Document:

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                                                                    Exhibit 10.4

                              AMENDED AND RESTATED
                          EMPLOYEE STOCK PURCHASE PLAN
                                       OF
                          COLUMBIA BANKING SYSTEM, INC.

                                     Recital
                                     -------

      The original Employee Stock Purchase Plan of Columbia Banking System, Inc.
was adopted by the Board of Directors on January 25, 1995, and approved by the
Shareholders on April 26, 1995. The Plan is now being amended and restated by
the Board of Directors for the purpose of (1) adding and clarifying definitions
and making implementing changes throughout the Plan; (2) expanding eligibility
of employees by removing the six months of employment requirement; (3)
decreasing the number of offering periods to two by expanding the length of each
period from three months to six months; (4) adding a "look-back" provision such
that the purchase price of stock purchased under the Plan will be the lesser of
the fair market value of the stock at the beginning of the Offering Period or at
the end of the Offering Period; and (5) expanding the Board's and Committee's
authority to amend the Plan and the terms of the options granted under the Plan
to allow for easier administration of the Plan.

      ARTICLE I - PURPOSE

      The Employee Stock Purchase Plan (the "Plan") of Columbia Banking System,
Inc. (the "Company") is intended to provide a method whereby Employees of the
Company will have an opportunity to acquire a proprietary interest in the
Company through the purchase of shares of the common stock of the Company
("Common Stock or Stock"). It is the intention of the Company to have the Plan
qualify as an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall
be construed so as to extend and limit participation in a manner consistent with
the requirements of that Section of the Code.

      ARTICLE II - DEFINITIONS

      "Bank" means Columbia Bank.

      "Beneficiary" means the person(s) designated by the Participant under
Section 12.1 (or otherwise determined under that Section) to receive Stock or
cash under this Plan to which the Participant would have been entitled.

      "Board" means the Board of Directors of Columbia Banking System, Inc.

      "Committee" means the Personnel and Compensation Committee of the Board.

      "Company" means Columbia Banking System, Inc., a Washington corporation,
its subsidiaries or other related corporations as may be designated by the
Board.

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      "Compensation" means any and all cash compensation paid by the Company to
the Employee, including base pay, bonus, overtime and shift premiums.

      "Employee" means any person who is employed by the Company on either a
full-time or part-time basis.

      "Enrollment Date" means the first day of each Offering Period.

      "Exercise Date" means the last day of each Offering Period.

      "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:

          (1) If the Common Stock is listed on any established stock exchange or
          a national market system, including without limitation The Nasdaq
          National Market or The Nasdaq Small Market of the Nasdaq Stock Market,
          its Fair Market Value shall be the closing sales price for such stock
          (or the closing bid, if no sales were reported) as quoted on such
          exchange or system for the last market trading day on the date of such
          determination, as reported in The Wall Street Journal or other source
          as the Committee deems reliable, or,

          (2) If the Common Stock is regularly quoted by a recognized securities
          dealer but selling prices are not reported, its Fair Market Value
          shall be the mean of the closing bid and asked prices for such stock
          on the date of such determination, as reported in The Wall Street
          Journal or other source as the Committee deems reliable, or,

          (3) In the absence of an established market for the Common Stock, the
          Fair Market Value shall be determined in good faith by the Committee.

      "Offering Period" means a period of approximately six (6) months during
which a Right granted pursuant to the Plan may be exercised, commencing on the
first Trading Day on or after January 1 and terminating on the last Trading Day
in the period ending the following June 30, or commencing on the first Trading
Day on or after July 1 and terminating on the last Trading Day in the period
ending the following December 31. The duration of Offering Periods may be
changed pursuant to Section 4.1 of this Plan. The initial six-month Offering
Period is a short period beginning on March 1, 2000, and terminating on June 30,
2000.

      "Participant" means an Employee who has commenced participation in the
Plan under Section 3.4.

      "Purchase Price" means an amount equal to 90% of the Fair Market Value of
a share of Common Stock on the Enrollment Date or on the Exercise Date,
whichever is lower; provided that the Purchase Price may be adjusted by the
Board pursuant to Section 12.5 of this Plan.

      "Trading Day" means a day on which national stock exchanges and the Nasdaq
System are open for trading.

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      "Right(s)" means a right, in the nature of an option, of a Participant to
purchase Stock under this Plan.

      ARTICLE III - ELIGIBILITY AND PARTICIPATION

      3.1 Initial Eligibility.
          -------------------

      Any Employee who is employed by the Company on a given Enrollment Date is
eligible to participate in the Plan.

      3.2 Leave of Absence.
          ----------------

      For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company, except as provided by Treasury Regulation
Section 1.421-7(h).

      3.3 Restrictions on Participation.
          -----------------------------

      Notwithstanding any provisions of the Plan to the contrary, no Employee
shall be granted a Right under the Plan:

      (a) if, immediately after the grant, such Employee would own stock, and/or
hold outstanding options (of any type and regardless of whether then exercisable
in whole or in part or not at all) to purchase stock, possessing 5% or more of
the total combined voting power or value of all classes of stock of the Company
(as determined under the rules of Section 424(d) of the Code); or

      (b) which permits his Rights to purchase stock under all employee stock
purchase (Section 423) plans of the Company to accrue at a rate which exceeds
$25,000 in fair market value of the stock (determined at the time such Right
under this or any other Section 423 Plan of the Company is granted) for each
calendar year in which such Right is outstanding. For this purpose, the $25,000
annual limit is cumulative, such that unused amounts from a prior calendar year
during which a Right was outstanding may be carried forward to future calendar
years, in accordance with Treasury Regulations Section 1.423-2(i).

      3.4 Commencement of Participation.
          -----------------------------

      An Employee may become a Participant in the Plan by completing an
authorization for payroll deduction on the form provided by the Company and
filing it with the Company's Human Resources Department prior to the applicable
Enrollment Date. Payroll deductions for a Participant will commence on the first
payroll date following the Enrollment Date and will end on the last payroll date
in the Offering Period to which such authorization is applicable, unless sooner
terminated by the Participant as provided in Article VIII of this Plan.

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      ARTICLE IV - OFFERINGS

      4.1 Offering Periods.
          ----------------

      The Plan will be implemented by consecutive Offering Periods with a new
Offering Period commencing on the first Trading Day on or after January 1 and
July 1 each year, or on such other date as the Board or Committee shall
determine, and continuing thereafter until terminated in accordance with Section
12.5 of this Plan. The Board or the Committee will have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter. The initial six-month offering period
is a short period beginning on March 1, 2000, and terminating on June 30, 2000.

      ARTICLE V - PAYROLL DEDUCTIONS

      5.1 Amount of Deduction.
          -------------------

      At the time a Participant files an authorization for payroll deduction,
the Participant shall elect to have deductions made from his Compensation on
each payday during the time he is a Participant in an Offering. A Participant's
payroll deductions may not be less than 1% of Compensation for the payroll date
to which the deduction is applied, and must be in whole percentage increments.

      5.2 Participant's Account.
          ---------------------

      All payroll deductions made for a Participant shall be credited to his
account under the Plan. A Participant may not make any separate cash payment
into such account.

      5.3 Changes in Payroll Deductions.
          -----------------------------

      A Participant may terminate or change the amount of his prospective
payroll deductions during any Offering Period by completing and filing with the
Company a new authorization for a change in payroll deduction. The Board or
Committee may, in its discretion, limit the number of participation rate changes
during any Offering Period. The change in payroll deduction rate will be
effective with the first full payroll period following five (5) business days
after the Company's receipt of the new authorization, unless processed sooner by
the Company. A Participant's authorization will remain in effect for successive
Offering Periods unless terminated as provided in Article VIII of this Plan.

      5.4 Leave of Absence.
          ----------------

      If a Participant goes on a leave of absence and such leave of absence is
not considered a termination of employment under Treasury Regulation Section
1.421-7(h), such Participant shall have the right to elect: (a) to withdraw the
balance in his account pursuant to Section 8.1, (b) to discontinue further
contributions to the Plan while on leave but remain a Participant in the Plan as
to contributions made prior to the leave, or (c) if the leave is paid, to remain
a Participant in

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the Plan during such leave of absence, authorizing deductions to be made from
payments by the Company to the Participant during such leave of absence.

      5.5 Decrease in Payroll Deductions.
          ------------------------------

      To the extent necessary to comply with Section 423(b)(8) of the Code and
Section 3.3 of this Plan, a Participant's payroll deductions may be decreased to
zero percent (0%) at any time during an Offering Period. Payroll deductions will
recommence at the rate provided in such Participant's payroll deduction
authorization at the beginning of the first Offering Period which is scheduled
to end in the following calendar year, unless terminated by the Participant as
provided in Article VII of this Plan.

      5.6 Tax Withholding.
          ---------------

      At the time Participant's Right is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the Participant must report such disposition to the Company and
make adequate provision for the Company's federal, state, or other tax
withholding obligations, if any, which arise upon the exercise of the Right or
the disposition of the Common Stock. At any time, the Company may, if required,
withhold from the Participant's compensation the amount necessary for the
Company to meet any applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Participant.

      ARTICLE VI - GRANTING OF RIGHTS

      On the Enrollment Date of each Offering Period, each Participant will be
granted a Right to purchase on the Exercise Date of such Offering Period up to a
number of shares of Common Stock determined by dividing such Participant's
accumulated payroll deductions in his account as of the Exercise Date by the
Purchase Price; provided that such purchase shall be subject to the limitations
set forth in Section 3.3 of this Plan.

      ARTICLE VII - EXERCISE OF RIGHTS

      7.1 Automatic Exercise.
          ------------------

      Unless a Participant gives notice to the Company as hereinafter provided,
his Right for the purchase of Common Stock with payroll deductions made during
any Offering Period will be deemed to have been exercised automatically on the
Exercise Date applicable to such Offering Period, for the purchase of the
maximum number of full shares of Common Stock which the accumulated payroll
deductions in his account at the time will purchase at the Purchase Price. No
fractional shares will be purchased; any accumulated payroll deductions in a
Participant's account which are not sufficient to purchase a full share will be
retained in the Participant's account for the subsequent Offering Period,
subject to earlier withdrawal by the Participant as provided in Article VIII of
this Plan. Any other monies left over in a Participant's account after the
Exercise Date will be returned to the Participant.

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      7.2 Fractional Shares.
          -----------------

      Fractional shares will not be issued under the Plan and any accumulated
payroll deductions which would have been used to purchase fractional shares will
be applied to succeeding Offerings or ultimately returned to the Participant, as
described above.

      7.3 Transferability of Rights.
          -------------------------

      During a Participant's lifetime, Rights held by such Participant shall be
exercisable only by the Participant.

      7.4 Delivery of Stock.
          -----------------

      As promptly as practicable after each Exercise Date on which a purchase of
Common Stock occurs, the Company will arrange the delivery to each Participant,
as appropriate, of the shares purchased upon exercise of any Right. The Company
may, in its discretion, provide a procedure for Participant shares to be held in
account by the Company or its agent. Such shares will be held in book entry form
until such time as a Participant requests issuance of a stock certificate
representing all or a portion of the accumulated shares held in such
Participant's account.

      ARTICLE VIII - WITHDRAWAL

      8.1 In General.
          ----------

      A Participant may withdraw payroll deductions credited to his account
under the Plan at any time by giving written notice to the Human Resources
Department. All of the Participant's payroll deductions credited to his account
will be paid to him promptly after receipt of his notice of withdrawal, and no
further payroll deductions will be made from his pay during such Offering
Period. The Company may, at its option, treat any attempt to borrow by a
Participant on the security of his accumulated payroll deductions as an
election, under Section 8.1, to withdraw such deductions.

      8.2 Effect on Subsequent Participation.
          ----------------------------------

      A Participant's withdrawal from any Offering Period will not have any
effect upon his eligibility to participate in any succeeding Offering Period or
in any similar plan which may hereafter be adopted by the Company.

      8.3 Termination of Employment.
          -------------------------

      Upon termination of the Participant's employment with the Company for any
reason, including retirement (but excluding death while in the employ of the
Company or an approved leave of absence), the payroll deductions credited to the
Participant's account will be returned to the Participant, or, in the case of
the Participant's death subsequent to the termination of the Participant's
employment, to the Participant's Beneficiary.

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      8.4 Termination of Employment Due to Death.
          --------------------------------------

      Upon termination of the Participant's employment because of the
Participant's death, the Participant's Beneficiary shall have the right to
elect, by written notice given to the Human Resources Department, prior to the
earlier of the Exercise Date or the expiration of a period of sixty (60) days
commencing with the date of the death of the Participant, either:

      (a) to withdraw all of the payroll deductions credited to the
Participant's account under the Plan, or

      (b) to exercise, on the Exercise Date next following the date of the
Participant's death, the Participant's Right for the purchase of the number of
full shares of Stock which the accumulated payroll deductions in the
Participant's account at the date of the Participant's death will purchase at
the applicable Purchase Price, and any excess in such account will be returned
to said Beneficiary.

      In the event that no such written notice of election shall be duly
received by the Human Resources Department, the Beneficiary shall automatically
be deemed to have elected, pursuant to paragraph 8.4(b), to exercise the
Participant's Right.

      ARTICLE IX - NO INTEREST

      No interest will be paid or allowed or any money paid into the Plan and
credited to the account of any Participant, whether used to purchase Common
Stock or returned to the participant or his Beneficiary.

      ARTICLE X - STOCK

      10.1 Maximum Shares.
           --------------

      The maximum number of shares of Common Stock which shall be issued under
the Plan, subject to adjustment upon changes in capitalization of the Company as
provided in Section 12.4, shall not exceed 100,000 shares for all Offering
Periods. If the total number of shares for which Rights are exercised during any
Offering Period exceeds the number of shares of Common Stock remaining under the
Plan, and if the Plan is not amended to increase the available shares, the Board
or the Committee shall make a pro rata allocation of the shares available (based
on the relative number of Rights exercised by each Participant during that
Offering Period), and the Plan shall terminate after exercise of such remaining
Rights.

      10.2 Participant's Interest In Common Stock.
           --------------------------------------

      The Participant will have no interest in Common Stock covered by his Right
until such Right has been exercised.

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      10.3 Registration of Common Stock.
           ----------------------------

      Common Stock to be delivered to a Participant under the Plan will be
registered in the name of the Participant, or, if the Participant so directs by
written notice to the Human Resources Department prior to the Exercise Date
applicable thereto, in the names of the Participant and one such other person as
may be designated by the Participant, to the extent permitted by applicable law.

      10.4 Restrictions on Exercise.
           ------------------------

      The Board or the Committee may, in its discretion, require as a condition
to the exercise of any Right that the Participant shall have represented at the
time of purchase, in form and substance satisfactory to the Company, that any
disposition of the shares of Common Stock shall be effected in accordance with
applicable securities laws, and that the Participant consents to having a legend
placed on the share certificates to that effect which is acceptable to counsel
for the Company.

      ARTICLE XI - ADMINISTRATION

      11.1 Appointment of the Committee.
           ----------------------------

      The Plan shall be administered by the Committee, or if the Board so
elects, the full Board. If the Board desires to directly exercise its powers
under this Plan, then the Board may take any action under the Plan that would
otherwise be the responsibility of the Committee.

      11.2 Authority of Board or the Committee.
           -----------------------------------

      Subject to the express provisions of the Plan, the Committee shall have
authority in its discretion to interpret and construe any and all provisions of
the Plan, to adopt rules and regulations for administering the Plan, and to make
all other determinations deemed necessary or advisable for administering the
Plan. The Committee's determination on the foregoing matters shall be
conclusive.

      11.3 Procedure.
           ---------

      The quorum and action requirements for the Committee regarding the Plan
shall be the same as for other activities conducted by the Committee. The
Committee may correct any defect or omission or reconcile any inconsistency in
the Plan, in the manner and to the extent it deems desirable.

      11.4 Securities Compliance.
           ---------------------

      Shares will not be issued with respect to a Right unless the exercise of
such Right and the issuance and delivery of such shares pursuant thereto
complies with all applicable provisions of law, domestic or foreign, including,
without limitation, the Securities Act of 1933, the Securities Exchange Act of
1934, the rules and regulations promulgated thereunder, and the requirements of

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any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

      As a condition to the exercise of a Right, the Company may require the
Participant exercising the Right to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

      ARTICLE XII - MISCELLANEOUS

      12.1 Designation of Beneficiary.
           --------------------------

      A Participant may file a written designation of a Beneficiary who is to
receive any Common Stock and/or cash to which the Participant may be entitled
under this Plan in the event of the Participant's death subsequent to an
Exercise Date on which the Right is exercised but prior to delivery to such
Participant of any shares and cash. Such designation of Beneficiary must be in
form satisfactory to the Company (including spousal consent to designation of
any non-spouse primary Beneficiary by a married Participant) and may be changed
by the Participant at any time by written notice to the Human Resources
Department. Upon the death of a Participant and upon receipt by the Company of
proof of identity and existence at the Participant's death of a Beneficiary
validly designated by him under the Plan, the Company shall deliver such Common
Stock and/or cash to such Beneficiary. In the event of the death of a
Participant and in the absence of a Beneficiary validly designated under the
Plan who is living at the time of such Participant's death, the Company shall
deliver such Common Stock and/or cash to the executor or administrator of the
estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such Common Stock and/or cash to the spouse or to any one or more
dependents of the Participant as the Company may designate. No Beneficiary
shall, prior to the death of the Participant by whom he has been designated,
acquire any interest in the Common Stock or cash credited to the Participant
under the Plan.

      12.2 Transferability.
           ---------------

      Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of a Right or to receive Common Stock under
the Plan may be assigned, transferred, pledged, or otherwise disposed of in any
way by the Participant other than by will or the laws of descent and
distribution. Any such attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Section 8.1.

      12.3 Use of Funds.
           ------------

      All payroll deductions received or held by the Company under this Plan may
be used by the Company for any corporate purpose and the Company shall not be
obligated to segregate such payroll deductions.

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      12.4 Adjustment Upon Changes in Capitalization, Dissolution, Liquidation,
           -------------------------------------------------------------------
Merger or Asset Sale.
--------------------

      (a)  Changes in Capitalization. Subject to any required action by the
           -------------------------
stockholders of the Company, the number of shares subject to issuance under the
Plan, as well as the price per share and the number of shares of Common Stock
covered by each Right under the Plan which has not yet been exercised shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board or Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.

      (b)  Merger or Asset Sale. In the event of a proposed sale of all or
           --------------------
substantially all of the assets of the Company, or the merger of the Company
with and into another corporation, each outstanding Right shall be assumed or an
equivalent Right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Right, the Offering Period
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date"). The New Exercise Date shall be before the date of the Company's
proposed sale or merger. The Board shall notify each Participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the Exercise
Date for the Participant's Right has been changed to the New Exercise Date and
that the Participant's option shall be exercised automatically on the New
Exercise Date, unless prior to such date the Participant has withdrawn from the
Offering Period as provided in Article VIII.

      12.5 Amendment or Termination.
           ------------------------

      (a) The Board of Directors of the Company or the Committee may at any time
and for any reason terminate or amend the Plan. Except as provided in Section
12.4 hereof, no such termination can affect Rights previously granted, provided
that an Offering Period may be terminated by the Board of Directors or the
Committee on any Exercise Date if the Board or the Committee determines that the
termination of the Offering Period or the Plan is in the best interests of the
Company and its stockholders. Except as provided in Section 12.4 and Section
12.5 hereof, no amendment may make any change in any option theretofore granted
which adversely affects the rights of any participant. To the extent necessary
to comply with Section 423 of the Code (or any other applicable law, regulation
or stock exchange rule), the Company shall obtain shareholder approval in such a
manner and to such a degree as required.

      (b) Without stockholder consent and without regard to whether any
Participant Rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the

                                       10
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amount withheld during an Offering Period, establish the exchange ratio
applicable to amounts withheld in a currency other than U. S. dollars, permit
payroll withholding in excess of the amount designated by a Participant in order
to adjust for delays or mistakes in the Company's processing of properly
completed withholding elections, establish reasonable waiting and adjustment
periods and/or accounting and crediting procedures to ensure that amounts
applied toward the purchase of Common Stock for each Participant properly
correspond with amounts withheld from the Participant's Compensation, and
establish such other limitations or procedures as the Board (or its committee)
determines in its sole discretion advisable which are consistent with the Plan.

      (c)  In the event the Board or the Committee determines that the ongoing
operation of the Plan may result in unfavorable financial accounting
consequences, the Board or the Committee may, in its discretion and, to the
extent necessary or desirable, modify or amend the Plan to reduce or eliminate
such accounting consequences including, but not limited to:

          (1)  altering the Purchase Price for any Offering Period including an
          Offering Period underway at the time of the change in Purchase Price;

          (2)  shortening any Offering Period so that the Offering Period ends
          on a new Exercise Date, including an Offering Period underway at the
          time of the Board action; and

          (3)  allocating shares.

          Such modifications or amendments shall not require stockholder
approval or the consent of any Plan participants.

      12.6 No Employment Rights.
           --------------------

      The Plan does not, directly or indirectly, create in any Employee or class
of Employees, any right with respect to continuation of employment by the
Company, and it shall not be deemed to interfere in any way with the Company's
right to terminate, or otherwise modify, an Employee's employment at any time.

      12.7 Effect of Plan.
           --------------

      The provisions of the Plan shall, in accordance with its terms, be binding
upon, and inure to the benefit of, each Participant and Beneficiary, and
successors thereof, including, without limitation, estates and the executors,
administrators or trustees, heirs and legatees, and any receiver, trustee in
bankruptcy or creditor representative.

                                       11
<PAGE>

      12.8 Governing Law.
           -------------

      The laws of the State of Washington will govern all matters relating to
this Plan, except to the extent superseded by the laws of the United States.

                                  COLUMBIA BANKING SYSTEM, INC.

                                  By:______________________________
                                     ______________________________
                                     Its:__________________________

Date Amended By The Board:  January 26, 2000
                            ----------------

Date Adopted By The Board:  January 25, 1995
                            ----------------

Date Adopted By The Shareholders:  April 26, 1995
                                   --------------

                                       12<PAGE>

                                                                    Exhibit 10.5

                            Basic Lease Information

                                 OFFICE LEASE

Lease Date:                                    December 15, 1999

Landlord:                                      Haub Brothers Enterprises Trust
Address of Landlord:                           c/o Mr. John D. Barline
                                               P.O. Box 1872
                                               Tacoma, WA 98401-1872

Tenant:                                        Columbia Banking Systems, Inc., a
                                               Washington corporation

Address of Premises:                           1301 South "A" Street

Contact:                                       W. W. Philip
                                               Telephone:  253-305-1900

Paragraph 1         Lease Term: One Hundred Eighty (180) Months, commencing 75
                    days after issuance of: (a) a certificate from Landlord's
                    Architect that the building has been substantially completed
                    in accordance with the approved plans and specifications
                    (the "Certificate of Construction Completion"); (b) a
                    Certificate of Construction Completion for the building from
                    the City of Tacoma; and (c) a Certificate from Landlord's
                    Architect that the Landlord's obligations as enumerated in
                    Exhibit "C" have been substantially competed except for
                    normal punch list items. In the event this Lease commences
                    on a date other than the first day of a calendar month, said
                    term shall extend for said number of Months in addition to
                    the remainder of the calendar month following the date of
                    Lease commencement.

Paragraph 2         Rent: $115,412.00 for floors 6, 7 and 8. This is based on
                    62,105 NRSF. The exact square footage will be verified in
                    writing and adjusted upon substantial completion of the
                    building. The rent will also be adjusted based on reduced
                    costs, as more particularly described on Exhibit H.

Paragraph 17        Tenant's Percentage Share of Operating Expenses is
                    estimated to be: (62,105 NRSF) 36.14% The exact percentage
                    will be verified in writing and adjusted upon substantial
                    completion of the building.

Paragraph 2         Security Deposit:          $0.00

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

                                      -1-
<PAGE>

                                Lease Agreement

     THIS LEASE is made as of this 15th day of December, 1999, between Haub
                                   ----        --------
Brothers Enterprises Trust (hereinafter called "Landlord") and Columbia Banking
Systems, a Washington Corporation (hereinafter called "Tenant").

     Landlord hereby leases to Tenant and Tenant hereby leases from Landlord for
the purposes and upon the terms and conditions hereinafter set forth, those
premises (hereinafter called "Premises") containing approximately Sixty-Two
Thousand One Hundred Five (62,105) square feet of net rentable office area
(floors 6,7 and 8) as outlined on Exhibit "A" attached hereto and made a part
                                  -----------
hereof, specified in the Basic Lease Information attached hereto, which Premises
are within the building known as the 13th and A Street Building (the real
property and all improvements, including said building are hereinafter called
"Building") which is described in Exhibit "B" attached hereto. It is
                                  -----------
acknowledged that the Lessee is desirous of possibly leasing additional space in
the building (500sf more of less on the first floor). Should the parties agree
upon such, then said space may be added as and addendum to the Lease

     1.   TERMS AND POSSESSION.

          (a)  The term of this Lease shall be One Hundred Eighty (180) Months,
commencing 75 days after Landlord has delivered possession of the entire
premises to Tenant and has delivered to Tenant: (a) a certificate from
Landlord's Architect that the building has been substantially completed in
accordance with the approved plans and specifications (the "Certificate of
Construction Completion") and (b) a Certificate of Construction Completion for
the building from the City of Tacoma ; and (c) a Certificate from Landlord's
Architect that the Landlord's obligations as enumerated in Exhibit "C" have been
substantially competed except for normal punch list items. The parties
anticipate the Building to be completed and ready for commencement of occupancy
on or about January 1, 2001 Landlord agrees to allow Tenant to commence
construction of its tenant improvements concurrent with Landlord's construction
of the building so long as the Tenant improvement work does not interfere with
or adversely affect Landlord's ability to deliver the premises timely. Tenant
shall be permitted to occupy the Premises before the commencement of the term
for purposes of completing tenant improvements, installing equipment, moving
furniture and other activities prior to conducting business from the Premises
and such activities and occupancy by Tenant shall not be deemed Tenant's
acceptance of possession; provided, however, that such period of occupancy
before commencement of the term shall not exceed 75 days. Tenant shall be deemed
to have accepted possession of the Premises and the Lease term shall begin upon
commencing the operation of its business on the Premises or 75 days after
issuance of the three (3) above required Certificates, , whichever first occurs
(herein, the "Commencement Date"). If Landlord, for any reason whatsoever,
cannot deliver possession of the building to Tenant on or before January 1,2001,
this Lease shall not be void or voidable, nor shall Landlord or its agents be
liable to Tenant for any loss or damage resulting therefrom. In that event,
however, Tenant shall not be liable for any rent until the Lease commences as
described above. In the event that Landlord fails to deliver possession of the
building as defined above by December 15, 2001, unless otherwise modified by
both parties, this Lease "may" be canceled by Tenant and, upon Tenant exercising
this option, the Lease shall be of no further effect.

          (b)  Landlord agrees to provide a tenant improvement allowance for
construction of building standard tenant improvements to the leased premises not
to exceed thirty five and no/100 ($35.00) per rentable square foot including all
construction costs, space planning, architectural and engineering fees, and
Washington State sales tax in effect at the time the improvements are
constructed. Any improvement costs exceeding the above referenced amount shall
be the sole responsibility of the tenant. Tenant improvement design shall be
mutually acceptable by both landlord and tenant. Construction of the tenant
improvements shall be the sole responsibility of the tenant. Landlord agrees to
construct a shell and core for Tenant's occupancy in the Premises as described
in the attached Exhibit "C Shell and Core Work Letter Agreement, and made a part
                ---------- ------------------------------------
hereof. Tenant shall be responsible for constructing its own Tenant Improvements
to the Premises (office area only) as more particularly described on Exhibit "D"
                                                                     -----------
Tenant Improvement's Work Letter Agreement, and made a part hereof.
------------------------------------------

                                      -2-
<PAGE>

          (c)  Tenant shall accept the Premises upon notice from Landlord that
all work which is the Landlord's responsibility is substantially complete,
subject to minor punch list items. Tenant shall, within ninety (90) days of such
notice, provide Landlord with a complete list of any alleged deficiencies in
such work and Landlord shall promptly repair the same. Thereafter, Tenant shall
be deemed to have waived such deficiencies not made known to Landlord, except
for latent deficiencies, and to have accepted the building as fully in
compliance with Landlord's obligations hereunder.

      2.  RENT. In consideration of this Lease, Tenant promises and agrees to
pay Landlord rent for said Premises at the rate of:

                              ANNUAL BASE RENT
      MONTHS              PER RENTABLE SQUARE FOOT        MONTHLY BASE RENT

      1-24                         $22.30                       $115,412
      25-48                        $23.30                       $120,587
      49-72                        $25.80                       $133,526
      73-120                       $26.30                       $136,113
      121-180                      $27.06                       $140,047

One such monthly installment shall be payable by Tenant to Landlord in advance,
without demand, upon Tenant's execution of this Lease, and a like monthly
installment shall be due and payable on or before the first day of each
succeeding calendar month during the term hereof. Rent for any fractional month
at the beginning or end of the Lease term shall be prorated.

     In the event Tenant fails to pay any installment of rent or other incurred
expense hereunder as and when such installment is due, to help defray the
additional cost to Landlord resulting from such late payments, Tenant shall pay
to Landlord a late charge in an amount equal to three percent (3%) of such
installment for any installment not paid by the 10th of the month for which it
is due; and the failure to pay such amount within ten (10) days after written
demand therefor shall be an event of default hereunder. The provision for such
late charge shall be in addition to all of Landlord's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord's remedies in any manner. In the event that any installment of
rent or other incurred charge remains unpaid ten (10) days after assessment or
invoice thereof, interest shall be assessed on all outstanding amounts at the
lesser of (i) the rate of 12% per annum or (ii) the highest rate allowed by law.

     3.   USE. The demised Premises shall be used and occupied by Tenant as
banking and other associated services, including but not limited to insurance
and securities related activities.

          (a)  Tenant shall not use, or permit to be used, the demised Premises
for any other purpose. Tenant shall not commit nor permit the commission of any
waste in, on or about the Premises, and shall not occupy or use, nor permit to
be occupied or used any portion of the demised Premises for any business or
purpose which is unlawful in part or in whole, nor permit anything to be done
which will in any way increase the rate of fire insurance on the Building or its
contents, or cause the cancellation of such insurance or otherwise affect said
insurance in any manner. In the event that, by reason of acts of Tenant, there
shall be any increase in the rate of insurance on the Building or its contents
created by Tenant's acts or conduct of business, then such acts shall be deemed
to be an event of default hereunder and Tenant hereby agrees to pay the amount
of such increase on demand and acceptance of such payment shall not constitute a
waiver of any of Landlord's rights hereunder.

          (b)  Tenant agrees that it shall not generate, handle, store or
dispose of any hazardous substance on or in the Premises or common areas or any
other part of the Building. As used herein, the term "hazardous substance" means
any hazardous, toxic or dangerous substance, waste or material, which is now or
hereafter becomes designated a hazardous and/or regulated under any Federal,
State or local statute, ordinance, rule, regulation or other law now or
hereafter in effect pertaining to environmental protection, contamination or
clean-up. Tenant agrees to hold harmless, indemnify and defend Landlord from and
against any damage, loss, claim or liability resulting from any breach of this
covenant, including

                                      -3-
<PAGE>

any attorneys' fees and costs incurred as a result of any such breach. This
indemnity shall survive the termination of this Lease, whether by expiration of
its term or otherwise.

          (c)  Landlord agrees that it shall not generate, handle, store or
dispose of any hazardous substance on or in the Premises or common areas or any
other part of the Building. As used herein, the term "hazardous substance" means
any hazardous, toxic or dangerous substance, waste or material, which is now or
hereafter becomes designated a hazardous and/or regulated under any Federal,
State or local statute, ordinance, rule, regulation or other law now or
hereafter in effect pertaining to environmental protection, contamination or
clean-up. Landlord agrees to hold harmless, indemnify and defend Tenant from and
against any damage, loss, claim or liability resulting from any breach of this
covenant and any damage, loss, claim or liability with respect to any hazardous
substance existing on or in the Building as of the Commencement Date of this
Lease, including any attorneys' fees and costs incurred as a result of any such
breach. This indemnity shall survive the termination of this Lease, whether by
expiration of its term or otherwise.

      4.  LANDLORD'S OBLIGATIONS. Landlord shall maintain the Premises and the
public and common areas of the Building in good order and condition consistent
with the operation of a first-class office building in downtown Tacoma,
Washington. Such maintenance includes, but is not limited to, changing burnt out
florescent lights, maintaining the standard provided levelours and doors,
washing in normal course exterior windows inside and out, furnishing Tenant
while occupying the demised Premises water, hot and cold, at those points of
supply provided for general use of tenants of the Building; providing heated and
refrigerated air conditioning in season, at such times as Landlord normally
furnishes these services to all tenants of the Building, and at such hours and
temperatures and in such amounts as are considered by Landlord to be standard,
such service on Sunday and holidays to be optional on the part of Landlord;
janitor service on weekdays other than holidays; elevator service; and electric
service for normal office use, all in the manner and to the extent deemed by
Landlord to be standard for such a first class office building; but failure to
any extent to furnish, or any stoppage of these defined services, resulting from
causes beyond control of Landlord shall not render Landlord liable in any
respect for damages to person, property or business, nor be construed as an
eviction of Tenant for effect any abatement of rent, nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Landlord will provide all
normal services to the building without any extra or special charges to tenant
on holidays which are not bank holidays and during which the bank tenant is open
to the public. Should any equipment or machinery furnished by Landlord break
down, or for any cause cease to function properly, Landlord shall use reasonable
diligence to repair same promptly, but Tenant shall have no claim for rebate of
rent or damages on account of any interruptions in service occasioned thereby or
resulting therefrom except for landlord gross negligence. Tenant shall pay to
Landlord on demand such charges as Landlord may reasonably prescribe for any
electric service required by Tenant for computers and other electrical equipment
or other electric service deemed by Landlord not to be standard. Should tenant
elect to operate, heating, ventilating, air conditioning services in the
building at any time other than normal building operating hours, the cost of
operating said systems shall be billed back to tenant based on an hourly rate of
usage. No janitorial service shall be provided for Saturdays, Sundays or legal
holidays. The costs of any janitorial or other service provided by Landlord to
Tenant which are in addition to the services ordinarily provided Building
tenants shall be repaid by Tenant as Additional Rent upon receipt of billings
therefor.

      5.  TENANT'S REPAIRS AND ALTERATIONS. Tenant shall not in any manner
deface, damage or injure the Building, and will pay the cost of repairing any
damage or injury done to the Building or any part thereof by Tenant or Tenant's
agents, employees. Tenant shall throughout the term of the Lease take good care
of the demised Premises and keep them free from waste and nuisance of any kind.
Tenant agrees to keep the demised Premises, including all fixtures installed by
Tenant , in good condition and make all necessary repairs. At the end or other
termination of this Lease, Tenant shall deliver up the demised Premises with all
improvements located thereon, except as provided in this paragraph, in good
repair and condition, reasonable wear and tear excepted. Tenant shall not make
or allow to be made any alterations or physical additions in or to the demised
area without the prior written consent of Landlord which consent shall not be
unreasonably withheld or delayed. Not withstanding the above, tenant may make
periodic improvements to the demised premises not costing more than twenty-five
thousand and no/100 ($25,000.00), so long as said improvements are constructed
in a professional manner consistent with the

                                      -4-
<PAGE>

level of quality of the building, and in compliance with all applicable building
codes in affect at the time the improvements are to be constructed. tenant must
complete the subject work in a manner that will not be disruptive to the other
tenants in the building. At the termination of this Lease Tenant shall, if
Landlord so elects, remove all alterations, physical additions or improvements
erected by Tenant and shall restore the demised Premises to their original
condition; otherwise such improvements shall be delivered up to Landlord with
the demised Premises. All furniture and moveable trade fixtures installed by
Tenant may be removed by Tenant at the termination of this Lease if Tenant so
elects, and shall be removed if Landlord so elects. All such removals and
restoration shall be accomplished in a good workmanlike manner so as not to
damage the primary structure or structural qualities of the Building.

      6.  ASSIGNMENT AND SUBLETTING. Except in the event of a merger with
another bank or similar entity with equal to or greater net worth at the time of
transfer, Tenant shall not assign this Lease, or allow same to be assigned by
operation of law or otherwise, or sub-let the demised Premises or any part
thereof unless tenant agrees to remain primarily liable with respect to the
terms and conditions of this lease. Said sublease or transfer shall require the
prior written consent of landlord which shall not be unreasonably withheld.
Landlord shall have the right to transfer and assign, in whole or in e part, any
of its rights under this Lease, and in the Building and property referred to
herein; and to the extent that such assignee assumes Landlord's obligations
hereunder, Landlord shall by virtue of such assignment be released from such
obligations.

          If Tenant is a corporation, any dissolution or reorganization of
Tenant, or the sale or other transfer of ownership (either in one or more
transactions) of fifty percent (50%) or more of the total voting power of all
classes of voting stock shall be deemed an assignment. If Tenant is a
partnership, the withdrawal or change, voluntary, involuntary or by operation at
law, of partners owning thirty percent (30%) or more of the partnership (either
in one or more transactions), or the dissolution of the partnership shall be
deemed an assignment.

          In the event that Landlord agrees to the assignment of this Lease or
to a sublease, Tenant agrees to pay the Landlord an amount of Five Hundred and
No/100 Dollars ($500.00) to reimburse Landlord for its costs in processing such
assignment or sublease.

      7.  MAINTENANCE. Tenant shall maintain the demised Premises in a neat,
clean and healthful condition, and shall comply with all laws, ordinances,
orders, rules, and regulations (state, federal, municipal, as well as those of
other agencies or bodies having any jurisdiction thereof) with reference to use,
condition, or occupancy of the demised Premises.

      8.  LIABILITY. Landlord shall not be liable for and Tenant shall indemnify
and hold Landlord harmless from any loss, liability, costs and expenses,
including attorneys' fees, arising out of any claim of injury or damage on or
about the leased Premises caused by the negligence or misconduct or breach of
this Lease by Tenant, its employees, subtenants, customers, invitees or by any
other person entering the leased Premises or the Building or Property under
express or implied invitation of Tenant or arising out of Tenant's use of the
leased premises. Landlord shall not be liable to Tenant or Tenant's agents
employees, invitees or any person entering upon the Property in whole or in part
because of Tenant's use of the leased Premises for any damage to persons or
property due to condition, design, or defect in the Building or its mechanical
systems which may exist or occur Landlord shall not be liable or responsible for
any loss or damage to any property or person occasioned by theft, fire, act of
God, public enemy, injunction, riot, strike, insurrection, war, court order,
requisition or order of government body or authority, or other matter beyond
control on Landlord, or for any injury or damage or inconvenience, which may
arise through repair or alteration of any part of the Building, or failure to
make repairs, or from any cause whatever except Landlord's willful acts or gross
negligence. Tenant agrees to purchase at its own expense and to keep in force
during the term of this Lease a policy or policies of workmen's compensation and
comprehensive liability insurance, including personal injury and property
damage, in the minimum amounts of Two Million Dollars ($2,000,000.00) for
property damage and Two Million Dollars ($2,000,000.00) per person and Two
Million Dollars ($2,000,000.00) per occurrence for personal injuries or deaths
of person occurring in or about the Premises. The amounts of insurance may be
increased upon mutual written agreement of both parties. Said policies shall:
(I) name Landlord as an additional insured and insure Landlord's contingent
liability

                                      -5-
<PAGE>

under this Lease; (ii) be issued by an insurance company which is acceptable to
Landlord (acceptability shall not be unreasonably withheld) and licensed to do
business in the State of Washington; and (iii) provide that such insurance shall
not be canceled unless thirty (30) days' prior written notice shall have been
given to Landlord. Said policy or policies or certificate thereof shall be
delivered to Landlord by Tenant upon commencement of the term of the Lease and
upon each renewal of said insurance. During the term of this lease, Landlord
will maintain an amount of insurance on the building equal to at least 90% of
its current replacement cost and Landlord will maintain comprehensive liability
insurance, including personal injury and property damage, in the minimum amounts
of Two Million Dollars ($2,000,000.00) for property damage and Two Million
Dollars ($2,000,000.00) per person and Two Million Dollars ($2,000,000.00) per
occurrence for personal injuries or deaths of person occurring in or about the
Premises.

      9.  WAIVER OF SUBROGATION. Notwithstanding any provisions to the contrary
elsewhere in this lease, Landlord and Tenant hereby waive any right that each
may have against the other on account of any loss or damage arising in any
manner which is covered by policies of insurance for fire and extended coverage,
theft, public liability, workmen's compensation or other insurance now or
hereafter existing during the term hereof.

      10. RULES AND REGULATIONS. Tenant and Tenant's agents, employees, and
invitees shall comply fully with all requirements of the rules of the Building
which are attached as Exhibit "E". Landlord shall at all times have the right to
                      -----------
change such rules and regulations or to amend them in such reasonable manner as
may be deemed advisable for safety, care, and cleanliness of the Building and
for preservation of good order therein, all of which rules and regulations,
changes, and amendments shall be forwarded to Tenant in writing and shall be
carried out and observed by Tenant. Tenant shall further be responsible for the
compliance with such rules and regulations by the employees, servants, agents,
visitors and invitees of Tenant. The terms in this lease shall supercede and be
controlling over any contrary provisions in the Building rules and regulations.

      11. INSPECTION. Landlord, or its officers, agents, and representatives
shall have the right to enter into and upon any and all parts of the demised
Premises, (except for bank "security areas") at reasonable hours to clean or
make repairs or alterations or additions as Landlord may deem necessary. With 24
hour advance notice, Landlord, or its officers, agents, and representatives
shall have the right to enter the Premises for general inspections of the same
and/or to show the demised Premises to purchasers or lenders, and Tenant shall
not be entitled to any abatement or reduction of rent by reason thereof. In
addition to the above, Landlord may show the premises to prospective tenants
only after the expiration of tenant's notice to renew its lease has expired as
defined in paragraph 38 of this lease. The tenant bank may from time to time
advise the Landlord in writing of bank "security areas" within its premise into
which areas the Landlord will not have access without accompaniment of a bank
officer.

      12. CONDUCT OF BUSINESS. Tenant shall conduct its business, control its
employees, and use its best efforts to control its agents, customers, and
invitees - all in such a manner as not to create any nuisance, or interfere
with, annoy or disturb other tenants or Landlord in the management of the
Building.

      13. CONDEMNATION. If the demised Premises shall be taken or condemned in
whole or in substantial part for public purposes, then the term of this Lease
shall, at the option of Landlord, forthwith cease and terminate. Tenant may make
a claim against the condemning agency for Tenant's moving and relocation costs
and for the value of its leasehold estate terminated because of the
condemnation. Any such claim shall be made jointly with the Landlord and
Landlord and Tenant will share pro-rata any condemnation award, but in any case,
Tenant shall not be entitled to an amount in excess of its moving and relocation
costs and the value of the terminated leasehold estate. In the event of a
partial condemnation such that the balance of the Premises provides adequate
space of Tenant's operations then and in the foreseeable future, as reasonably
determined by Tenant, this Lease shall remain in full force and effect, rent
shall be reduced proportionately by the amount of the Premises taken, and
Landlord shall restore or make any reasonable improvement to the Premises or the
Property which is required as a result of the condemnation so that the balance
of the Premises and the property are restored to a useable condition as nearly
as possible to the condition prior to the condemnation.

                                      -6-
<PAGE>

      14. FIRE AND OTHER CASUALTY. In the event that the Building should be
totally destroyed by fire, tornado or other casualty, or should be so damaged
that rebuilding or repairs cannot be completed within two hundred forty (240)
days after the date of such damage, Landlord, or Tenant, by giving written
notice to the other within sixty (60) days after the date of such damage, may at
its option terminate this Lease, in which event the rent shall be abated during
the unexpired portion of this Lease effective with the date of such damage. In
the event the Building should be damaged by fire, tornado or other casualty, but
only to such extent that rebuilding or repairs can be completed within two
hundred forty (240) days after the date of such damage, or if the damage should
be more serious but neither party has elected to terminate this Lease, in either
such event Landlord shall proceed with reasonable diligence to restore the
Building to substantially the same condition in which it was immediately prior
to the happening of the casualty, except that Landlord shall not be required to
rebuild, repair or replace any part of the partitions, fixtures, and other
improvements which may have been placed by Tenant or other tenants within the
Building, except to the extent that insurance proceeds made available to
Landlord include recovery for such improvements. Rent shall be abated prorata
with respect to that portion of the Premises which is untenantable during the
time the demised Premises are unfit for occupancy. In the event that any
mortgagee under a deed of trust, security agreement or mortgage on the Building
should require that the insurance proceeds be used to retire the mortgage debt,
Landlord shall have no obligation to rebuild and this Lease may terminate upon
notice to Tenant. Notwithstanding the foregoing, in no event shall the Landlord
be responsible for loss or damage to any of Tenant's personal property. Any
insurance which may be carried by Landlord or Tenant against loss or damage to
the Building or to the demised Premises shall be for the sole benefit of the
party carrying such insurance and under its sole control.

      15. HOLDING OVER. Should Tenant, or any of its successors in interest,
hold over the demised Premises, or any part thereof, after the expiration of the
term of this Lease, unless otherwise agreed in writing, such holding over shall
constitute and be construed as a tenancy from month to month only, at a rental
equal to rent paid for the last month of the term of this Lease plus twenty-five
percent (25%) of such amount. The inclusion of the preceding sentence shall not
be construed as Landlord's consent for the Tenant to hold over.

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

      17. RENT ADJUSTMENT - OPERATING EXPENSES. Landlord shall give Tenant a
statement of the Operating Expenses (as defined below) for the Building for each
calendar year, and shall use its best efforts to provide such statement within
ninety (90) days after the close of the calendar year. Except as provided
herein, if such Operating Expenses (allocated on a square foot basis to all
rentable space in the Building) exceed a base of Six and 47/100 Dollars ($6.47)
per square foot of area within the demised Premises (the "Base"), Tenant shall
pay Landlord Tenant's proportionate share of such excess for the entire calendar
year immediately preceding issuance of said statement. The statement shall also
show the projected expenses for the upcoming year. If the projected expenses
exceed the Base, then Tenant shall pay the difference between the new and the
former estimates for the period from January 1 of the current calendar year
through the month in which the statement is sent within twenty (20) days after
Landlord sends the projections to Tenant. Thereafter, Tenant shall pay the new
estimated amount until Landlord further revises such estimated amount. If the
actual expenses show that Tenant's estimated payments exceeded Tenant's actual
obligations, Landlord shall credit the difference against payment of the rent
next due. If the Term shall have expired and no further Rent shall be due,
Landlord shall provide a refund of such difference at the time Landlord sends
its annual statement to tenants. Regardless of the foregoing, increases in
Tenant's share of Operating Expenses shall be limited as they relate to "Capped
Expenses." As used herein, "Capped Expenses" shall consist of all expenses
except taxes, assessments, utilities, and insurance. The increase in Capped
Expenses over those which existed in the third year of this Lease (the "Base
Year"), shall be the lesser of (i) the actual amount of such increase, or (ii)
the amount of the Capped Expense in the

                                      -7-
<PAGE>

Base Year increased at 4% per year, cumulative and compounded. In the event the
building is partially occupied during any calendar year, Landlord has the right
to adjust or annualize the Operating Expenses to reflect a fully occupied
building. Such adjustments shall be calculated according to accepted standards
of accounting for office building management and generally accepted accounting
principles using the principles identified on Exhibit "F."
                                              ------------

          If at Lease commencement or termination a partial calendar year is
involved, operating expenses shall be computed as though a full calendar year
were involved and prorated for such partial year. If the Lease terminates other
than at the end of a calendar year, an estimate of current annual operating
expenses shall be computed for the year of termination and any increased rental
based on such estimate shall be billed to the Tenant prior to termination.
Landlord shall furnish Tenant an itemized statement of the actual operating
expenses at the end of the calendar year as outlined in the preceding paragraph.

          For purposes of this Lease, operating expenses shall include those
expenses paid or incurred by the Landlord for maintaining, operating and
repairing the real property (including the building lobby and all building
common areas), of which the demised Premises are a part, the Building and other
improvements thereon and the personal property used in conjunction therewith
(hereafter collectively referred to as "Project") including but not limited to
the cost of ad valorem taxes, regular and special assessments, license fees and
other charges of any kind whatsoever, payable by Landlord as a result of any
public, quasi-public or private assessment or levy, electricity, lights, natural
gas, ventilation, heating and air conditioning, water, window cleaning, window
repair, levelor style or similar blinds, doors, janitorial service, exterior
building maintenance, landscaping, insurance (including but not limited to fire,
extended coverage, liability, worker's compensation, elevator or any other
insurance carried in good faith by the Landlord and applicable to the Project)
painting, uniforms, customary property management fees not to exceed 5% of
rentals, supplies, sundries, sales or use taxes on supplies or services, cost of
wages, salaries and so-called fringe benefits of all persons engaged in the
operation, maintenance and repair of the Project, or any other costs or expenses
which the Landlord pays or incurs to provide benefits for employees so engaged
in the operation, maintenance and repair of the Project, the charges of any
independent contractor who under contract with the Landlord or its
representatives does any of the work of operating, maintaining or repairing the
Project, legal and accounting expenses, including but not limited to such
expenses as relate to seeking or obtaining reductions in and refunds of real
estate taxes, or any other expense or charge, whether or not hereinabove
mentioned, which in accordance with generally accepted accounting and management
principles would be considered as an expense of maintaining, operating or
repairing the Project. If any Project expense, though paid in one year, relates
to more than one calendar year, the Landlord shall allocate the reimbursement of
said expenses based on its normal life expectancy according to generally
accepted accounting practices.

          Landlord's managers may, from time to time, hire such individuals and
companies to provide limited security for the Property as Landlord and its
managers may decide and the cost thereof will be added to the total cost of
operating the Building as defined in this lease. Notwithstanding the foregoing,
Landlord will maintain a guard in, around, or near the building during such
hours as may be mutually agreed upon by Landlord and tenant, or during such
hours as the major building tenants (those leasing at least two (2) full floors)
may request of the Landlord from time to time in writing.. In the event that
Landlord maintains a guard or provides some other form of security, Landlord
does not assume any liability whatsoever as a result of providing or contracting
for such guard service/security.

          Tenant at its expense shall have the right at all reasonable times to
review Landlord's books and records relating to this Lease for any year or years
for which additional rental payments become due hereunder. 0nce per calendar
year, tenant at its expense shall have the right to audit landlord's books and
records relating to this building. In the event the audit shows actual building
expenses differ from landlords actual year end reconciled expenses by an amount
greater than three percent of said expenses, tenant shall be reimbursed for its
audit costs by Landlord.

The following shall be expressly excluded from Tenant's share of operating
expenses:

 .    financing and refinancing charges, and costs associated with such
     financing and refinancing.;

                                      -8-
<PAGE>

 .    depreciation or amortization;
 .    leasing brokerage commissions and expenses;
 .    initial improvements to tenant spaces and other forms of tenant allowances
     and the costs of renovating or redecorating leased space;
 .    bad debt loss, rent loss or reserves for bad debt or rent loss;
 .    late payment interest or penalties;
 .    advertising and promotional expenditures for leasing space;
 .    costs of removing hazardous materials which were not placed on the property
     by tenant;
 .    costs associated with building code violations when the building was
     constructed;
 .    charitable or political contributions;
 .    costs of asbestos removal;
 .    capital expenses, except those (i) made primarily to reduce expenses or to
     comply with laws or insurance requirements imposed after the Building was
     constructed, or (ii) for replacements or upgrades of nonstructural items
     located in the common areas of the building required to keep such areas In
     a first class condition. To the extent that any such permitted capital
     expenditure exceed $5,000, such expenditure shall be amortized in
     accordance with generally accepted accounting principles. In each such
     case, Landlord may include interest on the unamortized amount at the
     prevailing loan rate available to Landlord when the cost was incurred;
 .    legal fees in connection with leasing, tenant disputes or enforcement of
     leases;

It is further agreed that rebates, refunds, and payments from other revenue
sources specific to operating expenses will be applied towards operating
expenses.

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

          (a)  Tenant shall fail to pay any installment of rent hereby reserved
on or by the first day of any month, and shall not cure such failure within ten
(10) days after written notice to Tenant. Tenant shall not have any grace period
within which to cure any default in the payment of rental or adjustments thereto
beyond said notice period.

          (b)  Tenant shall fail to comply with any term, provision, or covenant
of this Lease, other than the payment of rent or other expenses, and shall not
cure such failure within thirty (30) days after written notice to Tenant for any
non-monetary default or within such reasonable period after such notice as may
be required to effect compliance so long as Tenant initiates compliance within
such thirty (30) day period and, thereafter, is diligently and reasonable
pursuing such cure.

          (c)  Tenant shall make an assignment for the benefit of creditors.

          (d)  Tenant shall file a petition under any section of the United
States Bankruptcy Code as amended, or any successor legislation or similar
statute of the United States or any State thereof; or Tenant shall be adjudged
bankrupt or insolvent in proceedings filled against Tenant thereunder and such
adjudication shall not be vacated or set aside or stayed within the time
permitted by law.

          (e)  A receiver or Trustee shall be appointed for all or substantially
all of the assets of Tenant and such receivership shall not be terminated or
stayed within the time permitted by law.

A notice under Paragraph 18 may be one and the same notice and may be given
concurrently with a notice under the unlawful detainer statue in the State of
Washington, if applicable.

      19. REMEDIES. Upon the occurrence of any event of default specified in
this Lease, Landlord shall have the option to pursue any one or more of the
following remedies:

          (a)  Terminate this Lease by written notice to the Tenant, in which
event Tenant shall immediately surrender the demised Premises to Landlord and if
Tenant fails to do so, Landlord may, without

                                      -9-
<PAGE>

prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the Premises and expel or remove Tenant
or Tenant's property and any other person who may be occupying the demised
Premises or any part thereof, without being liable for prosecution or of any
claim of damages therefor; and Tenant agrees to pay to Landlord on demand the
amount of all loss and damage which Landlord may suffer by reason of such
termination, whether through inability to relet the demised Premises on
satisfactory terms for the remainder of the Lease term or otherwise.

          (b)  Enter upon and take possession of the demised Premises and, if
Landlord so elects, relet the demised Premises and receive the rent therefor
without liability to Tenant for any amounts received in excess of the rent
called for under this Lease. Tenant agrees to pay the Landlord on demand any
costs of reletting and all other charges accruing hereunder, i.e., tenant
improvements, leasing commissions, as well as any deficiency that may arise by
reason of such reletting during the remaining term of this Lease.

          (c)  Enter upon the demised Premises without being liable for any
claim for damages therefor, and do whatever Tenant is obligated to do under the
terms of this Lease and has failed to do in a timely fashion; Tenant agrees to
reimburse Landlord on demand for any expenses which Landlord may incur in thus
effecting compliance with Tenant's obligations under this Lease, and Tenant
further agrees that Landlord shall not be liable for any damages resulting to
the Tenant from such action.

          (d)  Recover all unpaid rent, additional rent and other charges
arising during the remaining term of the Lease as well as on any costs and
commissions incurred in reletting and any losses or damages arising from
Tenant's default including reasonable attorneys' fees and court costs, all such
unpaid amounts to accrue interest at the lesser of (i) 12% per annum or (ii) the
highest rate allowed by law, from date due or incurred until paid.

     Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law or
equity, nor shall pursuit of any remedy herein provided constitute a forfeiture
or waiver of any rent due to Landlord hereunder or of any damages occurring to
Landlord by reason of the violation of any of the terms, provisions and
covenants herein contained. Landlord's acceptance of rent following an event of
default hereunder shall not be construed as Landlord's waiver of such event of
default. No waiver by Landlord of any violation or breach of any of the terms,
provisions and covenants herein contained shall be deemed or construed to
constitute a waiver of any other violation or breach of any of the terms,
provisions, and covenants herein contained. Forbearance by Landlord to enforce
one or more of the remedies herein provided upon an event of default shall not
be deemed or construed to constitute a waiver of such default or of any future
default.

      20. SURRENDER OF PREMISES. No act or thing done by the Landlord or its
agents during the term hereby granted shall be deemed an acceptance of a
surrender of the demised Premises and no agreement to accept a surrender of the
demised Premises shall be valid unless the same be made in writing and signed by
the Landlord.

      21. ATTORNEYS' FEES. In case it should be necessary or proper for Landlord
to bring any action under this lease or to consult or place said lease, or any
amount payable by Tenant thereunder, with an attorney concerning or for the
enforcement of any of Landlord's rights hereunder, then Tenant agrees in each
and any such case to pay the Landlord a reasonable attorneys' fee if Landlord is
the prevailing party. In case it should be necessary or proper for Tenant to
bring any action under this Lease because of Landlord's default hereunder, then
Landlord agrees in each and every case to pay to Tenant a reasonable attorneys'
fee if Tenant is the prevailing party.

      22. RECEIPTS FROM ASSIGNEE OR SUBTENANT. The receipt by the Landlord of
rent from any assignee, subtenant or occupant of the demised Premises shall not
be deemed a waiver of the covenant in this Lease contained against assignment
and subletting or an acceptance of the assignee, subtenant or occupant as tenant
or a release of the Tenant from the further observance or performance by the
Tenant of the covenants in this Lease contained, on the part of the Tenant to be
observed and performed. No provision of this Lease shall be deemed to have been
waived by the Landlord unless such

                                      -10-
<PAGE>

waiver be in writing signed by the Landlord.

      23. LANDLORD'S LIEN. Landlord retains its statutory landlord lien rights,
but waives such with respect to any money or personal property of Tenant's
customers or owned by the Tenant, but owed to the customer.

      24. CORPORATE AUTHORITY. If Tenant signs as a corporation, each of the
persons executing this Lease on behalf of Tenant does hereby covenant and
warrant that Tenant is a duly authorized and existing corporation, that Tenant
has and is qualified to do business in Washington, that the corporation has full
right and authority to do so, and that said persons have the full rights and
powers granted unto them by the corporation to bind it to this Lease. Upon
Landlord's request, Tenant shall provide Landlord with evidence reasonably
satisfactory to Landlord confirming the foregoing covenants and warranties.

      25. CERTAIN RIGHTS RESERVED BY LANDLORD. Except as otherwise provided
herein, Landlord shall have the following rights, exercisable without notice and
without liability to Tenant for damage or injury to property, persons or
business and without effecting an eviction, constructive or actual, or
disturbance of Tenant's use or possession or giving rise to any claim for set
off or abatement of rent:

          (a)  To decorate and make repairs, alterations, additions, changes or
improvements, whether structural or otherwise, in and about the Building, or any
part thereof, and for such purposes to enter upon the leased Premises and,
during the continuance of any such work, to temporarily close doors, entryways,
public spaces and corridors in the Building, to interrupt or temporarily suspend
Building services and facilities and to change the arrangement and location of
entrances or passageways, doors and doorways, corridors, elevators, stairs,
toilets, or other public parts of the Building, all without abatement of rent or
affecting any of Tenant's obligations hereunder, so long as the leased Premises
are reasonably accessible and Landlord makes its best effort not to interfere
with the peaceful operation of Tenant's business. See paragraph 11 hereof for
limitations to the foregoing and Exhibit "F" depicting security areas.
                                 ----------

          (b)  During this Lease term, Landlord and Tenant may mutually agree to
change the name of the Building.

          (c)  To grant to anyone the exclusive right to conduct any business or
render any service in or to the Building, provided such exclusive right shall
not operate to exclude Tenant from the use expressly permitted herein, and
provided that the Landlord shall obtain prior written approval of Tenant before
Landlord allows any other Tenant the right to operate a bank, financial
institution or ATM in the building. The term "financial institution" includes
banks, credit unions, savings and loan associations, investment bankers and
stock brokerage companies, but shall specifically exclude Morgan Stanley Dean
Witter and the Frank Russell Company.

          (d)  To have access for Landlord and other tenants of the Building to
any mail chutes located on the leased Premises according to the rules of the
United States Postal Service.

          (e)  To take all such reasonable measures as Landlord may deem
advisable for the security of the Building and its occupants, including without
limitation, the search of all persons entering or leaving the Building, the
evacuation of the Building for cause, suspected cause, or for drill purposes,
the temporary denial of access to the Building, and the closing of the Building
after normal business hours and on Saturdays, Sundays and holidays, subject,
however, to Tenant's right to admittance when the Building is closed after
normal business hours under such reasonable regulations as Landlord may
prescribe from time to time which may include by way of example but not of
limitation, that persons entering or leaving the Building, whether or not during
normal business hours, identify themselves to a security officer by registration
or otherwise and that such persons establish their right to enter or leave the
Building.

      26. PERSONAL LIABILITY. The liability of Landlord to Tenant for any
default by Landlord under the terms of this Lease shall be limited to the
interest of Landlord in the Building and the land, and

                                      -11-
<PAGE>

Landlord shall not be personally liable for any deficiency. This clause shall
not be deemed to limit or deny any remedies which Tenant may have in the event
of default by Landlord hereunder which do not involve the personal liability of
Landlord.

      27. NOTICES. Each provision of this Lease, or of any applicable
governmental laws, ordinances, regulations, and other requirements with
reference to the sending, mailing, or delivery of any notice, or with reference
to the making of any payment by Tenant to Landlord, shall be deemed to be
complied with when and if the following steps are taken:

                                      -12-
<PAGE>

          (a)  All rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address hereinbelow set
forth, or at such address as Landlord may specify from time to time by written
notice delivered in accordance with this Lease, and shall be deemed to be
delivered upon actual receipt by Landlord;

          (b)  Any notice or document required to be delivered hereunder shall
be deemed to be delivered, whether actually received or not, two (2) business
days after being deposited in the United States mail, postage prepaid, certified
or registered mail (with or without return receipt requested), addressed to the
parties hereto at the respective addresses set out opposite their names below,
or at such other address as they have theretofore specified by written notice
delivered in accordance herewith:

         TENANT                                  LANDLORD

         Columbia Banking Systems, Inc.          Haub Brothers Enterprises Trust
         a Washington corporation                c/o Mr. John D. Barline
         Attn:  Chief Executive Officer          P.O. Box 1872
         P.O. Box 2156                           Tacoma, WA  98401-1872
         Tacoma, WA  98401-2156

and

         Columbia Banking Systems, Inc.
         c/o Mr. William E. Holt
         Gordon Thomas Honeywell, et al.
         P.O. Box 1157
         Tacoma, WA  98401-1157

         28.  FORCE MAJEURE. Whenever a period of time is herein prescribed for
action to be taken by Landlord, Landlord shall not be liable or responsible for,
and there shall be excluded from the computation for any such period of time,
any delays due to strikes, riots, acts of God, shortages of labor or materials,
war, governmental laws, regulations, or restrictions, or any other causes of any
kind whatsoever which are beyond the control of Landlord.

         29.  ESTOPPEL CERTIFICATE. Within ten (10) days following any written
request which Landlord may from time to time make, Tenant shall execute and
deliver to Landlord a Certificate indicating that the Lease is in full force and
effect and that the Landlord is not in default hereunder or, alternatively,
specifying the nature of any claimed default, and the dates through which rent
and other charges have been paid.

         30.  SEVERABLE. If any clause or provision of this Lease is illegal,
invalid or unenforceable under present or future laws effective during the term
of this Lease, then and in that event, it is the intention of the parties hereto
that the remainder of this Lease shall not be affected thereby, and it is also
the intention of the parties to the Lease that in lieu of each clause or
provision of this Lease that is illegal, invalid or unenforceable, there be
added as a part of this Lease a clause or provision as similar in terms to such
illegal, invalid, or unenforceable clause or provision as may be possible and be
legal, valid and enforceable.

         31.  AMENDMENTS; BINDING EFFECT. This Lease may not be altered,
changed, or amended, except by instrument in writing signed by both parties
hereto. The terms, provisions, covenants and conditions contained in this Lease
shall apply to, inure to the benefit of, and be binding upon the parties hereto,
and upon their respective successors in interest and legal representatives,
except as otherwise herein expressly provided.

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

                                      -13-
<PAGE>

otherwise requires.

         33.  CAPTIONS. The captions contained in this Lease are for convenience
of reference only, and in no way limit or enlarge the terms and conditions of
this Lease.

         34.  SUBORDINATION. This Lease is subject to and is hereby subordinated
to all present and future mortgages, deeds of trust and other encumbrances
affecting the leased Premises or the property of which said Premises are a part,
provided that the holder of such encumbrance agrees to recognize the terms of
this Lease and to not disturb Tenant's occupancy so long as Tenant is not in
default. Tenant will upon demand by landlord, execute such instruments as may be
required at any time, and from time to time, to subordinate the rights and
interest of the Tenant under this Lease to the lien of any mortgage or Trust
Deed at any time placed on the land of which the leased Premises are a part;
provided, however, that such subordination shall not affect Tenant's right to
possession, use and occupancy of the leased Premises so long as Tenant shall not
be in default under any of the terms or conditions of this Lease. Tenant further
agrees:

              (a)   That any such subordination agreement will contain a
provision satisfactory to landlord's financing lender whereby Tenant will agree,
in the event of foreclosure of any such mortgage or Trust Deed to attorn to and
recognize as its landlord under the terms of this Lease said lender or any
purchaser of the leased property at a foreclosure sale or their heirs,
successors or assigns; and

              (b)   That it will execute and deliver to such lender an estoppel
certificate in form satisfactory to such lender.

         35.  PARKING. Landlord agrees and covenants to provide parking stalls
for use by Tenant's employees and customers at prices and locations on or about,
or near the property as more specifically set forth in Exhibit "H" hereto. For
                                                       ----------
each subsequent year of the lease term, the cost for said parking shall be
adjusted based upon current market rents for comparable parking in the Downtown
Tacoma market place. However, parking rents shall not be less than the parking
rent in the prior year.

         36.  OPTION TO EXPAND PREMISES WITHIN THE BUILDING. After the first
year following completion of the building and provided Tenant is not then in
default beyond any applicable cure period of any of the terms, covenants and
conditions hereof then, during the term hereof, when any non-retail space in the
Building becomes available for lease, Landlord shall notify Tenant of such
availability. Tenant shall have the right, within twenty (20) days after the
receipt of the notice, to lease said space when it becomes available on the same
terms and conditions in effect under Tenant's existing lease at the time tenant
exercises its right for said space. The rental rate for such space shall be on
the same terms and conditions as currently in effect under this Lease when this
option to expand premises is exercised. If the space has been previously
occupied, then Landlord shall at its cost repaint and recarpet such space to the
extent reasonably required, and will provide other tenant improvements (or
allowances for tenant improvements) equal to or better than those which Landlord
would offer to another tenant moving into such space (if Tenant does not
exercise its option, but Landlord later offers the space to another prospective
tenant with tenant allowances greater than that offered to Tenant, then Landlord
shall again give Tenant fifteen (15) days notice in which Tenant can again
exercise its option to lease the space with Landlord providing the tenant
improvements offered). If such space has not been previously occupied with
tenant improvements in place, Landlord shall provide Tenant with a tenant
improvement allowance in the same amount and on the same terms as set forth in
Exhibit "D" attached hereto multiplied by 100% plus the percentage difference
----------
between the cpi in effect on the commencement date of this lease term and the
cpi on the date of Landlord's offer to lease the space to Tenant, divided by 15
and multiplied by the number of years then remaining on the original 15 year
lease term. (For example, the tenant improvement allowance in Exhibit D is $35,
                                                              ---------
assuming Landlord's offer to lease is on the 7th anniversary of the initial
lease term, and assuming the cumulative cpi increase is 20%, then the
calculation would be (35 x 20% = 7 + 35 = 42, divided by 15 = 2.8, multiplied by
8 = $22.40). It is further agreed that if at the end of the remaining initial
    ------
lease term, Tenant exercises its option to renew all of its then leased space,
including this expanded space in the building, Tenant shall be entitled to
receive or be credited with the remaining portion of the tenant improvement
allowance not heretofore granted for the expanded space (under the foregoing
example, the remaining

                                      -14-
<PAGE>

allowance would be 42 -22.40 = $19.60). If within thirty (30) days after
Landlord delivers Tenant such written offer, Landlord does not receive notice in
writing that Tenant elects to lease all (and not part) of such space and within
twenty (20) days thereafter Tenant does not execute an amendment to this Lease
adding such space as part of the Premises, increasing the rent and adjusting
Tenant's prorata share of Operating Expenses, then Tenant shall have no further
rights pursuant to this Paragraph 36.

     37.  OPTION TO EXPAND TO NEWLY DEVELOPED PROPERTY. Should Landlord elect to
construct a building on the contiguous property to the north (commonly known as
the southeast corner of 12th and A Street) or on the property at the southeast
corner of 13th and Pacific Avenue (commonly known as the Greyhound Bus Property)
and so long as Landlord owns all properties concerned, Tenant shall have a first
right to negotiate a lease of space within such new development(s). All terms,
rental amounts, and conditions associated with leasing of space in the
development(s) shall be negotiated at the time the new property is to be
developed and is subject to mutual agreement of the parties. This option to
expand to newly developed property shall be for a period of sixty (60) days from
the date Landlord gives written notice to Tenant of its intent to develop said
properties.

     38.  OPTION TO RENEW. While this Lease is in full force and effect,
provided that Tenant is not then in default beyond any applicable cure period of
any of the terms, covenants and conditions hereof, Landlord grants to Tenant two
(2)consecutive options to extend the term of the Lease for periods of five (5)
years each, the first option commencing upon the termination of the original
Lease term as hereby extended, exercisable by giving Landlord notice in writing
not more than one (1) year and not later than six (6) months prior to the
commencement date of the option term, and the second option commencing upon the
termination of the first option, but only if such option was in fact exercised,
and exercisable by giving Landlord notice in writing not more than one (1) year
and not later than six (6) months prior to the commencement date of said second
option term. Such extension or renewal of the terms shall be on the same terms,
covenants or conditions as provided for in the original or immediately preceding
term except the monthly minimum rent shall be adjusted to an amount
respectively, determined by the then current market rental rate for fully
serviced similar Class A office space (including this building) in downtown
Tacoma, Washington, there shall be a new floor for Operating Expenses equal to
the Operating Expenses incurred during the last year of the lease term before
commencement of the option term which shall replace and supersede the floor of
$6.47 provided for in Section 17, and except that no additional options provided
herein shall be created or implied by virtue of any extension or renewal of the
lease term. Landlord and Tenant shall use their best efforts to negotiate and
agree upon the Current Market Rental Rate within sixty (60) days after Tenant
has given notice.

          Landlord and Tenant shall use their best efforts to negotiate and
agree upon the Current Market Rental Rate within sixty (60) days after Tenant
has given notice to exercise of the option, and if they are unable to so agree,
either party may request the following procedure. Landlord and Tenant shall each
appoint one (1) arbitrator, both of whom shall be appointed within sixty (60)
days after a party elects to pursue this arbitration process. The two
arbitrators shall then agree to appoint a third arbitrator; failing such
agreement, either Landlord or Tenant shall have the right to petition for the
appointment of the third arbitrator by the Presiding Judge of the Superior Court
of Pierce County. All arbitrators shall be persons having at least five (5)
years experience in the real estate market in Pierce County and shall hold an
MAI certification. Within thirty (30) days after the appointment of the three
arbitrators (collectively, the "arbitrators"), Tenant and Landlord shall each
submit to the arbitrators (and one another) their written opinion regarding
Current Market Rental Rate. Within ten (10) days after the arbitrators' receipt
of the last such opinion, the arbitrators shall decide by a majority vote the
Current Market Rental Rate. Such selected opinion by the arbitrators shall be
final and binding upon the parties. The arbitrators' agreed upon value must not
be greater or lesser than the highest and lowest of the alternatives proposed.
The cost of the arbitrators shall be split equally between Landlord and Tenant.
Such determination shall be final and binding upon the parties.

      39. SIGNAGE AND BUILDING NAME. The Building will be named "Columbia Bank
Center" and tenant will be allowed appropriate signage on or about the building
at Tenant's sole cost and expense. Tenant shall be allowed to change the
Building name at any time with Landlord's prior written approval, which shall
not be unreasonably withheld, however, in such event, Tenant shall be
responsible for paying for the

                                      -15-
<PAGE>

costs of changing signage on the Building or on any signs maintained by Tenant.
All Building signage must at all times be maintained in conformance with
applicable rules, regulations and ordinances of the local governmental
authorities and is subject to prior written approval of Landlord. At the
termination of this lease, Tenant shall remove all signage at its sole cost and
repair and restore the building to its original good condition. There shall be
no other exterior signs on or about the building (except for traffic signs and
storefront signage on the first floor) without Tenant's prior written consent,
which consent will not be unreasonably withheld or delayed.

     40.  RIGHT OF FIRST REFUSAL TO PURCHASE.

          (a)   Grant of Right of First Refusal. During the term of this lease
                -------------------------------
and all extensions hereof, Landlord grants Tenant a right of first refusal to
purchase the Building pursuant to this section.

          (b)   Applicable Transactions. If Landlord decides to offer the
                -----------------------
Building for sale or, if prior to that time it receives an offer to sell the
Building on terms Landlord would be willing to accept, then Landlord will notify
Tenant of the terms and conditions on which it would be willing to sell the
Building. Tenant shall then have sixty (60) days after the notice is given to
agree to that offer. If Tenant does not notify Landlord within said time that it
is accepting the offer, then Landlord may sell the Building to another purchaser
so long as the sales price is not less than what was offered to Tenant and so
long as Landlord and the prospective purchaser enter into a Purchase and Sale
Agreement for that purchase within one year of the notice given to Tenant. In
case Landlord is willing to accept an offer at a price less than that offered to
the Tenant, or Landlord has not received and accepted an offer within one year
of the date of the notice to Tenant, then Landlord shall again offer the
Building to Tenant before Landlord sells the Building.

          (c)   Excluded Transactions. Tenant does not have any right of first
                ---------------------
refusal to purchase the Building in any of the following transactions: (i) sales
of the Building to a related entity (as that term is defined below) and (ii)
encumbrances of the Building. A related entity shall be defined as: any
beneficiary of the Haub Brothers Enterprises Trust (Erivan Haub, Karl-Erivan
Haub, Georg Haub, Christian Haub, and/or the immediate members of their families
and/or heirs); or any entity which is at least fifty percent (50%) owned or
controlled by any of the foregoing individuals separately or together.

          (d)   Conditions. Tenant does not have any right of first refusal to
                ----------
purchase the Building if, at the time Landlord receives the offer or decides to
make an offer to Tenant, (i) Tenant is in default under this Lease, or (ii) an
event has occurred which would be a default under this Lease and Landlord has
issued a notice of default to Tenant.

          (e)   No Assignment. Except to the extent assignments are permitted
                -------------
without permission of the Landlord under the Lease, the rights granted to Tenant
in this section are personal and may not be assigned by Tenant.

          (f)   Foreclosure Sales. The right of first refusal created under this
                -----------------
section shall not apply to a foreclosure sale of the Building and shall
terminate upon such foreclosure. Tenant shall have the right to bid at any
foreclosure sale of the Building.

          (g)   Termination. This right of first refusal shall terminate upon
                -----------
the first sale of the Building so long as the Tenant has been given its right of
first refusal pursuant to the terms of this section.

          (h)   Time is of the Essence. Time is of the essence of each and every
                ----------------------
term of this section.

ATM provisions?

          LANDLORD:                            TENANT:

          HAUB BROTHERS ENTERPRISES            COLUMBIA BANKING SYSTEMS, a

                                      -16-
<PAGE>

     TRUST                           a Washington corporation

     By:________________________     By:____________________________________
                                         W. W. Philip
     Its:_______________________         Its: President and Chief Executive
                                         Officer

                                      -17-
<PAGE>

Acknowledgements

STATE OF WASHINGTON    )
                       )      ss.
COUNTY OF PIERCE       )

     On this day personally appeared before me W.W. Philip, to me known to be
the President and Chief Executive Officer of Columbia Banking Systems, a
Washington Corporation, the corporation that executed the foregoing instrument,
and acknowledged the said instrument to be the free and voluntary act and deed
of said corporation, for the uses and purposes therein mentioned, and on oath
stated that he was authorized to execute the same instrument.

     GIVEN under my hand and official seal this _____ day of _______________,
1999.

                              _________________________________________________

                              _________________________________________________
                                             (print notary's name)
                              Notary Public in and for the State of Washington,
                              residing at _____________________________________
                              My commission expires: __________________________

STATE OF WASHINGTON                      )
                                         )      ss.
COUNTY OF PIERCE                         )

     On this ___ day of __________, 1999, before me personally appeared John D.
Barline, to me known to be the individual who executed the foregoing instrument
as Attorney in Fact for Erivan Haub, as Trustee of the Haub Brothers Enterprises
Trust and acknowledged that he signed the same as his free and voluntary act and
deed as Attorney in Fact for said principal for the uses and purposes therein
mentioned, and on oath stated that the Power of Attorney authorizing the
execution of this instrument has not been revoked and that said principal is now
living and is not insane.

     GIVEN under my hand and official seal this _____ day of _______________,
1999.

                              __________________________________________________
                                             (print notary's name)
                              __________________________________________________

                              Notary Public in and for the State of Washington,
                              residing at ______________________________________
                              My commission expires: ___________________________

                                      -18-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}]]