LEASE AGREEMENT


IRE No.:              334090

LANDLORD:             THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

TENANT:               DS DISTRIBUTION, INC.

Date:                 August 30, 1999

Property:             407 Heron Drive
                      Building A, The Gateway Buildings
                      Pureland Industrial Complex
                      Logan Township, Gloucester County
                      Bridgeport, New Jersey 08014

<PAGE>

                    TABLE OF CONTENTS


 1.  Basic Lease Provisions.......................   1
 2.  Premises.....................................   3
 3.  Term and Commencement of Lease...............   3
 4.  Rent Payments................................   5
 5.  Repairs and Maintenance......................  11
 6.  Utilities....................................  15
 7.  Signs........................................  15
 8.  Usage........................................  15
 9.  Compliance with Laws, Rules and Regulations..  16
10.  [Intentionally Omitted]......................  16
11.  Indemnification, Waiver and Release..........  16
12.  Insurance....................................  16
13.  Waiver of Subrogation........................  18
14.  Tenant Improvements..........................  18
15.  Alteration and Improvements..................  23
16.  Mechanics Liens..............................  23
17.  Condemnation.................................  23
18.  Hazardous Substances.........................  24
19.  Fire and Casualty............................  30
20.  Hold Harmless................................  31
21.  Quiet Enjoyment..............................  32

                                       i
<PAGE>

22.  Landlord's Right of Entry....................  32
23.  Assignment or Sublease.......................  32
24.  Landlord's Lien..............................  33
25.  Uniform Commercial Code......................  34
26.  Default by Tenant............................  34
27.  Remedies for Tenant's Default................  34
28.  Waiver of Default or Remedy..................  35
29.  Acts of God; Force Majeure...................  35
30.  Attorney's Fees..............................  35
31.  Holding Over.................................  36
32.  Rights of First Mortgage.....................  36
33.  Estoppel Certificates........................  36
34.  Successors...................................  36
35.  Guaranty of Lease............................  37
36.  Definitions..................................  37
37.  Construction of Language.....................  37
38.  Notice.......................................  37
39.  Agreement and Limitation of Warranties.......  38
40.  Brokerage Commission.........................  38
41.  Waiver by Jury Trial.........................  39
42.  Choice of Law................................  39
43.  Forum Selection Clause.......................  39
44.  Authority....................................  39

                                       ii
<PAGE>

45.  Right of First Offer.......................... 40
46.  Antenna, Auxiliary Power Supply and Parking
     Spaces........................................ 42
47.  [RESERVED].................................... 43


Exhibits
--------

Exhibit A--Floor Plan(s)
Exhibit B--Rules and Regulations
Exhibit C--Insurance Questionnaire
Exhibit D--Guaranty of Lease
Exhibit E--Tenant Acceptance of Premises
Exhibit F--License Agreement

Schedules
---------

Schedule 9--Title Documents
Schedule 14.1--Shell Work

                                      iii
<PAGE>

                                LEASE AGREEMENT

     THIS LEASE is made as of the 30/th/ day of August, 1999, by and between THE
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation (hereinafter
referred to as "Landlord"), and DS DISTRIBUTION, INC., a Delaware corporation
(hereinafter referred to as "Tenant").

     In consideration of the mutual covenants contained in this Lease and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by each party hereto, Landlord and Tenant agree as follows:

     1.  Basic Lease Provisions.  As used in this Lease, the terms set forth
         ----------------------
below shall have the corresponding meanings set forth below.



                                          
1.1  Premises                                 The Building set forth on the Floor
                                              Plan attached hereto as Exhibit "A"
                                              and made a part hereof constituting
                                              270,378 rentable square feet,
                                              including a mezzanine area with an
                                              additional 5,800 square feet, together
                                              with the Lot and all easements
                                              appurtenant to such Lot.

1.2  Lot                                      The parcel of ground known as Block
                                              44, Lot 7.07, consisting of
                                              approximately 819,208 square feet
                                              located at the intersection of Heron
                                              Drive and Center Square Road in the
                                              Pureland Industrial Complex with
                                              approximately 626 feet of frontage
                                              along Heron Drive and 400 feet of
                                              frontage along Center Square Road.

1.3  Project                                  The three parcels of land located on
                                              Heron Drive in the Pureland Industrial
                                              Complex and owned by Landlord,
                                              together with the three buildings
                                              erected on such parcels, and which
                                              together contain approximately 496,145
                                              square feet of rentable space.


                                      -1-
<PAGE>


                                          
1.4  Building                                 The building located on the Lot at the
                                              Building Address.

1.5  Building Address                         407 Heron Drive Building A, The
                                              Gateway Building Pureland Industrial
                                              Complex Logan Township, Gloucester
                                              County Bridgeport, New Jersey 08014

1.6  Term                                     Sixty (60) months, with two (2)
                                              options to renew for an additional
                                              period of five (5) years each, subject
                                              to Section 45.1 of the Lease.

1.7  Lease Commencement Date                  Date of signing of Lease

1.8  Rent Commencement Date                   As set forth in Section 3 of Lease
                                              Tenant Improvements

1.9  Base Rent                                $1,226,623.90 per year (representing
                                              $4.54 PSF)

1.10  Security Deposit                        $102,218.66

1.11  Tenant's Address                        13920 SE Eastgate Way
                                              Suite 300
                                              Bellevue, Washington 98005

1.12  Landlord's Address                      720 E. Wisconsin Avenue
                                              Milwaukee, Wisconsin 53202

1.13  Manager                                 Lanard & Axilbund
                                              399 Market Street
                                              Philadelphia, PA 19106

1.14  Landlord's Broker                       GMH Realty, Inc.
                                              510 Pedricktown Road
                                              Bridgeport, New Jersey 08014

1.15  Tenant's Broker                         Staubach Company of Pennsylvania 225
                                              City Line Avenue, Suite 103
                                              Bala Cynwyd, Pennsylvania 19004


                                      -2-
<PAGE>


                                          
1.16  Tenant's Proportionate Share            With respect to a particular expense
                                              or amount attributable solely to the
                                              Premises for which Tenant is
                                              responsible, 100% of such expense or
                                              amount, or with respect to a
                                              particular expense or amount
                                              attributable to the Project, the
                                              percentage of all rentable space
                                              receiving benefit of the expense which
                                              is represented by the Premises


     2.  Premises.  Landlord hereby leases to Tenant and Tenant hereby rents
from Landlord the Premises.

     3.  Term and Commencement of Lease. This Lease shall be effective on the
Lease Commencement Date. The Term of the Lease shall begin upon the Rent
Commencement Date as defined herein. The "Rent Commencement Date" shall be that
date which is the earlier of (1) January 1, 2000, or (2) the date of issuance of
a temporary certificate of occupancy for the Premises. Notwithstanding the
foregoing, in the event that the Premises is divided into Warehouse, Pharmacy
and Office Phases as described in Section 14(D) below, with respect to the
Pharmacy and Office Phases, the Rent Commencement Date for each such Phase shall
be deemed to have occurred upon issuance of a temporary certificate of occupancy
for such Phase (whether or not such certificate of occupancy is issued before or
after January 1, 2000), provided that in all events the Rent Commencement Date
shall be deemed to have occurred with respect to the Warehouse Phase by January
1, 2000. The Term shall expire on that date which is the 5th anniversary of the
first date on which the entire Premises (and no lesser portion thereof) is
covered by a certificate or certificates of occupancy permitting use and
occupancy by Tenant as described in Section 14. All rental charges hereunder
shall commence on the Rent Commencement Date.

     3.1 Renewal of Term. Tenant shall have two (2) successive options to renew
the Term of the Lease upon its expiration for an additional period of five (5)
years each, subject to potential extension pursuant to Section 45.1 below (each
a "Renewal Term," which if exercised shall be deemed part of the Term), and
subject to the following provisions:

          (a) In order to exercise either option to renew the Lease, Tenant must
give Landlord written notice of its election to renew not later than 365 days
before the expiration of the then-current Term.  All terms of the Lease shall
remain in full force

                                      -3-
<PAGE>

and effect for the Renewal Term, except that the Base Rent applicable during the
period of renewal shall be at ninety-five percent (95%) of the then-prevailing
market rate of rent and all other charges for comparable space, which market
rate shall be calculated as the market rental rate for a new tenant not yet in
occupancy which receives no allowances for improvements above a base building
shell (e.g., as in the case of this Lease, including the Landlord's Work as
defined herein, but not including the remainder of the Tenant Improvements as
defined herein beyond the Landlord's Work), with such market rate to reflect
such factors as the Tenant's use of the Premises, location of the Building, size
of rental area, condition of the Premises, and the time the particular rate
under consideration becomes effective. However, in no event shall the Base Rent
for the Renewal Term be less than that in effect at the expiration of the
immediately preceding Term of the Lease. If Tenant exercises either option in
accordance with the foregoing, then Landlord shall notify Tenant in writing of
the market rate of rent to apply during the applicable Renewal Term, as
determined by real estate brokers or other professionals selected by Landlord.
Landlord shall provide such statement within 15 days after receiving the notice
of exercise of the applicable option.

          (b) If Tenant does not accept Landlord's determination of the market
rate of rent contained in its notice to Tenant under subsection (A) above, then
Tenant shall within 15 days after receiving Landlord's statement notify Landlord
in writing that it elects to have such value determined by a panel of 3 licensed
real estate brokers or appraisers, one of whom shall be selected by Landlord
within 5 days after the end of such 15 day period, one of whom shall be selected
by Tenant within 5 days after the end of such 15 day period, and the third of
whom shall be selected by the first two within 10 days after the first two are
selected.  Each broker or appraiser, within 10 days after the third such party
is so selected, shall submit a determination of such market rent, and the mean
of the two closest determinations shall be binding on the parties for purposes
of calculating rent during the applicable Renewal Term.  Landlord and Tenant
shall each pay the fee of the broker or appraiser selected by it and they shall
share equally the payment of the fee of the third such party.  If Tenant does
not notify Landlord within 15 days after receiving the Landlord's statement of
value of its election to have the market rate determined by the independent
panel, the rate set forth in Landlord's notice given under subsection (A) above
shall be binding on the parties.

          (c) Notwithstanding the appraisal procedure set forth above, Tenant
shall have the right to cancel and rescind its exercise of the renewal option
herein, provided that Tenant notifies Landlord in writing of such election on or
before the date which is 270 days prior to the expiration of the then-current
Term, and further provided that the Tenant pays all of the costs of the
appraisers described in the immediately preceding paragraph (b) of this section.

                                      -4-
<PAGE>

          (d) If Tenant fails to give notice exercising either of the foregoing
options by the date required herein, or if at the time Tenant exercises either
such option or at commencement of the applicable Renewal Term there exists an
uncured Event of Default hereunder past applicable notice and grace periods,
then Tenant's right and option to renew shall be automatically terminated and of
no further force or effect.


     4.  Rent Payments.

          4.1 Base Rent. During the Term of this Lease following the Rent
Commencement Date, Tenant shall pay to Landlord the Base Rent, payable in equal
monthly installments, in advance, on the first day of each and every calendar
month during the Term, delivered to the Manager's Address or at any other
address as designated from time to time. One monthly installment of Base Rent
shall be payable by Tenant on the date of execution of this Lease for the first
month's rent. If the Rent Commencement Date occurs on a day other than the first
day of the calendar month, the rent for such partial month shall be prorated for
each day at the rate of one-thirtieth (1/30) of the full monthly installment of
rent. Tenant shall pay, as additional rent, all other sums due under this
Lease.

          Notwithstanding the foregoing, in the event that the Premises is
divided into Warehouse, Pharmacy and Office Phases as described in Section 14(D)
below, and pursuant to Section 3 above the Rent Commencement Date shall have
occurred with respect to any of such Phases without the others, then upon such
partial Rent Commencement Date, the Tenant shall begin making payments of Base
Rent and Additional Rent as provided above in amounts which are allocable, pro
rata on a square foot basis, to the applicable Phase, provided that such rental
obligations shall begin with respect to the Warehouse Phase by January 1, 2000
notwithstanding the fact that a certificate of occupancy may not have been
issued for the Warehouse Phase by such date (except if such non-issuance is due
to the Landlord's negligence or intentional misconduct as provided elsewhere
herein).

     4.2  Security Deposit.  On the date of execution of this Lease by Tenant,
Tenant shall pay to Landlord the Security Deposit to be held for the performance
by Tenant of Tenant's covenants and obligations under this Lease, it being
expressly understood that the Security Deposit shall not be considered an
advance payment of rent or a measure of Landlord's damage in case of default by
Tenant.  Upon the occurrence of any Event of Default by Tenant or breach by
Tenant of Tenant's covenants under this Lease, Landlord may, from time to time,
without prejudice to any other remedy, use the Security Deposit to the extent
necessary to make good any arrears of rent and/or any damage, injury, expense or
liability caused to Landlord by

                                      -5-
<PAGE>

the Event of Default or breach of covenant, with any remaining balance of the
Security Deposit to be returned by Landlord to Tenant thirty (30) days after
termination of this Lease.

     4.3  Additional Rent.  In addition to the foregoing, Tenant shall pay as
additional rent (the "Additional Rent") the following:

          (a) Impositions.  During the Term of this Lease following the Rent
Commencement Date, Tenant shall pay to Landlord an amount equal to one-hundred
percent (100%) of the Impositions (as defined below) which are attributable
solely to the Premises ("Tenant's Proportionate Share of Impositions").  For any
year during the Term or any renewal thereof which is not a full calendar year,
Impositions shall be prorated between Landlord and Tenant on a 365 day calendar
year basis.  The term "Impositions" shall mean all taxes, assessments, ad
valorem real estate taxes, excises, personal property taxes, any kind (including
without limitation fees "in-lieu" of any such tax or assessment) of fee service
payments, levies, any tax imposed in substitution, partially or totally, of any
tax previously included within the definition of Impositions, any additional tax
the nature of which was previously included within the definition of
Impositions, and any other charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, of any kind and nature whatsoever which
shall or may during the Term of this Lease be assessed, levied, charged,
confirmed or imposed upon or become payable out of or become a lien upon the
Premises or Landlord's estate therein or any part thereof or the appurtenances
thereto or the sidewalks or streets adjacent thereto.

          The term "Impositions" shall not include any of the following:  (i)
any special tax district taxes or similar taxes or assessments (other than those
in the nature of ad valorem taxes or assessments or usage fees) which are
extraordinary and which are imposed for the recovery of the costs of
constructing infrastructure improvements or for the repayment of financing of
such costs, (ii) any future taxes or assessments or charges under local
improvement districts, community facilities districts or similar arrangements
undertaken by or with the consent of Landlord for the purpose of financing
improvements to or for the benefit of the Premises or other properties owned by
the Landlord, (iii) any correction of or supplement to any tax or assessment
applicable to any period prior to the Rent Commencement Date or the portion of
any tax or assessment applicable to any period prior to the Rent Commencement
Date, regardless of when imposed, (iv) any municipal, state or federal income
taxes assessed against Landlord, or any municipal state or federal capital stock
or levy, estate, succession, inheritance or transfer taxes payable by Landlord,
or any franchise taxes, or (v) any tax or assessment similar to a capital stock
or franchise tax imposed upon any non-corporate owner (the taxes enumerated in
this sentence are

                                      -6-
<PAGE>

collectively referred to as "Landlord's Taxes.). In addition, the term
Impositions shall not include any taxes or other amounts imposed in connection
with any tax parcel other than the tax parcel or parcels on which the Premises
is located. If any assessment, whether general, special, ordinary or
extraordinary, for which Tenant is liable under this Lease as an "Imposition" is
assessed in whole or in part against the Premises which may be payable over a
term of years, Landlord will exercise its right to make payment over such term
of years, and only such portion of any such tax or assessment which falls due
within each year of this Lease and is reasonably attributable to such year shall
be used in the determination of Tenant's payment obligation hereunder. Landlord
further agrees to pay any real property taxes sufficiently in advance to achieve
any available discounts or other savings.

          Tenant shall also pay to Landlord during the Term of this Lease or any
renewals thereof any rental, sales, and use taxes or other similar taxes (but
not income taxes), if any, levied or imposed by any city, state, county or other
governmental body having authority in the amount levied by such governmental
body with respect to the Base Rent and/or Additional Rent due hereunder
(collectively, "Additional Impositions").

          Additional Impositions and Tenant's Proportionate Share of Impositions
shall be paid by Tenant in equal monthly installments in an amount equal to one-
twelfth (l/12th) of the amount of Additional Impositions and Tenant's
Proportionate Share of Impositions as reasonably estimated by Landlord from time
to time in written notice to Tenant given at least 30 days prior to the date on
which such amounts are to become effective.  Within a reasonable amount of time
after the actual amount of Additional Impositions and Impositions can be
determined for each year, Landlord shall deliver to Tenant a written statement,
which shall be conclusive between the parties hereto, setting forth Landlord's
calculation of the Additional Impositions and Impositions and Tenant's
Proportionate Share of Impositions for such year.  If the aggregate amount of
estimated monthly payments made by Tenant in any year for Additional Impositions
and Tenant's Proportionate Share of Impositions is less than the actual amount
set forth on Landlord's statement, then within 30 days Tenant shall pay to
Landlord as Additional Rent upon demand the amount of such deficiency; if the
aggregate amount of monthly estimated payments made by Tenant to Landlord
exceeds the actual amount as set forth on Landlord's statement, and if Tenant is
not otherwise in default hereunder, the amount of such excess will be applied by
Landlord to reduce the installments of such Additional Rent due hereunder for
the next year (unless the refund amount is greater than $5,000, in which event
Landlord shall pay the amount to Tenant upon making the calculation); and if
there is any such excess for the last year of the term and if Tenant is not
otherwise in default hereunder, the amount thereof will be refunded by Landlord
to Tenant.

                                      -7-
<PAGE>

          Tenant shall have the right to file an appeal and contest the real
estate taxes and assessments applicable to the Premises in the event that the
Landlord refuses to conduct such an appeal upon demand of Tenant.  In the event
of any such appeal by Tenant, Tenant shall indemnify Landlord against all
expenses incurred in connection with such appeal, against any claims arising out
of the result of such appeal or any dismissal thereof, and against any increase
in real estate taxes assessed against the Premises resulting from such appeal.

     (b) Utilities and Other Operating Costs:  Electric and gas service shall be
separately metered.  Tenant shall pay 50% of the costs of all utilities consumed
at the Premises between the Lease Commencement Date and the Rent Commencement
Date.  Beginning upon the Rent Commencement Date, Tenant shall pay when due all
charges for electricity and gas consumed in connection with the Premises.  Upon
request, Landlord shall furnish Tenant with copies of the applicable bills for
utilities.  Tenant shall pay to Landlord an amount equal to one-hundred percent
(100%) of the Operating Costs (as defined below) which are attributable solely
to the Premises ("Tenant's Proportionate Share of Operating Costs").  As used
herein, "Operating Costs" means the amount of all costs to Landlord of operating
and maintaining the Premises, including (1) cost of wages and salaries of all
employees engaged in the operation and maintenance of the Premises, including
but not limited to payroll taxes, insurance and benefits (provided that such
wages and salaries shall be prorated to the extent any such employees are also
engaged with respect to other projects); (2) cost of supplies used in the
maintenance and repair of the Premises; (3) all costs of maintaining and
repairing any utility lines and systems on the Premises; (4) costs incurred
under all maintenance and service agreements for the Premises, including trash
removal, snow and ice removal and landscaping; (5) cost of general maintenance,
replacements and repairs to the Building, parking areas, sidewalks and
surrounding landscaping at the Premises; (6) all property management fees and
expenses; (7) the costs of any minor repairs and alterations to portions of the
Premises other than the roof, walls and other structural portions of the
Building which are required or made necessary by law or changes in law; (8) cost
of any capital improvements made to the Building that, in Landlord's reasonable
judgment, will reduce other operating expenses or increase energy efficiency,
provided such costs are amortized over the useful life of the improvement in
accordance with generally accepted accounting principles ("GAAP") at such rates
as may have been paid by Landlord on funds borrowed for the purpose of
constructing such capital improvements or, if no such funds were borrowed, at
such reasonable rates as are not in conflict with GAAP; (9) cost of any licenses
or permits required by any public authority; and (10) any owner's association or
similar fees or assessments (if any) applicable to the Premises which are
imposed under covenants recorded in the land

                                      -8-
<PAGE>

records with respect to the Premises. Notwithstanding the foregoing, "Operating
Costs" shall not include (a) any costs of initial construction of the Building
or of additions of space to the Building, or of constructing and dedicating
Heron Drive, including but not limited to paving, striping or replacement of
1999 drought damaged vegetation or other landscaping; (b) principal, interest,
ground lease or other debt service payments; (c) any fees or costs for property
management services which are in excess of the prevailing market rate, taking
into account any special factors related to the operation of the Building (i.e.,
which are in excess of that reached through arms-length bargaining); (d)
marketing costs, advertising costs or leasing or brokerage commissions; (e) any
costs which are recovered through insurance or condemnation proceeds; (f)
executive salaries and compensation; (g) costs and expenses incurred in
connection with collections or other enforcement of other tenants leases; (h)
costs of initial build-out or improvements to other tenants' spaces; (i)
expenses for any special services or utilities provided solely to, or otherwise
recovered entirely from, any other individual tenant in the Project; (j) rent or
other bad debt losses or reserves therefor; (k) transfer taxes, deed recordation
taxes or other costs directly attributable to the sale of the Building or any
ownership interest therein, (l) depreciation, (m) costs incurred in connection
with the sale, financing, refinancing, mortgaging, selling or change of
ownership of the Building, (n) any increases in insurance premiums caused by the
hazardous acts of the Landlord, (o) any expenditures which are capitalized under
GAAP or for federal income tax purposes, except as expressly provided in Section
4.3(b)(8), (p) general overhead, or (q) fees of architects, engineers, attorneys
or other professionals.

          Tenant's Proportionate Share of Operating Costs shall be paid by
Tenant in equal monthly installments in an amount equal to one-twelfth (1/12th)
of the amount of Tenant's Proportionate Share of Operating Costs as estimated by
Landlord from time to time in written notice to Tenant prior to or during each
year of the term of the Lease.  Within a reasonable amount of time after the
actual amount of Operating Costs can be determined for each year, Landlord shall
deliver to Tenant a written statement setting forth the calculation of the
Operating Costs and Tenant's Proportionate Share of Operating Costs for such
year (the "Expense Statement").  If the aggregate amount of estimated monthly
payments made by Tenant in any year for Tenant's Proportionate Share of
Operating Costs is less than the actual amount set forth on Landlord's
statement, then Tenant shall pay to Landlord as Additional Rent upon demand the
amount of such deficiency; if the aggregate amount of monthly estimated payments
made by Tenant to Landlord exceeds the actual amount as set forth on Landlord's
statement, and if Tenant is not otherwise in default hereunder, the amount of
such excess will be applied by Landlord to reduce the installments of such
Additional Rent due hereunder for the next year (unless the refund amount is
greater

                                      -9-
<PAGE>

than $5,000, in which event Landlord shall pay the amount to Tenant upon making
the calculation); and if there is any such excess for the last year of the Term
and if Tenant is not otherwise in default hereunder, the amount thereof will be
promptly refunded by Landlord to Tenant.

     4.4  Tenant's Audit of Operating Costs.  Tenant shall have the right, at
its own expense and after reasonable advance notice to Landlord, to review
Landlord's records relating to the calculation of Tenant's Proportionate Share
of Operating Costs for the then-current and immediately preceding calendar years
at the offices of Landlord's property manager.  In the event that such review
determines that Tenant's Proportionate Share of Operating Costs have been
miscalculated, Landlord shall pay Tenant (by crediting the next payment of Base
Rent due under the Lease) or Tenant shall pay Landlord (at the time of the next
installment of Base Rent), as the case may be, the amount of the overpayment or
underpayment by Tenant with respect to its share of such expenses.  Landlord
agrees that in the event that such a review by Tenant reveals an overpayment by
Tenant of its share of Operating Costs by an amount of greater than 10% with
respect to the year reviewed, then Landlord shall reimburse to Tenant the out-
of-pocket costs of such review up to (but not exceeding) an amount of $5,000.00.
Tenant agrees that any party performing such review shall be compensated on the
basis of hourly fees and not on a contingency or percentage basis.

     4.5  Late Charge.  Any item of Base Rent or Additional Rent which is not
made when due hereunder shall bear interest at the rate of 12% per annum until
paid  in full.  If the monthly payment of Base Rent and Additional Rent is not
received by Landlord on or before the fifth day of the month for which rent is
due, or if any other payment due Landlord by Tenant is not received by Landlord
on or before the fifth day of the month following the month in which Tenant was
invoiced, a service charge (the "Late Charge") in the amount of the greater of
five percent (5%) of such past due amount or FIVE HUNDRED AND 00/100 DOLLARS
($500.00) shall become due and payable in addition to such amounts owned under
this Lease.  The Late Charge shall also apply to any payment made by check draft
where the check is returned for any reason through no fault of the Tenant.  Time
is of the essence with respect to the payment of Basic Rent and Additional Rent
as set forth in this Lease.

     4.6  No Waiver.  No payment by Tenant or receipt by Landlord of a lesser
amount of monthly Base Rent and Additional Rent or any other sum due hereunder,
shall be deemed to be other than on account of the earliest due rent or payment,
nor shall any endorsement or statement on any check or any letter accompanying
any such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such rent or payment or pursue any other remedy available in this
Leave, at law or in

                                      -10-
<PAGE>

equity. Landlord may accept any partial payment from Tenant without invalidation
of any contractual notice required to be given herein (to the extent such
contractual notice is required) and without invalidation of any notice required
by any law pertaining to eviction or summary remedy for regaining possession of
real property in the event of tenant default.

     4.7  Tenant's Remedies.  This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent, and not dependent,
and Tenant shall not be entitled to any set-off of the Base Rent, Additional
Rent or other amounts owing hereunder against Landlord if Landlord, acting in
good faith, fails to perform its obligations set forth herein; provided,
however, the foregoing shall in no way impair the right of Tenant to commence a
separate action against Landlord for any violation by Landlord of the provisions
hereof so long as notice is first given to Landlord and any holder of a mortgage
or a deed of trust then covering the Premises, or any portion thereof provided
Tenant has received written notice of such mortgage), and a reasonable
opportunity is granted to Landlord and such holder to correct such violation.
Notwithstanding the foregoing, in the event that the Landlord breaches any
express obligation in this Lease to maintain or repair any portion of the
Premises, and such breach continues for a period of 30 days after written notice
from Tenant (or, in the event of an emergency or a situation in which the
default of Landlord materially and adversely impairs the Tenant's business
operations at the Premises, then such lesser period as is reasonable under the
circumstances), then Tenant shall have the right to perform the obligation so
breached by Landlord, provided that (i) Tenant notifies Landlord of its intent
to take such action, (ii) any work to be performed by Tenant shall be subject to
Section 15 of this Lease, and (iii) Tenant shall cede the work to Landlord upon
demand of Landlord for its completion.  In the event of such action by Tenant
taken in accordance with the foregoing provisions, Tenant shall be entitled to
reimbursement of its out-of-pocket costs of performing the work within 30 days
after Landlord's receipt of a statement and supporting documentation verifying
such costs.  Such right of action of Tenant shall not diminish the Tenant's
rights and remedies available under law upon a default of Landlord, all of which
may be exercised by the Tenant cumulatively or successively for full redress.

     5.   Repairs and Maintenance:

          5.1  Landlord's Obligations.  Unless otherwise expressly provided,
Landlord shall not be required to make any improvements, replacements or repairs
of any kind or character to the Premises during the term of this Lease except
those repairs set forth in this Paragraph 5.1.  Landlord shall maintain in good
repair and condition, except for reasonable wear and tear, only the following:

                                      -11-
<PAGE>

          (a) utility service lines and equipment between the Lot boundary and
the Building;

          (b) underground storm and sanitary sewers and drain lines, pipes,
conducts and other underground facilities between the Lot boundary and the
Building;

          (c) all paved areas on the Premises including the driveways,
sidewalks, parking lots and truck aprons;

          (d) the roof, foundation, and the structural soundness of the exterior
walls (excluding all doors) of the Building; and

          (e) all windows at the Premises with respect to manufacturers'
warranties and installation (and not with respect to cleaning or repairs after
damage);

          (f) all landscaping surrounding the building (including the
replacement of any trees stricken by drought conditions prior to the Lease
Commencement Date).

          (g) if the Building's exterior is painted, Landlord shall be
responsible for repainting the Building's exterior (except for exterior doors).

          Payment of the cost of the foregoing repairs and maintenance shall be
determined in accordance with Section 4 and the other express provisions of this
Lease, and, without limiting the generality of the foregoing, the payment of the
costs incurred in connection with items (d) and (e) above, except for the costs
of routine maintenance of the roof (which are not to be capitalized under GAAP
or federal income tax law or regulations), shall not be deemed Operating
Expenses or otherwise chargeable the Tenant.

          Tenant shall repair and pay for any damage including those repairs
which are the responsibility of Landlord, as stated above, caused by any
negligent or intentional act or omission of Tenant or Tenant's agents, employees
and invitees.  Landlord shall not be liable to Tenant for any damage or
inconvenience caused by making of repairs, and Tenant shall not be entitled to
any abatement or reduction of rent by reason of any repairs, alterations or
additions made by Landlord under this Lease.

          5.2  Right of Entry.  Landlord shall have the right, but shall not be
obligated, to enter the Premises at all reasonable hours, upon reasonable
advance notice, except in an emergency, for the purpose of making any repairs
which are

                                      -12-
<PAGE>

required by this Lease or which Landlord shall deem necessary for the
preservation of the Premises or the Building, and Landlord shall be allowed to
take all materials into and upon the Premises that may be required to make such
repairs, improvements, and additions, or any alterations for the benefit of
Tenant without Landlord in any way being deemed or held guilty of an eviction of
Tenant. Any such entry to the Building shall be subject to Tenant's reasonable
sign-in and security procedures. In addition, Landlord shall use commercially
reasonable efforts to not interfere with the Tenant's business in exercising any
right of entry into the Premises for repairs and maintenance. All such repairs,
decorations, additions and improvements shall be done during ordinary business
hours, or, if any such work is at the request of Tenant to be done during any
other hours, Tenant shall pay for all overtime costs.

          5.3  Tenant's Obligations.  Tenant shall, at its own expense, maintain
all parts of the Premises not required to be maintained by Landlord in good
clean repair and condition (including all necessary replacements) under
Paragraph 5.1, including, but not limited to, any downspouts, fire sprinkler
system, HVAC equipment, dock bumpers, pest control and extermination, regular
removal of debris.  Tenant shall take good care of the Premises and the Building
and its fixtures.  If Tenant neglects to keep and maintain the Premises in
accordance with its obligations under this Lease, then Landlord shall have the
right, but not the obligation, upon providing Tenant with notice and ten (10)
business days to cure, to have the work done, and the costs of performing such
work shall be charged to Tenant as Additional Rent and shall become payable by
Tenant with the payment of rent next due under this Lease.

          5.4 HVAC Equipment. In connection with Tenant's maintenance and repair
of the heating, ventilating, and air conditioning (HVAC) system, Tenant shall
provide Landlord during the term of this Lease and any renewal hereof with a
duplicate original of a maintenance contract in form and substance reasonably
acceptable to Landlord, with a reputable HVAC maintenance firm. If Tenant fails
to provide Landlord with a duplicate original of a maintenance contract within
45 days after the Rent Commencement Date, Landlord shall have the right (but not
the obligation), upon not less than 10 days advance notice, to obtain on behalf
of Tenant, a maintenance contract at reasonable market cost. The cost for such
contract shall be charged to Tenant as Additional Rent and shall become payable
by Tenant with the payment of rent next due hereunder. Tenant shall at all times
conduct maintenance on the HVAC equipment at the Premises in accordance with all
federal, state or local laws. Landlord agrees that during the Term, Tenant shall
receive benefit, through assignment or otherwise as appropriate, of all
manufacturer's warranties with respect to the HVAC systems. In the event that a
leak occurs in any portion of the HVAC equipment at the Premises, Tenant shall
promptly repair such leak in accordance with

                                      -13-
<PAGE>

such federal, state or local laws and shall, in any event repair such leaks
within the deadline imposed by such federal, state or local laws. Tenant hereby
agrees to indemnify, defend and hold Landlord harmless against any and all
damages, liabilities, losses, costs and expenses, including reasonable
attorneys' fees, incurred by Landlord as a result of Tenant's failure to conduct
maintenance on the HVAC equipment at the Premises in accordance with all
federal, state or local laws or as a result of Tenant's failure to repair any
leak in any portion of the HVAC equipment at the Premises in accordance with
federal, state or local laws. In the event of a replacement of a part or portion
of the HVAC equipment which is warranted by the manufacturer and/or guaranteed
by the installer, Tenant shall provide Landlord with a duplicate original of the
warranty and/or guarantee. The parties agree that the foregoing provisions are
not in diminution of the Landlord's obligations pursuant to Section 5.6 below.

     5.5  Requirements to Restore.  Tenant shall be responsible for any damage
to be committed on any portion of the Premises.  Tenant shall deliver the
Premises to Landlord in as good condition as existed at the Lease Commencement
Date, ordinary wear and tear, damage caused by Landlord, and casualty covered by
Section 19 being excepted.  The cost of any repairs necessary to restore the
condition of the Premises, for which Tenant is responsible hereunder, shall be
borne by Tenant, and if Landlord notifies Tenant and undertakes to restore the
Premises it shall have a right of reimbursement against Tenant which right shall
survive the termination of this Lease (provided that any claims in connection
therewith are brought to the attention of the Tenant within one year after
expiration of the Term).  Upon request of Tenant given within the last 6 months
of the Term, Landlord and Tenant shall perform a joint walkthrough of the
Premises and develop a written punchlist of restoration and repair work required
of the Tenant hereunder.  Tenant shall only be responsible for repairs, which
are required by the terms of this Lease but not listed on such punchlist agreed
to by Landlord, if the need for such repairs arises after the time of the walk-
through by the parties.

     5.6  Warranty.  Landlord hereby warrants to Tenant that for a period of one
(1) year from the Lease Commencement Date (the "Warranty Period"), the Tenant
Improvements described in Section 14 below shall be in good working order.  In
addition, Landlord warrants that the Tenant Improvements and, as of the Rent
Commencement Date, the Premises shall be in compliance with all applicable laws,
ordinances and regulations (including, as applicable, the Americans With
Disabilities Act) and the declarations and covenants of title set forth in
Schedule 9 hereto.  Landlord shall be responsible for any repairs to the Tenant
Improvements during the Warranty Period in addition to the obligations set forth
in Paragraph 5.1 above (but not including any maintenance or repairs which are
the Tenant's responsibility under Section 4.3 above).

                                      -14-
<PAGE>

     6.   Utilities.  Landlord shall provide the normal utility service
connections into the Building, the specifications for which are included in
Schedule 14.1 hereof.  Payment for utilities shall be as provided in Paragraph 4
hereof.  Tenant shall pay all costs caused by Tenant introducing excessive
pollutants or solids other than ordinary human waste into the sanitary sewer
system, including permits, fees and charges levied by any governmental
subdivision for any such pollutants or solids.  Tenant shall be responsible for
the installation and maintenance of any dilution tanks, holding tanks, settling
tanks, sewer sampling devices, sand traps or similar devices as may be required
by any governmental subdivision due to the nature of Tenant's use of the
sanitary sewer system beyond customary employee restroom use.  Tenant shall pay
all surcharges levied due to Tenant's use of sanitary sewer or waste removal
services insofar as such surcharges affect Landlord.  Landlord shall in no way
or event be liable for loss or interruption of utility service on or to the
Premises; however, Landlord shall, to the extent within its control, but without
the expenditure of money (unless related to an express obligation of Landlord
hereunder), take commercially reasonable steps to provide for the resumption of
such utility service.

     7.   Signs.  Tenant shall not place on the Project, any exterior signs or
advertisements, nor any interior signs or advertisements that are visible from
the exterior of the Premises, without the Landlord's prior written consent,
which consent shall not be unreasonably withheld or delayed.  The cost of
installation and regular maintenance of any such signs approved by the Landlord
shall be at the sole expense of the Tenant.  Any and all signs must meet the
standards imposed by the ordinances, statutes, laws and regulations of any
applicable state or local governmental authority, as well as any declarations or
other covenants of title applicable to the Premises true and correct copies of
which are provided by Landlord to Tenant as described in Section 9 below.
Tenant shall maintain its sign or signs in a good state of repair.  In the event
that Tenant's sign or signs are not maintained to the satisfaction of Landlord,
then Landlord may, at its option, repair such sign or signs and Tenant shall
pay, as Additional Rent, the full cost of such repair.  At the termination of
this Lease, or any extension thereof, the Tenant shall remove all of Tenant's
signs.  Any damage caused by the installation or removal of Tenant's signs shall
be repaired at Tenant's expense.

     8.   Usage.  The Premises may be used and occupied only for the purposes of
a warehouse, storage and distribution center and a pharmacy fulfillment center
with accessory offices, and for no other purpose or purposes without Landlord's
prior written consent, which consent shall not be unreasonably withheld or
delayed.  Tenant shall occupy the Premises, conduct its business and control its
agents, employees, invites and visitors in such a way as is lawful, reputable
and will not create any nuisance or otherwise interfere with, annoy or disturb
any other tenant or Landlord in its management of the Building.

                                      -15-
<PAGE>

     9.   Compliance with Laws; Rules and Regulations.  Tenant shall, at its
sole cost and expense (except as may be expressly provided otherwise by this
Lease), use and occupy the Premises in compliance with all applicable federal,
state, county and municipal laws, rules and regulations now or hereafter in
force, including the Americans with Disabilities Act of 1990, and in compliance
with any declarations and other covenants of title applicable to the Premises,
true and correct copies of which have been provided by Landlord to Tenant and
which are listed and referenced in Schedule 9 to this Lease.  Tenant will comply
with the Rules and Regulations of the Premises adopted by Landlord which are set
forth in Exhibit "B" to this Lease.  Landlord represents and warrants to Tenant
that Landlord has delivered to Tenant true and correct copies of all
declarations and other covenants of title which are recorded among the public
land records as of the date hereof and which are applicable to the Premises and
affect the use thereof, and Landlord shall not enter into any declarations or
covenants which shall affect the Tenant's use of the Premises without the
Tenant's prior consent, which consent shall not be unreasonably withheld or
delayed.  To Landlord's knowledge, no declarations, covenants or easements, or
other contracts or agreements, exist which affect the use of the Premises but
which are not listed in Schedule 9 hereto (other than public laws and
regulations).

     10.  [Intentionally omitted.]

     11.  Indemnification, Waiver And Release.

          11.1  Tenant's Indemnification.  Except to the extent attributable to
the negligence (whether through act or omission) or deliberate act of Landlord,
its employees or agents, and subject to the provisions of Section 13 herein,
Tenant shall indemnify and hold Landlord and the employees and agents of
Landlord (hereinafter collectively referred to as the "Indemnified Parties" and
individually as an "Indemnified Party") harmless from and against, any and all
demands, claims, causes of action, fines, penalties, damages, liabilities,
judgments, and related expenses (including, without limitation, reasonable
attorney's fees) incurred in connection with or arising from the use or
occupancy or manner of use or occupancy of the Premises by Tenant or any
employee, agent, invitee or licensee of Tenant.  If any action or proceeding for
which Tenant is responsible to indemnify the Landlord under this Section 11 is
brought against an Indemnified Party, Tenant, upon written notice from such
Indemnified Party, shall defend the same at Tenant's expense, with counsel
reasonably satisfactory to Landlord.

     12.  Insurance.

                                      -16-
<PAGE>

          12.1  Landlord's Insurance.  At all times during the Term, Landlord
shall procure and keep in full force and effect the following insurance:

          (a) All-Risk property insurance insuring (i) the Building, (ii) all
improvements located therein, and (iii) Landlord's equipment located in the
Building;

               (b) Commercial general liability insurance insuring its interest
in the Project;

               (c)  Rent loss insurance; and

          (d) Such other insurance as Landlord reasonably determines from time
to time are in accord with prudent business standards.

          12.2  Tenant's Insurance.  Tenant shall, at its sole cost and expense,
keep in full force and effect the following insurance:

          (a) Commercial general liability insurance insuring Tenant against
liability arising out of its use, occupancy or maintenance of the Premises or
the business operated by Tenant pursuant to the Lease.  Such insurance shall be
in the amount of at least $2,000,000 per occurrence.  Such policy shall name
Landlord and agents and any mortgagees of Landlord as additional insureds; and

          (b) Workers' Compensation insurance as required by state law.

          All such policies shall be written in a form and with an insurance
company reasonably satisfactory to Landlord and any mortgagees of Landlord, and
shall provide that Landlord, and any mortgagees of Landlord, receive not less
than thirty (30) days' prior written notice of any cancellation.  Prior to or at
the time that Tenant takes possession of the Premises, Tenant shall deliver to
Landlord copies of policies or certificates evidencing the existence of the
amounts and forms of coverage required hereunder.  Tenant shall, within thirty
(30) days prior to the expiration of such policies, furnish Landlord with
renewals or "binders" thereof, or upon 10 days' prior written notice to Tenant,
Landlord may order such insurance and charge the reasonable cost thereof to
Tenant as Additional Rent.

          12.3  Forms of Policies.  All policies maintained by Tenant will
provide that they may not be terminated except after thirty (30) days' prior
written notice to Landlord.  All commercial general liability and all-risk
property policies

                                      -17-
<PAGE>

maintained by Tenant shall be written as primary policies, not contributing with
and not supplemental to the coverage that Landlord may carry.

          12.4  Certain Insurance Risks.  Tenant shall not knowingly do any act
or thing upon the Premises or the Project which would (a) jeopardize or be in
conflict with fire insurance policies covering the Project or fixtures and
property in the Project; or (b) increase the rate of fire insurance applicable
to the Project to an amount higher than it otherwise would be for the Tenant's
permitted uses of the Project.  Tenant warrants to Landlord that the insurance
questionnaire attached hereto as Exhibit "C" and incorporated herein by
reference (filled-out by Tenant, signed and delivered to Landlord prior to the
execution of this Lease) accurately reflects Tenant's intended use of the
Premises.

     13.  Waiver of Subrogation:  Notwithstanding that any loss or damage may be
due to or result from the negligence of either of the parties hereto, Landlord
and Tenant, for themselves and their respective insurers, each waive any and all
rights to recover against the other, against any subsidiary or joint venture
partner of such other party, or against the officers, directors, shareholders,
partners, employees, agents, customers, invitees, or business visitors of such
other party, for any loss or damage to the property of such waiving party
arising from any cause to the extent coverable by property insurance required to
be maintained by such party hereunder without reference to any deductible.  With
respect to any insurance required herein that is provided through a plan of
self-insurance shall be deemed the actual insurance so required for purposes of
this provision.

     14.  Tenant Improvements:

          (A) Certain improvements shall be constructed in the Premises for the
purpose of initially preparing the Premises for occupancy by Tenant (the "Tenant
Improvements"), and as paid for, in accordance with the following procedures:

               (1) Landlord shall construct and complete the building shell
improvements defined and described in Schedule 14.1 hereto (the "Landlord's
Work").

               (2) The remaining Tenant Improvements shall be constructed as
follows:

          (a) Tenant has engaged an architect to prepare plans and
specifications of the Tenant Improvements for Landlord's review and approval.
Such plans and specifications shall be submitted to Landlord within 21 days
after the date hereof, and Landlord shall review and either approve or notify
Tenant of proposed changes thereto within 10 days after receiving same.  Tenant
shall make any

                                      -18-
<PAGE>

changes to such plans reasonably requested by Landlord and resubmit the revised
plans to Landlord, and Landlord shall review and either approve or notify Tenant
of proposed changes thereto, in each case within 5 days (with such procedure to
repeat as necessary to completion of the plans). The parties agree that Tenant
may generate plans for the Tenant Improvements in phases as described in Section
14(D) below, and the foregoing review and approval procedures shall apply to
each phase individually. If Tenant shall fail to deliver plans within the
specified time period, Landlord shall have no recourse against Tenant other than
to extend, by the number of days Landlord was actually delayed by Tenant,
Landlord's completion of the Tenant Improvements, except as expressly provided
in paragraph (C) of this section below with respect to any such failure which
causes a delay in the Rent Commencement Date.

          (b) Landlord's general contractor will act as general contractor (the
"GC") for the Tenant Improvements.  Promptly after the plans and specifications
have been finalized, the GC shall solicit competitive bids for all labor and
materials used to complete the Tenant Improvements on an "open book" basis
(i.e., Tenant shall have the right to include one subcontractor per trade on the
bidding list and shall have the right to examine all bids as they are opened).
After the final bids have been selected, Landlord and Tenant shall determine a
budget of all costs of the work.  In addition, Landlord will cause the GC to
furnish a guaranteed maximum cost contract (the "Guaranteed Contract"), and the
GC shall be entitled to, as part of such contract, a fee of six percent (6%) of
the total cost of Tenant Improvements.  Tenant shall not be responsible for any
costs of the Tenant Improvements which are in excess of the Guaranteed Contract,
plus the costs of any change orders described below, minus the Allowance
(defined herein).  Landlord shall apply for building permits and contract for
the construction of the Tenant Improvements covered by the plans and
specifications.  Prior to proceeding with the work, Landlord shall provide
Tenant with a copy of each executed subcontract.

          (c) Within 3 business days after completion of the bidding process
described above, which bidding process shall not exceed 15 business days from
completion of the plans and specifications, Landlord shall develop a work
schedule of construction to completion.  Such schedule may include times for
obtaining materials and times for proper performance of the work after delivery
of such materials.  Tenant shall have the right to revise the plans and
specifications in order to adjust (e.g., accelerate) such work schedule, if
possible, and such revisions shall be reviewed and resubmitted in accordance
with paragraph (a) of this section above.  Landlord shall adjust the work
schedule accordingly.

          (d) Landlord shall provide Tenant with weekly progress reports during
construction, and a representative specified by Tenant (the

                                      -19-
<PAGE>

"Tenant Representative") will have the right to participate in any meetings to
evaluate progress. The Tenant Improvements shall be constructed with quality
materials (subject to such selections as are made by Tenant) and in a good and
workmanlike manner and in compliance with all laws. Likewise, the applicable
architect for the Tenant Improvements shall have the right to reject or request
replacement of any work which does not meet such standards.

          (e) Landlord will notify Tenant of the need for any change orders or
develop appropriate change orders which are requested by Tenant.  With respect
to any change orders, Landlord shall identify for Tenant the increased costs and
delay, if any, which will result from such change orders.  With respect to any
change orders which are not requested by Tenant, Landlord shall obtain the
Tenant's prior written approval, as issued through the Tenant's Representative,
which approval shall not be unreasonably withheld or delayed.  Landlord shall
not proceed with the work underlying any such change order unless and until so
approved by Tenant.  All change orders, and any other modifications, additions,
substitutions and deletions with respect to the Tenant Improvements, shall be in
writing signed by the parties.

          (f) Tenant and its agents and contractors shall have the right to
enter the Premises for purposes of installing fixtures, provided that in doing
so such parties shall not interfere with Landlord or its contractors
constructing the Tenant Improvements, and further provided that prior to any
such entry Tenant shall have obtained the insurance required under the terms of
this Lease, and its contractors shall have obtained such liability, workmen's
compensation and other insurance as is reasonably acceptable to Landlord.  In
addition, Tenant shall obtain all permits required for such work, Landlord and
Tenant agree to cooperate during periods of simultaneous work and to take
reasonable steps to not interfere with each other and each other's contractors
during such periods.

          (g) Upon substantial completion of the Tenant Improvements, Landlord
and Tenant shall perform a joint walk-through of the Premises and develop a
punchlist of items for final completion.  Landlord shall complete all items on
the punchlist within 60 days.  In addition, Landlord shall obtain an as-built
survey of the Premises (which shall be deemed part of the Tenant Improvements).

          (3) Upon request of either party hereto, the other party shall
designate an individual to act as representative with the authority to bind such
party for certain specified purposes.

                                      -20-
<PAGE>

      (B) All costs and expenses of designing and constructing the Tenant
Improvements described in subsection (A) above shall be paid as follows:

          (1) The costs of constructing the Landlord's Work, including but not
limited to all fees of contractors, the costs of materials and permits and other
items shall be paid by Landlord.

          (2) Landlord shall provide and pay an allowance (the "Allowance") of
$1,145,000.00 towards all costs of the remaining Tenant Improvements, including
(i) the costs of design and all of the plans and specifications for the Tenant
Improvements, and (ii) the costs of constructing the Tenant Improvements,
including but not limited to all fees, costs and expenses paid under
construction contracts and subcontracts, costs and expenses, the costs of
materials, supplies, permits and other items, and any other out-of-pocket
expenditures incurred in any connection with such construction.  Such Allowance
shall not be paid for any other costs or purposes.  Except as may be provided by
approved or requested (by Tenant) change order described above, Landlord is
responsible for any cost overruns (i.e., excess costs of work beyond the
originally bid and contracted amount).  Tenant shall pay any and all costs of
designing and constructing the Tenant Improvements which equal the difference
between the Allowance and the Guaranteed Contract Amount plus approved or
requested (by Tenant) change orders.

          (3) Landlord and Tenant shall each disburse its portion of the costs
of the Tenant Improvements, proportionately and in installments, as work
progresses.  The Landlord's share of each payment shall be that fraction of the
total cost of the work as originally estimated which is represented by the
Allowance, and the Tenant's share of each payment shall be the remainder.  Each
payment shall be made for completed work, and directly to the professionals,
contractors and other parties performing the work, upon presentation for each
disbursement of (i) a requisition substantially in the form of AIA Requisition
Forms G702 and G703, including a description of all completed work for which
payment is requested, the amount requested with a breakdown by each trade
comprising the work, and the percentage of the entire project completed after
taking into account all such work, (ii) conditional lien waivers from all
parties for whom such payment is requested releasing all liens which may arise
on account of the work performed by such parties to the date of the request for
payment, and (iii) unconditional lien waivers covering all work up to and
including the immediately preceding payment.  Withheld from each disbursement
shall be the applicable retainage, not to be less than 10% as provided
hereinabove, which retainage shall be paid and disbursed upon (i) completion of
the Space Improvements as required by the applicable contract(s), (ii) delivery
of unconditional lien waivers as described above for all work comprising the

                                      -21-
<PAGE>

improvements, and (iii) issuance of a certificate of occupancy or other
applicable approval by the local authorities permitting occupancy by Tenant.

          (C) Landlord shall use commercially reasonable efforts to complete the
Tenant Improvements as soon as is practicable after execution of this Lease by
the parties.  However, Landlord shall have no liability to the Tenant hereunder
if delayed due to strike or other labor troubles, governmental restrictions,
failure or shortage of utility service, national or local emergency, accident,
flood, fire or other casualty, adverse weather condition, other act of God,
delays in obtaining a building permit or a certificate of occupancy, or any
other cause beyond the Landlord's and the GC's reasonable control (any of the
foregoing, "force majeure"), or if any delay in completion of the Tenant
Improvements or in delivering possession of the Premises to Tenant are caused by
Tenant, including but not limited to failure of Tenant to timely respond to
submissions by Landlord as required in this section above or Tenant's requesting
changes in the Tenant Improvements which delay completion thereof.  If Landlord
delays in the completion of the construction of the Tenant Improvements beyond
the scheduled date of completion as set forth in the Landlord's work schedule
developed in accordance with subsection (A)(2)(b) of this section above, not due
to causes of force majeure, defects in design by Tenant's architect or delays
caused by the Tenant as described above (including but not limited to delays
arising from change orders requested by the Tenant), but due to fault or cause
of Landlord or the GC, then Landlord shall be obligated to pay to Tenant an
amount of $1,000.00 for each business day of the delay caused by fault of
Landlord or the GC.  If completion of the Tenant Improvements are delayed beyond
January 1, 2000, not due to the failure of any certificate of occupancy to be
issued for reasons other than fault of Tenant, and not due to causes of force
majeure or fault or cause of Landlord or the GC, but rather are due to fault or
cause of Tenant, including but not limited to Tenant's failure to respond to
deadlines set forth hereinabove, then the Rent Commencement Date shall be deemed
to have occurred on the day on which such Date after January 1, 2000 would have
occurred if not for such delay.

     (D) The parties acknowledge that the Tenant shall design the Tenant
Improvements beyond the Landlord's Work for three phases of construction:  a
warehouse phase of not less than 85% of the Premises (the "Warehouse Phase"), a
pharmacy phase (the "Pharmacy Phase") and an office phase (the "Office Phase"),
all of which are shown together with their respective rentable square footages
in Exhibit A hereto.  Landlord agrees that upon request of Tenant, the Landlord
shall apply for a certificate of occupancy with respect to any Phase which is
less than all of the Premises.

                                      -22-
<PAGE>

     15.  Alteration and Improvements:  Subject to Paragraph 46 of this Lease,
Tenant shall not make or allow to be made any alterations or physical additions
in or to or outside the Premises without first obtaining the written consent of
Landlord, which consent shall not be unreasonably withheld or delayed.  Any
alterations, physical additions or improvements to the Premises made by Tenant
(other than Tenant's material handling systems, shelving and other trade
fixtures) and which are permanent in nature shall at once become property of
Landlord and shall be surrendered to Landlord upon the termination of this
Lease.  Landlord, at its option (and provided notice is given to Tenant at the
time of approval), to be exercised using reasonable discretion, may require
Tenant to remove any physical additions and/or to repair any alterations in
order to restore the Premises to the condition existing at the time Tenant took
possession (reasonable wear and tear excepted), all costs of removal and/or
alterations to be borne by Tenant.  This clause shall not apply to moveable
equipment or furniture and other trade fixtures owned by Tenant which may be
removed by Tenant without material damage to the Premises.  Notwithstanding the
foregoing, Landlord hereby consents to the erection by Tenant of a security
fence surrounding the truck court and rear portions of the Premises, subject to
Landlord's reasonable review of plans therefor and any applicable restrictions
set forth in the title covenants affecting the property.

     16.  Mechanics' Liens:  No mechanic's or other lien shall attach to or be
allowed to stand against the estate of Landlord by reason of any improvements
made by Tenant.  Tenant shall pay promptly all persons furnishing labor or
materials with respect to any work performed by Tenant or its contractor(s) in,
on or about the Premises.  In the event any mechanic's or other lien shall at
any time be filed against the Premises by reason of work, labor, services or
materials performed or furnished, or alleged to have been performed or
furnished, for Tenant or for anyone holding the Premises through or under
Tenant, Tenant shall cause the same to be discharged of record, or bonded to the
reasonable satisfaction of Landlord within 15 days after the imposition thereof.
If Tenant shall fail to cause such lien to be so discharged or bonded after
being notified of the filing thereof, then, in addition to any other right or
remedy of Landlord, Landlord may discharge the same by paying the amount claimed
to be due, and the amount so paid by Landlord (including actual attorney's fees
and expenses incurred by Landlord either defending against such lien or in
procuring the discharge of such lien), together with interest thereon, shall be
due and payable by Tenant to Landlord as Additional Rent. Nothing herein
contained shall be construed as a consent by Landlord to make any alteration,
improvement, installation or addition so as to give rise to any right to any
laborer or materialman to file any mechanic's lien or any notice thereof, or any
other lien purporting to affect the Premises.

     17.  Condemnation:

                                      -23-
<PAGE>

          (a) If, during the Term (or any extension or renewal thereof), all or
at least 10% of the Premises, or at least 50 spaces for automobiles in the
parking area (without being replaced), or at least 25% of the loading dock area,
is taken for any public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain or by purchase in lieu
thereof, and the taking would prevent or materially interfere with the use of
the Premises for the purpose for which they are then being used, Tenant shall
have the right to terminate this Lease through written notice to the Landlord
effective on the date physical possession is taken by the condemning authority.
All compensation and damages awarded for the partial or total taking of the
Premises shall belong to and be the sole property of Landlord, except that
Tenant shall be entitled to make its own claims for and receive any award that
may be made for the Tenant's Improvements (except for Landlord's Work), moving
expenses, and the removal of Tenant's trade fixtures, equipment and furnishings.

          (b) If a portion of the 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 purchase in lieu thereof, and this Lease is not
terminated as provided in Paragraph 17(a) above, Landlord shall, at Landlord's
sole risk and expense, restore and reconstruct the Building and other
improvements on the Premises to the extent necessary to make it reasonably
tenantable.  The rent payable under this Lease during the unexpired portion of
the term shall be prorated based on the portion of Premises which is reasonably
usable by Tenant.  All compensation and damages awarded for the partial taking
of the Premises shall belong to and be the sole property of Landlord.  Tenant
shall be entitled to make its own claims for and receive any award that may be
made for Tenant's improvements, moving expenses, and the removal of Tenant's
trade fixtures, equipment and furnishing.

     18.  Hazardous Substances:

          (a) The term "Hazardous Substance(s)" as used in the lease is defined
as follows:  Any element, compound, mixture, solution, particle or substance,
which presents danger or potential danger for damage or injury to health,
welfare or to the environment including, but not limited to:  (i) those
substances which are inherently or potentially radioactive, explosive,
ignitable, corrosive, reactive, carcinogenic or toxic and (ii) those substances
which have been recognized as dangerous or potentially dangerous to health,
welfare or to the environment by any federal, municipal, state, county or other
governmental or quasi-governmental authority and/or any department or agency
thereof.

          (b) Tenant agrees that at all times during the Term and any extensions
or renewals thereof, Tenant shall:

                                      -24-
<PAGE>

          (i) obtain Landlord's prior written consent, which consent shall be
granted or withheld in Landlord's sole discretion, but which determination as to
consent shall not be unreasonably delayed, to the manufacturing, processing,
distributing, using, producing, treating, storing (above or below ground level),
disposing of, or allowing to be present (the "Presence") of any Hazardous
Substance in or about the Premises.  In connection with each such consent
requested by Tenant, Tenant shall submit to Landlord a description, including
the composition, quantity and all other information requested by Landlord
concerning the proposed Presence of any Hazardous Substance.  Landlord's consent
to the Presence of any Hazardous Substance may be deemed given only by inclusion
of a description of the composition and quantity of the proposed Hazardous
Substance on a schedule attached to this Lease.  The term "Allowed Substance" as
used in this lease is defined as any Hazardous Substance which Landlord has
agreed to the presence thereof.  Landlord's consent to the Presence of any
Hazardous Substance at any time during the lease term or renewal thereof shall
not waive the requirement obtaining Landlord's consent to the subsequent
Presence of any other, or increased quantities of, Hazardous Substance in or
about the Premises.  If Landlord subsequently consents to the Presence of any
other Hazardous Substance, or to increased quantities of any Hazardous
Substance, such consent shall be deemed given only by amendment of the schedule
attached to this Lease.  Notwithstanding the foregoing, Landlord acknowledges
and agrees that an inventory of prescription drug products, including
pharmaceuticals for compounded medications, will be maintained by Tenant in
quantities appropriate for mail-service pharmacies for dispensing and delivery
in consumer quantities, and no explicit scheduling or further notice to Landlord
is necessary for these items and such goods shall be considered "Allowed
Substances" for purposes hereof.  Landlord further acknowledges that Tenant may
also store on the Premises "over-the-counter" products of the nature generally
sold in drugstores and general merchandise stores such as Target, K-Mart and
Rite Aid, or in supermarkets, including, without limitation, non-prescription
drug products and pharmaceuticals, and no explicit scheduling or further notice
to Landlord is necessary for these items only, and said goods shall be
considered "Allowed Substances," provided such packaged goods are not opened,
mixed or transferred to different containers at the Property (except for de
minimis quantities of non-prescription drug products or pharmaceuticals that may
be used in the compounding or mixing of prescription medications).  Tenant shall
also be permitted to store and use building cleaning supplies on the Property in
quantities which would be considered reasonable and appropriate in the ordinary
course of business.  Notwithstanding any provisions hereof to the contrary,
Tenant acknowledges that chlorinated solvents including, but not limited to,
Trichloroethene (TCE), 1,1,1 Trichloroethene (TCE), 1,1 Dichloroethane (DCA),
1,2, Dichloroethane (DCA), and 1,1, Dichlorethene (DCE), ("Chlorinated
Solvents") shall be deemed not

                                      -25-
<PAGE>

to be Allowed Substances, and the Presence of Chlorinated Solvents on the
Premises is strictly prohibited, except for those in consumer quantities which
are temporarily at the Premises and remain packaged during such time.

          (ii) refrain from (and prohibit others from) allowing the Presence of
any Hazardous Substance in or at the Premises which is not an Allowed Substance,
except as explicitly authorized in Paragraph 18.b(i).

          (iii)  promptly comply at Tenant's own cost and expense, with all
laws, orders, rules, regulations, certificates of occupancy, or other
requirements, as the same now exist or may hereafter be enacted, amended or
promulgated, of any federal, municipal, state, county or other governmental or
quasi-governmental authorities and/or any department or agency thereof relating
to the Presence of Hazardous Substances in or at the Premises, whether or not
such substances are Allowed Substances.  Notwithstanding anything to the
contrary contained in this Paragraph 18, Tenant's obligation under this
Paragraph is limited to any Hazardous Substance or condition which came to exist
on or at the Premises during the Tenant's occupancy thereof which was not
attributable to any act or omission of Landlord or Landlord's agents or, with
respect to areas beyond the Premises, acts or omissions of other third parties.
Moreover, Landlord agrees to remain responsible for any Hazardous Substance or
condition which existed on, at or outside the Premises prior to Tenant's
occupancy of the Premises.

          Without limiting the generality of the foregoing provisions, Tenant
shall, at Tenant's own expense and if applicable to Tenant's operation, comply
with the Industrial Site Recovery Act, N.J.S.A. 13:  1 K-6 et seq. and the
regulations promulgated thereunder ("ISRA").  Tenant shall, at Tenant's own
expense, make all submissions to, provide all information to, and comply with
all requirements of, the Bureau of Industrial Site Evaluation (the "Bureau") of
the New Jersey Department of Environmental Protection ("NJDEP").  Tenant's
obligations under this paragraph shall arise only if there is any closing,
terminating, or transferring of operations of an industrial establishment at the
Premises pursuant to ISRA which is triggered by Tenant.  If a closing,
terminating or transfer of ownership or operations occurs which is triggered by
Landlord, then Landlord shall have the sole obligation to satisfy ISRA as
defined herein, other than such actions as may be required under ISRA to address
any Hazardous Substances release or condition created during Tenant's occupancy
of the Premises and not attributable to any act or omission of Landlord or
Landlord's agent or, with respect to areas outside the Premises, acts or
omissions of other third parties.  In the event Landlord has the obligation to
satisfy ISRA, Tenant agrees to reasonably cooperate with and assist Landlord in
its submissions under ISRA (without cost to Tenant).  Provided this Lease is not
previously canceled or terminated by either

                                      -26-
<PAGE>

party or by operation of law, Tenant shall commence its submission under ISRA in
anticipation of the end of the Lease term no later than one year prior to the
termination of the Lease. The party responsible for complying with ISRA shall
notify the other in advance of all meetings which pertain to the Premises
scheduled between the responsible party or the responsible party's
representatives and NJDEP or any other environmental authority and the other
party or that party's representatives shall have the right, without obligation,
to attend and participate in all such meetings. If for any reason Tenant has not
complied with all of its obligations under this paragraph by the expiration of
the Term when it is Tenant's responsibility do so, Tenant's responsibility shall
continue. If, when it is Tenant's responsibility to comply with ISRA, Tenant
fails to obtain either: (i) a non-applicability letter; (ii) a de minimis
exemption; (iii) a negative declaration; or (iv) approval of a remedial action
workplan; (collectively referred to as ISRA clearance) from NJDEP prior to the
expiration or earlier termination of the term of this Lease, then upon the
expiration or earlier termination of the Lease term Landlord shall, based on the
criteria set forth below, consider the Lease as having ended or shall treat
Tenant as a holdover tenant in possession of the Premises:

          (1) If Tenant has obtained a remedial action workplan approval or a
Classification Exception Area approval from NJDEP prior to termination of the
Lease term, and groundwater monitoring is the only remedial activity being
required by N1DEP, then Tenant shall not be considered a holdover tenant.
Tenant shall nevertheless be obligated to promptly obtain ISRA clearance and to
fulfill the obligations set forth herein.

          (2) If remedial activities (other than groundwater monitoring)
affecting the Premises are required of Tenant by NJDEP and these activities will
continue post-closing, Landlord shall treat Tenant as a holdover tenant in
possession of the Premises and Tenant shall continue to pay to Landlord the
regular and additional monthly rent which Tenant would otherwise have paid under
the Lease until such time as Tenant obtains ISRA clearance and fulfills its
obligations hereunder.

          At no expense to the other party, the party with the responsibility of
complying with ISRA shall promptly provide all information in it's possession or
within it's knowledge pertinent to ISRA compliance at the Premises requested by
the other party and all information required for preparation of a non-
applicability affidavit, de minimis quantity exemption application, limited
conveyance application or other submission and shall promptly sign such
affidavits and submissions when requested by the other party or NJDEP.  The
responsible party shall likewise promptly furnish to the other party true and
complete copies of all

                                      -27-
<PAGE>

documents, submissions, correspondence and written communications provided by
the responsible party to and from the NJDEP pertinent to ISRA compliance at the
Premises, including all sampling and test results and reports obtained and
prepared from samples and tests taken at or about the Premises.

          Should Tenant's operations at the Premises be outside of those
industrial operations covered by ISRA, Tenant shall, at Tenant's own expense,
obtain a letter of non-applicability or de minimis quantity exemption prior to
the expiration of the Term and shall provide Tenant's submission and the
exemption letter to Landlord.

          Should the Bureau or any other division of NJDEP determine that a
remediation plan be prepared and that a remediation be undertaken because of the
Presence of Hazardous Substances at the Premises, then the party responsible for
remediating the Hazardous Substances, as defined hereinbelow, and as subject to
the limitation hereinbelow, shall at that party's own expense, prepare and
submit the required plans and financial assurances, and carry out the approved
plans.  The responsible party shall indemnify, defend and save harmless the
other party from all fines, suits, procedures, claims and actions of any kind
arising out of the responsible party's failure to provide all information of
NJDEP.  The responsible party's failure to abide by the terms of this paragraph
shall be restrainable by injunction.

          Notwithstanding anything to the contrary contained herein and for the
purposes of determining Tenant's responsibilities for remediating any Hazardous
Substances or environmental condition, in the event that any release or other
condition on or about the Premises arising during Tenant's occupancy of the
Premises results in the Presence of Hazardous Substances at the Premises, Tenant
shall be responsible for satisfying the remediation requirements of the New
Jersey Department of Environmental Protection (NJDEP) as set forth in the
applicable statutes and regulations, including N.J.A.C. 7:26(E), and for
achieving groundwater cleanup criteria set forth in N.J.A.C. 7:9-6.  In the
event that a Hazardous Substance release or condition on or at the Premises is
attributable to Tenant, Landlord shall arrange for testing and analysis of soil
samples from areas of the Premises which are unimpacted by the release or
condition (the costs of which shall be divided evenly between the parties), and
Tenant shall be responsible for achieving soil cleanup criteria in the impacted
area which is equivalent to the average testing results of the soil samples
taken from the unimpacted areas.  Tenant shall not be responsible for
remediating any Hazardous Substances, releases or conditions which existed on or
at the Premises prior to Tenant's occupancy or which exist outside the Premises
but not

                                      -28-
<PAGE>

due to act or omission of Tenant or any other parties for whom Tenant is
responsible hereunder.

          (iv) indemnify and hold Landlord, its agents and employees, harmless
from any and all demands, claims, causes of action, penalties, liabilities,
judgments, damages (including consequential damages) and expenses including,
without limitation, court costs and reasonable attorneys' fees including but not
limited to all costs of investigation and response to meet appropriate remedial
cleanup standards incurred by Landlord as a result of (a) Tenant's failure or
delay in complying, with the provisions of sections (b)(i) or (ii) above; (b)
Tenant's failure or delay in properly complying with such law, order, rule,
regulation, or other requirement referred to in section (b)(iii), above or (c)
any adverse effect which results from the Presence of any Hazardous Substance in
or about the Premises for which Tenant is responsible, whether or not such
Hazardous Substance is an Allowed Substance.  If any action or proceeding is
brought against Landlord, its agents or employees by reason of any such claim,
Tenant, upon notice from Landlord, will defend such claim at Tenant's expense
with counsel reasonably satisfactory to Landlord.  This indemnification by
Tenant of Landlord shall survive the termination of the Lease.

          (v) promptly disclose to Landlord by delivering, in the manner
prescribed for delivery of notice in the Lease, a copy of any forms,
submissions, notices, reports, or other written documentation (communications)
relating to the Presence of any Hazardous Substance in or about the Premises,
whether or not such Hazardous Substance is an Allowed Substance, and whether
such Communications are delivered to Tenant or are requested of Tenant by any
federal, municipal, state, county or other government or quasi-governmental
authority and/or any department or agency thereof

          (vi) notwithstanding any other provisions of this Lease, allow
Landlord, and any authorized representative of Landlord, access and the right to
enter and inspect the Premises, during business hours (except in case of
emergency), for the Presence of any Hazardous Substance, whether or not such
Hazardous Substance is an Allowed Substance, at any time deemed reasonable by
the parties (but not later than 72 hours of the written notice), upon reasonable
prior written notice to Tenant.  In the event of any such entry, Landlord shall
comply with the Tenant's reasonable security, safety and sign-in procedures.
Landlord shall not unreasonably interfere with the Tenant's use of the Premises
and shall, at Landlord's cost (unless the need for sampling or testing was
caused by Tenant), repair and restore any areas of the Premises which are
damaged (if any) by Landlord's sampling or testing.

                                      -29-
<PAGE>

          (c) Compliance by Landlord or Tenant with any provision of this
Paragraph 18 shall not be deemed a waiver of any other provision.  Without
limiting the foregoing, Landlord's consent to the Presence of any Allowed
Substance shall not relieve Tenant of its indemnity obligations under the terms
of this Paragraph 18.

          (d) Landlord represents and warrants that, as of July 15, 1999 and as
of the date hereof, to the best of the Landlord's knowledge (with knowledge of
the Landlord being deemed the knowledge of the persons with day-to-day
management and supervision of the Premises):  (i) there are no
outstanding/unresolved notice(s) of violation(s) of any Environmental Laws
pertaining to the Premises, and; (ii) there is not any Hazardous Substance or
condition on the Premises which, if disclosed to NJDEP or other regulatory
agency, would require investigation or remedial action.

          (e) Landlord shall indemnify, protect and hold harmless Tenant from
and against any and all claims, demands, liabilities, actions, suits,
proceedings, judgments, losses, damages (including punitive damages), fines,
penalties, costs and expenses (including reasonable attorneys', consultants' and
experts' fees) arising from (i) any Hazardous Substance or condition on, at or
outside the Premises which existed prior to Tenant's occupancy of the Premises,
(ii) any Hazardous Substance or condition which comes to exist on or at the
Premises from the date of Tenant's occupancy forward, and which is attributable
to any act or omission of Landlord or Landlord's agents or, with respect to
areas outside the Premises, act or omission of other third parties, and (iii)
any inaccuracy in the Landlord's warranty and representation set forth in
paragraph (d) of this section above.  The foregoing indemnification obligation
shall survive the expiration or earlier termination of this Lease.

     19.  Fire and Casualty:

          (a) If, the Building is totally destroyed by fire or other casualty,
or if the Building is damaged so that rebuilding cannot reasonably be completed
within one hundred twenty (120) working days after the date of written
notification by Tenant to Landlord of the destruction, Landlord and Tenant shall
have the right to terminate this Lease by written notice from one party to the
other effective as of the date Landlord received Tenant's written notification
of such casualty.  If neither Landlord or Tenant provides written notice of its
election to terminate this Lease within sixty (60) days of the date Landlord
received Tenant's written notification of such casualty, this Lease shall not
terminate and Landlord shall at its sole cost and expense proceed with
reasonable diligence to rebuild or repair the Premises to substantially the same
condition they existed prior to the damage, provided, however, Landlord shall
have no

                                      -30-
<PAGE>

obligation to restore or repair any alterations or improvements made by either
Landlord or Tenant to the Premises at Tenant's cost beyond the Tenant
Improvements.

          (b) If the Premises are partially damaged by fire or other casualty,
and rebuilding or repairs can reasonably be completed within one hundred twenty
(120) working days from the date of written notification by Tenant to Landlord
of the destruction, this Lease shall not terminate and Landlord will at its sole
cost and expense proceed with reasonable diligence to rebuild or repair the
Premises to substantially the same condition they existed prior to the damage,
provided, however, Landlord shall have no obligation to restore or repair any
alterations or improvements made by either Landlord or Tenant to the Premises at
Tenant's cost.  If the Premises are to be rebuilt or repaired and are
untenantable in whole or in part following the damage, the rent payable under
this Lease during the period for which the Premises are untenantable shall be
prorated.  In the event Landlord fails to substantially complete the necessary
repairs or rebuilding within one hundred twenty (120) working days from the date
of written notification by Tenant to Landlord of the destruction, Tenant may
terminate this Lease by delivering written notice of termination to the
Landlord.

          (c) Whenever Landlord shall be required by the terms of this Lease or
otherwise to make any improvements or repairs, to furnish any services, to
repair or reconstruct the Premises or to fulfill any other obligation hereunder,
and Landlord shall be delayed in or prevented from so doing for reasons beyond
Landlord's reasonable control, Landlord shall not be deemed thereby to be in
default and this Lease and the obligation of Tenant to pay rent hereunder and to
perform all of the other covenants and agreements hereunder on the part of
Tenant to be performed shall in no way be affected, impaired, or excused, and
any time limit herein fixed for Landlord's performance thereof shall be extended
by length of delay, if and so long as Landlord's nonperformance, delay or
default shall be caused by reason of governmental controls, war, riots or civil
disturbances, strikes, labor disputes, power shortages, acts of God, or any
other cause beyond Landlord's reasonable control.

          (d) To the extent that any portion of the Premises is rendered
untenantable due to fire or other casualty, all rent provided hereunder shall
abate, proportionately, from the portion of the Premises so rendered
untenantable, until restored as provided above.

     20.  Hold Harmless:  Landlord shall not be liable to Tenant's employees,
agents, invitees, licensees or visitors, or to any other persons, for any injury
to person or damage to property on or about the Premises.

                                      -31-
<PAGE>

     21.  Quiet Enjoyment:  Landlord covenants and agrees that, upon payment of
the required rents and performing the terms, conditions, covenants and
agreements contained in this Lease, Tenant shall peaceably and quietly have,
hold and enjoy the Premises during the full term of this Lease as well as any
extension or renewal thereof.  Landlord shall not be responsible for the acts or
omissions of any third party that may interfere with Tenant's use and enjoyment
of the Premises.

     22.  Landlord's Right of Entry:

          (a) Landlord shall have the right, during business hours after
reasonable advance notice (except in case of emergency), to enter the Premises
for the following reasons:  inspection; cleaning or making repairs required of
Landlord under the Lease; determining Tenant's use of the Premises; or
determining if an act of default under this Lease has occurred.  In the event of
any such entry, Landlord shall comply with the Tenant's reasonable security,
safety and sign-in procedures.

          (b) Landlord shall have the right, during business hours after
reasonable advance notice (except in case of emergency), to enter the Premises
during the last six (6) months of this Lease for the purpose of showing the
Premises to prospective tenants, and the Landlord shall also have the right at
such time to post on the exterior of the Premises the usual notice and/or signs
advertising the Premises "For Rent" or other such similar advertising as
Landlord deems necessary.  In the event of any such entry, Landlord shall comply
with the Tenant's reasonable security, safety and sign-in procedures.

     23.  Assignment or Sublease:

          (a) Landlord shall have the right to transfer and assign this Lease
along with any transfer or assignment, in whole or in part, of Landlord's rights
and obligations in the Premises.  In the event that Landlord transfers and
assigns this Lease, provided that the transferee assumes all of Landlord's
obligations under this Lease thereafter accruing, Landlord shall be released
from all liability under this Lease arising after the effective date of the
assignment.  Tenant shall not assign this Lease or sublet all or any part of the
Premises without the prior written consent of Landlord, which consent shall be
unreasonably withheld or delayed.  Any request by Tenant for Landlord's consent
to an assignment or sublease must be accompanied by:  (1) a copy of the proposed
assignment or sublease; (2) a written statement as to the proposed assignee or
sublessee's intended use of the Premises; (3) a Dunn and Bradstreet report or an
equivalent report of the proposed assignee or sublessee in a form reasonably
acceptable to Landlord; (4) financial statements including the most current
annual income statement and balance sheet (as defined by generally accepted

                                      -32-
<PAGE>

accounting practices) for the proposed assignee or sublessee (and Landlord shall
observe the confidentiality of any such statements which are not public); (5) at
the Landlord's discretion, banking and business references for the proposed
assignee or sublessee; and (6) a description of the intended use of the Premises
by the proposed assignee or sublessee and a satisfactory report from an
environmental engineer, satisfactory to Landlord, concerning said use and the
risks of environmental contamination resulting from the proposed use of the
Premises by the assignee or subtenant.  Landlord reserves the right to request
such other information as reasonably necessary to qualify the proposed assignee
or sublessee.  Landlord agrees to respond to any request by Tenant for approval
of an assignment or subletting within 15 days after receiving the request and
the information described above.  Notwithstanding the foregoing, Tenant shall
have the right to assign or sublet to any wholly owned subsidiary or parent
entity without the consent of Landlord, provided that Tenant notifies Landlord
in advance and delivers to Landlord the information regarding the transaction
described above.

          (b) In the event Landlord consents to an assignment or subletting, and
in the case of any assignment or subletting with respect to which Landlord's
consent is not required hereunder, Tenant shall nevertheless at all times remain
fully responsible and liable for the payment of rent and for compliance with all
other obligations under the terms, conditions and covenants of this Lease.
Landlord reserves the right to receive all rental money obtained from the
assignment or sublease as the case may be.  In the event that Tenant receives
payments from an approved assignee or sublessee in excess of the Basic Rent and
Additional Rent due under this Lease, Landlord shall be entitled to 50% of such
excess over the Tenant's out-of-pocket costs of such assignment or subletting
(e.g., space improvement costs and broker's commissions) in addition to the
Basic Rent and Additional Rent due under this Lease.  Upon the occurrence of an
Event of Default (as defined hereinafter), if all or any part of the Premises
are then assigned or sublet, Landlord, in addition to any other remedies
provided for by this Lease or provided for by law, may, at its option, collect
directly from the assignee or subtenant all rents becoming due to Tenant by
reason of the assignment or sublease.  Any collection directly by Landlord from
the assignee or subtenant shall not be construed to constitute a novation or a
release of Tenant from the further performance of its obligations under this
Lease.

     24.  Statutory Liens.  Landlord agrees that it shall, upon request of any
one or more lenders to whom Tenant grants a security interest in personal
property located at the Premises, execute an agreement waiving any statutory
lien (including NJSA 2A:42-1), existing by law and benefitting Landlord with
respect to such property, in favor of (and only in favor of) such lenders.

                                      -33-
<PAGE>

     25.  [Intentionally deleted.]

     26.  Default by Tenant:  Any of the following shall constitute an Event of
Default by Tenant under this Lease:

          (a) Tenant fails to pay when due any installment of rent or any other
payment required pursuant to this Lease after ten (10) days notice of such
default and failure to cure during such notice period;

          (b) Tenant fails to comply with any term, provision, or covenant of
this Lease, other than the payment of rent, and such failure is not cured within
thirty (30) days after written notice to Tenant or, if such failure is not
capable of being cured within 30 days, then within 60 days (except for those
obligations set forth in Section 5.3 which are not capable of being cured within
60 days, with respect to which the 60 day period shall not apply) provided that
Tenant begins efforts to cure promptly after receiving notice from Landlord and
diligently pursues such cure to completion;

          (c) Any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief is not dismissed within 60 days after the commencement thereof, or any
trustee, receiver or liquidator is appointed for Tenant, or of any material part
of its properties, and appointment is not vacated within 60 days after such
appointment; or

          (d) Tenant does or permits to be done any act which results in a lien
being filed against the Premises or the Project which is not bonded off within
15 days after Tenant is first notified of such lien.

     27.  Remedies for Tenant's Default:  Upon the occurrence of any Event of
Default set forth in this Lease, Landlord shall have the option to pursue any
one or more of the following remedies without any notice or demand:

          (a) Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord.  If Tenant fails to surrender the Premises,
Landlord may, without prejudice to any other remedy it has for possession or
arrearages in rent, enter upon and take possession of the Premises, by picking
or changing locks if necessary, and lock out, expel, or remove Tenant and any
other person who may be occupying all or any part of the Premises without being
liable for prosecution of any claim for damages.  Tenant agrees to pay on demand
the amount of all loss and damage which Landlord suffers by reason of the
termination of the Lease including inability to relet the Premises on
satisfactory terms.

                                      -34-
<PAGE>

          (b) Enter upon and take possession of the Premises, by picking or
changing locks if necessary, and lock out, expel or remove Tenant and any other
person who may be occupying all or any part of the Premises without being liable
for any claim for damages, and relet the Premises on behalf of Tenant and
receive directly the rent by reason of the reletting.  Tenant agrees to pay
Landlord on demand any deficiency that arises by reason of any reletting of the
Premises; further, Tenant agrees to reimburse Landlord for any expenditures made
by it for remodeling or repairing the Premises (except, in order to avoid
duplication, that which is recovered directly through such reletting).

          (c) Enter upon the Premises, by picking or changing locks if
necessary, without being liable for prosecution of any claim for damages, and do
whatever Tenant is obligated to do under the terms of this Lease.  Tenant agrees
to reimburse Landlord on demand for any expenses which Landlord incurs in
effecting compliance with Tenant's obligations under this Lease; further, Tenant
agrees that Landlord shall not be liable for any damages resulting to Tenant
from effecting compliance with Tenant's obligations under this subparagraph
caused by the negligence of Landlord or otherwise.

          (d) All rights and remedies of the Landlord herein enumerated in the
event of a default shall be cumulative and nothing herein shall exclude any
other right or remedy allowed by law.

     28.  Waiver of Default or Remedy:  Failure of Landlord to declare a default
or an Event of Default immediately upon its occurrence, or delay in taking any
action in connection with an Event of Default, shall not constitute a waiver of
the default or Event of Default, but Landlord shall have the right to declare
the default or Event of Default at any time and take such action as is lawful or
authorized under this Lease.  Failure by Landlord to enforce one or more of the
remedies provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of the default or of any other violation or breach of any of
the terms, provisions and covenants contained in this Lease.

     29.  [Intentionally deleted.]

     30.  Attorney's Fees:  In the event either party defaults in the
performance of any of the terms, covenants, agreements or conditions contained
in this Lease and the other party retains an attorney to enforce all or any part
of this Lease, and such party incurs attorneys' fees and costs in court or other
formal legal proceedings, then the non-prevailing party in such proceedings
shall pay the reasonable attorney's fees and costs of the prevailing party.

                                      -35-
<PAGE>

     31.  Holding Over:  In the event of holding over by Tenant after the
expiration or termination of this Lease, the holdover shall be as a tenant at
will and all of the terms and provisions of this Lease shall be applicable
during that period, except that Tenant shall pay Landlord as rent for the period
of such holdover an amount equal to one and one-half times the rent.  Tenant
agrees to vacate and deliver the Premises to Landlord upon Tenant's receipt of
notice from Landlord to vacate upon termination of this Lease.  The rental
payable during the holdover period shall be payable to Landlord on demand.  No
holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease.

     32.  Rights of First Mortgagee:  Tenant accepts this Lease subject and
subordinate to any recorded first mortgage or deed of trust lien presently
existing or hereafter created upon the Premises, provided that the applicable
mortgagee or beneficiary shall agree to honor this Lease and not disturb Tenant
in its possession of the Premises except upon an event of default past any
applicable notice and grace period.  Tenant agrees upon demand to execute
additional instruments so subordinating this Lease as Landlord may require.  If
the interests of Landlord under this Lease are transferred by reason of
foreclosure or other proceedings for enforcement of any first mortgage or deed
of trust on the Premises, Tenant shall be bound to the transferee (sometimes
called the "Purchasers"), at the option of the Purchaser, under the terms,
covenants and conditions of this Lease for the balance of the term remaining,
and any extensions or renewals, with the same force and effect as if the
Purchaser were Landlord under this Lease.

     33. Estoppel Certificates: Within ten (10) days after request by Landlord
or Landlord's mortgagee, Tenant agrees to furnish a statement certifying that
Tenant is in possession of the Premises; the Premises are acceptable; the Lease
is in full force and effect; the Lease is unmodified; Tenant claims no present
charge, lien, or claim of offset against rent, the rent is paid for the current
month, but is not prepaid for more than one month and will not be prepaid for
more than one month in advance; there is no existing default by reason of some
act or omission by Landlord; and such other matters as may be reasonably
required by Landlord or Landlord's mortgagee. If Tenant believes any of the
statements requested of Landlord in such Estoppel Certificate not to be true or
correct, Tenant shall state the circumstances relative thereto with specificity
in the statement. Tenant's failure to deliver such statement- within the time
specified herein shall cause Landlord to be automatically appointed as Tenant's
attorney-in-fact for the purpose of issuing such statement. Landlord agrees to
provide such an estoppel statement to Tenant within 10 days after request
therefor.

     34. Successors: This lease shall be binding upon and inure to the benefit
of Landlord and Tenant and their respective permitted heirs, personal
representatives,

                                      -36-
<PAGE>

successors and assignees. It is hereby covenanted and agreed that should
Landlord's interest in the Premises cease to exist for any reason during the
term of this Lease, then notwithstanding the happening of such event this Lease
nevertheless shall remain unimpaired and in full force and effect and Tenant
hereunder agrees to attorn to the then owner of the Premises.

     35. Guaranty Lease: Under appropriate circumstances, at Landlord's option,
Tenant may be required to provide a Guaranty of Lease in the form attached
hereto as "Exhibit "D" executed by a guarantor satisfactory to Landlord.

     36.  [Intentionally deleted.]

     37.  Construction of Language:  The captions appearing in this Lease are
inserted for convenience and in no way define, limit, construe or describe the
scope or intent of such paragraph.  If any provision of this Lease shall ever be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this tease, and such other provisions shall
continue in full force and effect.

     38.  Notice:

          (a) All rent and other payments required to be made by Tenant shall be
payable to Landlord at the address set forth below, or at any other address as
Landlord may specify from time to time by written notice.

          (b) All payments required to be made by Landlord to Tenant shall be
payable to Tenant at the address set forth below, or at any other address within
the United States as Tenant may specify from time to time by written notice.

          (c) Any notice or document required or permitted to be delivered by
this Lease shall be deemed to be delivered (whether or not actually received)
when:  (i) deposited in the United States Mail, postage prepaid, certified mail,
return receipt requested; (ii) deposited with a recognized overnight courier
such as Federal Express or United Parcel Service; (iii) sent by facsimile
transmission (with a confirmation copy to follow by either of the methods of
delivery set forth above); or (iv) delivered by hand, addressed to the Landlord
or Tenant at the respective addresses set out below with copies to the parties
set forth below:

LANDLORD:                                  TENANT:
---------                                  -------

The Creaney & Smith Group                  ds distribution, inc.
925 Fell Street                            c/o drugstore.com, inc.

                                      -37-
<PAGE>

Baltimore, Maryland 21231                  13920 SE Eastgate Way, Suite 300
                                           Bellevue, Washington 98005

and:                                       copy to:
---                                        -------

The Northwestern Mutual                    General Counsel
Life Insurance Company                     drugstore.com, inc.
1133 29th Street, N.W., Suite 700          13920 SE Eastgate Way, Suite 300
Washington, D C. 20036                     Bellevue, Washington 98005
Attn:  William H. Norton
                                           and to:
                                           ------
                                           Marvin Garfinkel, Esq.
                                           Mesirov Gelman Jaffe
                                             Cramer & Jamieson
                                             1735 Market Street, Suite 3800
                                             Philadelphia, Pennsylvania 19103

     39.  Agreement and Limitation of Warranties:  It is expressly agreed by the
parties, as a material consideration for the execution of this Lease, that the
Lease, with the specific references to written extrinsic documents, is the
entire agreement of the parties and supersedes all prior agreements or
negotiations between the parties; and that there are, and were, no oral
representations, warranties, understandings, stipulations, agreements or
promises pertaining to this lease or the expressly mentioned written extrinsic
documents not incorporated in writing in this Lease.  Landlord and Tenant
expressly agree that there are and shall be no implied warranties of
merchantability, habitability, fitness, for a particular purpose or of any other
kind arising out of this Lease and there are no warranties which extend beyond
those expressly set forth in this Lease.  It is likewise agreed that this Lease
may not be altered, waived, amended or extended except by an instrument in
writing signed by both Landlord and Tenant.  Notwithstanding anything to the
contrary contained in this Lease, provided that there is no mortgage or deed of
trust recorded among the land records with respect to the Premises, in no event
shall Landlord have any obligation or incur any liability beyond the interest of
Landlord in the Premises, including the rents, issues and profits therefrom, and
Tenant shall look exclusively to such interest of Landlord in the Premises for
the payment and discharge of any obligations imposed upon Landlord hereunder.

     40. Brokerage Commission: Landlord recognizes GMH Realty, Inc., Landlord's
Broker, and Staubach Company of Pennsylvania, Tenant's Broker

                                      -38-
<PAGE>

(collectively, the "Brokers"), as the sole Brokers procuring this Lease and
shall pay Brokers a commission therefor pursuant to a separate agreement between
Brokers and Landlord. Landlord and Tenant each represent and warrant one to
another that except as set forth herein, neither of them has employed any
broker, agent, or finder in connection with this Lease. Landlord agrees to
indemnify and hold Tenant harmless from any claim, or claim of or right to a
lien under the Statutes of Pennsylvania or New Jersey relating to real estate
broker liens, resulting from Landlord's acts or omissions for brokerage or other
similar fees in connection with the Lease or the leasing of the Premises by
Tenant and from and against all liabilities, costs, damages, and expenses that
would result from any such claim in connection with the Lease or the leasing of
the Premises by Tenant. Tenant agrees to indemnify and hold Landlord harmless
from any claim, or claim of or right to a lien under the Statutes of
Pennsylvania or New Jersey relating to real estate broker liens, resulting from
Tenant's acts or omissions for brokerage or other similar fees, except for
Tenant's employment of Tenant's Broker, in connection with the Lease or the
leasing of the Premises by Tenant and from and against all liabilities, costs,
damages, and expenses that would result from any such claim in connection with
the Lease or the leasing of the Premises by Tenant.

     41. Waiver by Jury Trial: LANDLORD AND TENANT EXPRESSLY WAIVE ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER, IN
CONNECTION WITH OR INCIDENT TO, THIS LEASE AND ANY AND ALL AMENDMENTS AND
SUPPLEMENTS HERETO, IN ANY WAY RELATED TO THE PREMISES OR THE MANAGEMENT OR
OPERATION OF THE PREMISES, WHETHER IN CONTRACT, TORT OR OTHERWISE, AND AGREE AND
CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY.

     42. Choice of Law: This Lease shall be governed by and construed in all
respects in accordance with the laws of the State of New Jersey without regard
to any conflict of laws principles.

     43. Forum Selection Clause. Landlord and Tenant agree that all disputes and
matters whatsoever arising under, in connection with or incident to this Lease
or the Premises shall be litigated, if at all, in and before a federal or state
court located in the State of New Jersey to the exclusion of the courts of any
other state or country.

     44.  Authority.  The individuals executing this Lease on behalf of Tenant
each represent to Landlord that they are duly authorized to execute and deliver
this

                                      -39-
<PAGE>

Lease on behalf of Tenant and to bind Tenant to the terms and provisions set
forth herein.

     45.  Right of First Offer.  Tenant shall have a right of first offer to
lease certain portions of the properties owned by Landlord and located within
the Pureland Industrial Complex which are available for lease during the Term of
this Lease, subject to any similar rights or options of other tenants existing
on the date of this Lease, and subject to the following additional terms:

          (A) If either (i) Landlord receives a bona-fide request for a site
visit or a written proposal for a lease with respect to any space which is in
excess of 50,000 square feet and not occupied by a tenant on the Lease
Commencement Date (defined herein), or (ii) the date upon which any space, which
is occupied by a tenant as of the Lease Commencement Date, is to become vacant
is known to Landlord with reasonable certainty (either of such respective
spaces, the "Expansion Space"), Landlord shall deliver to Tenant a notice
offering such space to Tenant (the "Expansion Availability Notice").  Such
Expansion Availability Notice shall include (1) the date on which the Tenant may
occupy such Expansion Space, (2) the Base Rent to apply to the Expansion Space,
which Base Rent shall be at a per square foot rate which is equal to the greater
of (i) the market rate in effect for comparable space in the area of the
Premises at the time, or (ii) the rate of Base Rent for the remainder of the
Term under the Lease, and (3) any other important terms upon which the Landlord
is offering the Expansion Space to the Tenant.

          (B) In order to exercise its rights under this section, Tenant must
give Landlord written notice of its election to accept the offer (the "Expansion
Acceptance Notice") within 10 days after receiving the Expansion Availability
Notice.  In addition, if Tenant does not accept landlord's determination of the
market rate of Base Rent contained in the Expansion Availability Notice, and
only if Tenant states this fact in the Expansion Acceptance Notice, then Tenant
shall have the right to have the market rate of Base Rent to apply to Tenant's
leasing of the Expansion Space determined by a panel of 3 licensed real estate
brokers or appraisers, one of whom shall be selected by Landlord within 5 days
after delivery of the Expansion Acceptance Notice, one of whom shall be selected
by Tenant within 5 days after delivery of the Expansion Acceptance Notice, and
the third of whom shall be selected by the first two within 10 days after the
first two are selected.  Each broker or appraiser, within 10 days after the
third such party is so selected, shall submit a determination of such market
rate, and the average of the two closest determinations (or, if higher, the rate
in effect with respect to the Premises) shall be binding on the parties for
purposes of calculating rate applicable to the Expansion Space.  Landlord and
Tenant shall each pay the fee of the broker or appraiser selected by it and they

                                      -40-
<PAGE>

shall share equally the payment of the fee of the third such party.  If Tenant
does not notify Landlord in the Expansion Acceptance Notice of its election to
have the market rate determined by the independent panel, the rate set forth in
the Expansion Availability Notice given under subsection (A) above shall be
binding on the parties.

          (C) If Tenant timely accepts the Landlord's offer in accordance with
subsection (B) above, then Tenant's leasing of the Expansion Space shall be
under all terms of this Lease for the remainder of the Term, except that (i) the
Base Rent shall be as determined in accordance with the provisions above, and
(ii) appropriate adjustments shall be made in the Tenant's Proportionate Share
of Impositions and Operating Costs to reflect the addition of the Expansion
Space to the Premises.  Furthermore, within 15 days after the later of the
Expansion Acceptance Notice or determination of the Base Rent to apply as
described in subsection (A) or (B) above, the parties shall execute a written
amendment to this Lease describing the addition of the Expansion Space to the
Premises and setting forth the foregoing changes to this Lease.

          (D) Tenant shall lease the Expansion Space in accordance with all
terms of this Lease, "as-is, where-is" and without warranty as to physical
condition, environmental condition or any other matter whatsoever, for the
period from the date the Tenant may occupy the Expansion Space as set forth in
the Expansion Availability Notice to the expiration of the Term of the Lease.

          (E) If Tenant fails to give notice accepting the Landlord's offer by
the time required above, or if at the time Tenant accepts such offer or at the
time Tenant's lease of the Expansion Space becomes effective the Tenant is in
default of any term of this Lease, then Tenant's right of first offer provided
in this section with respect to the Expansion Space described in the Landlord's
Expansion Availability Notice shall be automatically terminated and of no
further force or effect, and Landlord shall have the right to lease such
Expansion Space to any parties and upon any terms it sees fit.

     45.1 Expansion.  Tenant shall have a right to require that the Landlord
expand the Building at the Premises by an amount of approximately 75,000 square
feet, subject to the availability of permits, zoning, building, fire and
sprinkler codes, and all other legal requirements, in accordance with the
following terms:

          (A) In order to exercise its rights under this section, Tenant must
give Landlord written notice of its election to expand, which notice shall
include a statement as to the proposed size, location and description of the
expansion (the "Building Expansion"), on or before the 8th anniversary of the
Rent Commencement Date.  Upon such election by Tenant, the following shall
apply:

                                      -41-
<PAGE>

          (1) Such election shall be deemed an election to exercise the then-
applicable renewal option set forth in Section 3.1 hereof, except that the term
of such renewal together with the remainder of the then-existing Term (and with
respect to both the then-existing Premises and the Building Expansion) shall not
be less than 7 years (with the understanding that the then-applicable renewal
option set forth in Section 3.1 above shall be deemed exercised and the term of
such renewal option extended to achieve such 7 year term), and except that the
rent applicable to the existing Premises for any period in such term beyond the
then-current Term shall be determined in accordance with the procedures set
forth in Section 3.1.

          (2) The improvements to be constructed in connection with such
expansion of the Premises shall be constructed in accordance with the terms and
procedures set forth in Section 14 hereof with respect to the Tenant
Improvements, except that relating to the Allowance.

          (3) The monthly Base Rent applicable to the Building Expansion shall
be equal to that reflecting (i) amortization of the total cost of all building
standard shell improvements (i.e., consistent with the Landlord's Work) which
are part of the Building Expansion (including design, permitting, utility
extensions, construction and the like) over a period of 20 years with interest
at a rate which is 200 basis points in excess of the rate of interest then being
paid on 10-year U.S. Treasury Bonds, and (ii) amortization of the total cost of
all improvements beyond the building standard shell which are part of the
Building Expansion (including design, permitting, utility extensions,
construction and the like) over a period which is equal to the term of the Lease
with interest at a rate of 10% per annum.  In addition, appropriate adjustments
shall be made in the Tenant's Proportionate Share of Impositions and Operating
Costs to reflect the addition of the Building Expansion.

          (B) Within 30 days after the Tenant's notice exercising its right to
the Building Expansion, the parties shall enter into a written amendment to this
Lease setting forth the foregoing changes to this Lease.

     46.  Antenna, Auxiliary Power Supply and Parking Spaces.

          46.1  Antenna.  Subject to Subparagraph 46.5, Landlord hereby grants
to Tenant the right to install, replace, maintain and operate, at Tenant's sole
cost and expense, one or more satellite antennas and the associated equipment
required to operate such antennas (collectively, the "Antenna") at a location on
the roof of the Building, as reasonably determined by Tenant and approved by
Landlord, which approval shall not be unreasonably withheld or delayed.  The
Antenna is and shall remain the property of Tenant or Tenant's assignee, and may
be removed by Tenant at

                                      -42-
<PAGE>

any time or times. Tenant hereby warrants that the Antenna, and any equipment or
construction related to its installation, maintenance or operation, shall in no
way affect the structural integrity of the roof or cause the roof to leak.

          46.2  Auxiliary Power Supply.  Subject to Subparagraph 46.5, Landlord
hereby grants to Tenant the right to install, replace, maintain and upgrade, at
Tenant's sole cost and expense, one or more auxiliary electric generators
together with one or more above ground fuel storage tanks for the same
(collectively, the "Auxiliary Power Supply") at a location or locations on the
Premises (excluding the roof) as reasonably designated by Tenant and approved by
Landlord, which approval shall not be unreasonably withheld or delayed.  The
Auxiliary Power Supply is and shall remain the property of Tenant or Tenant's
assignee, and may be removed by Tenant at any time or times.

          46.3  Parking Spaces.  The Premises shall have, as of the Rent
Commencement Date, three-hundred twenty (320) parking spaces.

          46.4  Procedures.  Plans and specifications for the installation and
construction of each of the Antenna, Auxiliary Power Supply and Parking Spaces
shall be prepared by Tenant and its architects and other contractors, and
approved and signed by both Landlord and Tenant prior to the commencement of
installation and construction.  Installation and construction of each of the
Antenna, Auxiliary Power Supply and Parking Spaces shall be subject to the
general procedures set forth in Subsection 14.2 of this Lease.

          46.5  License Agreement.  Each of the Antenna shall be subject to and
governed by a separate license agreement in the form attached hereto as Exhibit
F.

     47.  Perpetuities.  If the rule against perpetuities would invalidate this
Lease or any portion hereof, or would limit the time during which this Lease
shall be effective, due to the potential failure of an interest in property
created herein to vest within a particular time, then notwithstanding anything
to the contrary herein, each such interest in property must vests, if at all,
before the passing of 21 years from the date of this Lease, or this Lease shall
become null and void upon the expiration of such 21 year period and the parties
shall have no further liability hereunder.

                     [SIGNATURES APPEAR ON FOLLOWING PAGE]

     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under
seal, with the intention that it be a sealed instrument, as of the date first
set forth above.

                              LESSOR:
                              ------

                                      -43-
<PAGE>

                              THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a
                              Wisconsin corporation

                              By:  Northwestern Investment Management Company, a
                                   Wisconsin corporation, its wholly owned
                                   subsidiary and authorized representative

                              By:  \s\ Donald L. O'Dell    (SEAL)
                                   --------------------
                                   Donald L. O'Dell
                                   Managing Director


                              LESSEE:
                              ------

                              DS DISTRIBUTING, INC.,
                              a Delaware corporation


                              By:  \s\ Peter M. Neupert  (SEAL)
                                   --------------------
                                   Peter M. Neupert
                                   President and Chief Executive Officer


                              Attest:  \s\ Naomi J. Skudler  (SEAL)
                                       --------------------
                                       Naomi J. Skudler
                                       Its Assistant Secretary

                                      -44-
<PAGE>

                                  Exhibit "D"

                               GUARANTY OF LEASE
                               -----------------

     THIS GUARANTY OF LEASE ("Guaranty") is made as of the 30th day of August,
1999 by DRUGSTORE.COM, INC. ("Guarantor"), a Delaware corporation, having an
address at 13920 SE East Gate Way, Suite 300, Bellevue, Washington 98005, for
benefit of the NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY ("Landlord").

     WHEREAS, Guarantor has a direct financial interest or relationship with DS
Distribution, Inc., the party named as Tenant under that Lease Agreement (the
"Lease") between such Tenant and Landlord to which this Guaranty is attached.

     AND, WHEREAS, Guarantor has agreed to guarantee the duties, obligations and
liabilities of the Tenant under the Lease as material inducement and
consideration for Landlord to enter into the Lease with Tenant.

     NOW, THEREFORE, for good and valuable consideration, the Guarantor hereby
agrees as follows:

     1.  Guarantor directly and primarily guarantees the timely payment of any
and all monetary obligations of the Tenant under the Lease, including but not
limited to all base or minimum rent, percentage rent (if any), reimbursements or
pass-through charges for taxes, insurance, maintenance, repairs and the like,
any other additional rent, all costs and expenses (including reasonable
attorneys' fees and other costs of collection), and any other charges.  In
addition, Guarantor hereby guarantees full and timely performance of all other
terms, covenants or conditions to be performed under the Lease by Tenant.
Furthermore, the Guarantor shall pay, reimburse and indemnify the Landlord for
any and all damages, costs, out-of-pocket expenses (including reasonable
attorneys' fees), losses and other liabilities arising or resulting from the
failure of the Tenant to perform, satisfy or observe any of the terms or
conditions of the Lease.

     2.  The liability of the Guarantor hereunder is direct, immediate,
absolute, continuing, unconditional and unlimited. In the event that two or more
persons or entities shall be parties to this Guaranty, the liability of each
such party shall be joint and several with the liability of the others.

     3.  The Guarantor hereby consents and agrees, in advance, to any amendments
or modifications to the Lease of any kind which may be agreed to by the Tenant,
including but not limited to renewals or extensions of the term of the lease,
increases or decreases of the rent payable under the lease, additions or removal
of parties named in the lease, or any other changes. Moreover, this Guaranty,
and Guarantor's obligations and liability hereunder, shall extend and apply to
the Lease as so amended or modified.

                                      -45-
<PAGE>

     4.  Any assignment, waiver, release, compromise, settlement, extension or
other action of any kind by the Landlord with respect to the Tenant or the Lease
shall not serve to affect or limit the obligations of the Guarantor with respect
to the obligations of the Tenant under the Lease as the same may be modified or
amended from time to time.  This Guaranty shall remain in full force and effect,
and the Guarantor shall remain fully liable hereunder, without regard to any
receipt, disposition, application or release of any other security for the Lease
by the Landlord.

     5.  The Landlord shall not be required to pursue any remedies against the
Tenant or any security deposit or other collateral as a condition to enforcement
of this Guaranty. Guarantor shall not be discharged or released by reason of the
discharge or release of the Tenant for any reason, including a discharge in
bankruptcy, receivership or other proceedings.

     6.  The Guarantor assumes all responsibility for keeping informed of the
Tenant's financial condition and all other circumstances relating to the risk of
nonperformance by Tenant under the Lease.  The Guarantor agrees that Landlord
shall have no duty to advise the Guarantor of information known to it regarding
such risks or circumstances.

     7.  The Guarantor subordinates to the Landlord's interest under the Lease
any and all claims which the Guarantor has or may have against the Tenant by
reason of subrogation for payments or performances under this Guaranty or claims
for any other reason or cause. The Guarantor agrees not to assert any claim
which it has or may have against the Tenant, including claims by reason of
subrogation under this Guaranty, until such time as all payments and other
obligations of the Tenant to the Landlord are fully satisfied and discharged.

     8.  Guarantor hereby knowingly and intelligently waives any and all rights
which it may have to request a jury trial in any action or proceeding, at law or
in equity, on any matter arising with respect to this Guaranty or the Lease.

     9.  This Guaranty is binding upon the Guarantor and all heirs, legal
representatives, successors and assigns of the Guarantor, and this Guaranty
shall inure to the benefit of the Landlord and its successors and assigns. No
assignment or delegation by the Guarantor shall release the Guarantor of any
obligations under this Guaranty.

                                      -46-
<PAGE>

     IN WITNESS WHEREOF, the Guarantor has duly signed this Guaranty on the date
stated above.

GUARANTOR:                                               DRUGSTORE.COM, INC.

[signature illegible]                         By: /s/ Peter M. Neupert
-------------------------------------------       Name: Peter M. Neupert
Witness                                           Title:  Chairman of the Board
                                                          President and CEO


STATE OF WASHINGTON,
COUNTY OF KING     :

     I HEREBY CERTIFY, that on this 1st day of September, 1999, before me, the
subscriber, a Notary Public of the State of Washington, personally appeared
Peter M. Neupert, known to me (or satisfactorily proven) to be Chairman of the
Board, President and CEO of DRUGSTORE.COM, INC., party to the foregoing Guaranty
of Lease, and acknowledged that he, being authorized to do so, executed the same
for the purposes therein contained.

     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                   \S\ Nancy J. Thygesen
                              ---------------------------------------
                                              Notary Public

                              My commission expires:

                              March 30, 2001
                              ---------------------------------------





                                      -47-

Source: OneCLE Business Contracts.