Tenant who shall otherwise each bear their
own costs
	 
	 	4.2.2	the valuer shall afford to the Landlord and the
Tenant an opportunity to make representations to him and shall
consider these representations
	 
	 	4.2.3	if the valuer shall die delay or become
unwilling or incapable of acting or if for any other reason
the President for the time being of the Royal Institution of
Chartered Surveyors or the person acting on his behalf shall
in his absolute discretion think fit he may by writing
discharge the valuer and appoint another in his place

	 	4.3	When the amount of any revised rent shall have been
ascertained memoranda (in such form as the Landlord shall reasonably
require) recording the amount of the revised rent shall be signed by
or on behalf of the Landlord and the Tenant and annexed to this
lease and counterpart and the parties shall bear their own costs of
this procedure
	 
	 	4.4	if the revised rent payable on and from any Review Date has
not been agreed by that Review Date rent shall thereafter be payable
at the rate in force immediately before the Review Date and
forthwith upon the revised rent being ascertained the Tenant shall
pay to the Landlord an amount representing the difference (“the
Shortfall”) between:-

	 	4.4.1	the amount of the yearly rent which would have
been payable for the period from that Review Date until the
day before the quarter day following the date of ascertainment
if the revised rent had been ascertained at that Review Date
and
	 
	 	4.4.2	(if less) the amount of the yearly rent paid for
that same period Together with interest at the Prescribed Rate
on the Shortfall calculated on a day to day basis by reference
to the quarter days upon which parts of the Shortfall would have been payable if
the revised rent had been ascertained at that Review Date

	 	4.5	for the purposes of Clause 4.4 the revised rent shall be
deemed to have been ascertained on the date when the same has been
agreed between the Landlord and the Tenant or as the case may be the
date of the award of the arbitrator or of the determination by the
valuer

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THE FOURTH SCHEDULE

The Covenants by the Tenant

1       To pay rent

To pay the reserved rents on the days and in the manner aforesaid without any
deduction or set-off and if the Landlord so requires to pay the same by Bankers
Standing Order direct to the bank account of the Landlord or as it shall direct

2       To pay outgoings

To bear pay and discharge (and to indemnify the Landlord against) all existing
and future rates taxes and outgoings whatsoever (whether or not of a capital or
non-recurring nature) which are now or may at any time hereafter be assessed
charged or imposed upon or payable in respect of the Demised Premises or any
part thereof or on the owner or occupier in respect thereof save for taxes on
rent and taxes payable in respect of dealings with any reversion immediately or
mediately expectant on the Term

3       To repair and decorate etc

At all times during the Term:

	 	3.1	to repair replace rebuild cleanse and keep the whole of the
Demised Premises and all additions and improvements thereto and the
Landlord’s fixtures and fittings and the Conduits therein in good
and substantial repair and condition (damage by any of the Insured
Risks excepted save to the extent that the policy or policies of
insurance effected by the Landlord pursuant to this lease have been
vitiated in consequence of any act neglect or default of the Tenant
or its servants or agents)
	 
	 	3.2	Without prejudice to the generality of the foregoing covenant:-

	 	3.2.1	to paint with two coats of best quality paint of
a colour to be determined by the Surveyor for the Landlord or
otherwise to treat in a proper and workmanlike manner all the
exterior wood iron and stucco or cement work and other
exterior surfaces of the Demised Premises heretofore or
usually painted or otherwise treated once in every third year
and in the last year of the Term (whether determined by
effluxion of time or under the provisions for re-entry
hereinafter contained or otherwise) having first
prepared such surfaces by stripping off stopping and priming
the same and washing down all washable surfaces

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	 	3.2.2	to paint with two coats of best quality paint or
otherwise to grain varnish clean paper and otherwise decorate
and treat in a proper and workmanlike manner all the interior
wood and iron work and other interior surfaces of the Demised
Premises as have been or ought properly to be so painted
decorated and treated once in every fifth year and in the last
year of the Term (whether determined by effluxion of time or
under the provisions for re-entry hereinafter contained or
otherwise) having first prepared such surfaces by stripping
off stopping and priming the same and washing down all
washable surfaces and so that in the last year of the Term the
tints colours and patterns of all such works of interior
decoration and treatment shall be such as shall be approved by
the Landlord
	 
	 	3.2.3	as and when required by the Landlord to clean
restore repoint and make good the external stone stucco and
brickwork of the Demised Premises

4       To contribute

To contribute and pay on demand to the Landlord ‘a fair proportion (to be
conclusively determined by the Landlords Surveyor) of all expenses incurred or
payable by the Landlord for constructing repairing renewing rebuilding
repointing and cleansing all party walls and structures foundations fences
Conduits fire exits and escapes roads passages pavements and all other
easements and amenities whatsoever the use of which is common to the Demised
Premises the Remainder of the Estate and to other properties and all expenses
of providing any services connected with the safety security or cleanliness of
the Estate and to keep the Landlord indemnified against such proportion of such
expenses

5       To yield up

To yield up the Demised Premises with the fixtures and additions thereto at the
expiration or sooner determination of the Term in good and substantial repair
and condition in accordance with the covenants hereinbefore contained

6       To permit entry to view

To permit the Landlord at all times during the Term upon not less than
forty-eight hours prior notice (except in emergency) to enter upon and view the
condition of the Demised Premises and forthwith (so far as the Tenant is liable) to execute all
repairs and works required to be done by written notice given by the Landlord
PROVIDED ALWAYS that if the Tenant shall not within two months after service of
such notice commence and proceed diligently with the execution of the repairs
and works mentioned in such notice it shall be lawful for the Landlord to enter
upon the Demised

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Premises with all necessary workmen and execute such repairs
and works at the expense of the Tenant in accordance with the covenants herein
contained and the costs thereof shall be a debt due from the Tenant to the
Landlord and be forthwith recoverable by action

7       To permit entry to repair

To permit the Landlord and the owners or tenants or occupiers of the Remainder
of the Estate and adjoining properties at all times upon not less than
forty-eight hours prior notice (except in emergency) to enter upon the Demised
Premises to execute repairs to or to alter or connect up Conduits to such
adjoining properties causing as little inconvenience as possible and making
good all damage thereby occasioned to the Demised Premises

8       Alterations

Not without the previous consent in writing of the Landlord (and then only in
accordance with plans previously approved by the Landlord and under the
supervision of and to the satisfaction of the Landlords surveyor) to erect or
permit or suffer to be erected any new building on the Demised Premises or make
or permit or suffer to be made any alteration of or addition to the Demised
Premises or alter the layout or arrangement of the Demised Premises (or add to
or alter any new buildings or alterations erected or made in pursuance of the
consent of the Landlord given under this clause) or to cut injure or permit or
suffer to be cut or injured any of the walls floors or timbers of the Demised
Premises (or any permitted alterations or additions thereto) or to carry out or
permit or suffer to be carried out any Development upon the Demised Premises

9       To comply with planning legislation

At all times during the Term to comply in all respects with the provisions and
requirements of the Planning Acts and of any planning consents (and the
conditions thereof) relating to or affecting the Demised Premises and to
indemnify and keep indemnified the Landlord against all liabilities whatsoever
thereunder AND forthwith to produce to the Landlord a copy of any order
direction proposal or notice made given or issued to the Tenant or any
sub-tenant under or by virtue of the Planning Acts affecting or relating to the
Demised Premises and at the request and cost of the Tenant
to make or join with the Landlord in making every such objection representation
or appeal against the same as the Landlord shall deem expedient

10       User

Not to use or permit or suffer to be used the Demised Premises or any part
thereof otherwise than for the Authorised User specified in the First Schedule
or for such alternative user as the Landlord may approve in writing such
approval not to be

16

 

unreasonably withheld PROVIDED ALWAYS that the Tenant hereby
acknowledges and admits that notwithstanding the foregoing provisions the
Landlord does not thereby or in any other way give or make nor has given or
made at any other time any representation or warranty that the Authorised User
is or will remain a permitted use within the provisions of the Planning Acts
nor shall any consent in writing which the Landlord may hereafter give to any
change of use be taken as including any such representation or warranty and
that notwithstanding that the Authorised User is not a permitted use within
such provisions as aforesaid the Tenant shall remain fully bound and liable to
the Landlord in respect of the obligations undertaken by the Tenant by virtue
of this lease without any compensation recompense or relief of any kind
whatsoever

11       Not to invalidate insurance

Not to do or permit or suffer to be done anything whereby the policy or
policies of insurance of the Demised Premises against the Insured Risks may
become void or voidable or whereby the rate of premium thereon may be increased
and to repay to the Landlord all sums paid by way of increased premiums and all
expenses incurred by it in or about any renewal of such policy or policies
rendered necessary by a breach of this covenant (all of which payments shall be
included in the rent herein reserved) and to comply with all the requirements
and recommendations of the insurers relating to the Demised Premises and to
indemnify the Landlord in respect of the non-payment of any policy monies or
the reduction in the amount thereof that is recoverable following any claim
under any such policy arising out of any breach of the foregoing covenant

12       Notification of insured event

To notify the Landlord immediately if any event or thing happens in or relating
to the Demised Premises against which the Demised Premises are insured under
the terms of this lease

13       No unauthorised insurance

Not to effect any insurance of or relating to the Demised Premises except that
provided for or referred to in this lease save that the Tenant may effect
insurance of loss of profit tenants fixtures fittings stock and any shop front and other
traders comprehensive risks

14       No nuisance etc

Not to do or permit or suffer to be done anything in or upon the Demised
Premises or any part thereof which may be or become a nuisance annoyance or
damage to the Landlord or the tenants or occupiers of other property in the
neighbourhood

17

 

15       No illegal or immoral use

Not to use the Demised Premises for any noxious noisy offensive or dangerous
trade business or pursuit not for any illegal or immoral act or purpose nor as
a club betting shop sex shop or amusement arcade or leisure centre not for any
public exhibition or show or political meeting and not to hold any sales by
auction nor keep any animals or birds on the Demised Premises and not to allow
on the Demised Premises anything which is or may become dangerous offensive
combustible inflammable radioactive or explosive

16       Prohibited uses

Not to use on the Demised Premises:–

	 	16.1	any machine other than normal shop and office machines which
shall be mounted so as to minimise noise and vibration
	 
	 	16.2	any machinery or sound reproduction amplifying equipment
which shall cause a nuisance to the Landlord or the owners or
occupiers of adjoining or neighbouring premises or
	 
	 	16.3	any machine which creates any electrical disturbance outside
the Demised Premises

17       No excessive loading

Not to do anything which imposes an excessive load or strain on the Demised
Premises or which may cause structural damage

18       No rubbish

Not to form or permit to be formed a rubbish dump on the Demised Premises but
to keep all rubbish and refuse in properly covered receptacles and not to store
or stack any goods on any part or parts of the Demised Premises which may for
the time being be unbuilt upon and not to hang place or deposit nor permit to
be hung placed or deposited any goods articles of things for sale or display or otherwise on any
forecourt yard or car park forming part of the Demised Premises

19       No pollution

Not to discharge anything into the Conduits serving the Demised Premises which
will or may be corrosive or harmful or which may cause any obstruction or
deposit therein

18

 

20       Display of notices

Not to exhibit or permit or suffer to be exhibited on any part of the exterior
of the Demised Premises or in the windows or on the external walls rails or
fences thereof any placard poster signboard or other advertisement except such
as shall previously have been approved in writing by the Landlord

21       Compliance with Statutes etc

To comply forthwith and in all respects at the Tenant’s own expense with all
statutes for the time being in force and with all requirements or directions of
any competent authority exercising powers under statute or Royal Charter and
all nuisance sanitary or other statutory notices served by upon either the
Landlord or the Tenant so far as the same relate to the Demised Premises and to
comply with all the requirements of the Factories Act 1961 the Office Shops and
Railway Premises Act 1963 and the Fire Precautions Act 1971 and any Act or Acts
for the time being amending or replacing the same and to keep the Landlord
fully indemnified against all actions proceedings costs expenses claims and
demands in respect thereof

22       Defective Premises Act

In connection with the Defective Premises Act 1972 or any legislation modifying
amending or replacing the same to:–

	 	22.1	Notify the Landlord in writing immediately of any defect in
the Demised Premises of which the Tenant is aware
	 
	 	22.2	erect and maintain within the Demised Premises prominent
notices of warning of relevant defects within the meaning of Section
4 of the said Act in such form as the Landlord may from time to time
require
	 
	 	22.3	indemnify the Landlord against any actions proceedings costs
expenses claims and demands incurred thereunder by reason of the
Tenant’s failure to erect and display such notices
	 
	 	22.4	permit the Landlord at any time on reasonable notice to enter
upon the Demised Premises erect and exhibit notices thereon giving
warning of relevant defects within the meaning of the said Section 4
in the Demised Premises and to install lighting or any other
reasonable means of warning or protection against such defects

23       To observe regulations

To observe and perform and to ensure (so far as the Tenant is able) that
persons doing business with the Tenant and the servants agents invitees
licensees and workmen of the Tenant shall observe and perform any and all
reasonable regulations and

19

 

instructions from time to time made or given by the
Landlord in respect of the use of the access roadways and in particular the
conditions relating thereto set out in the Second Schedule hereto

24     Alienation

	 	24.1	Not to assign nor to underlet or charge or part with
possession of any part or parts (as distinct from the whole) of the
Demised Premises or to part with possession of the whole of the
Demised Premises for all or any part of the Term or to permit any
company or person to occupy the same save by the way of an
assignment or underlease of the whole of the Demised Premises
	 
	 	24.2	Not to charge the whole of the Demised Premises without the
previous written consent of the Landlord which shall not be
unreasonably withheld
	 
	 	24.3	Not to assign the whole of the Demised Premises without the
previous written consent of the Landlord which shall not be
unreasonably withheld and upon or before any assignment and before
giving occupation to the assignee:-

	 	24.3.1	to obtain and deliver to the Landlord a direct covenant by
the assignee with the Landlord to observe and perform the
covenants and restrictions of this Lease and any deed licence
consent or other instrument supplemental to this Lease for the
remainder of the Term and to pay the rent reserved by this
Lease
	 
	 	24.3.2	if the intended assignee shall be a limited liability
company then if in its absolute discretion the Landlord shall
so require or otherwise if the Landlord shall reasonably so
require to obtain sureties acceptable to the Landlord who
shall covenant by way of indemnity and guarantee (if more than one jointly and
severally) with the Landlord before any assignment in the
terms set out in the Eighth Schedule

	 	24.4	Not to underlet the whole of the Demised Premises without the
previous written consent of the Landlord which shall not be
unreasonably withheld and save in accordance with the provisions of
Clauses 24.4.1 and 24.4.2

	 	24.4.1	Not to underlet the whole of the Demised Premises at a fine
or premium nor at a rent (including without prejudice to the
generality of that expression any insurance rent or service
charge rent) less than the greater of the rent payable
hereunder or the 

20

 

	 	 	open market rent of the Demised Premises at
the date of such underlease
	 
	 	24.4.2	To procure that any underlease of the Demised Premises shall
contain:-

	 	 	24.4.2.1	an unqualified covenant on the part of the
underlessee with the Landlord that the underlessee will
not assign or charge any part or parts of the Demised
Premises (as distinct from the whole) and will not
underlet or (save by way of an assignment of the whole)
part with or share possession of or permit any person
or company to occupy the whole or any part or parts of
the Demised Premises
	 
	 	 	24.4.2.2	a covenant on the part of the underlessee with the
Landlord that the underlessee will not assign or charge
the whole of the Demised Premises without the previous
written consent of the Landlord which shall not be
unreasonably refused
	 
	 	 	24.4.2.3	if the proposed underlessee is a limited liability
company then if in its absolute discretion the Landlord
shall so require or otherwise if the Landlord shall
reasonably so require sureties acceptable to the
Landlord who shall covenant by way of indemnity and
guarantee (if more than one jointly and severally) with
the Landlord in the terms (as near as may be) set out
in the Eighth Schedule
	 
	 	 	24.4.2.4	such covenants by the underlessee (which the Tenant
hereby undertakes to enforce) so as to prohibit the
underlessee from doing or suffering any act or thing
upon or in relation to the Demised Premises which will
contravene any of the Tenant’s obligations in this
lease
	 
	 	 	24.4.2.5	a condition for re-entry on breach of any covenant
on the part of the underlessee
	 
	 	 	24.4.2.6	provision for upwards only review of the rent
reserved by the underlease (which the Tenant hereby
undertakes to operate and enforce) corresponding both
as to terms and dates with the 

21

 

	 	 	 	provisions set out in
the Third Schedule for revision of the rent hereby
reserved
	 
	 		24.4.2.7	provision that the rent under such underletting is
reviewed in accordance with the terms of such review

	 	24.5	Notwithstanding the provisions of this Clause 24 the Tenant
may share the occupation of the Demised Premises with any company
which is throughout the period of such sharing a member of the same
group as the Tenant (within the meaning of Section 42 of the
Landlord and Tenant Act 1954) provided that no relationship of the
Landlord and Tenant be created by the sharing

25       Notice of alienation

Within one month after the execution of any assignment assent transfer charge
or underlease or assignment or charge of an underlease of or relating to the
Demised Premises to give notice thereof in writing with particulars thereof to
the solicitors for the time being of the Landlord and to produce to them a
certified copy of the deed evidencing such dealing or transmission (and in case
of a devolution of the interest of the Tenant not perfected by an assent within
six months of the happening thereof to produce to the said Solicitors the grant
of representation under which such devolution arises) and to pay to them a
registration fee of TWENTY-FIVE POUNDS (£25) together with Value Added Tax
thereon (or such other sum as the said Solicitors may reasonably require) in
respect of each such dealing or transmission together with such fees as may be
payable to any superior landlord

26       Letting notice etc

To permit the Landlord at any time in relation to a sale of the reversion
expectant on the Term and during the six months immediately preceding the
determination of this lease in relation to the reletting of the Demised
Premises to affix and retain without interference upon any part of the Demised
Premises a notice for the sale of or of the reletting of the same and to permit
persons with written authority from the Landlord or its agent at all reasonable
times to view the Demised Premises

27       Costs of licences etc

To pay to the Landlord all costs charges and expenses (including solicitors
counsels and surveyors and other professional costs and fees and bailiffs costs
charges expenses and commission) which may be charged or incurred by the
Landlord or any superior landlord:–

22

 

	 	27.1	1 in or in contemplation of any application by the Tenant to
any planning authority or any application by the Tenant to the
Landlord for any consent pursuant to the covenants herein contained
	 
	 	27.2	in or in contemplation of any proceedings under Sections 146
or 147 of the Law of Property Act 1925 or the preparation and
service of notice thereunder (notwithstanding forfeiture is avoided
otherwise than by relief granted by the Court) or for the
preparation and service of and negotiations consequent upon a
schedule of dilapidations served at any time during or after the
Term
	 
	 	27.3	in connection with the recovery of any arrears of rent and
monies payable and recoverable as rent hereunder
	 
	 	27.4	in connection with the enforcement of any of the Tenants
covenants herein contained

	 	AND to keep the Landlord fully indemnified against all actions
proceedings costs expenses claims and demands whatsoever in respect of
all or any of the said applications consents notices negotiations and
proceedings

28       Acquisition by third parties of rights

Not to allow any encroachment to be made or easement acquired on or over the
Demised Premises and in particular not to allow a right of access of light or
air from or over the Demised Premises to any neighbouring property to be
acquired and if any encroachment or easement shall be made or threatened to be
made or if any window or opening shall be opened or made threatened to be opened or made in any
neighbouring property which if not obstructed might by lapse of time confer the
right to such access of light or air on the owner of any neighbouring property
to give notice thereof to the Landlord and to permit it to enter the Demised
Premises and to do all such things as may be proper for the purpose of
preventing the making of such encroachment or the acquisition of such easement
or right to light or air

29       Cost of insurance revaluation

To reimburse the Landlord upon demand the cost of periodic valuations or
assessments of the cost of reinstatement of the Demised Premises for insurance
purposes

30       VAT

To pay and keep the Landlord indemnified against all VAT which may from time to
time be charged on and added to any rent or other monies for which the Tenant
may be liable under this Lease and the same shall be recoverable by action or
by distress as for rent in arrears

23

 

31       Interest on arrears

If the rent hereby reserved or any part thereof or any other sum payable by the
Tenant to the Landlord pursuant to the provisions of this lease shall not have
been paid upon the date whereon payment of the same was due then the Tenant
shall pay to the Landlord interest upon such rent or other sum at the
Prescribed Rate until the said rent or other sum shall have been paid

32       Perform obligations in superior lease

Without prejudice to the covenants conditions and other provisions of this
lease to perform and observe all the covenants on the part of the Landlord (as
tenant) contained in any superior lease under which the Landlord may hold the
Demised Premises so far as they relate to or affect the Demised Premises and
are not hereby expressly assumed by the Landlord and in the event of any
conflict between the covenants contained in any such superior lease and the
covenants contained herein the latter shall prevail

33       Perform obligations affecting superior title

To perform and observe all obligations and other matters imposed on the
Landlord and subject to which this Lease is granted and which are referred to
in Clause 3.2 of the Second Schedule

24

 

THE FIFTH SCHEDULE

The Covenants of The Landlord

1       Quiet enjoyment

That the Tenant paying the rents hereby reserved and observing and performing
the several covenants and stipulations herein on its part contained shall
peaceably hold and enjoy the Demised Premises during the Term without any
lawful interruption by the Landlord or any person rightfully claiming under or
in trust for it

2       To insure

To insure and keep insured the Demised Premises and the Landlords fixtures
therein against the Insured Risks for a sum sufficient to cover the cost of
reinstatement assuming total loss including all applicable VAT in some
insurance office or with underwriters of repute and upon the Tenants request to
produce to the Tenant at the Tenant’s own expense a copy of (or sufficient
extract from) such policy and of the annual premium receipt and in case of
destruction of or damage to the Demised Premises or any part thereof from any
cause covered by such insurance and subject to obtaining all necessary planning
consents and all other necessary licences approvals and consents which the
Landlord shall use reasonable endeavours to obtain to cause all monies received
in respect of such insurance (other than monies received for loss of rent and
architects and surveyors fees and for demolition and clearance expenses) in
rebuilding and reinstating the Demised Premises as soon as reasonably
practicable PROVIDED ALWAYS that if such rebuilding or reinstating be prevented
or frustrated all such insurance monies (other than as aforesaid) shall be
retained by the Landlord and this lease shall thereupon determine

3       To pay rent under superior lease

To pay the yearly rent made payable by the superior lease under which the
Landlord holds the Demised Premises and to observe and perform all the
covenants and conditions therein contained and on its part to be observed and
performed except insofar as the same are to be observed and performed by the
Tenant under the Tenant’s covenants herein contained

4       To repair roads etc.

To maintain and repair or use its reasonable endeavours to procure the
maintenance and repair of the roadways and footpaths shown coloured brown blue
or green on the Plan and the drains and sewers forming part of the common parts
of the Estate except insofar as the said road footpath drains and sewers are adopted and
maintainable at the public expense

25

 

THE SIXTH SCHEDULE

Provisos Agreements and Declarations

1       Re-entry

At any time after any of the following events shall happen the Landlord may
re-enter upon all or any part of the Demised Premises:–

	 	1.1	the whole or any part of the rent shall be unpaid for
twenty-one days after becoming payable whether formally demanded or
not or
	 
	 	1.2	there shall be any breach of any of the Tenant’s covenants or
	 
	 	1.3	the Tenant or any surety for the Tenant (being a company)
shall enter into liquidation whether compulsory or voluntary (save
for the liquidation of a solvent company for the purpose of
amalgamation or reconstruction) or suffers an administrative
receiver to be appointed or enters into a voluntary arrangement as
defined in Section 1 of the Insolvency Act 1986 or does or suffers
anything which would entitle a receiver to take possession of any of
its assets or does or suffers anything which would entitle any
person to present a petition for winding up or apply for an
administration order or ceases to exist or is dissolved or
	 
	 	1.4	the Tenant or any surety for the Tenant (being an individual)
shall be unable to pay a debt or have no reasonable prospect of
being able to pay a debt within the meaning of Section 268 of the
Insolvency Act 1986 or makes an application to the court for an
interim order under Section 253 of the Insolvency Act 1986 or does
anything which would entitle a petition for a bankruptcy order to be
made or makes any assignment for the benefit of or enters into any
arrangement with his creditors either by composition or otherwise

2       Consequences of re-entry

If the Landlord shall re-enter in accordance with Clause 1 of this Schedule
then this Lease shall thereupon terminate but without prejudice to any right of
action or remedy of the Landlord in respect of any breach non-observance or
non-performance of any of the Tenants covenants or the conditions herein
contained

3       Suspension of rent

In case the Demised Premises or any part thereof shall at any time during the
Term be so damaged or destroyed by the Insured Risks so as to be unfit for
occupation and use then (unless the insurance money shall be wholly or
partially irrecoverable by reason

26

 

solely or in part of any act neglect default
or omission of the Tenant) payment of the rent hereby reserved or ascertained
or a fair proportion thereof according to the nature and extent of the damage
sustained shall be suspended for the period for which loss of rent insurance is
maintained under Clause 2 of the Fifth Schedule or if earlier until the Demised
Premises shall again be rendered fit for occupation and use and any dispute
with reference to this provision shall be conclusively determined by the
Landlords Surveyor

4       Compensation for improvements

The provisions for compensation contained in Section 37 of the Landlord and
Tenant Act 1954 shall not apply to this lease except in the events specified in
Section 38 (2) of that Act

5       Service of notices

This Lease shall incorporate the regulations as to notices contained in Section
196 of the Law of Property Act 1925 as amended by the Recorded Delivery Service
Act 1962

6       Representations

The Tenant acknowledges that this Lease has not been entered in reliance wholly
or partly upon any statement or representation made by or on behalf of the
Landlord save insofar as any such statement or representation is expressly set
out in this lease or has been made in writing by the Landlord’s solicitors to
the Tenant’s solicitors before the date of entry into this Lease

7       Redevelopment

The Landlord shall be entitled to carry out or permit the Development of any
neighbouring premises of the Landlord or any part thereof and to build on or
into any boundary wall of the Demised Premises or to re-route any services in
or access to the Demised Premises subject to the Landlord exercising such right
in a reasonable manner and making good any damage caused and ensuring that the
Tenant’s full use and enjoyment of the Demised Premises is not thereby
adversely affected

8       Superior landlord’s consent

Whenever in this lease the consent or licence of the Landlord is required in
any matter then the Landlord shall be entitled to withhold its consent or
licence unless and until it has obtained the consent of any superior landlord

9       Monies due as rent

All monies payable by the Tenant under this Lease not expressly reserved as
rent shall be a charge on the Demised Premises and recoverable as for rent in
arrear

27

 

THE SEVENTH SCHEDULE

The Covenant of The Surety

1       To procure performance of Tenant’s Covenants

The Surety in consideration of this Lease having been made at its request
hereby covenants with the Landlord that the Tenant will throughout the Term pay
the rents hereby reserved or subsequently ascertained on the days and in manner
aforesaid and will perform and observe all the Tenant’s covenants hereinbefore
contained and that in case of default in such payment of rents or in the
performance or observance of such covenants as aforesaid the Surety will pay
and make good to the Landlord on demand all losses damages costs and expenses
thereby arising or incurred by the Landlord notwithstanding:-

	 	1.1	any neglect or forbearance of the Landlord in endeavouring to
obtain payment or to enforce performance of the several stipulations
herein on the Tenant’s part contained (and any time which may be
given to the Tenant by the Landlord shall not release or exonerate
or in any way affect the liability of the Surety under this
covenant)
	 
	 	1.2	that the terms of this Lease may have been varied by
agreement between the Landlord and the Tenant where such variation
is immaterial and not prejudicial to the Surety
	 
	 	1.3	that this Lease may have been assigned or that the Tenant may
have ceased to exist or may have surrendered part of the Demised
Premises or
	 
	 	1.4	any other act or thing whereby but for this provision the
surety would have been released

2       To take new Lease

If this Lease shall be disclaimed or the Tenant (being a company) shall be
dissolved or cease to exist and if the Landlord shall by notice in writing have
so required the Surety will take from the Landlord a new Lease of the Demised
Premises for a term commensurate with the residue of the term which would have
remained had there been no disclaimer dissolution or cesser (as the case may
be) at the same rent and subject to the same covenants and conditions as are
reserved by and contained in this Lease (with the exception of the surety
covenants contained in this Seventh Schedule) such new Lease to take effect
from the date of such disclaimer or dissolution or cesser (as the case may be)
and in such case the Surety shall without delay take or join in all acts
necessary for the grant of such new Lease and will pay all costs relating to
the grant of such new Lease and execute and deliver to the Landlord a
counterpart thereof

28

 

3       To pay rent if not required to take new Lease

If this Lease shall be disclaimed or the Tenant (being a Company) shall be
dissolved or cease to exist and if for any reason the Landlord shall not
require the Surety to take a lease of the Demised Premises pursuant to Clause 2
above the Surety shall nevertheless upon demand pay to the Landlord a sum equal
to the rent that would have been payable under this Lease but for the
disclaimer dissolution or cesser (as the case may be) for the period from the
date of such disclaimer dissolution or cesser (as the case may be) until the
expiration of six months therefrom or until the date upon which the Demised
Premises shall have been relet by the Landlord whichever shall first occur

29<PAGE>
                                                                   EXHIBIT 10.10

                             BASIC LEASE INFORMATION

                  Lease Date:                July 8, 1999

                  Landlord:                  NEW YORK LIFE INSURANCE COMPANY

                  Address of Landlord:       c/o Trammell Crow Company
                                             5601 Sixth Avenue South
                                             Seattle, WA  98108

                  Tenant:                    PURE WATER CORPORATION,
                                             an AquaSource Company,
                                             a Delaware corporation

                  Premises:                  21608 85th Avenue South
                                             Kent, WA  98032

Paragraph 1

                  "Premises approximately 75,940 square feet in Building B of
                  approximately 75,940 square feet (computed from measurements
                  to the edge of the roofline of the building and to the center
                  of interior walls, such premises being shown and outlined in
                  red on the plan attached hereto as Exhibit A, and being part
                  of the real property described in Exhibit B attached hereto.

Paragraph 1       Lease Term Commencing on the "Commencement Date" as
                  hereinafter defined and ending 88 months thereafter except
                  that in the event the Commencement Date is a date other than
                  the first day of a calendar month, said term shall extend for
                  said number of months in addition to the remainder of the
                  calendar month following the "Commencement Date".

Paragraph 1       Scheduled Term Commencement Date:       September 1, 1999

Paragraph 2       Monthly Base Rent:                      $28,857.00

Paragraph 2B      Security Deposit: $43,361.00

Paragraph 4A      Tenant's Initial Monthly Escrow Payment for Taxes
                  and Other Charges:                                  $ 4,670.00

Paragraph 7       Tenant's Initial Monthly Common Area Maintenance
                  Charge:                                             $ 2,764.00

Paragraph 13B     Terrain's Initial Monthly Insurance
                  Escrow Payment:                                     $   349.00

                  Tenant's Initial Monthly Payment Total:             $36,640.00

                  The foregoing Basic Lease Information is hereby incorporated
                  into and made a part of this Lease. Each reference in this
                  Lease to any of the Basic Lease Information shall mean the
                  respective Information herein above set forth and shall be
                  construed to incorporate all of the terms provided under the
                  particular Lease paragraph pertaining to such information. In
                  the event of any conflict between any Basic Lease Information
                  and the Lease, the former shall control.

<PAGE>

                                 LEASE AGREEMENT

THIS LEASE AGREEMENT, made and entered into by and between NEW YORK LIFE
INSURANCE COMPANY, hereinafter referred to as "Landlord", and PURE WATER
CORPORATION, an AquaSource Company, a Delaware corporation, hereinafter referred
to as "Tenant";

                                   WITNESSETH

1.     PREMISES AND TERM.

A.     A. In consideration of the obligation of Tenant to pay rent as herein
       provided, and in consideration of the other terms, provisions and
       covenants hereof, Landlord hereby demises and leases to Tenant, and
       Tenant hereby takes and leases from Landlord those certain Premises as
       outlined in red on Exhibit "A" attached hereto (hereinafter referred to
       as the "Premises") and incorporated herein by reference, together with
       all rights, privileges, easements, appurtenances, and amenities belonging
       to or in any way appertaining to the Premises and together with the
       buildings and other improvements situated or to be situated upon land
       described in Exhibit "B" attached hereto.

       B. TO HAVE AND TO HOLD the same for a term commencing on "Commencement
       Date"; as hereinafter defined, and ending thereafter as specified in the
       Basic Lease Information, attached hereto, (the "Lease Term"), provided,
       however, that, in the event the "Commencement Date" is a date other than
       the first day of a calendar month said term shall extend for said number
       of months in addition to the remainder of the calendar month following
       the "Commencement Date".

       C. The "Commencement Date" shall be the Scheduled Term Commencement Date
       shown in the Basic Lease Information, attached hereto and incorporated
       herein by reference, or the date upon which the Premises shall have been
       substantially completed in accordance with the plans and specifications
       described in Exhibit "C" attached hereto and incorporated herein by
       reference, whichever is earlier. If the Premises shall not have been
       substantially completed as aforesaid by the Scheduled Term Commencement
       Date, Tenant's obligations to pay rent and its other obligations for
       payment under this Lease shall commence on the date the Premises are
       substantially completed as aforesaid, and Landlord shall not be liable to
       Tenant for any loss or damage resulting from such delay. Landlord shall
       notify Tenant in writing as soon as Landlord deems the Premises to be
       substantially completed and ready for occupancy. In the event that the
       Premises have not in fact been substantially completed as aforesaid,
       Tenant shall notify Landlord of its objections. Landlord shall have a
       reasonable time after delivery of such notice in which to take such
       corrective action as may be necessary, and shall notify Tenant in writing
       as soon as it deems such corrective actions has been completed so that
       the Premises are substantially completed and ready for occupancy. The
       taking of possession by Tenant shall be deemed conclusively to establish
       that the Premises are in good and satisfactory condition, as of when
       possession was so taken. Tenant acknowledges that no representations as
       to the repair of the Premises have been made by Landlord, unless such are
       expressly set forth in this Lease. After the Commencement Date, Tenant
       shall, upon demand, execute and deliver to Landlord a letter of
       acceptance of delivery of the Premises, specifying the Commencement Date
       the rent commencement date, in recordable form. In the event of any
       dispute as to the substantial completion or work performed or required to
       be performed by Landlord, the certificate of Landlord's architect or
       general contractor shall be conclusive.

2.     BASE RENT AND SECURITY DEPOSIT.

       A. Tenant agrees to pay to Landlord Base Rent for the premises, in
       advance, without demand, deduction or set off, for the entire Lease Term
       hereof at the rate specified in the Basic Lease Information, payable in
       monthly installments. One such monthly installment shall be due and
       payable on the date hereof and a like monthly install shall be due and
       payable on or before the first day of each calendar month succeeding the
       Commencement Date recited above during the Lease Term, except that the
       rental payment for any fractional calendar month at the commencement or
       end of the Lease period shall be prorated on the basis of a 30-day month.

       B. In addition, Tenant agrees to deposit with Landlord on the date hereof
       a security deposit in the amount specified in the Basic Lease
       Information, which sum shall be held by Landlord, without obligation for
       interest, as security for the performance of Tenant's covenants and
       obligations under this Lease, it being expressly understood and agreed
       that such deposit is not an advance rental deposit, not the last month's
       rent nor a measure of Landlord's damages in the event of Tenant's
       default. Upon the occurrence of any event of default by Tenant, Landlord
       may, from time to time, without prejudice to any other remedy provided
       herein or provided by law, use such deposit to the extent necessary to
       make good any arrears of rent or other payments due Landlord hereunder,
       and any other damage, injury, expense, or liability caused by such event
       of default; or to perform any obligation required of Tenant under the
       Lease; and Tenant

<PAGE>

       shall pay to Landlord on demand the amount so applied in order to restore
       the security deposit to its original amount. Although the security
       deposit shall be deemed the property of Landlord, any remaining balance
       of such deposit shall be returned by Landlord to Tenant at such time
       after termination of this Lease that all of Tenant's obligations under
       the Lease have been fulfilled.

3.     USE.

       A. The Premises shall he used only for the purpose of general office,
       receiving, storing, shipping, assembly, light manufacturing, and selling
       (other than retail) products, materials and merchandise made and/or
       distributed by Tenant and for such other lawful purposes as may be
       incidental thereto. Outside storage, including without limitation, trucks
       and other vehicles, is prohibited without Landlord's prior written
       consent. Landlord does, however, grant Tenant permission to park or store
       vehicles or other items reasonably used in conducting business including
       but not limited to water tanks, in the areas indicated on exhibit on
       Exhibit A. Tenant agrees not to park any vehicles or to allow the parking
       of Tenant's vehicles in areas outside of this dedicated area. All such
       parking or storage shall comply with applicable laws codes and
       ordinances. Plans and specifications therefor shall be subject to the
       prior review and approval of Landlord, not to be reasonably withheld.
       Tenant shall at its own cost and expense obtain any and all licenses and
       permits necessary for its use of the Premises. Tenant shall comply with
       all governmental laws, ordinances and regulations applicable to the use
       of the Premises, and shall promptly comply with all governmental orders
       and directives including but not limited to those regarding the
       correction, prevention and abatement of nuisances in or upon, or
       connected with, the Premises, all at Tenant's sole expense. Tenant shall
       not permit any objectionable or unpleasant odors, smoke, dust, gas, noise
       or vibrations to emanate form the Premises, nor take any other action
       which would constitute a nuisance or would disturb or endanger any other
       tenants of the building in which the Premises are situated or
       unreasonably interface with their use of their respective Premises. In
       addition to any other remedies Landlord may have for a breach by Tenant
       of the terms of this Section 3, Landlord shall have the right to have
       Tenant evicted from the Premises. Without Landlord's prior written
       consent, Tenant shall not receive, store or otherwise handle any product,
       material or merchandise which is explosive or highly inflammable. Tenant
       will not permit the Premises to be used for any purpose or in any manner
       (including without limitation any method of storage) which would render
       the insurance thereon void or the Insurance risk more hazardous or cause
       the State Board of Insurance or other Insurance authority to disallow any
       sprinkler credits. In the event Tenant's use of Premises shall result in
       an increase in insurance premiums, Tenant shall be solely responsible for
       said increase.

       B. HAZARDOUS MATERIALS:

       Without limiting any provision of this Lease regarding compliance with
       applicable laws, Landlord and Tenant hereby further mutually agree as
       follows:

         (a) Tenant shall at all times and in all respects comply with all
       applicable Federal, state and local laws, ordinances and regulations,
       including, but not limited to, the Federal Water Pollution Control Act
       (33 U.S.Css.1251, et seq.), Resource Conservation & Recovery Act (42
       U.S.C.ss.6901, et seq.), Safe Drinking Water Act (42 U.S.C.ss.3000f, et
       seq.), Toxic Substances Control Act (15 U.S.D.ss.2601, et seq ), the
       Clean Air Act (42 U.S.C.ss.9601, et seq.), and other comparable local,
       state and federal laws, currently in force or enacted in the future
       ("Hazardous Materials Laws"), relating to industrial hygiene,
       environmental protection or the use, analysis, generation, manufacture,
       storage, sale, disposal or transportation of any oil, flammable
       explosives, asbestos, urea formaldehyde, radioactive materials or waste,
       or other hazardous, toxic, contaminated or polluting materials,
       substances or wastes, including, without limitation any "hazardous
       substances", "hazardous wastes", "hazardous materials" or "toxic
       substances" under any such laws, ordinances or regulations (collectively,
       "Hazardous Materials").

         (b) Tenant shall neither cause nor permit any Hazardous Materials to be
       used, generated, stored, transported, handled or disposed of in or about
       the Premises at any time. Tenant shall, at its expense, procure, maintain
       in effect and comply with all conditions of any and all permits,
       licenses, and other governmental and regulatory approvals required of
       Tenant for Tenant's use of the Premises. Upon expiration or earlier
       termination of the Lease term, Tenant shall cause all Hazardous Materials
       placed on the Premises, if any, to be removed from the Premises and
       transported for use, storage or disposal in accordance with and
       compliance with all applicable Hazardous Materials Laws. Tenant shall not
       take any remedial action in response to the presence of any Hazardous
       Materials in or about the Premises or the Premises, nor enter into any
       settlement agreement, consent decree or other compromise in respect to
       any claims relating to any Hazardous Materials in any way connected with
       the Premises, without first notifying Landlord of Tenant's intention to
       do so and affording Landlord ample opportunity to appear, intervene or
       otherwise appropriately assert and protect Tenant's interest with respect
       thereto.

<PAGE>

         (c) Tenant shall immediately notify Landlord in writing of: (i) any
       enforcement, cleanup, removal or other governmental or regulatory action
       instituted, completed or threatened pursuant to any Hazardous Materials
       Laws relative to the Premises; (ii) any claim made or threatened by any
       person against Tenant or the Premises relating to damage, contribution,
       cost recovery compensation, loss or injury resulting from or claimed to
       result from any Hazardous Materials; and (iii) any reports made to any
       governmental agency arising out of or in connection with any Hazardous
       Materials in or removed from the Premises, including any complaints,
       warnings or asserted violations in connection therewith. Tenant shall
       also supply to Landlord as promptly as possible copies of all claims,
       reports, complaints, notices, warnings or asserted violations, relating
       in any way to the Premises, the Premises, or Tenant's use of the
       Premises.

         (d) Tenant shall indemnify, defend (by counsel reasonably acceptable to
       Landlord), protect, and hold Landlord and its affiliates free and
       harmless from and against any and all claims, liabilities, penalties,
       forfeitures, losses or expenses (including reasonable attorney's fees),
       or death of or injury to any person or damage to any property whatsoever
       to the extent that the same arise from or are caused in whole or in part,
       directly or indirectly, by: (i) the presence in, on, under or about the
       Premises of any Hazardous Materials due to Tenant's or its agents,
       employees or contractors acts or omissions; (ii) Tenant's use, analysis,
       storage, transportation, disposal, release, threatened release, discharge
       or generation of Hazardous Materials Law. Tenant's obligations hereunder
       shall include, without limitation, and whether foreseeable or
       unforeseeable, all costs of any required or necessary repair, cleanup or
       detoxification or decontamination of the Premises, or the preparation and
       implementation of any closure, remedial action or other required plans in
       connection therewith, and shall survive the expiration or earlier
       termination of the term of this Lease.

         (e) Landlord shall indemnify, defend (by counsel reasonably acceptable
       to Tenant), protect, and hold Tenant and its affiliates free and harmless
       from and against any and all claims, liabilities, penalties, forfeitures,
       losses or expenses (including reasonable attorney's fees), or death or
       injury to any person or damage to any property whatsoever to the extent
       that the same arise from or are caused in whole or in part, directly or
       indirectly, by: (i) the presence in, on, under or about the Premises of
       any Hazardous Materials due to Landlord's or its agents, employees or
       contractors acts or omissions; (ii) Landlord's use, analysis, storage,
       transportation, disposal, release, threatened release, discharge or
       generation of Hazardous Materials to, in on, under, about or from the
       Premises; or (iii) Landlord's failure to comply with any Hazardous
       Materials Law. Landlord's obligations hereunder shall include, without
       limitation, and whether foreseeable or unforeseeable, all costs of any
       required or necessary repair, cleanup or detoxification or
       decontamination of the Premises or the preparation and implementation of
       any closure, remedial action or other required plans in connection
       therewith, and shall survive the expiration or earlier termination of the
       term of this Lease.

       For purposes of the release and indemnity provisions hereof (but without
       limiting any right either Landlord or Tenant may have against third
       party), any act or omission of Landlord or Tenant, or by their employees,
       agents subtenants (only in the case of Tenant), contractors or
       subcontractors of Landlord of Tenant or others acting for or on behalf of
       Landlord or Tenant (whether or not they are negligent, intentional,
       willful or unlawful) shall be strictly attributable to either Landlord or
       Tenant, as the case may be. If either party fails to fully comply with
       the provisions of this Article, the other party may at its option, obtain
       a written report from an independent environmental auditor and/or perform
       any or all of the noncomplying party's obligations hereunder, and all
       reasonable costs and expenses incurred by the other party shall be
       payable by the noncomplying party immediately upon demand.

4.     TAXES AND OTHER CHARGES

       A. Tenant agrees to pay its proportionate share of any and all real and
       personal property taxes, regular and special assessments, license fees,
       public service impact fees and other charges of any kind and nature
       whatsoever, payable by Landlord (with the exception of any income taxes
       incurred by Landlord) as a result of any public or quasi-public
       authority, private party, or owner's association levy, assessment or
       imposition against, or arising out of Landlord's ownership of or interest
       in, the real estate described in Exhibit "B" attached hereto, together
       with the building and the grounds, parking areas, driveways, roads, and
       alleys around the building in which the Premises are located, or any part
       thereof (hereinafter collectively referred to as the "Charges"). During
       each month of the Lease Term, Tenant shall make a monthly escrow deposit
       with Landlord (the "Escrow Payment") equal to 1/12 of its proportionate
       share of the Charges which will be due and payable for that particular
       calendar year. Any lump sum public service impact fees paid by Landlord
       shall be amortized over ten (10) years at interest not to exceed twelve
       percent (12%) per annum, and equal installments of such fee, together
       with interest accrued thereon, shall be payable monthly as a portion of
       the Charges. Tenant authorizes Landlord to use the funds deposited by
       Tenant with Landlord under the Paragraph 4 to pay the Charges. Each
       Escrow Payment shall be due and payable, as additional rent at the same
       time and in the same manner as the payment of monthly rental as provided
       herein. The amount of the Initial Monthly Escrow Payment will be
       specified in the Basic Lease

<PAGE>
       Information. The Initial Escrow Payment is based upon Tenant's
       proportionate share of the Charges. The Escrow Payment account of Tenant
       shall be reconciled annually. If the Tenant's total Escrow Payments are
       less than Tenant's actual pro rata share of the Charges, Tenant shall pay
       to Landlord upon demand the difference; if the Tenant's total Escrow
       Payments are more that Tenant's actual pro rata share of the Charges,
       Landlord shall retain such excess and credit it to Tenant's Escrow
       Payment account for the successive year's Charges. Tenant's proportionate
       share of the Charges shall be computed by multiplying the Charges by a
       fraction, the numerator of which shall be the number of gross leasable
       square feet of floor space in the Premises and the denominator of which
       shall be the total applicable gross leasable square footage; or such
       other equitable apportionment as may be adopted.

       B. If Tenant should fail to pay any Escrow Payments required to be paid
       by Tenant hereunder, in addition to any other remedies provided herein,
       Landlord may, if it so elects, pay such Escrow Payments or taxes,
       assessments, license fees and other charges. Any sums so paid by Landlord
       shall be deemed to be so much additional rental owing by Tenant to
       Landlord and due and payable upon demand as additional rental plus
       interest at the rate of eighteen percent (18%) per annum from the date of
       payment by Landlord until repaid by Tenant.

       C.         (1) If at any time during the Lease Term, the present method
                  of taxation shall be changed so that in lieu of the whole or
                  any part of any taxes, assessments, fees or charges levied,
                  assessed or imposed on real estate and the improvements
                  thereon, there shall be levied, assessed or imposed on
                  Landlord a capital levy or other tax directly on the rents
                  received therefrom and/or a franchise tax, assessment, levy or
                  charge measured by or based, in whole or in part, upon such
                  rents or the present or any future building or buildings, than
                  all such taxes, assessments, fees or charges, or the part
                  thereof so measured or based, shall be deemed to be included
                  within the term "Charges" for the purposes hereof.

                  (2) Tenant may, alone or along with other tenants of the
                  building containing the Premises, at its sole cost and
                  expense, in its or their own name(s) dispute and contest any
                  Charges by appropriate proceedings diligently conducted in
                  good faith, but only after Tenant and all other tenants, if
                  any, joining with Tenant in such contest have deposited with
                  Landlord the amount so contested and unpaid or their
                  proportionate shares thereof as the case may be, which shall
                  be held by Landlord without obligation for interest until the
                  termination of the proceedings, at which time the amount(s)
                  deposited shall be applied by Landlord toward the payment of
                  the items held valid (plus any court costs, interest,
                  penalties and other liabilities associated with the
                  proceeding(s), and Tenant's share of any excess shall be
                  returned to Tenant. Tenant further agrees to pay to Landlord
                  upon demand Tenant's share (as among all Tenants who
                  participated in the contest) of all court costs, interest,
                  penalties and other liabilities relating to such proceedings.
                  Tenant hereby indemnifies and agrees to hold harmless the
                  Landlord from mid against any cost, damage or expense
                  (including attorney's fees) in connection with any such
                  proceedings.

                  (3) Any payment to be made pursuant to this Paragraph 4 with
                  respect to the calendar year in which this Lease commences or
                  terminates shall bear the same ratio to the payment which
                  would be required to be made for the full calendar year as
                  that part of such calendar year covered by the Lease Term
                  bears to a full calendar year.

       D. Tenant shall be liable for all taxes levied against personal property
       and trade fixtures placed by Tenant in the Premises. If any such taxes
       are levied against Landlord or Landlord's property and if Landlord elects
       to pay the same or if the assessed value of Landlord's property is
       increased by inclusion of personal property and trade fixtures placed by
       Tenant in the Premises and Landlord elects to pay the taxes bases on such
       increase, Tenant shall pay to Landlord upon demand that part of such
       taxes for which Tenant is primarily liable hereunder.

5.     TENANT'S MAINTENANCE

       A Tenant shall at its own cost and expense keep and maintain all parts of
       the Premises (except those for which Landlord is expressly responsible
       under the terms of this Lease) in good condition, promptly making all
       necessary repair and replacements, including but not limited to, windows,
       glass and plate glass, doors, any special office entry, interior walls
       and finish work, floor and floor covering, downspouts, gutters, heating
       and air-conditioning systems, dock boards, truck doors, dock bumpers,
       paving, plumbing work and fixtures, termite and pest extermination,
       regular removal of trash and debris, keeping the parking areas,
       driveways, alleys and the whole of the Premises in a clean and sanitary
       condition. Tenant shall not be obligated to repair any damage caused by
       fire, tornado, or other casualty covered by the insurance to be
       maintained by Landlord pursuant to subparagraph 13(a) below, except that
       Tenant shall be obligated to repair all wind damage to glass except with
       respect to tornado or hurricane damage. Any expenditure by Tenant in any
       fixture of the Premises that must be capitalized under GAAP, for any
       reason other than

<PAGE>

       replacement due to damage by the Tenant should be amortized over the
       useful life expectancy of the fixture and Tenant should only be
       responsible for payment of that portion equal to the term of the Lease.
       In such case, Landlord will provide Tenant with an amortization budget.

       B. Tenant shall not damage any demising wall or disturb the integrity and
       support provided by any demising wall and shall, at its sole cost and
       expense, promptly repair any damage or injury to any demising wall caused
       by Tenant or its employees, agents, licensees or invitees.

       C. Tenant and its employees, customers and licensees shall have the right
       to use the parking area, if any, as may be designated by Landlord in
       writing, subject to such reasonable rules and regulations as Landlord may
       from time to time prescribe and subject to rights or ingress and egress
       of other tenants. Landlord shall not be responsible for enforcing
       Tenant's exclusive parking rights against any third parties. If Tenant or
       any other particular tenant of the building can be clearly identified as
       being responsible for obstructions or stoppage of a common sanitary
       sewage line, then Tenant, if Tenant is responsible, or such other
       responsible Tenant, shall pay the entire cost thereof, upon demand, as
       additional rent.

       D. Tenant shall, at its own cost and expense enter into a regularly
       scheduled preventive maintenance/service contract with a maintenance
       contractor for servicing all heating and air-conditioning systems and
       equipment within the Premises.

6.     LANDLORD'S REPAIRS. After reasonable notice from Tenant, Landlord shall
       repair the roof and exterior walls and the cost thereof (except for any
       costs incurred to repair structural defects) shall be shared as provided
       in Paragraph 7. Tenant shall repair and pay for any damage to such items
       to be maintained by Landlord caused by any act, omission or negligence of
       Tenant, or Tenant's employees, agents, licensees or invitees, or caused
       by Tenant's default hereunder. The term "walls" as used herein shall not
       include windows, glass or plate glass, doors, special store fronts or
       office entries. Tenant shall immediately give Landlord written notice of
       defect or need for repairs, after which Landlord shall have a reasonable
       opportunity and time to repair same or cure such defect. Landlord's
       liability with respect to any defects, repairs or maintenance for which
       Landlord is responsible under any of the provisions of this Lease shall
       be limited to the cost of such repairs or maintenance or the curing of
       such defect.

7.     MONTHLY COMMON-AREA MAINTENANCE CHARGE. Tenant agrees to pay as an
       additional charge each month its proportionate share of the cost of
       operation and maintenance of the Common Area which shall be defined from
       time to time by Landlord. Common Area costs which may be incurred by
       Landlord, at its discretion, shall include, but not be limited to costs
       incurred for lighting, water, sewage, trash removal, exterior painting,
       exterior window cleaning, sweeping, accounting, policing, services
       negotiation, customary property management fee not to exceed 5% of
       rentals, sewer lines, plumbing, paving, landscape maintenance, plant
       material replacement and other like charges, and for administration of
       the items set forth in this paragraph. Landlord shall maintain the Common
       Area in reasonably good condition and repair. The proportionate share to
       be paid by Tenant of the cost of operation and maintenance of the Common
       Area shall be computed on the ratio that the gross leasable square feet
       of the Premises bears to the total applicable gross leasable square
       footage or such other equitable apportionment as may be adopted. Landlord
       shall make monthly or other periodic charges based upon the estimated
       annual cost of operation and maintenance of the Common Area, payable in
       advance but subject to adjustment after the end of the year on the basis
       of the actual cost for such year. Any such periodic charges shall be due
       and payable upon delivery of notice thereof. The initial Common-Area
       Maintenance Charges, subject to adjustment as provided herein, shall be
       due and payable, as additional rent, at the same time and in the same
       manner as the time and manner of the payment of monthly rental as
       provided herein. The amount of the initial monthly Common-Area
       Maintenance Charge shall be as specified in the Basic Lease Information.

8.     ALTERATIONS

       A. Tenant shall not make any alterations, additions or improvements to
       the Premises (including but not limited to roof and wall penetrations)
       without the prior written consent of Landlord. Tenant may, without the
       consent of Landlord, but at its own cost and expense and in a good
       workmanlike manner erect such shelves, bins, machinery and trade fixtures
       as it may deem advisable, without altering the basic character of the
       building or improvements and without overloading or damaging such
       building or improvements, and in each case complying with all applicable
       governmental laws, ordinances, regulations and other requirements. All
       alterations, additions, improvements and partitions erected by Tenant
       shall be and remain property of Tenant during the term of this Lease and
       Tenant shall, unless Landlord otherwise elects as hereinafter provided,
       to remove all alterations, additions, improvements and partitions erected
       by tenant and restore the Premises to their original condition by the
       date of termination of this lease or upon earlier vacating of the
       Premises, provided, however, that if Landlord so elects prior to
       termination of this Lease or upon earlier vacating of the Premises,
       provided, however, that if Landlord so elects, prior to

<PAGE>

       termination of this Lease or upon earlier vacating of the Premises, such
       alterations, additions, improvements and partitions shall become the
       property of Landlord as of the date of termination of this Lease or upon
       earlier vacating of the Premises and shall be delivered up to the
       Landlord with the Premises. All shelves, bins, machinery and trade
       fixtures installed by Tenant may be removed by Tenant prior to the
       termination of this Lease if Tenant so elects, and shall be removed by
       the date of termination of this Lease or upon earlier vacating of the
       Premises if required by Landlord; upon any such removal Tenant shall
       restore the Premises to their original condition. All such removals and
       restoration shall be accomplished in good workmanlike manner so as not to
       damage the primary structure or structural qualities of the buildings and
       other improvements situated on the Premises.

       B. Tenant shall remove any sumps and clarifiers and any related Hazardous
       Materials ("Hazardous Material" shall mean petroleum and petroleum
       products, asbestos, and PCB's and any "hazardous substances", "hazardous
       materials", or "toxic substances" in the Comprehensive Environmental
       Response, Compensation and Liability Act of 1980, as amended, the
       Hazardous Materials Transportation Act, as amended, or the Resource
       Conservation and Recovery Act, as amended, those substances, materials
       and wastes which are defined and "hazardous wastes" or as "hazardous
       substances" in the Washington State Model Toxics Control Act, as codified
       at Chapter 70.105D, Revised Code of Washington, and "hazardous" or
       "toxic" in the regulations adopted or publication promulgated pursuant to
       any of said laws) in or about the Premises and associates with Tenant's
       use and occupancy thereof upon the expiration of earlier termination of
       this Lease.

       C. Notwithstanding anything to the contrary contained herein, Landlord
       agrees that the Tenant shall not be responsible for, and Landlord shall
       hold Tenant harmless against, any costs of cleanup or removal arising
       from or associated with any hazardous material existing in, on or
       throughout the Premises, as of anytime up to the date Tenant occupies the
       Premises pursuant to the terms of this Lease.

9.     SIGNS. Tenant shall not install signs upon the Premises without
       Landlord's prior written approval, and any such signage shall be subject
       to any applicable governmental laws, ordinances, regulations and other
       requirements. Tenant shall remove all such signs by the termination of
       this Lease. Such installations and removals shall be made in such a
       manner as to avoid injury or defacement of the building and other
       improvements, and Tenant shall repair any injury or defacement, including
       without limitation discoloration caused by such installation and/or
       removal.

10.    INSPECTION.

       A. Landlord and Landlord's agents and representatives shall have the
       right to enter and inspect the Premises at any reasonable time during
       business hours, for the purpose of ascertaining the condition of the
       Premises in order to make such repairs as may be required or permitted to
       be made by Landlord under the terms of this Lease. During the period that
       is six (6) months prior to the end of the Term hereof, Landlord and
       Landlord's agents and representatives shall have the right to enter the
       Premises at any reasonable time during business hours for the purpose of
       showing the Premises and shall have the right to erect on the Premises a
       suitable sign indicating the Premises are available.

       B. Tenant shall give written notice to Landlord at least thirty (30) days
       prior to vacating the Premises and shall arrange to meet with Landlord
       for a joint inspection of the Premises prior to vacating. In the event of
       Tenant's failure to give such notice or arrange such joint inspection,
       Landlord's inspection at or after Tenant's vacating the Premises shall be
       conclusively deemed correct for the purpose of determining Tenant's
       responsibility for repairs and restoration. It shall be the
       responsibility of Tenant, prior to vacating the Premises, to clean and
       repair the Premises and restore them to the condition in which they were
       in upon delivery of the Premises to Tenant at the Commencement Date,
       reasonable wear and tear excepted. Cleaning, repair and restoration shall
       include, but not be limited to, removal of all trash, cleaning and
       repainting of walls, where necessary, cleaning of carpet and flooring,
       replacement of light bulbs and tubes, cleaning and wiping down of all
       fixtures, maintenance and repair of all heating and air-conditioning
       systems, and all similar work, which shall be done at the latest
       practical date prior to vacation of the Premises.

11.    UTILITIES. Landlord agrees to provide at its cost water, electricity and
       gas service connections into the Premises; but Tenant shall pay for all
       water, gas, heat, light, power, telephone, sewer, sprinkler charges and
       other utilities and services used on or from the Premises, together with
       any taxes, penalties, surcharges or the like pertaining thereto and any
       maintenance charges for utilities and shall furnish all electric light
       bulbs and tubes. If any such services are not separately metered to
       Tenant, Tenant shall pay a reasonable proportion as determined by
       Landlord of all charges jointly metered with other Premises. Landlord
       shall in no event be liable for any interruption or failure of utility
       services on the Premises.

<PAGE>
12.    ASSIGNMENT AND SUBLETTING

       Tenant shall not have the right, voluntarily or involuntarily, to assign,
       convey, transfer, mortgage or sublet the whole or any part of the
       Premises under this Lease without the prior written consent of Landlord.
       Notwithstanding anything contained to the contrary in this Section,
       Tenant may assign this Lease to its parent corporation or to any
       wholly-owned subsidiary corporation or Affiliate (as hereinafter defined)
       of Tenant without obtaining the prior written consent of Landlord,
       provided that all the following conditions are met:

         (i) Any such assignee shall remain the parent of Tenant, or a
         wholly-owned subsidiary corporation of Tenant, or an affiliate as the
         case may be;

         (ii) The net worth of the assignee shall not be not less than Tenant's
         net worth prior to such assignment or at the time of execution of this
         Lease, whichever shall be greater;

         (iii) Tenant shall have given Landlord thirty (30) days' prior notice
         of such assignment;

         (iv) Tenant shall not be in default under any of the provisions of this
         Lease at the time of such assignment; and

         (v) The assignee furnishes Landlord at least thirty (30) days' prior to
         the effective date of said assignment a written instrument satisfactory
         to Landlord agreeing to assume and be bound by all the conditions,
         obligations and agreements contained in this Lease.

       As used herein, (i) "Affiliate" shall mean an entity which (aa) directly
       or indirectly control, Tenant, (bb) is under the direct or indirect
       control of Tenant or (cc) is under common ownership of fifty-one percent
       (51%) or more of the voting securities or rights of the controlled
       entity, (ii) "parent corporation " shall mean a company which owns a
       majority of whose voting stock is owned by Tenant. Notwithstanding any
       such assignment, the assignor and any guarantors hereunder shall remain
       fully and primarily liable for the performance of all conditions,
       obligations and agreements of tenant under this lease. In the event
       Tenant applies to Landlord for consent to assign, convey, transfer or
       sublet the Premises, Landlord may condition such consent upon the right
       to receive one-half of the profit, if any, which Tenant may realize on
       account of such assignment, conveyance, transfer or sublease of the
       Premises. For purposes of this paragraph, "profit" shall mean any sum
       which the assignee, Sublessee or transferee is required to pay, or which
       is credited to Tenant as rent in excess of the rents required to be paid
       by Tenant to Landlord under this Lease. Landlord also reserves the right
       to recapture the Premises provided, that Tenant may, by written notice
       given to Landlord within five (5) business days after Tenant's receipt of
       Landlord's recapture notice, revoke Tenant's request for consent, in
       which event Landlord shall not recapture the Premises and this Lease
       shall continue in full force and effect as if Tenant had not requested
       Landlord's consent to an assignment or subletting, or applicable portion
       thereof in lieu of giving its consent by notice given to Tenant within
       twenty (20) days after receipt of Tenant's written request for assignment
       or subletting. Such recapture shall terminate this Lease as to the
       applicable space effective on the prospective date of assignment or
       subletting, which shall be the last day of a calendar month and not
       earlier than sixty (60) days after receipt of Tenant's request hereunder.
       In the event that Landlord shall not elect to recapture and shall
       thereafter give its consent, Tenant shall pay Landlord a reasonable fee,
       not to exceed $500.00, to reimburse Landlord for processing costs
       incurred in connection with such consent. For purposes of this Lease, any
       corporate or partnership dissolution, liquidation or merger, and any
       transfer of the corporate shares or general partnership interests holding
       a majority of the voting rights in Tenant, whether in a single or any
       number of transactions cumulatively, or any assignment or transfer by
       operation of law shall be considered an "assignment" of this Lease
       requiring Landlord's prior consent and otherwise subject to the
       provisions of this subsection.

       B. Notwithstanding any permitted assignment or subletting, Tenant shall
       at all times remain directly, primarily and fully responsible and liable
       for the payment of the rent herein as specified and for compliance with
       all of its other obligations under the terms, provisions and covenants of
       this Lease. Upon the occurrence of an "event of default" as hereinafter
       defined, if the Premises or any part thereof are then assigned or sublet,
       Landlord, in addition to any other remedies herein provided, or provided
       by law, may at its option collect directly from such assignee or
       subtenant all rents becoming due to Tenant under such assignment,
       transfer of sublease and apply such rent against any sums due to Landlord
       from Tenant hereunder, and no such collection shall be construed to
       constitute a novation or a release of Tenant from the further performance
       of Tenant's obligations hereunder.

13.    INSURANCE, FIRE AND CASUALTY DAMAGE.

       A. Landlord agrees to maintain insurance covering the building of which
       the Premises are a part in an amount not less than eighty percent (80%)
       (or such greater percentage as may be necessary to comply with the
       provisions of any co-insurance clauses of the policy) of the "replacement
       cost" thereof as such term is defined in the Replacement Cost Endorsement
       to be attached thereto, insuring against the perils of Fire, Lightning,
       Extended Coverage, Vandalism and Malicious Mischief, extended by Special
       Extended

<PAGE>

       Coverage Endorsement to insure against all other Risks of Direct Physical
       Loss, such coverages and endorsements to be as defined, provided and
       limited in the standard bureau form prescribed by the insurance
       regulatory authority for the State in which the Premises are situated by
       use by insurance companies admitted in such state for the writing of such
       insurance on risks located within such state. Subject to the provisions
       of subparagraph 13, C, D, E below, such insurance shall be for the sole
       benefit of Landlord and under its sole control. In the event the
       Insurance policy shall contain a deductible, Tenant shall be liable for
       and pay any deductible withheld from insurance proceeds or payable under
       the terms of the insurance policy in the event of a claim or insured loss
       thereunder.

       B. Tenant agrees to pay, its proportionate share of Landlord's cost of
       carrying fire and extended coverage insurance ("Insurance") on the
       building. During each month of the term of this Lease, Tenant shall make
       a monthly escrow deposit with Landlord equal to one-twelfth of its
       proportionate share of the insurance on the buildings and grounds which
       will be due and payable for that particular year. Tenant authorizes
       Landlord to use the funds deposited by him with Landlord under this
       paragraph to pay the cost of such Insurance. Each Insurance Escrow
       Payment shall be due and payable, as additional rent, at the same time
       and manner of the payment of the monthly rental as provided herein. The
       initial share of the estimated insurance for the year in question, and
       the monthly Insurance Escrow Payment is subject to increase or decrease
       as determined by Landlord to reflect an accurate monthly escrow of
       Tenant's estimated proportionate share of this insurance. The Insurance
       Escrow Payment account of Tenant shall be reconciled annually. If the
       Tenant's total insurance Escrow Payments are less than Tenant's actual
       pro rata share of the insurance, Tenant shall pay to Landlord upon demand
       the difference; if the total Insurance Escrow Payments of Tenant are more
       than Tenant's actual pro rata share of the Insurance, Landlord shall
       promptly refund the balance of such excess to Tenant and Insurance.
       Tenant's cost of insurance shall be computed by multiplying the cost of
       insurance by a fraction, the numerator of which shall he the number of
       gross leasable square feet of floor space in the Premises and the
       denominator of which shall be the total applicable gross leasable square
       footage. The amount of the initial monthly Insurance Escrow Payment will
       be as specified in the Basic lease Information.

       C. If the building, of which the Premises are a part, should be damaged
       or destroyed by fire, tornado or other casualty, Tenant shall give
       immediate written notice thereof to Landlord.

       D. If the building, of which the Premises are a part, should be totally
       destroyed by fire, tornado or other casualty, or if it should be so
       damaged thereby that rebuilding or repairs cannot in Landlord's
       estimation be completed within two hundred (200) days after the date upon
       which Landlord is notified by Tenant of such damage, this Lease shall
       terminate and the rent shall be abated during the unexpired portion of
       this Lease, effective or if adequate insurance proceeds are for any
       reason unavailable, upon the date of the occurrence of such damage
       provided that rent shall not abate if the casualty was caused by the
       negligence or intentional misconduct of Tenant. Landlord shall give
       notice to Tenant in writing of its determination to terminate this Lease
       within sixty (60) days following the date of the occurrence of such
       damage.

       E. If the building, of which the Premises are a part, should be damaged
       by any peril covered by the insurance to be provided by Landlord under
       subparagraph 13(A) above, but only to such extent that rebuilding of
       repairs can in Landlord's estimation be completed within two hundred
       (200) days after the date upon which Landlord is notified by Tenant of
       such damage, and adequate insurance proceeds to restore are available
       this Lease shall not terminate, and Landlord shall at its sole cost and
       expense thereupon proceed with reasonable diligence to rebuild and repair
       such building to substantially the condition in which it existed prior to
       such damage, except that Landlord shall not be required to rebuild,
       repair or replace any part of the partition, fixtures, additions and
       other improvements which may have been placed in, or about the Premises
       by the Tenant. If the Premises are untenantable in whole or in part
       following such damage, the rent payable hereunder during the period in
       which they are untenantable shall be reduced to such extent as may be
       fair and reasonable "under all of the circumstances" (provided that rent
       will not abate if the casualty was caused by the negligence or
       intentional misconduct of Tenant). In the event that Landlord shall fail
       to complete such repairs and rebuilding within two hundred (200) days
       after the date upon which Landlord is notified by Tenant of such damage,
       Tenant may at its option terminate this Lease by delivering written
       notice of termination Tenant's exclusive remedy, whereupon all rights and
       obligations hereunder shall cease and terminate.

       F. Notwithstanding anything herein to the contrary, in the event the
       holder of any indebtedness secured by a mortgage or deed of trust,
       covering the Premises requires that the insurance proceeds be applied to
       such indebtedness, then Landlord shall have the right to terminate this
       Lease by delivering written notice of termination to Tenant within
       fifteen (15) days after such requirement is made by any such holder,
       whereupon all rights and obligations hereunder shall cease and terminate.

       G. Each of Landlord and Tenant hereby releases the other from any loss or
       damage to property caused by fire or any other perils insured through or
       under them by way of subrogation or otherwise for any loss or

<PAGE>

       damage to property caused by fire or any other perils insured in policies
       of insurance covering such property, even if such loss or damage shall
       have been caused by the fault or negligence of the other party, or anyone
       for whom such party may be responsible; provided however, that this
       release shall be applicable and in force and effect only with respect to
       loss or damage occurring during such times as the releasor's policies
       shall contain a clause or endorsement to the effect that any such release
       shall not adversely affect or impair said policies or prejudice the right
       of the releasor to recover thereunder and then only to the extent of the
       insurance proceeds payable under such policies. Each of the Landlord and
       Tenant agrees that it will request its insurance carriers to include in
       its policies such a clause or endorsement. If extra cost shall be charged
       therefor, each party shall advise the other thereof and of the amount of
       the extra cost, and the other party, at its election, may pay the same,
       but shall not be obligated to do so.

14.    LIABILITY. Landlord shall not be liable to Tenant or Tenant's employees,
       agents, servants, guests, invitees of visitors, or to any other person
       whomsoever, for any injury to person or damage to property on or about
       the Premises, resulting from and/or caused in part or whole by the
       negligence or misconduct of Tenant, its employees, agents, servants,
       guests, invitees or visitors, or of any other person entering upon the
       Premises, or caused by the building and improvements located on the
       Premises becoming out of repair, or caused by leakage of gas, oil, water
       or steam or by electricity emanating front the Premises, or due to any
       cause whatsoever, and Tenant hereby covenants and agrees that it will at
       all times indemnify and hold safe and harmless the property, the Landlord
       (including without limitation the trustee and beneficiaries if Landlord
       is a trust), Landlord's employees, agents, servants, guests, invitees and
       visitors from any loss, liability, claims, suits, costs, expenses,
       including without limitation attorney's fees and damages, both real and
       alleged, arising out of any such damage or injury; except injury to
       repair any part of the Premises which Landlord is obligated to repair and
       maintain hereunder within a reasonable time after the receipt of written
       notice from Tenant of needed repairs. Tenant's obligation to indemnify
       Landlord under this Paragraph 14 included an obligation to indemnify for
       losses resulting from death or injury to Tenant's employees, and Tenant
       accordingly hereby waives any and all immunities it now has or hereafter
       may have under any Industrial Insurance Act, or other worker's
       compensation, disability benefit or other similar act which would
       otherwise be applicable in the case of such a claim. Tenant shall procure
       and maintain throughout the term of this Lease a policy or policies of
       Insurance, at its sole cost and expense, insuring both Landlord and
       Tenant against all claims, demands or actions arising out of or in
       connection with: (i) the Premises; (ii) the condition of the Premises;
       (iii) Tenant's operation in and maintenance and use of the Premises, and
       (iv) Tenant's liability assumed under this Lease, the limits of such
       polices, together with receipt evidencing payment of premiums therefor,
       shall be delivered to Landlord prior to the Commencement Date of this
       Lease. Not less that fifteen (15) days prior to the expiration date of
       any such policies, certified copies of the renewals thereof (bearing
       notations evidencing the payment of renewal premiums) shall be delivered
       to Landlord. Such policies shall further provide that not less that
       thirty (30) days written notice shall be given to Landlord before such
       policy may be cancelled or changed to reduce insurance provided thereby.
       Except to the extent Tenant has specifically waived its right of recovery
       in this Lease in Sections 6, 11, 13G, 14, 19, 22, and 26, Landlord shall
       indemnify and hold Tenant harmless against and from any and all claims
       arising from any breach or default in the performance of any obligation
       on Landlord's part to be performed under the terms of this Lease, or
       arising from any intentional misconduct or gross negligence of Landlord,
       or any officer, agent, employee, guest or invitee of Landlord, and from
       all costs, attorney's fees and liabilities incurred in connection with
       the defense of any such claim or any action or proceeding brought
       thereon. In any action or proceeding brought against Tenant by reason of
       such claim, Landlord, upon notice from Tenant, shall defend the same at
       Landlord's expense by counsel reasonably satisfactory to Tenant. In no
       event shall any indemnity in the Lease by Landlord apply to the extent of
       the gross negligence or intentional misconduct of Tenant or its agents,
       employees, contractors, or invitees.

       14B. TENANTS INSURANCE.

       1. Notwithstanding anything to the contrary set forth in this Lease,
       Tenant covenants and agrees that during the term of this Lease (and any
       renewal or extension thereof), Tenant, at its sole cost and expense,
       shall obtain, maintain and keep in full force and effect:

         (a) Comprehensive General Liability Insurance including Blanket
       Contractual, Personal Injury, Broad Form Property Damage, Products
       Liability, Completed Operations, Fire Legal Liability, Host Liquor Law
       Liability (and if Tenant shall be operating a restaurant, tavern or other
       establishment which sells or dispenses any drink or beverage containing
       alcohol, Dram Shop Liability) and Owned, Non-owned and Hired automobile
       coverages, naming Landlord and Tenant, any mortgagee of the Building and
       any landlord under a lease of the property on which the Building is
       located, and any other designee of Landlord, as insureds, with minimum
       limits of $1,000,000 combined single limit for property damage and bodily
       injury per occurrence for any and all claims for injury or damage to
       persons or property or for the loss of life or property occurring upon,
       in or about the Premises and the public portions of the Building arising
       out of or in connection with any act or omission of Tenant, its
       employees, agents, contractors, customers, and invitees.

<PAGE>

         (b) All Risk insurance including without limitation sprinkler leakage
       and flood and earthquake (if flood and earthquake exposure exists) and
       vandalism and malicious mischief on a 100% replacement cost basis
       covering all contents, merchandise, inventory, equipment, floor
       coverings, fixtures and improvements and such other portions of the
       Premises which Landlord is not responsible for restoring. Tenant shall
       apply all insurance proceeds attributable to any of the foregoing items
       to the repair and restoration thereof. In addition, Tenant shall obtain
       and keep in full force and effect during the term of this Lease business
       interruption insurance with all risk perils and such other insurance in
       such amounts as Landlord shall reasonably require.

         (c) Workers' Compensation insurance as required by law and Employer's
       Liability coverage for a minimum of $1,000,000 per occurrence.

       2. Tenant covenants to comply with any and all rules and regulations
       applicable to the Premises issued by the Board of Fire Underwriters or by
       any other body hereinafter constituted exercising similar functions and
       insurance companies writing policies covering the Premises. Tenant shall
       pay all costs, expenses, claims, fines, penalties and damages imposed
       because of failure of Tenant to comply with this Section (2) and agrees
       to indemnify Landlord from all liability (including without limitation
       attorney's fees) with reference thereto. Tenant shall, at its own cost
       and expense, procure and maintain each and every permit, license,
       certificate or other authorization and any renewals, extensions or
       continuances of the same required in connection with lawful and proper
       use of the Premises for Tenant's business. Tenant agrees to pay upon
       demand as additional rent under this Lease any increase in the amount of
       insurance premiums payable by Landlord for its insurance on the Building
       and/or the underlying property ("Landlord's Insurance") over and above
       the rate now in force that may be caused by Tenant's use or occupancy of
       the Premises or any act or omission of Tenant, its agents, employees,
       contractors or cancelled or suspended, then Tenant shall indemnify
       Landlord against any liability, cost or expense which would have been
       covered thereunder. All insurance obtained by Tenant hereunder shall be
       under primary policies and Landlord's Insurance shall be excess and
       noncontributory.

       3. Tenant shall deposit a policy or policies of all such insurance, or an
       approved certificate evidencing such insurance issued by duly authorized
       agents of the carriers in question, with Landlord at least ten (10) days
       before the Commencement Date and renewals of such policies and at least
       thirty (30) days prior to the expiration of any existing policies. All
       such policies shall provide that such insurance shall not be modified,
       cancelled, reduced or allowed to lapse except upon thirty (30) days prior
       written notice (by certified mail, return receipt requested) to Landlord
       and all additional insureds.

       4. All such policies shall (a) be written in form and substance
       satisfactory to Landlord by an insurance company licensed and authorized
       to do business in the state in which the Building is located and having a
       rating of not less than "A - X" by A.M. Best Company's most recent
       ratings report, and otherwise satisfactory to Landlord in all respects,
       (b) contain a provision or endorsement that (i) no act of omission of
       Tenant shall affect or limit the obligation of the insurer to pay the
       amount of the loss solely responsible for the payment of all premiums and
       that Landlord shall have no obligation to pay same notwithstanding that
       Landlord is or may be named as an insured. Tenant's failure to provide
       and keep in force the aforementioned insurance shall be regarded as a
       material default hereunder, entitling Landlord to exercise any or all of
       the remedies in the event of a default under this Lease. Carrying the
       prescribed insurance shall in no way be construed as either a limitation
       or satisfaction of the hold harmless or indemnity agreements contained in
       this Lease. In the event Tenant shall not obtain any of the insurance
       required to be obtained hereunder, Landlord shall have the right to
       obtain such insurance on Tenant's behalf and Tenant shall pay to Landlord
       the cost thereof upon demand as additional rent. Landlord shall have the
       further right to review annually the form, substance and limits of all
       Tenant's insurance required hereunder an Tenant shall adjust its
       insurance and/or increase the limits thereof as Landlord shall deem
       reasonably necessary.

       14C. MISCELLANEOUS

       Tenant will list Landlord, Landlord's lenders and property managers as
       additional insureds on Tenant's insurance policies. Tenant is also
       expressly required to maintain fire and extended coverage insurance for
       the full replacement value of any alterations, additions or improvements
       installed by or for it at the Premises.

15.    CONDEMNATION.

       A. If the whole or any substantial part of the Premises should be taken
       for any public or quasi-public use under governmental law, ordinance or
       regulation, or by right of eminent domain, or by private purchase in lieu
       thereof and the taking would prevent or materially interfere with the use
       of the Premises for the

<PAGE>

       purpose for which they are being used, this Lease shall terminate and the
       rent shall be abated during the unexpired portion of the Lease, effective
       when the physical take of said Premises shall occur.

       B. If part of tine Premises shall be taken for any public or quasi-public
       use under any governmental law, ordinance or regulation, or by right of
       eminent domain, or by private purchase to lieu thereof, and this Lease is
       not terminated as provided in the subparagraph above, this Lease shall
       not terminate but the rent payable hereunder during the unexpired portion
       of this Lease shall be reduced to such extent as may be fair and
       reasonable under all of the circumstances.

       C. In the event of any such taking or private purchase in lieu thereof,
       Landlord shall be entitled to receive the entire award. Tenant shall be
       entitled to make a claim in any condemnation proceeding which does not
       reduce the amount of Landlord's award, for the value of any furniture,
       furnishings and fixtures installed by and at the sole expense of Tenant.

16.    HOLDING OVER. Tenant will, at the termination of this Lease by lapse of
       time or otherwise, yield up immediate possession to Landlord. If Landlord
       agrees in writing that Tenant may hold over after the expiration or
       termination of this Lease, unless the parties hereto otherwise agree in
       writing on the terms of such holding over, the hold over tenancy shall be
       subject to termination by Landlord at any time upon not less than five
       (5) days advance written notice, or by Tenant at any time upon not less
       that thirty (30) days advance written notice, and all of the other terms
       and provisions of this Lease shall be applicable during that period,
       except that Tenant shall pay Landlord from time to time upon demand, as
       rental for the period of any hold over, an amount equal to one and
       one-half (1-1/2) the Base Rent in effect on the termination date, plus
       all additional rental as defined herein, computed on a daily basis for
       each day of the hold over period. No holding over by Tenant, whether with
       or without consent of Landlord, shall operate to extend this Lease except
       as otherwise expressly provided. The preceding provisions of this
       paragraph 16 shall not be construed as Landlord's consent of Tenant to
       hold over.

17.    QUIET ENJOYMENT. Landlord covenants that it now has, or will acquire
       before Tenant takes possession of the Premises, good fee or leasehold
       title of the Premises, free and clear of all liens and encumbrances,
       excepting only the lien for current taxes not yet due, such mortgage of
       mortgages as are permitted by the terms of this Lease, zoning ordinances
       and other building and fire ordinances and governmental regulations
       relating to the use of such property, and easements, restrictions and
       other conditions of record. In the event this Lease is a sublease, then
       Tenant agrees to take the Premises subject to the provisions of the prior
       leases. Landlord represents and warrants that it has full right and
       authority to enter into this Lease and that Tenant, upon paying the
       rental herein set forth, and performing its other covenants and
       agreements herein set forth, shall peaceably and quietly have, hold and
       enjoy the Premises for the term hereof will without hindrance or
       molestation from Landlord, subject to the terms and provisions of this
       Lease.

18.    EVENTS OF DEFAULT. The following events shall be deemed to be events of
       default by Tenant under this Lease:

       A. Tenant shall fail to pay any installment of the rent herein reserved
       when due, of any payment with respect to taxes hereunder when due, or any
       other payment or reimbursement to Landlord required herein when due, and
       such failure shall continue for a period of five (5) days from the date
       such payment was due.

       B. Tenant shall become insolvent, or shall make a transfer in fraud of
       creditors, of shall make an assignment for the benefit of creditors.

       C. Tenant shall file a petition under any section or chapter of the
       National Bankruptcy Act, as amended, or under any similar law or statute
       of the United States or any State thereof; or Tenant shall be adjudged
       bankrupt or insolvent in proceedings filed against Tenant thereunder.

       D. A receiver or trustee shall be appointed for all or substantially all
       of the assets of Tenant.

       E. Tenant shall desert or vacate any substantial portion of the Premises.

       F. Tenant shall fail to comply with any term, provision or covenant of
       this Lease (other than the foregoing in this Paragraph 18), and shall not
       cure such failure within thirty (30) days after written notice thereof to
       Tenant.

<PAGE>

19.    REMEDIES. Upon the occurrence of any such events of default described in
       Paragraph 18 hereof, Landlord shall have the option to pursue any one or
       more of the following remedies without any notice or demand whatsoever.

       A. Landlord may accelerate all rent payments due hereunder which shall
       then become immediately due and payable.

       B. Terminate this Lease, in which event Tenant shall immediately
       surrender the Premises to Landlord, and if Tenant fails so to do,
       Landlord may, without prejudice to any other remedy which it may have for
       possession or arrearages in rent, enter upon and take possession of the
       Premises and expel or remove Tenant and any other person who may be
       occupying such Premises or any part thereof, by force if necessary,
       without being liable for prosecution or any claim of damages therefor,
       and Tenant agrees to pay to Landlord on demand the amount of all loss and
       damage which Landlord may suffer by reason of such termination, whether
       through inability to relet the Premises on satisfactory terms or
       otherwise.

       C. Enter upon and take possession of the Premises and expel or remove
       Tenant and any other person who may be occupying such Premises or any
       pact thereof, by force if necessary, without being liable for prosecution
       or any claim for damages therefor, and relet the Premises for such terms
       ending before, on or after the expiration date of the Lease Term, at such
       rentals and upon such other conditions (including concessions and prior
       occupancy periods) as Landlord in its sole discretion may determine, and
       receive the rent therefor; and the Tenant agrees to pay to the Landlord
       on demand any deficiency that may arise by reason of such reletting.
       Landlord shall have no obligation to relet the Premises or any part
       thereof and shall not be liable for refusal or failure to relet or in the
       event of reletting the Premises at a rental in excess of that agreed to
       be paid by Tenant pursuant to the terms of this Lease, Landlord and
       Tenant each mutually agree that Tenant shall not be entitled, under any
       circumstances, to such excess rental, and Tenant does hereby specifically
       waive any claim to such excess rental.

       D. Enter upon the Premises, by force if necessary, without being liable
       for prosecution or any claim for damages therefor, and do whatever Tenant
       is obligated to do under the terms of this Lease; and Tenant agrees to
       reimburse Landlord on demand for any expenses which Landlord may incur in
       this effecting compliance with Tenant's obligations under this Lease, and
       Tenant further agrees that Landlord shall not be liable for any damages
       resulting to the Tenant from such action, whether caused by the
       negligence of Landlord or otherwise.

       E. Whether or not Landlord retakes possession or relets the Premises,
       Landlord shall have the right to recover unpaid rent and all damages
       caused by Tenant's default, including attorney's fees. Damage shall
       include, without limitation, all rents lost, all legal expenses and other
       related costs incurred by Landlord following Tenant's default, all costs
       incurred by Landlord in restoring the Premises to good order and
       condition, or in remodeling, renovating or otherwise preparing the
       Premises for reletting, all costs (including without limitation any
       brokerage commissions and the value of Landlord's other rights and
       remedies hereunder or at law and shall not be construed as liquidated
       damages or as limiting Landlord's remedies in any manner.

       F. In the event Tenant fails to pay any installment of rent, additional
       rent or other charges hereunder within five (5) business days after
       written notice from Landlord that such amount is overdue, to help defray
       the additional cost to Landlord for processing such late payments Tenant
       shall pay to Landlord on demand a late charge in all amount equal to five
       (5%) of such installment; and the failure to pay such amount within ten
       (10) days after demand therefor shall be an event of default hereunder.
       The provision for such late charge shall be in addition to all of
       Landlord's other rights and remedies hereunder or at law and shall not be
       construed as liquidated damages or as limiting Landlord's remedies in any
       manner.

G.     Pursuit of any of the foregoing remedies shall not preclude pursuit of
       any of the other remedies herein provided or any other remedies provided
       by law, such remedies being cumulative and non-exclusive, nor shall
       pursuit of any remedy herein provided constitute a forfeiture or waiver
       of any rent due to a Landlord hereunder or of any damages accruing to a
       Landlord by reason of the violation of any of the terms, provisions and
       covenants herein contained. No act or thing done by the Landlord or its
       agents during the Lease Term hereby granted shall be deemed a termination
       of this Lease or an acceptance of the surrender of the Premises, and no
       agreement to terminate this Lease or to accept a surrender of said
       Premises shall be valid unless in writing signed by Landlord. No waiver
       by Landlord or Tenant of any violation or breach of any of the terms,
       provisions and covenants herein contained shall be deemed or construed to
       constitute a waiver of any other violations or breach of any of the
       terms, provisions and covenants herein contained. Landlord's acceptance
       of the payment of rental or other payments hereunder after the occurrence
       of an event of default shall not be construed as a waiver of such
       default, unless Landlord notifies Tenant in writing. Forbearance by
       Landlord or Tenant to enforce one or more of the remedies herein provided
       upon an event of default shall not be deemed or construed to constitute a
       waiver of such default or of Landlord's

<PAGE>

       or Tenant's right to enforce any such remedies with respect to such
       default or any subsequent default. If, on account of any breach or
       default by Tenant in Tenant's obligations under the terms and conditions
       of this Lease, it shall become necessary or appropriate for Landlord to
       employ or consult with an attorney concerning or to enforce or defend any
       of Landlord's rights or remedies hereunder, Tenant agrees to pay any
       reasonable attorney's fees so incurred. In the event of any litigation
       concerning this lease the substantially prevailing party shall be
       reimbursed its attorney's fees and costs by the substantially prevailing
       party.

20.    LANDLORD'S LIEN. In addition to any statutory lien for rent in Landlord's
       favor, Landlord shall have and Tenant hereby grants to Landlord a
       continuing security interest for all rentals, and other sums of money
       becoming due hereunder from Tenant, upon all goods, wares, equipment,
       fixtures, furniture, inventory, accounts, contract rights, chattel paper
       and other, personal property of Tenant situated on the Premises, and such
       property shall not be removed therefrom without the consent of Landlord
       until all arrearages in rent as well as any and all other sums of money
       then due to Landlord hereunder shall first have been paid and discharged.
       In the event of a default under this Lease, Landlord shall have, in
       addition to any other remedies provided herein or by law, all rights and
       remedies under the Uniform Commercial Code, including without limitation
       the right to sell the property described in this Paragraph 20 at public
       or private sale. Tenant hereby agrees to execute such financing
       statements and other instruments necessary or desirable in Landlord's
       discretion to perfect the security interest hereby created. Any statutory
       lien for rent is not hereby waived, the express contractual lien herein
       granted being in addition and supplementary thereto.

21.    MORTGAGES. Tenant accepts this Lease subject and subordinate to any
       ground leases, mortgage(s) and/or deed(s) of trust now or at any time
       hereafter constituting a lien or charge upon the Premises or the
       improvements situated thereon, provided, however, that if the mortgagee,
       trustee, or holder of any such mortgage or deed of trust elects to have
       Tenant's interest in this Lease superior to any such instrument, then, by
       notice to Tenant from such mortgagee, trustee or holder, this Lease shall
       be deemed superior to such lien, whether this Lease was executed before
       or after said mortgage or deed of trust. Tenant shall at any time
       hereafter on demand execute any instruments, releases or other documents
       which may be required by any mortgage for the purpose of subjecting and
       subordinating this Lease to the lien of any such mortgage. If any
       proceedings are brought for foreclosure, or in the event of the exercise
       of the power of sale under any mortgage or deed of trust made by Landlord
       covering the Premises or in the event of a transfer in lieu of
       foreclosure, Tenant shall attorn to the mortgagee, beneficiary, or
       purchaser/assignee and recognize the same as the new landlord under this
       Lease.

22.    LANDLORD'S DEFAULT. Landlord shall not be in default unless Landlord
       fails, to perform obligations required of Landlord within a reasonable
       time, but in no event later than thirty (30) days after written notice by
       Tenant to Landlord and to the holder of any first mortgage or deed of
       trust covering the Premises whose name and address shall have theretofore
       been furnished to Tenant in writing and specifying how Landlord has
       failed to perform such obligations and the acts required to cure the
       same; provided, however, that if the nature of Landlord's obligation is
       such that more than thirty (30) days are required for performance,
       Landlord shall not be in default if Landlord commences performance within
       such thirty (30) day period and thereafter diligently prosecutes the same
       to completion. Tenant shall have the right to recover its actual damages
       caused by an uncured default of Landlord under this Lease. In no event
       shall Tenant have the right to offset damages against rent or to
       terminate this Lease as a result of Landlord's default, or to seek
       consequential of punitive damages against Landlord for a default
       hereunder.

23.    MECHANICS LIEN. Tenant shall have no authority, express or implied, to
       create or place any lien or encumbrance of any kind or nature whatsoever
       upon, or in any manner to bind, the interest of Landlord in the Premises
       or to charge the rentals payable hereunder for any claim in favor of any
       person dealing with Tenant, including those who may furnish materials or
       perform labor for any construction or repair, and each such claim shall
       affect and each such lien shall attach to, if at all, only the leasehold
       interest granted to Tenant by this instrument. Tenant covenants and
       agrees that it will pay or cause to be paid all sums legally due and
       payable by it on account of any labor performed or materials furnished in
       connection with any work performed on the Premises on which any lien is
       or can be validly and legally asserted against its leasehold interest in
       the Premises or the improvements thereon and that it will save and hold
       Landlord harmless from any and all loss, cost or expense based on or
       arising out of asserted claims or liens against the leasehold estate or
       against the right, title and interest of the Landlord in the Premises or
       under the terms of this Lease.

24.    NOTICES. Each provision of this instrument or of any applicable
       governmental laws, ordinances, regulations and other requirements with
       reference to the sending, mailing or delivery of any notice or the making
       of any payment by Landlord to Tenant or with reference to the sending,
       mailing or delivery of any

<PAGE>

       notice or the making of any payment Tenant to Landlord shall be deemed to
       be compiled with when and if the following steps are taken:

       A. All rent and outer payments required to be made by Tenant to Landlord
       hereunder shall be payable to Landlord at the address hereinbelow set
       forth or at such other address as Landlord may specify from time to time
       by written notice delivered in accordance herewith. Tenant's obligation
       to pay rent and any other amounts to Landlord under the terms of this
       Lease shall not be deemed satisfied until such rent and other amounts
       have been actually received by Landlord.

       B. All payments required to be made by Landlord to Tenant hereunder shall
       be payable to Tenant at the address hereinbelow set forth, or at such
       other address within the continental United States as Tenant may specify
       from time to time by written notice delivered in accordance herewith.

       C. Any notice or document required or permitted to be delivered hereunder
       shall be deemed to be delivered whether actually received or not three
       business days after deposit in the United States mail, postage prepaid,
       Certified or Registered Mail, addressed to the parties hereto at the
       respective addresses set out below, or at such other address as they have
       thereto specified by written notice delivered in accordance herewith:

           LANDLORD:                              TENANT:

           New York Life Insurance Company        Pure Water Corporation
           c/o TRAMMELL CROW COMPANY              an Aqua Source Company,
           5601 6th Avenue South                  21608 85th Avenue South
           Seattle, WA 98108                      Kent, WA 98032

       If and when included within the term "Landlord", as used in this
       instrument, there are more than one person, firm or corporation, all
       shall jointly arrange among themselves for their joint execution of such
       a notice specifying some individual at some specific address for the
       receipt of notices and payments to Landlord; if and when included within
       the term "Tenant", as used in this instrument, there are more than one
       person, firm or corporation, all shall jointly arrange among themselves
       for their joint execution of such a notice specifying some individual at
       some specific address within the continental United States for the
       receipt of notices and payments to Tenant. All parties included within
       the terms "Landlord" and "Tenant", respectively, shall be bound by
       notices given in accordance with the provisions of this paragraph to the
       same effect as if each had received such notice

25.    MISCELLANEOUS.

       A. Words of any gender used in this Lease shall be held and construed to
       include any other gender, and words in the singular number shall be held
       to include the plural, unless the context otherwise requires.

       B. The terms, provisions and covenants and conditions contained in this
       Lease shall apply to, insure the benefit of, and be binding upon, the
       parties hereto and upon their respective heirs, legal representatives,
       successors and permitted assigns, except as otherwise herein expressly
       provided. In the event of any sale of the subject real estate by
       Landlord, Landlord shall automatically be released from all liability
       under this Lease arising out of any act, occurrence or omission occurring
       after the consummation of such sale. Landlord shall have the right to
       assign any of its rights and obligations under this Lease. Each party
       agrees to furnish to the other, promptly upon demand, a corporate
       resolution, proof of due authorization by partners, or other appropriate
       documentation evidencing the due authorization of such party to enter
       into this Lease.

       C. The captions inserted in this Lease are for convenience only and in no
       way define, limit or otherwise describe the scope of intent of this
       Lease, or any provision hereof, or in any way affect the interpretation
       of this Lease.

       D. Tenant agrees from time to time within ten (10) days after request of
       Landlord, to deliver to Landlord, or Landlord's designee, an estoppel
       certificate stating that this Lease is full force and effect, the date to
       which rent has been paid, the unexpired term of this Lease and such other
       matters pertaining to this Lease as may be requested by Landlord. It is
       understood and agreed that Tenant's obligation to furnish such estoppel
       certificates in a timely fashion is a material inducement for Landlord's
       execution of this Lease

       E. This Lease may not be altered, changed of amended except by an
       instrument in willing signed by both parties hereto.

<PAGE>
       F. All obligations of Tenant hereunder not fully performed as of the
       expiration or earlier termination of the term of this Lease shall survive
       the expiration or earlier termination of the Term hereof, including
       without limitation all payment obligations with respect to taxes and
       insurance and all obligations concerning the condition of the Premises.
       Upon the expiration or earlier termination of the Term hereof, and prior
       to Tenant vacating the Premises, Tenant shall pay to Landlord any amount
       reasonably estimated by Landlord as necessary to put the Premises,
       including without limitation all heating and air-conditioning systems and
       equipment therein, in good condition and repair pursuant to Paragraph
       10(B) hereof. Tenant shall also, prior to vacating the Premises, pay to
       Landlord the amount, as estimated by Landlord, of Tenant's obligation
       hereunder for real estate taxes and insurance premiums for the year in
       which the Lease expires or terminates. All such amounts shall be used and
       held by Landlord for payment of such obligations of Tenant hereunder,
       with Tenant being liable for any additional costs therefor upon demand by
       Landlord, or with any excess to be returned to Tenant after all such
       obligations have been determined and satisfied, as the case may be. Any
       security deposit held by Landlord shall he credited against the amount
       payable by Tenant under this Paragraph 25(F).

       G. If any clause or provision of this Lease is illegal, invalid or
       unenforceable under present of future laws effective during the Term of
       this Lease, then and in that event, it is the intention of the parties
       hereto that the remainder of this Lease shall not be affected thereby,
       and it is also the intention of the parties to this Lease that in lieu of
       each clause or provision of this Lease that is illegal, invalid or
       unenforceable clause or provision as may be possible and be legal, valid
       and enforceable.

       H. Because the Premises are on the open market and are presently being
       shown, this Lease shall be treated as an offer with the Premises being
       subject to prior lease and such offer subject to withdrawal or
       nonacceptance by Landlord or to other use of the Premises without notice,
       and this Lease shall not he valid or binding unless and until accepted by
       Landlord in writing and a fully executed copy delivered to both parties
       hereto.

       I. All references in this Lease to "the date hereof" or similar
       references shall be deemed to refer to the last date, in point of time,
       on which all parties hereto have executed this Lease.

       J. During the term of this Lease and any subsequent option periods,
       Landlord shall have the right to request and obtain Tenant's current
       financial statements with reasonable advance notice. Tenant shall comply
       with Landlord's request for financial statements in a reasonable time
       frame not to exceed thirty (30) days from the date of request.

26.    LIABILITY OF LANDLORD. Tenant agrees that no trustee, officer, employee,
       agent or individual partner of Landlord, (or its constituent entitles),
       shall be personally liable for any obligation of Landlord hereunder, and
       that Tenant must look solely to the interests of Landlord, or its
       constituent entitles in the subject real estate, for the enforcement of
       any claims against Landlord arising hereunder.

27.    TIME. Time is of the essence of this Lease for each and all of its
       provisions in which Tenant's performance is a factor.

28.    NO RECORDATION. Tenant shall not, without the consent of Landlord, record
       this Lease or any "short form" memorandum thereof.

29.    ADDITIONAL PROVISIONS.

       Paragraphs 30-34, attached hereto are by this reference incorporated
       herein.

       TENANT:

       PURE WATER CORPORATION,
       an Aqua Source Company
       a Delaware corporation

       BY: ___________________________________

       ITS: __________________________________

       LANDLORD:

       NEW YORK LIFE INSURANCE COMPANY

       BY: ___________________________________

       ITS: __________________________________

<PAGE>

STATE OF ____________________________________)
                                                SS
COUNTY OF____________________________________)

BE IT REMEMBERED, that on this __________day of ________________________,
19____, before me, the undersigned a Notary Public in and for said County and
State, duly commissioned an sworn, personally appeared
_________________________________ known to me to be the person who signed as
_______________________________ of ________________________________________, 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/she was
duly elected, qualified and acting as officer of the corporation, that he/she
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.

                                   _____________________________________________

                                   Notary Public for ___________________________

                                   Residing at _________________________________

                                   My Commission Expires _______________________

STATE OF ____________________________________)
                                                SS
COUNTY OF____________________________________)

BE IT REMEMBERED, that on this ______day of _____________________, 19_________,
before me, the undersigned a Notary Public in and for said County and State,
duly commissioned and sworn, personally appeared ___________________________
known to me to be the person who signed as _____________________________________
of _________________________________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/she was duly elected, qualified and acting
as an officer of the corporation, that he/she 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.

                                   _____________________________________________

                                   Notary Public for ___________________________

                                   Residing at__________________________________

                                   My Commission Expires________________________

<PAGE>

                                GUARANTY OF LEASE

         THIS GUARANTY OF LEASE is attached to and is hereby made a part of that
certain Lease dated July 8, 1999 between NEW YORK LIFE INSURANCE COMPANY
("Landlord"), and PURE WATER CORPORATION an AquaSource Company, a Delaware
corporation ("Tenant").

         FOR VALUE RECEIVED and in consideration of and as an inducement to
Landlord entering into this Lease, the undersigned guarantor ("Guarantor"),
AquaSource, Inc., unconditionally and continuously guarantees to Landlord, its
successors and assigns, and acknowledging that Guarantor receives an economic
benefit from Tenant's entering into this Lease, the full and timely performance
and observance by Tenant of all the terms and conditions of the Lease to be
performed and observed by Tenant.

         This Guaranty and the obligations of Guarantor hereunder shall not be
terminated or impaired by reason of the granting by Landlord of any indulgences
to Tenant or the assertion by Landlord against Tenant of any of Landlord's
rights or remedies under the Lease, or by the relief of Tenant from any of
Tenant's obligations under the lease by operation of law or otherwise, whether
or not Guarantor has received notice of same. Guarantor waives all suretyship
defences and waives notice of any breach by Tenant.

         This Guaranty shall continue in full force and effect as to any
renewal, amendment, modification, extension, assignment or transfer of the Lease
or any subletting of the Lease premises, whether or not Guarantor shall have
received notice of or consented to the same. The liability of Guarantor under
this Guaranty is primary and absolute, and Landlord may at its opinion proceed
against guarantor without proceeding against Tenant. Any action against
Guarantor may be brought in the county in which the Lease premises are located,
or in King County, Washington, at Landlord's option.

         Landlord's delay or failure to insist upon the strict performance or
observance of any obligation of Tenant under the Lease or to execute any right
or remedy available under the Lease or at law or in equity, shall not be
construed to be a waiver of Landlord's prerogative to insist upon such strict
performance or observance or to exercise any such right or remedy. Receipt by
Landlord of rent or other payment with knowledge of a breach of any term or
condition of the Lease shall not be construed to be a waiver of such breach.

         The liability of Guarantor hereunder shall not be affected or limited
by: the release or discharge of Tenant in any creditors', receivership,
bankruptcy or other proceedings; the impairment, limitation or modification of
the liability of the Tenant or the estate of the Tenant in bankruptcy, or of any
remedy for the enforcement of Tenant's said liability under the Lease, resulting
from the operation of any present or future provision of the federal bankruptcy
laws or other statutes or from the decision in any court; the rejection or
disaffirmance of the Lease in any such proceedings; any disability or other
defence of Tenant; or the cessation, from any cause whatsoever, of the liability
of the Tenant.

         Until all terms, conditions and agreements of the Lease are fully
performed and observed by Tenant; Guarantor hereby waives the right to enforce
any claim, right or remedy which Guarantor now has or hereafter shall have
against Tenant by reason of any one or more payments or acts of performance in
compliance with the obligations of Guarantor hereunder, and Guarantor hereby
subordinates any liability or indebtedness of Tenant now or hereafter held by
Guarantor to the obligations of Tenant to Landlord under the Lease.

         This Guaranty shall inure to the benefit of the Landlord, its
affiliates, successors and assigns, and shall be binding upon the successors and
assigns of Guarantor.

         This Guaranty is irrevocable and may not be changed, affected,
discharged or terminated other than by an agreement in writing signed by
Guarantor and Landlord.

         Guarantor shall pay all costs and expenses paid or incurred by Landlord
in enforcing either the Lease or this Guaranty, including court costs and a
reasonable amount for legal services performed by counsel, whether employed or
retained by Landlord.

         DATED this ___day of ______________, 19___.   AquaSource, Inc.

                                                 _______________________________
                                                 (signature)

                                                 _______________________________
                                                 (Name - PLEASE PRINT)
CORPORATE ADDRESS

___________________________________

___________________________________

___________________________________

CORPORATE TELEPHONE:

___________________________________

<PAGE>

AQUASOURCE LNC.
________________________________________________________________________________

                          CERTIFICATE OF THE SECRETARY

The undersigned, Diane S. Eismont, does hereby certify that she is Corporate
Secretary of AquaSource, Inc., a Delaware corporation, and does hereby further
certify that attached is an excerpt from the Minutes of a Meeting of the Board
of Directors of the Company duly called and held on August 19, 1999, at which
meeting a quorum was present and acting throughout; none of the corporate action
reported in said excerpt has been modified or rescinded.

         WITNESS the due execution hereof this 19th day of August, 1999

                                         _______________________________________
(SEAL)                                   Diane S. Eismont
                                         Corporate Secretary

<PAGE>

                          EXCERPT FROM THE MINUTES OF A
                        MEETING OF THE BOARD OF DIRECTORS
                               OF AQUASOURCE, INC.
                             HELD ON AUGUST 19, 1999

Approval of a Guarantee of Pure Water Corporation Lease

         Mr. Villiotti explained to the Board that Pure Water Corporation,
located in Seattle, Washington, was moving into a new facility under very
favorable lease terms (on a gross basis, 48 cents per square foot per month). A
total of 75,940 square feet will be leased for seven years at an annual cost of
about $440,000 per year. Mr. Villiotti explained that a guarantee from
AquaSource is necessary as part of the lease in order to obtain these lease
terms and he recommended that the Board approve such a guarantee.

         After questions and discussion and on motion duly made and seconded,
the following resolutions were unanimously adopted:

         RESOLVED, That the Company is authorized to enter into the Guaranty of
Lease Agreement, as part of the Lease Between New York Life Insurance Company
and Pure Water Corporation, substantially under the terms presented to the Board
at this meeting; and

         FURTHER RESOLVED, That each of the proper officers of the Company is
authorized, in the name and on behalf of the Company, to do and perform all acts
and execute and deliver all such documents and other instruments as each of them
may deem necessary or appropriate in order to fully effectuate the purpose of
the foregoing resolution.

<PAGE>

                                GUARANTY OF LEASE

       THIS GUARANTY OF LEASE is attached to and is hereby made a part of that
certain Lease, dated July 8, 1999, between NEW YORK LIFE INSURANCE COMPANY
("Landlord"), and PURE WATER CORPORATION, an AquaSource Company, a Delaware
corporation ("Tenant").

FOR VALUE RECEIVED and in consideration of and as an inducement to Landlord
entering into this Lease, the undersigned guarantor ("Guarantor"), AquaSource,
Inc., unconditionally and continuously guarantees to Landlord, its successors
and assigns, and acknowledging that Guarantor receives an economic benefit from
Tenant's entering into this Lease, the full and timely performance and
observance by Tenant of all the terms and conditions of the Lease to be
performed and observed by Tenant.

       This Guaranty and the obligations of Guarantor hereunder shall not be
terminated or impaired by reason of the granting by Landlord of any indulgences
to Tenant or the assertion by Landlord against Tenant of any of Landlord's
rights or remedies under the Lease, or by the relief of Tenant from any of
Tenant's obligations under the lease by operation of law or otherwise, whether
or not Guarantor has received notice of same. Guarantor waives all suretyship
defenses and waives notice of any breach by Tenant.

       This Guaranty shall continue in full force and effect as to any renewal,
amendment, modification, extension, assignment or transfer of the Lease or any
subletting of the Lease premises, whether or not Guarantor shall have received
notice of or consented to the same. The liability of Guarantor under this
Guaranty is primary and absolute, and Landlord may at its option proceed against
guarantor without proceeding against Tenant. Any action against Guarantor may be
brought in the county in which the Lease premises are located, or in King
County, Washington, at Landlord's option.

       Landlord's delay or failure to insist upon the strict performance or
observance of any obligation of Tenant under this lease or to exercise any right
or remedy available under the Lease or at law of in equity, shall not be
construed to be a wavier of Landlord's prerogative to insist upon such strict
performance or observance or to exercise any such right or remedy. Receipt by
Landlord of rent or other payment with knowledge of a breach of any term or
condition of the Lease shall not be construed to be a waiver of such breech.

       The liability of Guarantor hereunder shall not be affected of limited by:
the release or discharge of Tenant in any creditors', receivership, bankruptcy
or other proceedings; the impairment, limitation or modification of the
liability of the Tenant or the estate of the Tenant in bankruptcy, or of any
remedy for the enforcement of Tenant's said liability under the Lease, resulting
from, the operation of any present or future provision of the federal bankruptcy
laws or other, statutes or from the decision in any court; the rejection or
disaffirmance of the Lease in any such proceedings; any disability or other
defense of Tenant, or the cessation, from any cause whatsoever, of the liability
of the Tenant.

       Until all the terms, conditions and agreements of the Lease are fully
performed and observed by Tenant, Guarantor hereby waives the right to enforce
any claim, right or remedy which Guarantor now has or hereafter shall have
against Tenant by reason of any one or more payments or acts of performance in
compliance with the obligations of Guarantor hereunder, and Guarantor hereby
subordinates any liability or indebtedness of Tenant now or hereafter held by
Guarantor to the obligations of Tenant to Landlord under the Lease.

       This Guaranty shall inure to the benefit of the Landlord, its affiliates,
successors and assigns, and shall be binding upon the successors and assigns of
Guarantor.

       This Guaranty is irrevocable and may not be changed, affected, discharged
of terminated other than by an agreement in writing signed by Guarantor and
Landlord.

       Guarantor shall pay all costs and expenses paid or incurred by Landlord
in enforcing either the Lease or this Guaranty, including court costs and a
reasonable amount for legal services performed by counsel, whether employed or
retained by Landlord.

         DATED this ____day of _________________ , 1999.   AquaSource,Inc

                                                 _______________________________
                                                 (Signature)

                                                 _______________________________
                                                 (Name - PLEASE PRINT)

CORPORATE ADDRESS;

_________________________________________

_________________________________________

CORPORATE TELEPHONE:

_________________________________________

<PAGE>

                         ADDITIONAL PROVISIONS TO LEASE
                                  July 8, 1999

                         NEW YORK LIFE INSURANCE COMPANY
                                   as Landlord

                                       and

                  PURE WATER CORPORATION, an AquaSource Company
                             a Delaware corporation,
                                    as Tenant
________________________________________________________________________________

    30.      FREE RENT. Tenant shall not be required to pay the monthly base
             rent for the period September 1, 1999 through December 31, 1999,
             but will be responsible for its share of the monthly operating
             expenses during this time, provided that this Lease does not
             terminate prior to December 31, 2006. If for any reason this Lease
             terminates prior to December 2006, Tenant shall be required to
             promptly pay to Landlord, in addition to other charges that may be
             due, four (4) month's base rent for the period September 1, 1999
             through December 31, 1999.

    31.      RENT INCREASE. Effective September 1, 2002, the monthly base rent
             as provided for in Paragraph 2 of the Lease shall be increased to
             Thirty Two Thousand Six Hundred Fifty Four and No/100 ($32,654.00).
             Effective September 1, 2005, the monthly base rent as provided for
             in Paragraph 2 of the Lease shall be increased to Thirty Five
             Thousand Six Hundred Ninety One and No/100 ($35,691.00).

    32       OPTION TO EXTEND. While this lease is in full force and effect,
             provided Tenant is not and has not been in default of any of the
             terms, covenants and conditions thereof, Landlord grants to Tenant
             one (1) option to extend the term of the Lease for a period of five
             (5) years commencing upon the termination of the original Lease
             term, exercisable by giving Landlord notice in writing not later
             nine (9) months prior to the termination of the original lease
             term. Such extension or renewal shall be on the same terms,
             covenants and conditions as provided for in the original term
             except that the monthly base rent during the extended term shall be
             at the fair market rental then in effect on equivalent properties,
             of equivalent size, in equivalent areas. However, in no event shall
             the Monthly Base Rent during the Option Term be below that in
             effect in the final full calendar month of the original term of the
             Lease. In the event the demised Premises is sublet or assigned this
             renewal option will be null and void and of no further effect.

    33.      TENANT IMPROVEMENTS. Landlord agrees to provide to Tenant a
             Seventy-Five Thousand and no/100 Dollars ($75,000) tenant
             improvement allowance so that Tenant may complete its improvements
             to the Premises provided that Tenant completes tenant improvements
             and submits invoices for the same to the Landlord on or before
             December 31, 2000. Should Tenant not complete its tenant
             improvements and/or submit invoices for the same to the Landlord on
             or before December 31,2000, Landlord shall not be required to pay
             the $75,000 tenant improvement allowance. Prior to Tenant
             commencing work on these improvements, Tenant shall submit to
             Landlord two (2) copies of plans detailing the design and plan of
             improvements Landlord shall either approve or disapprove plans
             within five (5) days and, if approved, return a signed, approved
             copy to Tenant. In the event that the plans are not approved by
             Landlord, Landlord shall inform Tenant of the reasons for such
             disapproval and Tenant shall have five (5) days in which to submit
             revised plans to Landlord for approval, which approval shall not be
             unreasonably withheld or delayed. Tenant shall not unreasonably
             refuse to satisfy any objections made by Landlord to said plans and
             specifications. Any objections Tenant has to Landlord's objection
             shall be submitted to Landlord in writing within said five (5) day
             period. A failure of one party to give any notice to the other
             party within such five (5) day period shall be deemed to constitute
             approval of the plans and specifications or the objections thereto,
             as appropriate.

                     Upon Landlord's approval of Tenant's plans, Tenant shall
             promptly enter into a construction contract with a licensed, bonded
             contractor. The construction of all improvements to be made on the
             Premises shall be performed in a first-class, workmanlike manner
             and in conformity with all applicable governmental laws,
             ordinances, rules, orders, regulations, and other

<PAGE>

                                    EXHIBIT B

                            KENT EAST CORPORATE PARK

                                LEGAL DESCRIPTION

That portion of the South 1/2 of Northwest 1/4 and the North 1/2 of the
Southwest 1/4 of Section 7, Township 22 North, Range 5 East, W.M., in King
County, Washington, being more particularly described as follows:

COMMENCING at the West 1/4 corner of said Section 7; thence S 89(degree)59'28" E
along the South line of said Northwest 1/4 a distance of 50.01 feet to a point
on the East line of a parcel conveyed to the City of Kent for 84TH AVENUE SOUTH
road purposes as recorded under Recording No. 9008061001 said point also being
the POINT OF BEGINNING; thence N 1(degree)15'05" E along said line 767.80 feet
to the North line of the South 767.62 feet of Government Lot 2 in said Section
7; thence ; 89(degree)59'28" E along said North line 447.76 feet to the East
line of the West 497.65 feet of said Government Lot 2; thence S 1(degree)15'05"
W along said East line 400.15 feet to the North line of the South 10 acres of
said Government Lot 2; thence S 89(degree)59'28" E along said North line 258.06
feet to the East line of the West 755.65 feet of said Government Lot 2; thence N
1(degree)15'05" E along said East line 400.15 feet to said North line of the
South 767.52 feet; thence S 89(degree)59'28" E along said North line 811.85 feet
to the Westerly line of a parcel conveyed to the State of Washington as recorded
under Recording No. 8406291616; thence Southerly along said line by the
following courses and distances: S 27(degree)02'29" E 222.77 feet; S
10(degree)57'58" E 30.41 feet; S 20(degree)42'36" E 95.02 feet; S
1(degree)42'05" W 125.20 feet; N 88(degree)29'46" E 13.61 feet to the Westerly
margin of a drainage ditch right-of-way condemned by King County Superior Court
Cause No. 32912 and as field located in February, 1990; thence Southerly along
said margin by the following courses and distances: S 4(degree)54'00" W 235.12
feet; S 13(degree)37'00" W 118.22 feet; S 23(degree)57'00" W 111.60 feet; S
20(degree)36'00" W 109.72 feet; S 14(degree)32'00" W 109.77 feet; S
12(degree)31'00" W 311.40 feet to the North line of a parcel conveyed to the
City of Kent for SOUTH 218TH STREET road purposes as recorded under Recording
No. 9008061002; thence S 89(degree)54'38" W along said line 307.74 feet to the
West line of TRACT 18 of SHINN'S CLOVERDALE ADDITION TO KENT, as per plat
recorded in Volume 6 of Plats, Page 52, records of said King County; thence N
1(degree)14'10" E along said West line 388.47 feet to its intersection with the
Easterly extension of the South line of TRACT 10 of said Plat; thence S
89(degree)58'36" W along said extended line and along the South line of said
TRACT 10 a distance of 530.86 feet to the West line of the East 1 acre of TRACT
9 of said Plat; thence S 1(degree)18'03" W along said West line 243.49 feet to
the North line of a parcel conveyed to the City of Kent for SOUTH 218TH STREET
and 84TH AVENUE SOUTH road purposes as recorded under Recording No. 9008061003;
thence S 89(degree)56'39" W along said line 380.24 feet to the East line of The
West 244 feet of said TRACT 9; thence N 1(degree)15'40" E along said line 76.52
feet to the North line of the South 90 feet of said TRACT; thence N
89(degree)56'39" E along said line 14.00 feet to the East line of the West 258
feet of said TRACT; thence N 1(degree)15'40" E along said line 167.17 feet to
the North line of said TRACT; thence N 89(degree)58'36" E 18.00 feet to the East
line of the West 306 feet of said TRACT 10; thence N 1(degree)15'40" E along
said line 248.46 feet to the South line of the North 8.72 feet of said TRACT 10;
thence N 89(degree)59'28" W along said South line 256.06 feet to the East line
of said Parcel conveyed to the City of Kent as recorded under Recording No.
9008061001; thence N 1(degree)15'40" E along said East line 8.72 feet to the
POINT OF BEGINNING.

TOGETHER WITH that portion of the South 1/2 of the Northwest 1/4 and the North
1/2 of the Southwest 1/4 of Section 7, Township 22 North, Range 5 East, W.M., in
King County, Washington, being more particularly described as follows:

COMMENCING at the West 1/4 corner of said Section 7; thence S 89(degree)59'28" E
along the South line of said Northwest 1/4 a distance of 1690.84 feet to a point
on the Easterly margin of a drainage ditch right-of-way condemned by King County
Superior Court Cause No. 32912 and as field located in February, 1990, said
point also being the POINT OF BEGINNING; thence Northerly along said margin the
following courses and distances: N 13(degree)37'00" E 83.72 feet; N
4(degree)54'00" E 239.83 feet to the Southerly line of a parcel conveyed to the
State of Washington as recorded under Recording No. 8406291616; thence leaving
said Easterly margin N 88(degree)29'46" E along said Southerly line 36.23 feet
to the Westerly margin of STATE ROUTE NO. 167 as conveyed to the State of
Washington as recorded under Recording No. 5335185; thence Southerly along said
Westerly margin by the following courses and distances: S 1(degree)30'14" E
463.44 feet; S 0(degree)59'52" E 172.05 feet to a point on a curve to the right
from which the center bears N 89(degree)58'21" W 3164.10 feet distant; thence
Southerly along said curve through a central angle of 5(degree)59'09" an arc
distance of 330.57 feet to the Northerly line of a parcel conveyed to the City
of Kent for SOUTH 218TH STREET road purposes as recorded under Recording No.
9008061002; thence leaving said Westerly margin and running along said Northerly
line the following courses and distances: S 89(degree)54'38" W 13.70 feet to a
point on a curve to the left from which the center bears S 53(degree)02'27" W
50.00 feet distant;

<PAGE>

thence Westerly along said curve through a central angle of 106(degree)15'37" an
arc distance of 92.73 feet; thence S 89(degree)54'39" W 166.66 feet to the
Easterly margin of said drainage ditch right-of-way as field located in
February, 1990; thence leaving said Northerly line and running along said
Easterly margin by the following courses and distances: N 12(degree)31'00" E
305.37 feet; N 14(degree)32'00" E 108.00 feet; N 20(degree)36'00" E 107.67 feet;
N 23(degree)57'00" E 113.13 feet; N 13(degree)37'00" E 38.66 feet to the POINT
OF BEGINNING.

Revised December 6, 1990
90-007A

<PAGE>

                                    EXHIBIT C

                               TENANT IMPROVEMENTS
________________________________________________________________________________

This page has been intentionally left blank

<PAGE>

January 5, 2000

Mr. Mark Landis
Pure Water Corporation
P.O. Box 80347
Seattle, Washington 98108-0347

RE:      KENT EAST CORPORATE PARK
         NOTICE OF LEASE COMMENCEMENT

Dear Mark:

The purpose of this letter is to serve as a written notification and
confirmation of certain provisions contained within your Lease. As of September
1, 1999, Pure Water Corporation took possession of the premises as described in
the Lease. The undersigned, on behalf of Tenant, acknowledges that Tenant is now
in possession of the premises and that the lease is in full force and effect.
Tenant also acknowledges that a key to the premises has been received.

The lease commencement date is hereby deemed to be September 1, 1999. The
primary lease term as set for the in the Basic Lease Information shall be 88
months, the lease expiration date is December 31, 2006 and the initial base
rental payments shall be $28,857.00 per month.

The actual rentable area in the premises is hereby deemed to be 75,940 square
feet. The actual rentable area in the building is 75,940 square feet, and of the
Park as a whole is 807,096 square feet. Therefore, the Tenant's proportionate
share of the building and park area shall be 100% and 9.41% respectively.

Please indicate your agreement to and acceptance of the items outlined above by
signing the enclosed copy of this letter and returning one original copy to us.
Again, we welcome you to your new space within Kent East Corporate Park and look
forward to a long and mutually beneficial relationship.

Sincerely,                       APPROVED THIS 8TH DAY OF FEBRUARY, 2000
                                               ---        --------

TRAMMELL CROW COMPANY      PURE WATER CORPORATION

//s/Eric M. Ragde
Eric M. Ragde                    BY:     _______________________________________
Operations Manager

                                 TITLE:  President
                                         _______________________________________

cc:      John D. Robertson

<PAGE>

                                AMENDMENT NO. 1

              (DATED DECEMBER 23, 1996 FOR REFERENCE PURPOSES ONLY)

     THIS AMENDMENT No. 1 to Lease is entered into by and between ARGONNE
COMMERCIAL CENTER, ("Landlord") and PURE WATER CORPORATION, a Washington
Corporation, ("Tenant").

                                    RECITALS

         WHEREAS, Landlord and Tenant entered into a Lease dated January 12,
1996 ("Lease") for the premises located at E. 9516 Montgomery, Unit #14,
Spokane, Washington 99206 ("Premises"), and more particularly described in said
Lease; and,

         WHEREAS, Landlord and Tenant now wish to further modify said Lease.

                               W I T N E S S E T H

         NOW, THEREFORE, in consideration of mutual covenants herein below,
Landlord and Tenant agree as follows:

1.       Paragraph #5 is amended to read as follows: "The term of this lease is
         extended for a period of five (5) years commencing February 1, 1997 and
         ending January 31, 2002."

2.       Paragraph #8 is amended to read as follows: "Tenant agrees to pay
         Landlord as basic rent the amounts as follows:

<TABLE>
<CAPTION>
         COMMENCING                 ENDING               BASIC MONTHLY RENTAL
         ----------                 ------               --------------------
         <S>                        <C>                       <C>

         February 1, 1997           January 31, 1998          $1,041.00
         February 1, 1998           January 31, 1999          $1,073.00
         February 1, 1999           April 30, 1999            $1,105.00
         May 1, 1999                January 31, 2000          $1,894.00
         February 1, 2000           January 31, 2001          $1,950.00
         February 1, 2001           January 31, 2002          $2,009.00
</TABLE>

3.       Beginning May 1, 1999, Paragraph #1 shall be amended to read as
         follows: "PREMISES": Unit #14 containing approximately 5,605 square
         feet of the building commonly know as 9516 E. Montgomery, being a part
         of the real property situated in the County of Spokane, State of
         Washington, described as follows: The South 120 feet of the North 340
         feet of the West 1/2 of Tract 363 of OPPORTUNITY PLAT TWO, as per Plats
         thereof recorded in Volume "Q" of Plats, page 41, EXCEPT the west 5
         feet thereof for Locust Road situate in the County of Spokane, State of
         Washington."

<PAGE>

4.       Beginning May 1, 1999, Tenant's share of operation expenses as provided
         in Paragraph 2 of Rider #1 to that certain Net Lease between Argonne
         Commercial Center as Landlord and Pure Water Corporation, a Washington
         Corporation as Tenant, dated January 12, 1996, shall be amended to
         9.91%, increased from 5.96%. All other terms of said Paragraph 2,
         Operation Expenses, shall remain the same.

5.       Tenant herein acknowledges that ZDI Gaming's Lease expires April 30,
         1999 as to Unit #15 and within a reasonable period of time after ZDI
         Gaming vacates the premises, Landlord agrees to remove the office doors
         from the existing office space to the warehouse area and to create a 8'
         x 8' opening between Units #14 and #15 where opening had previously
         existed. Further, Landlord agrees to remove the carpeting in the office
         areas. THE STEPPED UP RENT WHICH INCLUDES UNIT #15 SHALL COMMENCE ON
         MAY 1, 1999 OR ON THE DATE WHEN SAID SPACE IS READY FOR OCCUPANCY BY
         PURE WATER CORPORATION.

6.       This Amendment No. 1 modifies and supersedes the Lease as amended to
         the extent stated herein only. In the event of any inconsistencies
         between the Lease as amended and this Amendment No. 1, this Amendment
         No. 1 shall control. All other provisions of the Lease as amended will
         remain in full force and effect.

7.       The Lease as amended and this Amendment No. 1 represents the entire
         agreement of the parties and neither has made nor relied upon any
         representations, warranties, promises, covenants or undertakings other
         than those expressly set forth herein.

8.       SEE ATTACHED EXHIBIT "A": FOR DESCRIPTION OF MODIFICATIONS PERTAINING
         TO DRIVE-THROUGH OPENING BETWEEN UNITS 14 AND 15. ANY MODIFICATIONS TO
         BE COMPLETED BY TENANT HEREIN SHALL BE COMPLETED IN A PROFESSIONAL
         MANNER. AT LANDLORD'S OPTIONS TENANT AGREES TO REBUILD THE STEPS TO
         MEZZANINE AND TO FINISH SOUTH MEZZANINE WALL WHICH MAY BE REMOVED BY
         TENANT AS SHOWN ON EXHIBIT "A".

LANDLORD                                      TENANT

ARGONNE COMMERCIAL CENTER                     PURE WATER CORPORATION ,
                                              a Washington Corporation

________________________________              __________________________________

BY: RICHARDS, MERRILL, PETERSON/              BY:_______________________________
    ALVIN J. WOLFF INC., FUND I               Its:  ____________________________

BY: ALVIN J. WOLFF INC., GENERAL              Date:  ________________________
    PARTNER

Its:  _____________________________

Date:  ____________________________

<PAGE>

                          A C K N O W L E D G E M E N T

STATE OF ____________________________     )
                                          )  ss.
County of ___________________________     )

     I certify that I know or have satisfactory evidence that
______________________ ___________________________ is the person who appeared
before me, and said person acknowledged that he/she signed this instrument, on
oath stated that he/she was authorized to execute the instrument and
acknowledged it as the _______________________ of _____________________________
to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.

                           DATED:  ________________________ , 1996

                                   _____________________________________________
                                   NOTARY PUBLIC in and for said
                                   County and State, residing at _______________

                                   _____________________________________________

                                   My appointment expires ______________________

                          A C K N O W L E D G E M E N T

STATE OF ____________________________     )
                                          )  ss.
County of ___________________________     )

     I certify that I know or have satisfactory evidence that
______________________________________________ is the person who appeared before
me, and said person acknowledged that he/she signed this instrument, on oath
stated that he/she was authorized to execute the instrument and acknowledge it
as the ___________________ of __________________________________ to be the free
and voluntary act of such party for the uses and purposes mentioned in the
instrument.

                           DATED:  ________________________ , 1996

                                   _____________________________________________
                                   NOTARY PUBLIC in and for said
                                   County and State, residing at _______________

                                   _____________________________________________

                                   My appointment expires ______________________

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