<PAGE>

                                                                 Exhibit 10.119

                            PUT TO LEASE PROPERTY



DATE:                                                            April 30, 1997

FROM:                                    Eagle Hardware & Garden, Inc., Grantor

TO:                                Tigard-Tualatin School District 23J, Grantee

I.  RECITALS.

    A.        Grantee is the owner of certain real property located in
Washington County, Oregon, more particularly described in Exhibit A, consisting
of approximately 1.52 acres ("the Property").

    B.        The Oregon Department of Transportation ("ODOT") has stated that
it intends to acquire the Property for the development of a freeway overpass. 
ODOT is a division of state government and has the power to condemn pursuant to
Oregon Revised Statutes.

    C.        As of April 11, 1997, Grantee and ODOT were less than $50,000
apart in their negotiations over the compensation ODOT is to pay Grantee for the
Property.

    D.        Grantor is willing to lease the Property from Grantee for
30 years on the terms and conditions hereinafter stated, if Grantee exercises
its rights hereunder to lease the Property to Grantor.

II.      AGREEMENT.

         In consideration of the following terms and conditions and Grantee's
entering into a written agreement to lease to Grantor the approximately
10.5-acre parcel abutting the Property on the north side, Grantor and Grantee
agree as follows:

         1.        GRANT OF PUT.  Grantor hereby grants to Grantee the sole and
exclusive right to lease the Property to Grantor for a term of 30 years for the
rent hereafter stated and in accordance with a written ground lease
substantially in the form of attached Exhibit B. 

         2.        DURATION OF PUT.  This put may be exercised by Grantee at
any time until 11:59 a.m. on the closing date set forth in Section 8 of the
Agreement to Lease for the adjoining 10.5-acre parcel.

         3.        MEANS OF EXERCISING PUT.  This put shall be exercised, if at
all, by written notice given by Grantee to Grantor at any time during the
duration of the put, which notice shall specify that Grantee has elected to
exercise this put.


                                     - 1 -
<PAGE>

         4.        PUT TO BE EXERCISED WITH REGARD TO ENTIRE PROPERTY.  This
put may be exercised only with respect to the entirety of the Property and
nothing contained herein shall be construed as permitting Grantee to lease less
than all the Property to Grantor pursuant to this put.

         5.        EFFECT OF EXERCISING PUT.  Once this put is exercised,
Grantor shall be obligated to lease the Property from Grantee and Grantee shall
be obligated to lease the Property to Grantor in accordance with this put and
attached Exhibit B, subject to the condition, however, that the closing of the
30-year ground lease by Grantee to Grantor of the approximately 10.5-acre parcel
abutting the Property on the north side occurs as provided in the agreement to
lease between the parties hereto.  If such condition is not satisfied, this put
shall automatically terminate and both parties shall be relieved of all
obligations, duties, and liabilities under this put.

         6.        RENT.  If Grantee exercises this put, the minimum rent for
the Property and the periodic rent increases shall be as described in Section 3
of attached Exhibit B.

         7.        CLOSING.  The leasing of the Property shall be closed in
escrow at First American Title Insurance Company of Oregon, 10260 S.W. Greenburg
Road, Tigard, Oregon.  At the closing, Grantor and Grantee shall execute two
originals of a 30-year ground lease substantially in the form of  attached
Exhibit B.  One original shall be delivered to Grantor, and the other shall be
delivered to Grantee.  The cost of the escrow shall be shared equally by Grantor
and Grantee.  The closing shall occur simultaneously with the closing of the
lease by Grantee to Grantor of the 10.5-acre parcel abutting the Property on the
north side.

         8.        LEASEHOLD POLICY OF TITLE INSURANCE.  Within 20 days after
closing, Grantee shall deliver to Grantor an ALTA extended leasehold policy of
title insurance in the sum of $1 million, insuring Grantor against damage or
injury sustained by it as the result of liens or encumbrances on the Property
other than those described in attached Exhibit C.  At Closing, Grantor shall pay
the difference in cost between a standard and an extended leasehold title
insurance policy.

         9.        PRORATIONS.  The real property taxes, if any, and utility 
charges associated with the Property shall be prorated as of the date of 
closing.

         10.       REMEDIES; CHOICE OF LAW AND FORUM.  Time is of the essence
of this put.  In the event of a breach of this put by either party, the party
not in breach shall be entitled to all remedies available at law or in equity,
including without limitation specific performance, declaratory relief, and a
judgment or judgments for money damages. 

         This put shall be governed by the laws of the state of Oregon. 
Washington County (Oregon) Circuit Court shall be the sole and exclusive forum
for the filing and 


                                     - 2 -
<PAGE>

prosecution of any suit or action to declare, interpret, or enforce any of 
the terms or provisions of this put.

         11.       ATTORNEY FEES.  If a suit or action is initiated to declare,
interpret or enforce any of the terms or provisions of this put, the losing
party agrees to pay the prevailing party's reasonable attorney fees to be fixed
by the trial court and appellate courts, respectively.  

         In witness whereof, the parties have executed this put effective as of
the day and year first written above.



Eagle Hardware & Garden, Inc.          Tigard-Tualatin School District 23J, 
Grantor                                Grantee


By: /s/ John P. Foucrier               By: /s/ Richard Carlson
   ---------------------------------      --------------------------------
   Executive Vice President               Chair of the Board


By: /s/ George Smith                   By: /s/ Russell Joki
   ---------------------------------      --------------------------------
   Vice President                         Superintendent




                                     - 3 -
<PAGE>






[MAP]







<PAGE>
                                       
                              30-YEAR GROUND LEASE
                                    BETWEEN
                     TIGARD-TUALATIN SCHOOL DISTRICT 23J
                                      AND
                        EAGLE HARDWARE & GARDEN, INC.









                               (1.52 ACRE PARCEL)
                                   FALL 1997








                                                                      EXHIBIT B
<PAGE>

                               TABLE OF CONTENTS

Section 1.   Razing the School Improvements; the Project. . . . . . . . . .   1

Section 2.   Construction of the Project. . . . . . . . . . . . . . . . . .   2

Section 3.   Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2

Section 4.   Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3

Section 5.   Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4

Section 6.   Taxes and Other Charges. . . . . . . . . . . . . . . . . . . .   5

Section 7.   Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .   8

Section 8.   Lessor's Right to Perform Lessee's Covenants . . . . . . . . .  10

Section 9.   Compliance with Legal Requirements . . . . . . . . . . . . . .  11

Section 10.  Repairs and Maintenance. . . . . . . . . . . . . . . . . . . .  12

Section 11.  Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . .  12

Section 12.  Alterations, Additions, and New Improvements . . . . . . . . .  12

Section 13.  Title to Improvements. . . . . . . . . . . . . . . . . . . . .  13

Section 14.  No Waste . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

Section 15.  Inspection and Access. . . . . . . . . . . . . . . . . . . . .  13

Section 16.  Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . .  14

Section 17.  Condemnation . . . . . . . . . . . . . . . . . . . . . . . . .  15

Section 18.  Assignment and Subletting. . . . . . . . . . . . . . . . . . .  17

Section 19.  Leasehold Mortgages. . . . . . . . . . . . . . . . . . . . . .  18

Section 20.  Default; Remedies. . . . . . . . . . . . . . . . . . . . . . .  22

Section 21.  No Abatement of Rent . . . . . . . . . . . . . . . . . . . . .  24

Section 22.  Transfer of Interest by Lessor . . . . . . . . . . . . . . . .  24


                                     - i -
<PAGE>

Section 23.  Supplemental Rent Increase for 30th Year of Lease. . . . . . .  24

Section 24.  Option to Purchase . . . . . . . . . . . . . . . . . . . . . .  24

Section 25.  Lessor's Right to Encumber . . . . . . . . . . . . . . . . . .  25

Section 26.  Nonmerger. . . . . . . . . . . . . . . . . . . . . . . . . . .  25

Section 27.  Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . . .  26

Section 28.  Surrender. . . . . . . . . . . . . . . . . . . . . . . . . . .  26

Section 29.  Invalidity of Particular Provisions. . . . . . . . . . . . . .  27

Section 30.  No Representations . . . . . . . . . . . . . . . . . . . . . .  27

Section 31.  Estoppel Certificate . . . . . . . . . . . . . . . . . . . . .  27

Section 32.  Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . .  27

Section 33.  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .  28

Section 34.  Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . .  29

Section 35.  Costs and Attorney Fees. . . . . . . . . . . . . . . . . . . .  30

Section 36.  Entire Agreement . . . . . . . . . . . . . . . . . . . . . . .  30

Section 37.  Applicable Law; Choice of Forum. . . . . . . . . . . . . . . .  30

Section 38.  Interest on Rent Arrearages. . . . . . . . . . . . . . . . . .  31

Section 39.  Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . . .  31

Section 40.  Covenants to Bind and Benefit Parties. . . . . . . . . . . . .  31

Section 41.  Captions and Table of Contents . . . . . . . . . . . . . . . .  31

Section 42.  Definition of Lessor . . . . . . . . . . . . . . . . . . . . .  31

Section 43.  Recordation of Memorandum of Lease . . . . . . . . . . . . . .  32

Section 44.  Statutory Disclaimer . . . . . . . . . . . . . . . . . . . . .  32

Section 45.  Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . .  32


                                     - ii -
<PAGE>

Exhibit A    Description of the Premises. . . . . . . . . . . . . . . . . .  33

Exhibit B    Encumbrances on the Premises as of the Effective Date of the
             Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34

Exhibit C    Put to Lease . . . . . . . . . . . . . . . . . . . . . . . . .  35








                                     - iii -

<PAGE>

                                     GROUND LEASE



Date:    Effective as of          , 1997    [INSERT THE COMMENCEMENT DATE AT 
                         ---------          CLOSING]

Lessor:  Tigard-Tualatin School District 23J                     ("Lessor")

Lessee:  Eagle Hardware & Garden, Inc.                           ("Lessee")



         Lessor and Lessee agree as follows:

         Lessor leases to Lessee, and Lessee leases from Lessor, the real
property (the "Premises") consisting of approximately 1.52 acres described in
attached Exhibit A.  The foregoing demise is subject, however, to the
encumbrances described in attached Exhibit B.

         The terms and provisions of the Put to Lease attached as Exhibit C are
incorporated into this Lease by this reference.

         The Premises are leased for a term (the "Term") of 30 years,
commencing on               , 1997 [TO BE COMPLETED AT CLOSING; SEPTEMBER 19,
              --------------
1997, IF THERE IS NO 30-DAY EXTENSION PURSUANT TO SECTION 3(c) OF THE AGREEMENT
TO LEASE FOR THE 10.5-ACRE PARCEL ABUTTING THE PREMISES ON THE NORTH SIDE;
OCTOBER 20, 1997, IF THERE IS A SINGLE 30-DAY EXTENSION; NOVEMBER 21, 1997, IF
THERE IS A SECOND 30-DAY EXTENSION], which is herein referred to as the
Commencement Date.


I.A.1. RAZING THE SCHOOL IMPROVEMENTS; THE PROJECT

         I.A.1.1   Lessee shall, at its sole expense, demolish the 
improvements situated on the Premises ("the School Improvements") as of the 
Commencement Date.  This demolition work shall be completed by Lessee on or 
before March 28, 1998.  Lessee shall lawfully dispose of all materials 
removed from the School Improvements during demolition at its sole expense 
and in compliance with the Legal Requirements. 

         Lessee is aware that the Premises include Hazardous Substances. 
Examples of such substances are an underground storage tank, the contents of
that tank, and the materials described in the 64-page document entitled "AHERA
Reinspection Report," a copy of which was previously furnished to Lessee. 
Lessee shall, at its sole cost, lawfully remove and dispose of Hazardous
Substances before undertaking any construction on the Premises.

                               -1-

<PAGE>

         I.A.1.2   Lessee intends to construct a new building(s) (the 
"Building") and related improvements on, under, and over the Premises 
satisfactory to Lessor.  The Building and all the related improvements are 
referred to in this Lease as the "Project."  The Project and any future 
alterations, additions, replacements, or modifications to the Project during 
the Term of this Lease are referred to in this Lease as the "Improvements."

I.A.2.   CONSTRUCTION OF THE PROJECT

         Lessee shall construct the Project substantially in accordance with
the plans and specifications previously approved by Lessor as provided in the
Agreement to Lease between the parties hereto for the 10.5-acre parcel that
abuts the Premises on the north side.  Lessee shall, subject to acts of God,
strikes, or any other reason beyond the reasonable control of Lessee, diligently
prosecute the work to completion by no later than eighteen months after the
Commencement Date.  The work shall be performed in accordance with the Legal
Requirements and in a good and professional manner.  For the purposes of this
Lease, the term Legal Requirements includes all present and future laws,
ordinances, orders, rules, regulations, and requirements of all federal, state,
and municipal governments, departments, commissions, boards, and officers,
foreseen or unforeseen, ordinary as well as extraordinary.  Lessor shall have
the right to inspect the work at reasonable intervals subject to the supervision
of Lessee and in a manner that will minimize any interference with the work.

I.A.3.   RENT

         I.A.3.1   Lessee covenants and agrees that commencing on the 
Commencement Date of this Lease and extending throughout the Term, it shall 
pay to Lessor, promptly when due, without notice or demand and without 
deduction or setoff of any amount whatsoever, $6,586.67 per month as Minimum 
Rent for the Premises. All rent shall be paid in advance, on the first day of 
each month during the Term.

         I.A.3.2   All amounts payable under Section 3.1 above, as well as 
all other amounts payable by Lessee to Lessor under the terms of this Lease, 
shall be paid at the office of Lessor set forth in Section 33, or at such 
other place within the continental limits of the United States as Lessor 
shall from time to time designate by notice to Lessee, in lawful money of the 
United States which shall be legal tender in payment of all debts and dues, 
public and private, at the time of payment.

         I.A.3.3   It is intended that the Minimum Rent provided for in this 
section shall be an absolutely net return to Lessor throughout the Term, free 
of any expense, charge, or other deduction whatsoever, including all claims, 
demands, or setoffs of any nature whatsoever.

         I.A.3.4   Lessee shall also pay without notice, except as may be 
provided in this Lease, and without abatement, deduction, or setoff, as 
additional rent, all sums, impositions, costs, and other payments which 
Lessee in any of the provisions of this Lease 

                                    -2-

<PAGE>

assumes or agrees to pay, and in the event of any nonpayment, Lessor shall 
have (in addition to all other rights and remedies) all the rights and 
remedies provided for in this Lease or by law in the case of nonpayment of 
the Minimum Rent.

         I.A.3.5   The Minimum Rent provided in Section 3.1 above shall be 
increased by 13 percent on each of the five-, ten-, 15-, 20-, and 25-year 
anniversary dates of the Commencement Date and shall remain at that level 
until the next subsequent upward adjustment.  (More specifically, relative to 
the Minimum Rent on the Commencement Date, the Minimum Rent shall increase by 
13 percent on the five-year anniversary date of the Commencement Date, by 26 
percent on the ten-year anniversary date, by 39 percent on the 15-year 
anniversary date, by 52 percent on the 20-year anniversary date, and by 65 
percent on the 25-year anniversary date.)   Under no circumstances, however, 
shall the percentage increases in Minimum Rent be allowed to exceed 100 
percent of the cost increases as measured by the United States Bureau of 
Labor Statistics' index entitled All Urban Consumers (CPI-U) (Portland) 
(1982-84 = 100) or the nearest comparable data on changes in the cost of 
living if such index is no longer published.  The change in the cost of 
living shall be determined by comparison of the figure for June 1997 with 
that of June of the year in which the adjustment in rent is to be made.  
Minimum Rent shall not be reduced below that payable during the immediately 
preceding five-year period. 

I.A.4.1  USE

         I.A.4.1   Subject to the limitations set forth in this Section 4 and 
in the balance of this Lease, Lessee may use the Premises and the 
Improvements for any lawful purpose.

         I.A.4.2   Lessee shall not use or occupy, or permit or suffer all or 
any part of the Premises or the Improvements to be used or occupied (1) for 
any unlawful or illegal business, use, or purpose; (2) in any such manner to 
constitute a nuisance of any kind; (3) as or for (a) a bar, pub, nightclub, 
music hall, or disco in which less than 60 percent of its space or revenue is 
devoted to and derived from food service; (b) a flea market; (c) a massage 
parlor; (d) a facility for the sale of paraphernalia for use with illicit 
drugs; (e) a facility for the sale or display of pornographic material (as 
determined by community standards for the area in which the Property is 
located); (f) an off-track betting parlor; (g) a carnival, amusement park, or 
circus; (h) a facility for any use which is illegal or dangerous or is 
inconsistent with an integrated, community-oriented retail and commercial 
shopping center; or (i) a facility for the sale or rental of used goods 
(including thrift shops, secondhand, or consignment stores); or (4) for any 
purpose or in any way in violation of the certificate of occupancy, or any 
Legal Requirements, including but not limited to Legal Requirements 
respecting Hazardous Substances.  The term Hazardous Substance means any 
hazardous, toxic, or dangerous substance, waste, or material that is the 
subject of environmental protection Legal Requirements, including but not 
limited to the items listed in the United States Department of Transportation 
Hazardous Materials Table (49 CFR Section 172.101) or designated as hazardous 
substances by the United States Environmental Protection Agency (40 CFR pt 
302).  Lessee 

                                -3-

<PAGE>

acknowledges that the term Legal Requirements includes, but is not limited 
to, all environmental protection laws such as the Comprehensive Environmental 
Response, Compensation and Liability Act (42 USC Sections 9601-9675), the 
Water Pollution Prevention and Control Act (33 USC Sections 1251-1376), and 
the Air Pollution and Control Act (42 USC Sections 7401-7671q).  Any dispute 
between Lessor and Lessee arising under the provisions of clause (4) of this 
Section 4.2 shall be submitted to arbitration as provided in Section 34 below.

         I.A.4.3   Lessee shall observe and comply with all conditions and 
requirements necessary to preserve and extend any and all rights, licenses, 
permits (including but not limited to zoning variances, special exceptions, 
and nonconforming uses), privileges, franchises, and concessions that now 
apply to the Premises or that have been granted to or contracted for by 
Lessor or Lessee in connection with any existing or presently contemplated 
use of the Premises or the Improvements.

         I.A.4.4   Lessee shall not suffer or permit the Premises or the 
Improvements or any portion to be used by the public, as such, without 
restriction or in such manner as might reasonably tend to impair Lessor's 
title to the Premises or Improvements or any portion, or in such manner as 
might reasonably make possible a claim or claims of adverse usage, adverse 
possession, or prescription by the public, as such, or of implied dedication, 
of the Premises or Improvements or any portion.  Lessee acknowledges that 
Lessor does not consent, expressly or by implication, to the unrestricted use 
or possession of the whole or any portion of the Premises or Improvements by 
the public, as such.

         I.A.4.5   Lessor and Lessee agree that if and when any governmental 
or any other public authority requires the execution and delivery of any 
instrument to evidence or consummate the dedication of any street adjoining 
the Premises and/or if and when any governmental or any other public 
authority or any public utility company requires the execution and delivery 
of any rights of way, easements, and grants in, over, and along any such 
streets or in, over, under, or through the Premises (except any that may run 
under the Improvements) for the purpose of providing water, gas, steam, 
electricity, telephone, storm and sanitary sewer, or any other necessary or 
desirable service or facility for the benefit of the Premises or the 
Improvements, then both parties, without cost to either party, will execute, 
acknowledge, and deliver any such instrument or document as may be required.

I.A.5.  LIENS

         I.A.5.1   Lessee shall have no power to do any act or to make any 
contract that may create or be the foundation for any lien, mortgage, or 
other encumbrance on the reversion or other estate of Lessor or on any 
interest of Lessor in the Premises.

         I.A.5.2   Lessee shall not suffer or permit any liens to attach to 
the interest of Lessee in all or any part the Premises by reason of any work, 
labor, services, or materials done for, or supplied to, or claimed to have 
been done for or supplied to, Lessee or anyone occupying or holding an 
interest in all or any part of the Improvements on the Premises 

                                   -4-

<PAGE>

through or under Lessee.  If any such lien shall at any time be filed against 
the Premises, Lessee shall cause the same to be paid or bonded against within 
45 days after the date on which the lien is filed.  Lessee reserves the right 
to contest any such liens.

         I.A.5.3   Nothing in this Lease shall be deemed to be, or be 
construed in any way as constituting, the consent or request of Lessor, 
express or implied, by inference or otherwise, to any person, firm, or 
corporation for the performance of any labor or the furnishing of any 
materials for any construction, rebuilding, alteration, or repair of or to 
the Premises or to the Improvements, or as giving Lessee any right, power, or 
authority to contract for or permit the rendering of any services or the 
furnishing of any materials that might in any way give rise to the right to 
file any lien against Lessor's interest in the Premises or against Lessor's 
interest, if any, in the Improvements.  Lessee is not an agent of Lessor for 
the construction of Improvements on the Premises.  Lessor shall have the 
right to post and keep posted at all reasonable times on the Premises and on 
the Improvements any notices that Lessor shall be required to post for the 
protection of Lessor and of the Premises and of the Improvements from any 
such lien.  The foregoing shall not be construed to diminish or vitiate any 
rights of Lessee in this Lease to construct, alter, or add to the 
Improvements.

I.A.6  TAXES AND OTHER CHARGES

         I.A.6.1   Lessee shall pay and discharge, or cause to be paid and
discharged, at its sole cost and expense, before any fine, penalty, interest, or
cost may be added for nonpayment, all real estate taxes, personal property
taxes, privilege taxes, excise taxes, business and occupation taxes, gross sales
charges, assessments (including, but not limited to, assessments for public
improvements or benefits), and all other governmental impositions and charges of
every kind and nature whatsoever, whether or not now customary or within the
contemplation of the parties and regardless of whether the same shall be
extraordinary or ordinary, general, or special, unforeseen or foreseen, or
similar or dissimilar to any of the foregoing which, at any time during the
Term, shall be or become due and payable and which:

         I.A.6.1.1   Shall be levied, assessed, or imposed against the Premises 
     or the Improvements or any interest of Lessor or Lessee under this 
     Lease; or

         I.A.6.1.2  Shall be or become liens against the Premises or the 
     Improvements or any interest of Lessor or Lessee under this Lease; or

         I.A.6.1.3  Shall be levied, assessed, or imposed on or against 
     Lessor by reason of any actual or asserted engagement by Lessor or 
     Lessee, directly or indirectly, in any business, occupation, or 
     other activity in connection with the Premises or the Improvements; 
     or

                               -5-

<PAGE>

         I.A.6.1.4  Shall be levied, assessed, or imposed on or in connection 
     with the ownership, leasing, operation, management, maintenance, 
     repair, rebuilding, use, or occupancy of the Premises or the 
     Improvements;

under or by virtue of any present or future Legal Requirement, it being the
intention of the parties that, insofar as the same may lawfully be done, Lessor
shall be free from all such expenses and all such real estate taxes, personal
property taxes, privilege taxes, excise taxes, business and occupation taxes,
gross sales taxes, occupational license taxes, water charges, sewer charges,
assessments, and all other governmental impositions and charges of every kind
and nature whatsoever (all of such taxes, water charges, sewer charges,
assessments, and other governmental impositions and charges that Lessee is
obligated to pay being collectively called "Tax" or "Taxes").

         I.A.6.2   Nothing contained in this Lease requires Lessee to pay any 
franchise, estate, inheritance, succession, capital levy, or transfer tax of 
Lessor, or any income, excess profits, or revenue tax, or any other tax, 
assessment, charge, or levy on the Rent payable by Lessee under this Lease; 
provided, however, that if at any time during the Term the methods of 
taxation prevailing at the commencement of the Term are altered so that in 
lieu of any Tax under this section there is levied, assessed, or imposed (1) 
a tax, assessment, levy, imposition, or charge, wholly or partially as a 
capital license fee measured by the Rent payable by Lessee under this Lease, 
then all such taxes, assessments, levies, impositions, or charges or the part 
so measured or based, shall be deemed to be included within the term Tax for 
the purposes of this Lease, to the extent that such Tax would be payable if 
the Premises were the only property of Lessor subject to such Tax, and Lessee 
shall pay and discharge the same as provided in respect to the payment of 
Taxes.

         I.A.6.3   If by law any Tax is payable, or may at the option of the 
taxpayer be paid, in installments, Lessee may, whether or not interest shall 
accrue on the unpaid balance, pay the same, and any accrued interest on any 
unpaid balance, in installments as each installment becomes due and payable, 
but in any event before any fine, penalty, interest, or cost may be added for 
nonpayment of any installment or interest.

         I.A.6.4   Any Tax relating to a fiscal period of the taxing 
authority, a part of which is within the Term and a part of which is before 
or after the Term, whether or not such Tax shall be assessed, levied, 
imposed, or become a lien on the Premises or the Improvements, or shall 
become payable, during the Term, shall be apportioned and adjusted between 
Lessor and Lessee so that Lessee shall pay only the portions that correspond 
with the portion of such fiscal periods included within the Term.  With 
respect to any Tax for public improvements or benefits that by law is 
payable, or at the option of the taxpayer may be paid, in installments, 
Lessor shall pay the installments that become due and payable after the Term 
expires, and Lessee shall pay all such installments which become due and 
payable at any time during the Term.

                                 -6-

<PAGE>

         I.A.6.5   Lessee covenants to furnish to Lessor, within 30 days 
after the last date when any Tax must be paid by Lessee as provided in this 
section, official receipts, if such receipts are then available to Lessee, of 
the appropriate taxing authority, or other proof satisfactory to Lessor, 
evidencing payment.

         I.A.6.6   Lessee shall have the right at Lessee's expense to contest 
or review the amount or validity of any Tax or to seek a reduction in the 
assessed valuation on which any Tax is based, by appropriate legal 
proceedings.  Lessee may defer payment of such contested Tax on condition, 
however, that if such contested Tax is not paid beforehand and if such legal 
proceedings shall not operate to prevent the enforcement of the collection of 
the Tax so contested and shall not prevent the sale of the Premises or the 
Improvements to satisfy the same, then before instituting any such 
proceedings Lessee shall furnish to Lessor and to any Permitted Leasehold 
Mortgagee (as defined below), if so required by the terms of its mortgage, a 
surety company bond, cash deposit, or other security reasonably satisfactory 
to Lessor and any such Permitted Leasehold Mortgagee, as security for the 
payment of such Tax, in an amount sufficient to pay such Tax, together with 
all interest and penalties in connection with such Tax and all charges that 
might be assessed against the Premises or the Improvements in the legal 
proceedings.  Upon termination of such legal proceedings or at any time when 
Lessor or any such Permitted Leasehold Mortgagee shall determine the security 
to be insufficient for the purpose, Lessee shall forthwith, on demand, 
deliver to Lessor or such Permitted Leasehold Mortgagee additional security 
as is sufficient and necessary for the purpose, and on failure of Lessee so 
to do, the security originally deposited shall be applied to the payment, 
removal, and discharge of the Tax and the interest and penalties in 
connection with the Tax and the charges and costs accruing in such legal 
proceedings and the balance, if any, shall be paid to Lessee provided that 
there is then no uncured default under this Lease.  In the event that such 
security shall be insufficient for this purpose, Lessee shall forthwith pay 
over to Lessor an amount sufficient, together with the security originally 
deposited, to pay the same.  Lessee shall not be entitled to interest on any 
money deposited pursuant to this section.

         I.A.6.7   Any contest as to the validity or amount of any Tax, or 
assessed valuation on which such Tax was computed or based, whether before or 
after payment, may be made by Lessee in the name of Lessor or of Lessee, or 
both, as Lessee shall determine, and Lessor agrees that it will, at Lessee's 
expense, cooperate with Lessee in any such contest to such extent as Lessee 
may reasonably request, it being understood, however, that Lessor shall not 
be subject to any liability for the payment of any costs or expenses in 
connection with any proceeding brought by Lessee, and Lessee covenants to 
indemnify and save Lessor harmless from any such costs or expenses.  Lessee 
shall be entitled to any refund of any such Tax and penalties or interest 
that have been paid by Lessee or by Lessor and reimbursed to Lessor by Lessee.

         I.A.6.8   The parties shall use reasonable efforts to see that all 
communications from the governmental authorities respecting Taxes are sent 
directly by such authorities to Lessor.  Lessor shall forward any and all 
such communications to Lessee within four business days of Lessor's receipt.  
The certificate, advice, receipt, or bill of the 

                              -7-

<PAGE>

appropriate official designated by law to make or issue the same or to 
receive payment of any Tax or nonpayment of such Tax shall be prima facie 
evidence that such Tax is due and unpaid or has been paid at the time of the 
making or issuance of such certificate, advice, receipt, or bill.

I.A.7  INSURANCE

         I.A.7.1   Throughout the Term of this Lease, Lessee, at its sole 
cost and expense, shall maintain, for the mutual benefit of Lessee and 
Lessor, property insurance covering loss or damage by fire and other risks as 
may be embraced within all-risk insurance insuring the full replacement cost 
(excluding foundation and excavation cost) of the Improvements.  If all-risk 
insurance becomes unavailable, then Lessee shall insure the Improvements with 
such coverage as is customary from time to time for comparable first-class 
buildings in the Portland metropolitan area.  The amount of such insurance 
policy shall be increased from time to time as the full replacement cost of 
the Improvements increases.  Any dispute regarding insurance matters shall be 
arbitrated by the parties in accordance with Section 34 below.

         In the event of any casualty damage to the Improvements, Lessor may
make proof of loss if Lessee fails to do so within 15 days of the casualty and
after 10 days' written notice from Lessor of its intent to do so.  

         If the insurance proceeds (the "Proceeds") of any insurance on the
Improvements equal more than 20 percent of the replacement cost of the
Improvements, then all Proceeds shall be paid to a bank trust department (the
"Trustee") as trustee for the parties.  The Trustee shall be selected by Lessee
and approved by Lessor, which approval shall not be unreasonably withheld.  If
the Proceeds are less than such amount, then the Proceeds shall be delivered to
Lessee.  

         Unless the casualty occurs on or after the 27th anniversary of the
Commencement Date, Lessee shall promptly repair or replace the damaged and
destroyed Improvements in substantially the form as existed on the date of the
casualty or in a manner reasonably satisfactory to Lessor with any alterations
that would have been allowed under Section 12 below.  The Trustee shall pay or
reimburse Lessee from the Proceeds for the cost of repair, restoration, or
replacement on satisfactory proof of expenditure by Lessee, satisfactory
evidence of sufficient progress on the work, and satisfactory evidence of
sufficient funds available to complete restoration.  

         The Trustee shall not be liable to the parties except in the event of
gross negligence or fraud.  The Trustee shall be entitled to deduct a customary
and reasonable charge for its services.  

         Any proceeds not used for the repair, restoration, or replacement of
the Improvements shall be remitted to Lessee.

                              -8-

<PAGE>

         If the Proceeds of any insurance on the Improvements equal more than 
20 percent of the replacement cost of the Improvements; the damage occurs 
within three years of the expiration of the Term; and, within 15 days of the 
casualty, Lessee serves on Lessor a written irrevocable notification of the 
exercise of the option to purchase pursuant to Section 24 below, Lessee shall 
have the right (but not the obligation): (a) to join with Lessor in directing 
the Trustee to set aside a sum equal to the rent that will accrue under this 
Lease between the date of the casualty and the expiration of the Term, which 
sum shall thereafter be Lessor's exclusive property and shall be paid to 
Lessor by the Trustee as the rent becomes due, and (b) if the Trustee's rent 
set-aside takes place in accordance with clause (a) above, to be paid all the 
Proceeds, if any, in excess of the amount set aside by the Trustee to pay the 
accruing rent.

         If the Proceeds of any insurance on the Improvements equal more than 
20 percent of the replacement cost of the Improvements, the casualty occurs 
within three years of the expiration of the Term, and Lessee does NOT, within 
15 days of the casualty, either

    (a) serve upon Lessor, Lessee's written commitment to promptly
    commence reconstruction of the Improvements and to thereafter
    prosecute diligently such reconstruction to completion, or (b) serve a
    written irrevocable notice on Lessor of the exercise of the option to
    purchase pursuant to Section 24 below,

then Lessor shall have the right (but not the obligation) to promptly 
terminate this Lease and retain all the Proceeds.  In the event Lessor 
terminates the Lease under these last-mentioned circumstances, Lessee's 
option to purchase pursuant to Section 24 below shall immediately be 
terminated.  Any dispute regarding the distribution of Proceeds shall be 
arbitrated in accordance with Section 34 below.

         I.A.7.2     Lessee, at its expense, shall maintain at all times 
during the Term of this Lease comprehensive general liability insurance in 
respect of the Premises and the conduct or operation of its business, with 
Lessor as additional insured, with $5.0 million minimum combined single-limit 
coverage, or its equivalent.  Such policies shall contain such endorsements 
as are reasonably requested by Lessor and the exclusions shall be limited to 
those approved by Lessor, such approval not to be unreasonably withheld.  
Lessee shall deliver to Lessor and any additional named insured such fully 
paid-for policies or certificates of insurance, in a form satisfactory to 
Lessor, issued by the insurance company or its authorized agent, at least two 
days before the Commencement Date.  Lessee shall procure and pay for renewals 
of such insurance from time to time before the expiration, and Lessee shall 
deliver to Lessor and any additional named insured such renewal policy or 
certificate at least 30 days before the expiration of any existing policy.  
All insurance policies (or the certificates thereof) shall contain provisions 
whereby (1) losses shall be payable despite the negligence of any person 
having an insurable interest in the Improvements; (2) the proceeds will be 
paid in accordance with the terms of this Lease; and (3) the policies cannot 
be canceled or modified unless Lessor and any additional named insured are 

                                     -9-

<PAGE>

given at least 30 days' prior written notice of such cancellation or 
modification.

         I.A.7.3     All insurance policies shall be written as primary 
policies and shall not be contributing with or be in excess of the coverage 
that either Lessor or Lessee may carry.  All such insurance policies shall be 
issued in the name of Lessee, with Lessor being included in the insurance 
policy definition of who is an additional insured, and shall be primary to 
any insurance available to Lessor.

         I.A.7.4    All policies of insurance shall be issued by good, 
responsible companies having a Best's rating of at least B + VIII (or 
substantially equivalent rating if a Best's rating is no longer published).  
The policies must be acceptable to Lessor (with acceptance not to be 
unreasonably withheld), and must be issued by companies qualified to do 
business in the state of Oregon. Executed copies of such policies of 
insurance (or the certificates thereof) shall be delivered to Lessor within 
30 days after the Building is completed and thereafter no less than 30 days 
before the expiration of the term of each such policy.  As often as any such 
policy shall expire or terminate, renewal or additional policies shall be 
procured and maintained by Lessee in like manner and to like extent.  All 
policies of insurance (or the certificates evidencing the policies) must 
contain a provision that the company writing the policy will give Lessor 30 
days' written notice in advance of any cancellation, substantial change of 
coverage, or the effective date of any reduction in amount of insurance.

         I.A.7.5     The obligations of Lessee to carry the insurance 
provided for may be brought within the coverage of a so-called blanket policy 
or policies of insurance; provided, however:

         I.A.7.5.1 That the coverage afforded will not be reduced or 
    diminished by reason of the use of such blanket policy of insurance;

         I.A.7.5.2 That the requirements set forth are otherwise satisfied; and

         I.A.7.5.3 That, as to all insurance, Lessor shall be named as an 
    additional insured.

         I.A.7.6     Lessor may from time to time, but not more frequently 
than once every three years, require that the amount of general liability 
insurance to be maintained by Lessee under Section 7.2 be increased so that 
the amount adequately protects Lessor's interest based on amounts of coverage 
required of comparable tenants in comparable buildings.

                                    -10-

<PAGE>
I.A.8. LESSOR'S RIGHT TO PERFORM LESSEE'S COVENANTS

         I.A.8.1     If Lessee at any time fails to pay any Tax in accordance 
with the provisions of this Lease or fails to make any other payment or 
perform any other act on its part to be made or performed, then Lessor, after 
10 days' notice to Lessee (or without notice in case of an emergency) and 
without waiving or releasing Lessee from any obligation of Lessee contained 
in this Lease or from any default by Lessee and without waiving Lessor's 
right to take such action as may be permissible under this Lease as a result 
of such default, may (but shall be under no obligation to):

         I.A.8.1.1 Pay any Tax payable by Lessee pursuant to the provisions of 
     this Lease; or

         I.A.8.1.2 Make any other payment or perform any other act on Lessee's 
     part to be made or performed as provided in this Lease, and may enter the 
     Premises and the Improvements for any such purpose, and take all such 
     action, as may be necessary.

         I.A.8.2     All sums so paid by Lessor and all costs and expenses 
incurred by Lessor, including reasonable attorney fees, in connection with 
the performance of any such act, together with, if Lessee does not pay the 
same within the 10-day period after notice from Lessor, interest from the 
date of such payment or incurrence by Lessor of such cost and expense until 
paid, at the lesser of 18 percent per annum or the maximum interest rate 
permitted by law, shall constitute Additional Rent payable by Lessee under 
this Lease and shall be paid by Lessee to Lessor on demand.

I.A.9. COMPLIANCE WITH LEGAL REQUIREMENTS

         I.A.9.1     Throughout the Term, Lessee shall promptly comply with 
all Legal Requirements that may apply to the Premises or to the use or manner 
of uses of the Premises or the Improvements or the owners or users of the 
Improvements, whether or not the Legal Requirements affect the interior or 
exterior of the Improvements, necessitate structural changes or improvements, 
or interfere with the use and enjoyment of the Premises or the Improvements, 
and whether or not compliance with the Legal Requirements is required by 
reason of any condition, event, or circumstance existing before or after the 
Term commences.  Lessee shall pay all costs of compliance with Legal 
Requirements, but Lessee shall have the right to cease occupation or use of 
all or any part of the Premises or the Improvements in lieu of compliance 
with any Legal Requirement that may require expenditures on behalf of Lessee 
for continued use or occupation of the Premises.

         I.A.9.2     Lessee shall have the right, after prior written notice 
to Lessor, to contest by appropriate legal proceedings, diligently conducted 
in good faith, in the name of Lessee or Lessor or both, without cost or 
expense to Lessor, the validity or application of any Legal Requirement 
subject to the following:

                                    -11-

<PAGE>

         I.A.9.2.1 If, by the terms of any Legal Requirement, compliance may 
    legally be delayed pending the prosecution of any such proceeding without 
    the incurrence of any lien, charge, or liability of any kind against all 
    or any part of the Premises or the Improvements and without subjecting 
    Lessee or Lessor to any liability, civil or criminal, for failure to 
    comply, Lessee may delay compliance until the final determination of such 
    proceeding; or

         I.A.9.2.2 If any lien, charge, or civil liability would be incurred 
    by reason of any such delay, Lessee nevertheless may contest the matter 
    and delay compliance, provided that such delay would not subject Lessor 
    to criminal liability or fine, and Lessee

               I.A.9.2.2.1 Furnishes to Lessor security, reasonably satisfactory
         to Lessor, against any loss or injury by reason of such contest or 
         delay, and

               I.A.9.2.2.2 Prosecutes the contest with due diligence.

         I.A.9.3     Lessor shall execute and deliver any appropriate papers 
that may be necessary or proper to permit Lessee to contest the validity or 
application of any Legal Requirement, provided all the requirements of this 
section have been satisfied by Lessee and Lessor will incur no cost.

I.A.10. REPAIRS AND MAINTENANCE

         I.A.10.1 Subject to Lessee's right to make alterations in accordance 
with Section 12 below, Lessee shall, at its sole expense, maintain, repair, 
and replace the Premises and the Improvements as necessary to keep them in 
good order, condition, and repair throughout the entire Term.  Lessee's 
obligations shall extend to both structural and nonstructural items and to 
all maintenance, repair, and replacement work, including but not limited to 
unforeseen and extraordinary items.  Lessee shall be responsible for all 
aspects of maintaining the parking area, including but not limited to 
security patrols, landscaping, cleaning, snow and ice removal, and lighting.

         I.A.10.2 Lessor shall not be required to furnish to Lessee any 
facilities or services of any kind whatsoever during the Term, such as, but 
not limited to, water, steam heat, gas, hot water, electricity, light, and 
power.  Lessor shall in no event be required to make any alterations, 
rebuildings, replacements, changes, additions, improvements, maintenance, or 
repairs during the Term.

         I.A.10.3 Lessor assigns to Lessee, without recourse, such rights, if 
any, as Lessor may have against any parties causing damage to the 
Improvements on the Premises to sue for and recover amounts expended by 
Lessee as a result of such damage.

                                    -12-

<PAGE>

I.A.11. UTILITIES

         Throughout the Term, Lessee shall furnish to the Premises water, 
electricity, gas, garbage, and sewer service suitable for the intended use of 
the Premises.  Lessee shall pay for all electricity, potable water, gas, 
sewer, garbage collection, and other services and utilities consumed in the 
Premises.

I.A.12. ALTERATIONS, ADDITIONS, AND NEW IMPROVEMENTS

         The term Modifications means any demolition, improvement, 
alteration, change, or addition, of, in, or to all or any part of the 
Premises or the Improvements.  The term Minor Modifications shall mean any 
Modifications costing less than $500,000 and the term Major Modifications 
shall mean any and all Modifications other than Minor Modifications.  
Multiple Modifications occurring within a period of 365 days shall be deemed 
a single Modification for the purposes of applying the provisions contained 
in this section.  At any time during the Term and at Lessee's own cost and 
expense, Lessee may make or permit to be made any Minor Modifications, 
provided there is no existing and unremedied default on the part of Lessee, 
of which Lessee has received notice of default, under any of the terms, 
covenants, and conditions of this Lease.  Lessee may make any Major 
Modification provided that (a) the same does not diminish the value of the 
Premises and the Improvements, taken as a whole, (b) such modification shall 
be of a design consistent with, and shall incorporate building materials 
consistent with, high quality commercial development in Portland, Oregon, 
area, and (c) Lessee provides Lessor with evidence reasonably satisfactory to 
Lessor that the requirements set forth in (b) and (c) of this Section 12 will 
be met before commencing any Major Modification.  All salvage material in 
connection with any Modification that Lessee is permitted to make shall 
belong to Lessee.

I.A.13. TITLE TO IMPROVEMENTS

         Title to Improvements shall be and remain in Lessee until the 
expiration of the Term, unless this Lease is terminated sooner as provided. 
Upon such expiration or sooner termination (unless Lessee exercises the 
option to purchase pursuant to Section 24 below and timely closes on that 
transaction), title to the Improvements shall automatically pass to, vest in, 
and belong to Lessor without further action on the part of either party and 
without cost or charge to Lessor.  During the Term, Lessee shall be entitled 
for all taxation purposes to claim cost recovery deductions and the like on 
the Improvements.

I.A.14. NO WASTE

         Lessee shall not do or suffer any waste or damage, disfigurement, or 
injury to the Premises or the Improvements.  

                                    -13-

<PAGE>

I.A.15. INSPECTION AND ACCESS

         I.A.15.1     Lessee shall permit Lessor and its authorized 
representatives to enter the Premises and the Improvements at all reasonable 
times during usual business hours for the purposes of inspecting the same and 
making any repairs or performing any work that Lessor is entitled to make or 
perform pursuant to Section 8 above.  Nothing in this Lease shall imply any 
duty or obligation on the part of Lessor to do any such work or to make any 
Improvements of any kind whatsoever to the Premises (including, but not 
limited to, repairs and other restoration work made necessary due to any 
fire, other casualty, or partial condemnation, irrespective of the 
sufficiency or availability of any fire or other insurance proceeds, or any 
award in condemnation, which may be payable). The performance of any work by 
Lessor shall not constitute a waiver of Lessee's default in failing to 
perform the same.

         I.A.15.2    During the progress of any work on the Premises or the 
Improvements performed by Lessor pursuant to the provisions in this section, 
Lessor may keep and store on the Premises all necessary materials, tools, 
supplies, and equipment.  Lessor shall not be liable for inconvenience, 
annoyance, disturbance, loss of business, or other damage of Lessee or any 
user by reason of making such repairs or performing any such work, or on 
account of bringing materials, tools, supplies, and equipment onto the 
Premises or into the Improvements during the course of the work and the 
obligations of Lessee under this Lease shall not be affected by the work.

         I.A.15.3    Lessor shall have the right to enter on the Premises and 
the Improvements at all reasonable times during usual business hours for the 
purpose of showing the same to prospective purchasers of Lessor's interest 
and, at any time within two years before the Term expires, for the purpose of 
showing the same to prospective Lessees.

         I.A.15.4    Except in the event of emergency repairs, all entry to 
the Premises by Lessor shall require at least 24 hours' advance notice to 
Lessee. In the event of any emergency repairs, Lessor shall use reasonable 
efforts to give Lessee the earliest possible notice of the same.

                                    -14-

<PAGE>

I.A.16. INDEMNITY

         I.A.16.1    Lessee is and shall be in exclusive control of the 
Premises and of the Improvements, and Lessor shall not in any event 
whatsoever (except to the extent of its own negligence or willful tortious 
acts) be liable for any injury or damage to any property or to any person 
happening on, in, or about the Premises or the Improvements or any injury or 
damage to the Premises or the Improvements or to any property, whether 
belonging to Lessee or to any other person, caused by any fire, breakage, 
leakage, defect, or bad condition in any part or portion of the Premises or 
of the Improvements, or from steam, gas, electricity, water, rain, or snow 
that may leak into, issue, or flow from any part of the Premises or the 
Improvements from the drains, pipes, or plumbing work of the same, or from 
the street, subsurface, or any place or quarter, or due to the use, misuse, 
or abuse of all or any of the Improvements or from any kind of injury that 
may arise from any other cause whatsoever on the Premises or in or on the 
Improvements, including defects in construction of the Improvements, latent 
or otherwise.

         I.A.16.2    Lessee shall indemnify and hold Lessor harmless against 
and from all liabilities, obligations, damages, penalties, claims, costs, 
charges, and expenses, including reasonable architect and attorney fees, that 
may be imposed on or incurred by or asserted against Lessor by reason of any 
of the following occurrences during the Term:

         I.A.16.1 Any work or thing done in, on, or about all or any part of 
    the Premises or the Improvements by Lessee or any party other than Lessor;

         I.A.16.2.2 Any use, nonuse, possession, occupation, condition, 
    operation, maintenance, or management of all or any part of the Premises 
    or the Improvements or any adjacent alley, sidewalk, curb, vault, 
    passageway, or space;

         I.A.16.2.3 Any negligence on the part of Lessee or any of its agents,
    contractors, servants, employees, sublessees, licensees, or invitees;

         I.A.16.2.4 Any accident, injury, or damage to any person or property 
    occurring in, on, or about the Premises or the Improvements; or

         I.A.16.2.5 Any failure on the part of Lessee to perform or comply 
    with any of the covenants, agreements, terms, provisions, conditions, or 
    limitations contained in this Lease on its part to be performed or complied 
    with.

         I.A.16.3    In case any action or proceeding is brought against 
Lessor by reason of any such claim, Lessee upon written notice from Lessor 
shall, at Lessee's expense, resist or defend such action or proceeding by 
counsel approved by Lessor in writing, which approval shall not be 
unreasonably withheld. Lessee's obligations under this Section 16 in no event 
shall be greater than the scope of the standard industry form of contractual 

                                    -15-

<PAGE>

liability insurance coverage that Lessee is required to carry under this 
Lease.


I.A.17. CONDEMNATION

         I.A.17.1    If all the Premises and the Improvements are taken or 
condemned, by right of eminent domain or by purchase under threat of 
condemnation, or if such portion of the Premises or the Improvements shall be 
so taken or condemned that the portion remaining is not sufficient and 
suitable (in Lessee's reasonable judgment) to permit the restoration of the 
Improvements following such taking or condemnation, then this Lease and the 
Term, at Lessee's option, shall cease and terminate as of the date on which 
the condemning authority takes possession (any taking or condemnation of the 
land described in this Section being called a "Total Taking"), and the Rent 
shall be apportioned and paid to the date of such total taking.

         I.A.17.2    If this Lease expires and terminates as a result of a 
Total Taking, the rights and interests of the parties shall be determined as 
follows:

         I.A.17.2.1 The total award or awards for the Total Taking shall be 
    apportioned and paid in the following order of priority:

              I.A.17.2.1.1 Lessor shall have the right to and shall be 
         entitled to receive directly from the condemning authority, in its 
         entirety and not subject to any trust, that portion of the award, 
         which is defined and referred to as the "Land Award," and Lessee 
         shall not be entitled to receive any part of the Land Award.  The 
         term Land Award shall mean that portion of the award in condemnation 
         that represents the fair market value of the Premises (or as used in 
         Section 17.3.1 below that portion of the Premises taken), considered 
         as vacant, unimproved but encumbered by this Lease, the consequential 
         damage to any part of the Premises that may not be taken, the 
         diminution of the assemblage or plottage value of the Premises not so 
         taken and all other elements and factors of damage to the Premises; but
         in all events such damage or valuation shall take into consideration 
         that the Premises are encumbered by this Lease;

              I.A.17.2.1.2 Lessee shall have the right to and shall be 
         entitled to receive directly from the condemning authority that 
         portion of the award referred to as the "Leasehold Award."  The term 
         Leasehold Award shall mean that portion of the award in condemnation 
         proceedings that represents the fair market value of Lessee's interest 
         in the Improvements and the fair market value of Lessee's leasehold 
         estate as so taken and, provided this Lease is not terminated as a 
         result of such condemnation or taking, the consequential damages to 
         any part of the Improvements.

                                    -16-
<PAGE>
              I.A.17.2.1.3   It is the intent of the parties that the Land 
         Award and Leasehold Award will equal the total amount of the awards 
         respecting a total taking.

         I.A.17.2.2  If the court or such other lawful authority as may be 
    authorized to fix and determine the awards fails to fix and determine, 
    separately and apart, the Land Award and the Leasehold Award, such awards 
    shall be determined and fixed by written agreement mutually entered into by
    Lessor and Lessee, and if an agreement is not reached within 20 days after 
    the judgment is entered in the condemnation proceedings, the controversy 
    shall be resolved in the same court as the condemnation action is brought, 
    in such proceedings as may be appropriate for adjudicating the controversy;
    and

         I.A.17.2.3     If the condemning authority refuses or otherwise fails 
    to deduct from the Leasehold Award any rent or other money due from Lessee 
    to Lessor and to pay same directly to Lessor, then Lessee shall execute and
    deliver to Lessor a written and acknowledged assignment of such amount 
    payable out of such Leasehold Award, and if, nevertheless, the full amount 
    of the Leasehold Award is paid to Lessee, Lessee shall hold in trust for 
    Lessor and pay over to Lessor forthwith on the receipt of the award the 
    amount or amounts so due.

         I.A.17.3       If, during the Term, there is a taking or condemnation
of the Premises or the Improvements that is not a total taking and not a 
temporary taking of the kind described below, or in the event of the change 
in the grade of the streets or avenues on which the Premises abuts, this 
Lease and the Term shall not cease or terminate but shall remain in full 
force and effect with respect to the portion of the Premises and of the 
Improvements not taken or condemned (any taking or condemnation or change of 
grade of the kind described in this Section being referred to as a "Partial 
Taking"), and in such event:

         I.A.17.3.1     The total award or awards for the taking shall be 
    apportioned and paid in the following order of priority:

              I.A.17.3.1.1   Lessor shall have the right to and shall be 
         entitled to receive directly from the condemning authority, in its 
         entirety and not subject to any trust, that portion of the award that
         equals the Land Award, and Lessee shall not be entitled to receive any
         part of that award; and

              I.A.17.3.1.2   Lessee shall have the right to and shall be 
         entitled to receive directly from the condemning authority the balance
         of the award, to be applied by Lessee as it shall deem appropriate.

         I.A.17.4       In the event of a taking of all or a part of the 
Premises or the Improvements for temporary use, this Lease shall continue 
without change, as between Lessor 


                                      -17-

<PAGE>

and Lessee, and Lessee shall be entitled to the entire award made for such 
use; provided that Lessee shall be entitled to file and prosecute any claim 
against the condemnor for damages and to recover the same, for any negligent 
use, waste, or injury to the Premises or the Improvements throughout the 
balance of the then-current Term.  The amount of damages so recovered shall 
belong to Lessee.

         I.A.17.5       In the event of any dispute between Lessee and Lessor 
with respect to any issue of fact arising out of a taking mentioned in this 
Section, such dispute shall be resolved by the same court in which the 
condemnation action is brought, in such proceedings as may be appropriate for 
the adjudicating the dispute.

I.A.18   ASSIGNMENT AND SUBLETTING

         I.A.18.1       Until the Project is substantially completed, Lessee 
shall not sell, assign, or in any other manner transfer any interest in this 
Lease or the estate of Lessee under this Lease without the prior written 
consent of Lessor.  After the Project is completed, Lessee shall not sell, 
assign, or in any other manner transfer any interest in this Lease or the 
estate of Lessee under this Lease without the prior written consent of 
Lessor, which consent shall not be unreasonably withheld.  Lessor shall have 
the right to require Lessee to remain liable and responsible for all of 
Lessee's duties and obligations under this Lease as a precondition to 
approving any requested assignment.  Notwithstanding anything in this Section 
18 to the contrary, Lessee's rights and leasehold interests in this Lease may 
be sold, assigned, or otherwise transferred in any transaction involving the 
merger of Lessee into, or the acquisition of all or substantially all of 
Lessee's assets by, another entity, without the necessity of obtaining 
Lessor's consent, provided that simultaneously with the merger or acquisition 
the other entity agrees to attorn to Lessor regarding the timely performance 
of all of Lessee's duties and obligations under this Lease.

         I.A.18.2      Lessee shall have the right to sublet portions of the 
Premises and/or of the Improvements at any time and from time to time, but 
only for a term or terms that shall expire before the expiration of the Term, 
and provided that each such sublease shall be in writing and shall be subject 
and subordinate to the rights of Lessor under this Lease.


                                      -18-

<PAGE>

I.A.19   LEASEHOLD MORTGAGES

         I.A.19.1       Lessee shall have the right, in addition to any other 
rights granted and without any requirement to obtain Lessor's consent, to 
mortgage or grant a security interest in Lessee's interest in this Lease and 
the Premises and the Improvements and any subleases, under one or more 
leasehold mortgages to one or more Lending Institutions, as defined, and/or 
under one or more purchase money leasehold mortgages, and to assign Lessee's 
interest in this Lease and any subleases as collateral security for such 
leasehold mortgages, on the condition that all rights acquired under such 
leasehold mortgages shall be subject to each and all of the covenants, 
conditions, and restrictions set forth in this Lease and to all rights and 
interests of Lessor, none of which covenants, conditions, restrictions, 
rights, or interests is or shall be waived by Lessor by reason of the right 
given to mortgage or grant a security interest in Lessee's interest in this 
Lease and the Premises and the Improvements, except as expressly provided 
otherwise.

         I.A.19.2       Any mortgage made pursuant to this section is 
referred to as a "Permitted Leasehold Mortgage," and the holder of or secured 
party under a Permitted Leasehold Mortgage is referred to as a "Permitted 
Leasehold Mortgagee."  The Permitted Leasehold Mortgage that is prior in lien 
or interest among those in effect is referred to as the "First Leasehold 
Mortgage," and the holder of or secured party under the First Leasehold 
Mortgage is referred to as the "First Leasehold Mortgagee."  For the purposes 
of any rights created under this section, any so-called wraparound lender 
shall be considered a First Leasehold Mortgagee.  If a First Leasehold 
Mortgage and a Permitted Leasehold Mortgage that is second in priority in 
lien or interest among those in effect are both held by the same Permitted 
Leasehold Mortgagee, the two Permitted Leasehold Mortgages are collectively 
referred to as the "First Leasehold Mortgage."  A "Permitted Leasehold 
Mortgage" includes, without limitation, mortgages and trust deeds as well as 
financing statements, security agreements, and other documentation that the 
lender may require.  The words Lending Institution, as used in this Lease, 
mean any commercial, national, or savings bank, savings and loan association, 
trust company, pension trust, foundation, or insurance company, and any other 
entity, person, corporation, partnership, or otherwise making a loan on the 
security of Lessee's interest in this Lease or all or any part of the 
Improvements.

         I.A.19.3       If a Permitted Leasehold Mortgagee sends to Lessor a 
true copy of its leasehold mortgage, together with written notice specifying 
the name, contact person, address, telephone number, and fax number of the 
Permitted Leasehold Mortgagee, then as long as such Permitted Leasehold 
Mortgage remains unsatisfied of record or until written notice of 
satisfaction is given by the holder to Lessor, the following provisions shall 
apply (in respect of such Permitted Leasehold Mortgage):

         I.A.19.3.1     Except as expressly provided otherwise below, there 
    shall be no cancellation, termination, surrender, acceptance of surrender, 
    amendment, or modification of this Lease without in each case the prior 
    consent in writing of the 


                                      -19-

<PAGE>

    Permitted Leasehold Mortgagee.  Nor shall any merger result from the 
    acquisition by, or devolution upon, any one entity of the fee and the 
    leasehold estates in the Premises.

         I.A.19.3.2     Lessor shall, upon serving Lessee with any notice, 
    whether of default or any other matter, simultaneously serve a copy of such
    notice on the Permitted Leasehold Mortgagee, and no such notice to Lessee 
    shall be deemed given unless a copy is so served on the Permitted Leasehold
    Mortgagee in the manner provided in this Lease for giving notices.

         I.A.19.3.3     In the event of any default by Lessee under this Lease,
    each Permitted Leasehold Mortgagee has the same period as Lessee has, plus 
    20 days, after service of notice on it of such default, to remedy or cause 
    to be remedied or commence to remedy and complete the remedy of the default
    complained of for such default, and Lessor shall accept such performance by
    or at the instigation of such Permitted Leasehold Mortgagee as if the same
    had been done by Lessee.  Each notice of default given by Lessor will state
    the amounts of whatever rent are then claimed to be in default.

         I.A.19.3.4     If Lessor elects to terminate this Lease by reason of 
    any default of Lessee, the Permitted Leasehold Mortgagee, in addition to 
    the rights granted under the preceding Section, shall also have the right 
    to postpone and extend the specified date for the termination of this Lease
    as fixed by Lessor in its notice of termination, for a period of six months,
    provided that the Permitted Leasehold Mortgagee shall promptly cure or 
    promptly cause to be cured any then-existing defaults in payment of rent 
    and meanwhile pay the rent, and provided further that the Permitted 
    Leasehold Mortgagee shall forthwith take steps to acquire or sell Lessee's 
    interest in this Lease by foreclosure of the Permitted Leasehold Mortgage 
    or otherwise and shall prosecute the same to completion with all due 
    diligence.  If, at the end of the six-month period, the Permitted Leasehold
    Mortgagee is actively engaged in steps to acquire or sell Lessee's
    interest, the time of the Permitted Leasehold Mortgagee to comply with the
    provisions of this Section 19.3.4 shall be extended for such period as is
    reasonably necessary to complete such steps with reasonable diligence and
    continuity.

         I.A.19.3.5     Lessor agrees that the name of the Permitted Leasehold 
    Mortgagee may be added, at Lessee's request, to the "Loss Payable 
    Endorsement" of any and all insurance policies required to be carried by 
    Lessee.

         I.A.19.3.6     Lessor agrees that in the event of termination of this 
    Lease by reason of any default by Lessee, Lessor will enter into a new 
    lease of the Premises with the Permitted Leasehold Mortgagee or its 
    nominee, for the remainder of the Term, effective on the date of such 
    termination, at the rent and on the terms, provisions, covenants, and 
    agreements contained in this Lease and subject only to the same conditions 
    of title as this Lease is subject to on the date this Lease is executed 
    (and any liens or encumbrances created, permitted, or suffered by Lessee 
    prior to termination), 


                                      -20-

<PAGE>

    and to the rights, if any, of any parties then in possession of any part of
    the Premises, provided:

              I.A.19.3.6.1   The Permitted Leasehold Mortgagee or its nominee 
         shall make written request on Lessor for such new lease within 15 days
         after the date of termination indicated in the notice of termination 
         given to Permitted Leasehold Mortgagee and such written request shall 
         be accompanied by payment to Lessor of rent then due to Lessor under 
         this Lease.

              I.A.19.3.6.2   The Permitted Leasehold Mortgagee or its nominee 
         shall pay to Lessor, at the time the new lease is executed and 
         delivered, any and all rent that would be due at the time of the 
         execution and delivery of the new lease pursuant to this Lease but for
         such termination, and in addition any expenses, including reasonable 
         attorney fees, to which Lessor shall have been subjected by reason of 
         such default.

              I.A.19.3.6.3   The Permitted Leasehold Mortgagee or its nominee 
         shall perform and observe all covenants contained in this Lease on 
         Lessee's part to be performed and further shall remedy any other 
         conditions that Lessee under the terminated Lease was obligated to 
         perform; and on execution and delivery of such new lease, any 
         subleases that may have been assigned and transferred previously by 
         Lessee to Lessor, as security under this Lease, shall then be held by 
         Lessor as security for the performance of all the obligations of 
         Lessee under the new lease.

              I.A.19.3.6.4   Lessor shall not warrant possession of the 
         Premises or the Improvements to Lessee under the new lease.

              I.A.19.3.6.5   Such new lease shall be expressly made subject to 
         the rights, if any, of Lessee under the terminated Lease.

              I.A.19.3.6.6   Lessee under such new lease shall have the same 
         right, title, and interest in and to the Improvements on the Premises 
         as Lessee had under the terminated Lease.

         I.A.19.3.7     Nothing contained in this Lease requires the Permitted
    Leasehold Mortgagee or its nominee to cure any default that occurs as a 
    result of the status of Lessee, such as Lessee's bankruptcy or insolvency, 
    or to discharge any lien, charge, or encumbrance against Lessee's interest 
    in this Lease junior in priority to the line of the Permitted Leasehold
    Mortgage.

         I.A.19.3.8     Lessor agrees to amend this Lease from time to time to 
    the extent reasonably requested by a Lending Institution proposing to make 
    Lessee a loan 

                                      -21-

<PAGE>

    secured by a Permitted Leasehold Mortgage, provided that such proposed 
    amendments do not materially or adversely affect the right of Lessor or 
    Lessor's interest in the Premises.  All reasonable expenses incurred by 
    Lessor in connection with any such amendment shall be paid by Lessee.

         I.A.19.3.9     The First Leasehold Mortgagee shall be given notice of 
    any arbitration or other proceeding or dispute by or between the parties 
    and shall have the right to intervene and be made a party to any such 
    arbitration or other proceeding.  In any event, each Permitted Leasehold
    Mortgagee shall receive notice of, and a copy of, any award or decision
    made in the arbitration or other proceeding.

         I.A.19.3.10    Any award or payment in condemnation or eminent domain 
    that is not the property of Lessor and which is made in respect of Lessee 
    and the Premises or Improvements shall be paid to the First Leasehold 
    Mortgagee for the benefit of Lessee and applied in the manner agreed by 
    Lessee and the First Leasehold Mortgage.

         I.A.19.3.11    No fire or casualty loss claims by Lessee shall be 
    settled and no agreement will be made in respect of any award or payment in
    condemnation or eminent domain owed to Lessee without in each case the 
    prior written consent of the First Leasehold Mortgagee.

         I.A.19.3.12    Lessor, within 15 days after a request in writing by 
    Lessee or any Permitted Leasehold Mortgagee (provided there has been no 
    similar request within the previous 60 days), shall furnish a written 
    statement, duly acknowledged, that this Lease is in full force and effect 
    and unamended, or if there are any amendments, such statement will specify 
    the amendments, and that there are no defaults by Lessee that are known to 
    Lessor, or if there are any known defaults, such statement shall specify 
    the defaults Lessor claims exist.

         I.A.19.3.13.   Lessor, on request, shall execute, acknowledge, and 
    deliver to each Permitted Leasehold Mortgagee an agreement prepared at the 
    sole cost and expense of Lessee, in form satisfactory to the Permitted 
    Leasehold Mortgagee and Lessor, among Lessor, Lessee, and the Permitted 
    Leasehold Mortgagee, agreeing to all the provisions of this section.

         I.A.19.3.14    Lessor shall at no time be required to subordinate its 
    fee simple interest in the Premises or its rights or interests in this 
    Lease to the lien of any leasehold mortgage, nor to mortgage its fee simple
    interest in the Premises as collateral or additional security for any 
    leasehold mortgage.  Lessor shall attorn to any Permitted Leasehold 
    Mortgagee or any other person who becomes Lessee by, through, or under a 
    Permitted Leasehold Mortgage.

                                      -22-

<PAGE>

         I.A.19.3.15    If Lessee is declared bankrupt or insolvent and this 
    Lease is thereafter lawfully canceled or rejected, Lessor shall immediately
    execute a new lease under the same terms and conditions as this Lease to 
    the Permitted Leasehold Mortgagee or its nominee, provided that all 
    defaults under this Lease except the bankruptcy or insolvency of Lessee be 
    cured by the Permitted Leasehold Mortgagee or its nominee and the Permitted
    Leasehold Mortgagee or its nominee makes written request for such new lease
    within 15 days after the date the Lease is lawfully canceled or rejected.

I.A.20.  DEFAULT; REMEDIES

         I.A.20.1       Time is of the essence of this Lease.

         I.A.20.2       A breach by Lessee of the 30-year ground lease for 
the 10.5 acre parcel abutting the Premises on the north shall constitute a 
breach of this Lease and shall entitle Lessor to all remedies available under 
this Lease.  The occurrence of any one or more of the following events of 
default shall also constitute a breach of this Lease by Lessee:

         I.A.20.2.1     If Lessee defaults in the payment of Rent due and 
    payable by Lessee, and such default continues for 10 days after Lessor 
    has given Lessee a written notice specifying the same; or

         I.A.20.2.2    If Lessee, whether by action or inaction, is in default 
    of any of its obligations under this Lease (other than a default in the 
    payment of Rent by Lessee) and such default continues and is not remedied 
    within 25 days after Lessor has given Lessee a written notice specifying 
    the same, or, in the case of a default that can be cured but not within a 
    period of 25 days, if Lessee has not (1) commenced curing such default 
    within such 25-day period; (2) notified Lessor of Lessee's intention to 
    cure the default; or (3) continuously and diligently completed the cure of 
    the default.

         I.A.20.3       During any 12-month period, Lessee shall be entitled 
to a maximum of two notices pursuant to Section 20.2.

         I.A.20.4       Upon the occurrence of an event of default, Lessor 
may exercise any one or more of the remedies set forth in this section or any 
other remedy available in equity or under law or contained in this Lease:

         I.A.20.4.1     Lessor or Lessor's agents and employees may immediately
    or at any time thereafter reenter the Premises either by summary eviction 
    proceedings or by any suitable action or proceeding at law, or by force or 
    otherwise, without being liable to indictment, prosecution, or damages, and
    may repossess the same, and may remove any person from the Premises, to the
    end that Lessor may have, hold, and enjoy the Premises.

                                      -23-

<PAGE>

         I.A.20.4.2     Lessor may relet the whole or any part of the Premises 
    from time to time, either in the name of Lessor or otherwise, to such 
    Lessees, for such terms ending before, on, or after the expiration date of 
    the Lease Term, at such rentals and on such other conditions (including 
    concessions and free rent) as Lessor may determine to be appropriate.  To 
    the extent allowed under Oregon law, Lessor shall have no obligation to 
    relet all or any part of the Premises and shall not be liable for refusal 
    to relet the Premises, or, in the event of such reletting, for refusal or 
    failure to collect any rent due on such reletting; and any action of Lessor
    shall not operate to relieve Lessee of any liability under this Lease or 
    otherwise affect such liability.  Lessor at its option may make such 
    physical changes to the Premises as Lessor, in its sole discretion, 
    considers advisable and necessary in connection with any such reletting or 
    proposed reletting, without relieving Lessee of any liability under this 
    Lease or otherwise affecting Lessee's liability.

         I.A.20.4.3     Whether or not Lessor retakes possession or relets the 
    Premises, Lessor has the right to recover its damages, including without 
    limitation all lost rentals, all legal expenses, all costs incurred by 
    Lessor in restoring the Premises or otherwise preparing the Premises for 
    reletting, and all costs incurred by Lessor in reletting the Premises.

         I.A.20.4.4     To the extent permitted under Oregon law, Lessor may 
    sue periodically for damages as they accrue without barring a later action 
    for further damages.  

         I.A.20.4.5     Lessor may in one action recover accrued damages plus 
    damages attributable to the remaining Term equal to the difference between 
    the Rent reserved in this Lease for the balance of the Term after the time 
    of award, and the fair rental value of the Premises for the same period, 
    discounted at the time of award at a reasonable rate not to exceed 8 
    percent per annum.  If Lessor has relet the Premises for the period that 
    otherwise would have constituted all or part of the unexpired portion of 
    the Term, the amount of rent reserved on such reletting shall be deemed, 
    prima facie, to be the fair and reasonable rental value for the part or the
    whole of the Premises so relet during the term of the reletting.

         I.A.20.5       No failure by Lessor to insist on the strict 
performance of any agreement, term, covenant, or condition of this Lease or 
to exercise any right or remedy consequent upon a breach, and no acceptance 
of full or partial Rent during the continuance of any such breach, 
constitutes a waiver of any such breach or of such agreement, term, covenant, 
or condition.  No agreement, term, covenant, or condition to be performed or 
complied with by Lessee, and no breach by Lessee, shall be waived, altered, 
or modified except by a written instrument executed by Lessor.  No waiver of 
any breach shall affect or alter this Lease, but each and every agreement, 
term, covenant, and condition of this Lease 

                                      -24-

<PAGE>

shall continue in full force and effect with respect to any other 
then-existing or subsequent breach.

         I.A.20.6       Each right and remedy provided for in this Lease 
shall be cumulative and shall be in addition to every other right or remedy 
provided for in this Lease or now or hereafter existing at law or in equity 
or by statute or otherwise, and the exercise or beginning of the exercise by 
Lessor or Lessee of any one or more of the rights or remedies provided for in 
this Lease or now or hereafter existing at law or in equity or by statute or 
otherwise shall not preclude the simultaneous or later exercise by the party 
in question of any or all other rights or remedies provided for in this Lease 
or now or hereafter existing at law or in equity or by statute or otherwise.

I.A.21.  NO ABATEMENT OF RENT

         I.A.21.1       Except as otherwise specifically provided in this 
    Lease, no abatement, refund, diminution, or reduction of rent or other 
    compensation shall be claimed by or allowed to Lessee, or any person 
    claiming under it, under any circumstances, whether for inconvenience, 
    discomfort, interruption of business, or otherwise, arising from work on 
    Improvements, by virtue or because of Legal Requirements, or the occurrence
    of any matters referred to in Sections 7.1 (casualty damage) and 17 
    (condemnation) of this Lease, or for any other reason, cause, or 
    occurrence.

         I.A.21.2       Unless caused by Lessor, if any adjoining fence or 
    structure encroaches on the Premises, no claim, demand, or objection of any
    kind shall be made by Lessee against Lessor by reason of such 
    encroachments; no claim for abatement of Rent due under this Lease shall be
    made by reason of such encroachments or acts of, or in connection with, 
    removal of the encroachments. The rights, liabilities, and obligations of 
    the parties shall be the same as if there were no encroachments.  In any 
    related legal proceedings, the Premises may properly and without prejudice 
    be described according to the description previously used without reference
    to any such encroachments.  Lessor agrees to cooperate with Lessee in any 
    proceedings sought by Lessee to remove such encroachments, provided such 
    cooperation does not cause Lessor to incur any expense.

I.A.22.  TRANSFER OF INTEREST BY LESSOR

         Lessor may sell, exchange, assign, transfer, convey, contribute, 
distribute, or otherwise dispose of all or any part of its interest in the 
Premises or this Lease (including but not limited to Lessor's reversion), 
subject to Lessee's right of quiet enjoyment and the non-disturbance of 
Lessee's leasehold interest and the attornment of any successor to Lessor's 
interest in this Lease

I.A.23.  SUPPLEMENTAL RENT INCREASE FOR 30TH YEAR OF LEASE

                                      -25-

<PAGE>

         If, as of the 29th anniversary of the Commencement Date, Lessee has 
not exercised the option to purchase provided in Section 24 below, the 
Minimum Rent for the Premises throughout the 30th year of the Term shall be 
$21,714 more than the rent paid during the 29th year of the Term.

I.A.24. OPTION TO PURCHASE

         Provided Lessee is not then in default under this Lease 
[AND FURTHER PROVIDED THAT LESSEE SIMULTANEOUSLY EXERCISES THE OPTION TO
PURCHASE THE 10.5-ACRE PARCEL THAT ABUTS THE PREMISES ON THE NORTH SIDE],
Lessee shall have the option to purchase all of the Premises from Lessor at 
the expiration of the Term for a total consideration equal to $1 million plus 
a percentage increase that is equal to the percentage increase in the 
Consumer Price Index published by the United States Bureau of Labor 
Statistics of the United States Department of Labor.  The comparison shall be 
made using the index entitled All Urban Consumers (CPI-U) (Portland) 
(1982-84 = 100) or the nearest comparable data on changes in the cost of living
if such index is no longer published.  The increase shall be determined by 
comparison of the last CPI figure published before the Commencement Date with 
that of the last CPI figure published during the thirtieth year of the Term.

         In no event, however, shall the option purchase price exceed $1.6 
million or be less than $1 million.

         In the event Lessee chooses to exercise the option to purchase the 
Premises, it shall do so by giving Lessor irrevocable written notice of the 
exercise of the option after the end of the twenty-seventh year of the Term, 
but no later than the date that is 75 days before the end of the Term 
[SIMULTANEOUSLY WITH LESSEE'S GIVING IRREVOCABLE WRITTEN NOTICE OF ITS
EXERCISE OF THE OPTION TO PURCHASE THE 10.5-ACRE PARCEL.]  If the option
to purchase the Premises is exercised, the transaction shall be closed during
the last 10 days of the Term.  Rent shall be paid by Lessee through the end of
the Term.  Lessor shall convey the Premises by means of a statutory bargain and
sale deed free and clear of encumbrances except the encumbrances described
above as presently existing and any liens or encumbrances Lessee may have
caused, permitted, or suffered to attach to the Premises since the effective
date of this Lease.  The bargain and sale deed shall convey Lessor's right,
title, and interest in the Premises.  Lessor shall furnish Lessee with a
standard owner's title insurance policy, in the amount of the purchase price,
issued by a reputable title insurance company selected by Lessor and approved
by Lessee, which approval shall not be unreasonably withheld.  The title
insurance shall be at the expense of Lessor and shall be delivered within 
a reasonable period of time after the closing of such conveyance.  The title
insurance policy shall contain only the standard printed exceptions and the
exceptions permitted in the deed.  Proration of taxes and other customary
adjustments shall be made as of the closing of the conveyance.  The closing
shall be in escrow at a reputable escrow company selected by Lessee and
approved by Lessor, which approval shall not be unreasonably withheld.
The escrow fee and closing costs shall be shared equally by the parties.
                                       -26-

<PAGE>

I.A.25.  LESSOR'S RIGHT TO ENCUMBER

         Subject to Section 27 below, Lessor, during the Term, may encumber, 
mortgage, pledge, or otherwise hypothecate its fee simple interest in the 
Premises and/or its rights and interests under this Lease.

I.A.26.  NONMERGER

         There shall be no merger of this Lease, or of the leasehold estate 
created by this Lease, with the fee estate in the Premises by reason of the 
fact that this Lease, the leasehold estate created by this Lease, or any 
interest in this Lease or in any such leasehold estate, may be held, directly 
or indirectly, by or for the account of any person who shall own the fee 
estate in the Premises or any interest in such fee estate, and no such merger 
shall occur unless and until all persons at the time having an interest in 
the fee estate in the Premises and all persons (including all Permitted 
Leasehold Mortgagees) having an interest in this Lease, or in the leasehold 
estate created by this Lease, shall join in a written instrument effecting 
such merger and shall duly record the same.

I.A.27.  QUIET ENJOYMENT

         Lessee, on paying the Rent and observing and keeping all covenants, 
agreements, and conditions of this Lease on its part to be kept, shall 
quietly have and enjoy the Premises during the Term without hindrance or 
molestation by anyone claiming by, through, or under Lessor as such, subject, 
however, to the exceptions, reservations, and conditions of this Lease.

I.A.28.  SURRENDER

         I.A.28.1   Except as otherwise provided, Lessee, on the last day of the
Term, shall surrender and deliver up the Premises and all Improvements to the 
possession and use of Lessor without fraud or delay, free and clear of all 
lettings and occupancies other than subleases then terminable at the option 
of Lessor or subleases to which Lessor shall have specifically consented in 
writing, and free and clear of all liens and encumbrances other than those, 
if any, existing as of the Commencement Date and those, if any, created by 
Lessor, without any payment or allowance whatever by Lessor on account of any 
Improvements on the Premises.

         I.A.28.2   When furnished by or at the expense of Lessee or any
sublessee, furniture, fixtures, and equipment may be removed by Lessee at
or before this Lease terminates, provided, however, that the removal will
not injure the Premises or the Improvements or necessitate changes in or
repairs to the same. Lessee shall pay or cause to be paid to Lessor the cost
of repairing any damage arising from such removal and restoration of the
Premises and/or the Improvements to their condition before such removal.
                                       -27-
<PAGE>

         I.A.28.3   Any personal property of Lessee or any sublessee that 
shall remain on the Premises after the termination of this Lease and the 
removal of Lessee or such sublessee from the Premises may, at the option of 
Lessor, be deemed to have been abandoned by Lessee or such sublessee and may 
either be retained by Lessor as its property or be disposed of, without 
accountability, in such manner as Lessor may see fit, or if Lessor gives 
written notice to Lessee to such effect, such property shall be removed by 
Lessor at Lessee_s sole cost and expense.  If this Lease terminates early for 
any reason other than the default of Lessee then, anything to the contrary 
notwithstanding, Lessee or any sublessee shall have a reasonable time 
thereafter to remove its personal property.

         I.A.28.4   Lessor shall not be responsible for any loss or damage 
occurring to any property owned by Lessee or any sublessee.

         I.A.28.5   The provisions of this section shall survive any 
termination of this Lease.

I.A.29.  INVALIDITY OF PARTICULAR PROVISIONS

         If any term or provision of this Lease or the application of this 
Lease to any person or circumstances is, to any extent, invalid or 
unenforceable, the remainder of this Lease, or the application of such term 
or provision to persons or circumstances other than those as to which it is 
held invalid or unenforceable, shall not be affected, and each term and 
provision of this Lease shall be valid and be enforced to the fullest extent 
permitted by law.

I.A.30.  NO REPRESENTATIONS

         Lessee acknowledges that it has examined the Premises and that no 
representations as to the condition of the Premises have been made by Lessor 
or any agent or person acting for Lessor (except as expressly provided in 
this Lease or the attached Put to Lease (Exhibit C)).  Before any 
construction commences on the Premises, Lessee shall conduct tests of the 
subsurface and soil conditions to ascertain the suitability of the Premises 
for the contemplated Project and shall furnish such fill and take such other 
steps as may be required before the commencement of construction.  Lessor 
shall have no liability because of, or as a result of, the existence of any 
subsurface or soil condition, either on the Premises or on adjacent land, 
that might affect Lessee's construction.
                                       -28-
<PAGE>

I.A.31.  ESTOPPEL CERTIFICATE

         Either party, within 10 days after a request from time to time made 
by the other party and without charge, shall give a certification in writing 
to any person, firm, or corporation reasonably specified by the requesting 
party stating (1) that this Lease is then in full force and effect and 
unmodified, or if modified, stating the modifications; (2) that Lessee is not 
in default in the payment of Rent to Lessor, or if in default, stating such 
default; (3) that as far as the maker of the certificate knows, neither party 
is in default in the performance or observance of any other covenant or 
condition to be performed or observed under this Lease, or if either party is 
in default, stating such default; (4) that as far as the maker (if Lessor) of 
the certificate knows, no event has occurred that authorized, or with the 
lapse of time will authorize, Lessee to terminate this Lease, or if such 
event has occurred, stating such event; (5) that as far as the maker of the 
certificate knows, neither party has any offsets, counterclaims, or defenses, 
or, if so, stating them; (6) the date to which Rent has been paid; and (7) 
any other matters that may be reasonably requested by the requesting party.

I.A.32.  FORCE MAJEURE

         If the performance by either of the parties of their respective 
obligations under this Lease (excluding monetary obligations) is delayed or 
prevented in whole or in part by any Legal Requirement (and not attributable 
to an act or omission of the party), or by any acts of God, fire or other 
casualty, floods, storms, explosions, accidents, epidemics, war, civil 
disorders, strikes or other labor difficulties, shortage or failure of supply 
of materials, labor, fuel, power, equipment, supplies or transportation, or 
by any other cause not reasonably within the party's control, whether or not 
specifically mentioned, the party shall be excused, discharged, and released 
of performance to the extent such performance or obligation (excluding any 
monetary obligation) is so limited or prevented by such occurrence.

I.A.33.1  NOTICES

         I.A.33.1   Any notice required or permitted by the terms of this 
Lease shall be deemed given if delivered personally to the party to be 
notified, or delivered by overnight or other express courier, or sent by 
United States certified mail, postage prepaid, return-receipt requested, and 
addressed as follows:
<TABLE>

<S>    <C>                                   <C>
       If to Lessor:                         with copy to:
       Superintendent                        Business Manager
       Tigard-Tualatin School District 23J   Tigard-Tualatin School District 23J
       13137 S.W. Pacific Highway            13137 S.W. Pacific Highway
       Tigard, Oregon  97223                 Tigard, Oregon  97223

                                       -29-
<PAGE>

<S>    <C>                                   <C>
       If to Lessee:                         with copy to:
       Richard T. Takata                     William N. Moloney, Esq.
       President                             Attorney at Law
       981 Powell Avenue S.W.                5711 N.E. Tolo Road
       Renton, Washington  98055             Bainbridge Island, WA  98110

</TABLE>

or such other addresses as may be designated by either party by written 
notice to the other.  Except as otherwise provided in this Lease, every 
notice, demand, request, or other communication shall be deemed to have been 
given or served on actual receipt.

         I.A.33.2   A copy of each notice from Lessor to Lessee shall be 
contemporaneously delivered to each Permitted Leasehold Mortgagee which shall 
have previously delivered to Lessor, by certified mail, return receipt 
requested, addressed as provided above in this section, its name, fax number, 
and the mailing address to which communications under this section are to be 
delivered.  Notice to Lessee shall not be effective until a duplicate notice 
is received by each Permitted Leasehold Mortgagee that is entitled to notice.

         I.A.33.3   Lessee shall immediately send to Lessor, in the manner 
prescribed above for giving notice, copies of all notices given by it to any 
Permitted Leasehold Mortgagee or received by it from such Permitted Leasehold 
Mortgagee, and copies of all notices that it receives with respect to the 
Premises or Improvements from any government authorities, fire regulatory 
agencies, and similarly constituted bodies, and copies of its responses to 
such notices.

         I.A.33.4    Notwithstanding anything in this section to the 
contrary, any notice mailed to the last designated address of any person or 
party to which a notice may be or is required to be delivered pursuant to 
this Lease or this section shall not be deemed ineffective if actual delivery 
cannot be made due to a change of address of the person or party to which the 
notice is directed or the failure or refusal of such person or party to 
accept delivery of the notice.

I.A.34.  ARBITRATION

         I.A.34.1   GENERAL.  Except with respect to pending litigation, 
Lessor or Lessee may at any time request final and binding arbitration of any 
matter in dispute when arbitration is expressly provided for in this Lease or 
its Exhibits.  The term "pending litigation" as used in the preceding 
sentence means litigation that has continued for more than 60 days after the 
first legal process has been served on a party to this agreement by the other 
party without any request for arbitration by the party served.  Any party who 
fails to submit to binding arbitration following a lawful demand by the other 
party shall bear all costs and expenses, including reasonable attorney fees 
(including those incurred in any trial, bankruptcy proceeding, appeal, or 
review) incurred by the other party in obtaining a stay of any pending 
judicial proceeding concerning a dispute which by the terms of this Lease has 
been properly
                                       -30-

<PAGE>

submitted to mandatory arbitration, and/or compelling arbitration of any 
dispute.  A party may request arbitration by giving notice to that effect to 
the other party, specifying in the notice the nature of the dispute.  The 
dispute shall be determined in the Portland, Oregon, metropolitan area by a 
single arbitrator for matters up to $350,000, and by three arbitrators for 
any dispute in excess of that amount, in accordance with the rules then 
pertaining to the Washington County Circuit Court Arbitration Program, except 
to the extent provided otherwise under Oregon laws on arbitration and as 
otherwise provided herein.  If such program is terminated, then the rules of 
Arbitration Services of Portland or its successor (if any) shall be used.  
All arbitrators shall be licensed attorneys having at least ten years 
experience with commercial ground-leasing transactions.  On the application 
of either party, the award in the arbitration may be enforced by the order or 
judgment of a court of competent jurisdiction.

         I.A.34.2   NOTICE.  If Lessor gives notice requesting arbitration, 
Lessee shall simultaneously serve a duplicate of the notice on each Permitted 
Leasehold Mortgagee whose name and address shall previously have been 
furnished to Lessor, and the Permitted Leasehold Mortgagee shall have the 
right to participate in the arbitration.

         I.A.34.3   COST.  The fees and expenses of any arbitration shall be 
borne by the losing party.  The prevailing party shall be entitled to recover 
the expenses of its attorneys and experts.

         I.A.34.4   GOVERNING RULES; PRESERVATION OF REMEDIES.  The 
arbitrator or arbitrators shall resolve all disputes in accordance with the 
substantive law of the state of Oregon.  The arbitrator or arbitrators shall 
have no authority or jurisdiction to award any damages or any other remedies 
beyond those that could have been awarded in a court of law had the parties 
litigated the claims instead of arbitrating them.  The parties shall not 
assert any claim for punitive damages except to the extent such awards are 
specifically authorized by statute. No provision of, nor the exercise of any 
rights under, this arbitration section of the Lease shall limit the right of 
Lessor to evict Lessee, to exercise self-help remedies, or to obtain 
provisional or ancillary remedies such as an injunction, receivership, 
attachment, or garnishment.

         I.A.34.5   MISCELLANEOUS ARBITRATION PROVISIONS.  The parties shall 
use their best efforts to complete any arbitration within 75 days of the 
filing of the dispute unless the dispute is regarding the refusal to grant a 
consent or approval, in which case the time period shall be 45 days.  The 
arbitrator or arbitrators shall be empowered to impose sanctions for any 
party's failure to do so.  These arbitration provisions shall survive any 
termination, amendment, or expiration of this Lease unless the parties 
otherwise expressly agree in writing.  Each party agrees to keep all disputes 
and arbitration proceedings strictly confidential, except for the disclosure 
of information required in the ordinary course of business of the parties or 
as required by applicable law or regulation.  Any time limitation (such as 
the statute of limitations or laches) that would bar litigation of a claim 
shall also bar arbitration of the claim. If any provision of this arbitration 
program is declared invalid by any court, the remaining provisions shall not 
be affected thereby and shall remain fully enforceable.  The parties 

                                       -31-

<PAGE>

understand that they have decided that on demand of either of them, 
their disputes as described herein will be resolved by arbitration rather 
than in a court, and once so decided cannot later be brought, filed, or 
pursued in court.

I.A.35.  COSTS AND ATTORNEY FEES

         If either party brings an action to declare, interpret, or enforce 
any of the terms or provisions of this Lease and obtains a judgment in its 
favor, the court shall award to such prevailing party its costs and attorney 
fees, specifically including attorney fees incurred before, or in preparation 
for, or at trial and in connection with any appeal (whether or not taxable as 
such by law).

I.A.36.  ENTIRE AGREEMENT

         This Lease contains the entire agreement between the parties and, 
except as otherwise provided, can be changed, modified, amended, or 
terminated only by an instrument in writing executed by the parties.  It is 
mutually acknowledged and agreed by Lessee and Lessor that there are no 
verbal agreements, representations, warranties, or other understandings 
affecting this Lease.

I.A.37.  APPLICABLE LAW; CHOICE OF FORUM

         This Lease shall be governed by, and be construed in accordance 
with, the laws of the state of Oregon.

         Washington County (Oregon) Circuit Court shall be the sole and 
exclusive forum for the filing and prosecution of any suit or action to 
declare, interpret, or enforce any of the terms or provisions of this Lease.

I.A.38.  INTEREST ON RENT ARREARAGES

         All arrearages in the payment of rent that Lessee fails to pay 
within the 10-day period after notice from Lessor shall bear interest from 
the date due until paid, at the lesser of the maximum lawful rate or 18 
percent per annum.

I.A.39.  BROKERAGE

         Lessor and Lessee represent to each other that they have not 
employed any brokers in negotiating and consummating the transaction set 
forth in this Lease, but have negotiated directly with each other.

                                       -32-
<PAGE>

I.A.40.  COVENANTS TO BIND AND BENEFIT PARTIES

         The covenants and agreements contained in this Lease shall bind and 
inure to the benefit of Lessor and its successors and assigns and Lessee and 
its successors and assigns.

I.A.41.  CAPTIONS AND TABLE OF CONTENTS

         I.A.41.1  The captions of this Lease are for convenience and 
reference only, and in no way define, limit, or describe the scope or intent 
of this Lease or in any way affect this Lease.

         I.A.41.2  The table of contents preceding this Lease but under the 
same cover is for the purpose of convenience and reference only, and is not 
to be deemed or construed in any way as part of this Lease, nor as 
supplemental or amendatory.

I.A.42.  DEFINITION OF LESSOR

         The term Lessor as used in this Lease means only the owner for the 
time being of the Premises, so that in the event of a sale, transfer, 
conveyance, or other termination of Lessor's interest in the Premises, Lessor 
shall be and is entirely freed and relieved of all liability of Lessor 
thereafter accruing, and in such event Lessor shall remit any funds held by 
Lessor, in which Lessee has an interest, to the successor owner of the 
Premises. Lessor shall remain liable for any such money not so remitted.  It 
shall be deemed and construed without further agreement between the parties 
or their successors in interest, or between the parties and such successor 
owner of the Premises, that such successor owner has assumed and agreed to 
carry out any and all agreements, covenants, and obligations of Lessor 
thereafter accruing.

I.A.43.  RECORDATION OF MEMORANDUM OF LEASE

         Lessee may elect that a memorandum of lease, executed and 
acknowledged by both parties, be recorded in the public records of Washington 
County, Oregon. Lessee shall pay the recording costs.

I.A.44.  STATUTORY DISCLAIMER

             In relevant part, ORS 93.040 states:

             "THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN 
THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS.  
BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE 
TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING 
DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON LAWSUITS 
AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930."

                                       -33-
<PAGE>

I.A.45.  CONSENT

             In the event this Lease is silent as to the standard for any 
consent, approval, determination, or similar discretionary action, the 
standard shall be sole and unfettered discretion as opposed to any standard 
of good faith, fairness, or reasonableness.

             IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease to 
be executed by their duly authorized officers effective as of the date first 
written above.

                                   Tigard-Tualatin School District 23J, Lessor:


                                   by
                                     -------------------------------------
                                     Chair of the Board


                                   by
                                     -------------------------------------
                                     Superintendent


                                   Eagle Hardware & Garden, Inc.


                                   by
                                     -------------------------------------
                                     President


                                   by
                                     -------------------------------------
                                     Vice President 






                                       -34-

<PAGE>

EXHIBIT A     Description of the Premises 























                                     - 35 -
<PAGE>

EXHIBIT B     Encumbrances on the Premises as of the Effective Date of the 
              Lease 























                                     - 36 -
<PAGE>

EXHIBIT C     Put to Lease





















                                     - 37 -
<PAGE>

1. Taxes, including the current fiscal year, not assessed because 
of Public School Exemption. If the exempt status is terminated an 
additional tax may be levied. Account Nos. 2S11AC-01801 and 
2S11AC-01900

2.  City Liens, if any, of the City of Tigard.
Note: An inquiry has been directed to the City Clerk and subsequent 
advice will follow concerning the actual status of such liens.

3.  Statutory Powers and Assessments of Unified Sewerage Agency.

4.  An easement created by instrument, including the terms and 
provisions thereof;
Recorded    : August 1, 1955 in Book 372, page 50
Favor of    : Ponland General Electric Company
For         : Utilities
Affects     : Southerly portion of Parcell II

5. Relinquishment of Access as contained in Deed
Recorded    : May 5, 1965 in Book 551, page 352
From        : Yoneive A. Paulsen, individually and as Trustee, and 
               Gilbert T. Paulsen, her husband
To          : The State of Oregon, by and through its State Highway 
              Commission

6. An easement created by instrument, including the terms and 
provisions thereof:
Recorded    : August 10, 1967 in Book 654, page 192.
Favor of    : City of Tigard
For         : Sewer line
Affects     : See recorded document for details

7. An easement created by instrument, including the terms and provisions 
thereof;
Recorded    : August 8, 1959 in Book 752, page 842
Favor of    : City of Tigard
For         : Underground sewer line
Affects     : See recorded document for details

8. Unrecorded leases or periodic tenancies, if any.

9. The following matters pertain to Lenders Extended coverage only:

(a) Discrepancies, conflicts in boundary lines, shortage in area, 
encroachments or any other facts which a correct survey would disclose.

(b) Parties in possession, or claiming to be in possession, other than 
the vestees shown herein.

(c) Statutory liens for labor and/or materials, including liens for 
contributions due to the State of Oregon for employment compensation 
and for workman's compensation, or any rights thereto, where no notice 
of such liens or rights appears of record.

NOTE: This report does not include a search for Financing Statements 
filed in the office of the Secretary of State, or in a county other 
than the country wherein the premises are situated, and no liability is 
assumed if a Financing Statement is filed in the office of the County 
Clerk (Recorder) covering fixtures on the premises wherein the lands 
are described other than by metes and bounds or under the rectangular 
survey system or by recorded lot and block.

NOTE: Washington County Ordinance No. 267, filed August 5, 1982 in 
Washington County, Oregon, imposes a tax of $1.00 per $1,000,00 or 
fraction thereof on the transfer of real property located within 
Washington County.

Certain conveyances may be exempt from said ordinance, in which case, 
Washington County will require the filing of an affidavit of exemption. 
In either situation, the transfer tax must be paid or an affidavit must 
be filed.