Document:

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                                                                   EXHIBIT 10.10

                               TERM LOAN AGREEMENT

      THIS AGREEMENT is made as of the 28 day of August, 2002, by and between
NATIONAL INTERSTATE CORPORATION, an Ohio corporation with its principal office
located at 3250 Interstate Drive, Richfield, Ohio 44286 (herein called
"Company"), and KEYBANK NATIONAL ASSOCIATION, 127 Public Square, Cleveland, Ohio
44114 (herein called "Bank").

                           Article 1. Credit Facility

      Section 1.1. Amount of Term Loan. The Bank hereby agrees, subject to the
terms and conditions of this Agreement, to extend a term loan to the Company.

      (a) The Loan shall be in the principal amount of no more than
$5,000,000.00. "Loan" is defined as the credit to the Company extended by the
Bank in accordance with this Section 1.1.

      (b) A properly executed note in the form of Exhibit "A" attached hereto
(herein called "Note"), with all blanks appropriately filled in and dated the
date hereof shall evidence the Loan pursuant to this Section 1.1.

      (c) The Company shall repay the principal amount of the Loan in
forty seven (47) consecutive and equal monthly installments of $104,167.00 each,
starting on October 1, 2002, and continuing on the first day of each month
thereafter until August 1, 2006, and one (1) final installment due on September
1, 2006, or the earlier acceleration of the maturity of the Note in accordance
with Article 6 hereof, when any remaining principal balance shall be due and
payable.

      Section 1.2. Interest Rate.

      (a) Defined Terms. As used in this Section 1.2:

      "Business Day" means a day of the year on which banks are not required or
authorized to close in Cleveland, Ohio and, if the applicable Business Day
relates to any Libor Rate Loan, on which dealings are carried on in the London
interbank Eurodollar market.

      "Interest Period" means, with respect to any Libor Rate Loan, the period
commencing on the date such Loan is made, continued, or converted and ending on
the last day of such period and thereafter, each subsequent period commencing on
the last day of the immediately preceding Interest Period and ending on the last
day of such period. The duration of each Interest Period for any Libor Rate Loan
shall be one month, provided that:

      (i)   whenever the last day of any Interest Period would otherwise occur
            on a day other than a Business Day, the last day of such Interest
            Period shall occur on the next succeeding Business Day; provided
            that if such extension of time would cause the last day of such
            Interest Period for a Libor Rate Loan to occur in the next following
            calendar month, the last day of such Interest Period shall occur on
            the next preceding Business Day;

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      (ii)  the Company may not select any Interest Period that both begins
            before and ends after any principal installment payment date set
            forth in Section 1.1(c) above.

      "Libor Rate" means, for any Interest Period for any Libor Rate Loan, an
interest rate per annum equal at all times during such Interest Period to the
quotient of (a) the rate per annum at which deposits in United States dollars
are offered at 11:00 a.m. (London, England time) (or as soon thereafter as is
reasonably practicable) by prime banks in the London interbank eurodollar market
two Business Days prior to the first day of such Interest Period in an amount
and maturity of such Libor Rate Loan, divided by (b) a number equal to 1.00
minus the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of the Libor Reserve Requirements current on the date two Business
Days prior to the first day of such Interest Period.

      "Libor Rate Loan" means any Loan that bears interest with reference to the
Libor Rate.

      "Libor Reserve Requirements" means, for any Interest Period for any Libor
Rate Loan, the maximum reserves (whether basic, supplemental, marginal,
emergency, or otherwise) prescribed by the Board of Governors of the Federal
Reserve System (or any successor) with respect to liabilities or assets
consisting of or including "Eurocurrency Liabilities" (as defined in Regulation
D of the Board of Governors of the Federal Reserve System) having a term equal
to such Interest Period.

      "Prime Rate Loan" means any Loan that bears interest with reference to the
Prime Rate.

      "Prime Rate" of Bank is defined as that rate established from time to time
by the Bank as the Bank's Prime Rate, whether or not such rate is publicly
announced; the Prime Rate may not be the lowest rate charged by Bank for
commercial or other extensions of credit. In the event of any change in the
Prime Rate, the rate of interest upon such Loan shall be adjusted to immediately
correspond with such change, except such interest rate shall not exceed the
highest rate permitted by law.

      (b) Interest Rate. The Loan shall bear interest prior to maturity at a
rate per annum, selected by the Company pursuant to Section 1.2 (d) below, equal
to (i) the Prime Rate minus .50% or (ii) the Libor Rate plus 2.50%.

      (c) Late Payments. Whenever the unpaid principal amount of the Loan(s),
and accrued interest thereon, or any fees or any other sum payable hereunder,
shall become due and payable and remain unpaid (whether by acceleration or
otherwise), the amount thereof shall thereafter until paid in full bear interest
at a rate per annum equal to three percent (3%) in excess of the Prime Rate of
the Bank in effect from time to time, which rate shall change immediately and
correspondingly with each change in the Prime Rate. In addition, prior to
maturity, for each payment of principal or interest not paid when due the
Company shall also pay a late fee equal to $500.00.

      (d) Loan Conversions. The outstanding principal amount of the Loan may be
made or converted into a Prime Rate Loan on such Business Day and in such amount
as the Company shall request by written notice given to the Bank no later than
11:00 a.m. (Cleveland, Ohio time) on the date of disbursement of or conversion
into the requested Prime Rate Loan. Provided that no Event of Default of any
potential default as defined in Section 4.7 below, has occurred and is
continuing, the outstanding principal amount of the Loan may be made or
continued as or

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converted into a Libor Rate Loan on such Business Day, in such amount (equal to
$100,000.00 or an integral multiple thereof), and with such an Interest Period
as the Company shall request by written notice given to the Bank no later than
11:00 a.m. (Cleveland, Ohio time) on the second Business Day prior to the date
of disbursement or continuation of or conversion into the requested Libor Rate
Loan. Each written notice of any Libor Rate Loan shall be irrevocable and
binding on the Company and Company shall indemnify the Bank against any loss or
expense incurred by the Bank as a result of any failure by the Company to
consummate such transaction, including, without limitation, any loss (including
loss of anticipated profits) or expense incurred by reason of liquidation or
reemployment of deposits or other funds acquired by the Bank to fund the Loan. A
certificate as to the amount of such loss or expense submitted by the Bank to
the Company shall be conclusive and binding for all purposes, absent manifest
error. The Company may not elect the Libor Rate if U.S. dollar deposits are not
available to the Bank in the London Eurodollar Interbank Market for the period
and in the amount requested by the Company. In the event that the Company fails
to provide the Bank with the required written notice for Libor Rate Loans, the
Company shall be deemed to have given a written notice that such Loan shall be
continued as a Libor Rate Loan on the last day of the applicable Interest Period
for an additional 1 month Interest Period.

      (e) Additional Costs.

            (i) If, due to either (i) the introduction of, or any change in, or
            in the interpretation of, any law or regulation or (ii) the
            compliance with any guideline or request from any central bank or
            other governmental authority (whether or not having the force of
            law), there shall be an increase in the cost to the Bank of making,
            funding or maintaining Loans, then the Company shall from time to
            time, upon demand by the Bank pay to the Bank additional amounts
            sufficient to reimburse the Bank for any such additional costs. A
            certificate of the Bank submitted to the Company as to the amount of
            such additional costs, shall be conclusive and binding for all
            purposes, absent manifest error. Upon notice from the Company to the
            Bank within five (5) Business Days after the Bank notifies the
            Company of any such additional costs pursuant to this Section
            2.8(b), the Company may either (A) prepay in full all Loans of any
            types so affected then outstanding, together with interest accrued
            thereon to the date of such prepayment, or (B) convert all Loans of
            any types so affected then outstanding into Loans of any other type
            not so affected upon not less than four (4) Business Days' notice to
            the Bank. If any such prepayment or conversion of any Libor Rate
            Loan occurs on any day other than the last day of the applicable
            Interest Period for such Loan, the Company also shall pay to the
            Bank such additional amounts sufficient to indemnify the Bank
            against any loss, cost, or expense incurred by the Bank as a result
            of such prepayment or conversion, including, without limitation, any
            loss (including loss of anticipated profits), cost, or expense
            incurred by reason of the liquidation or reemployment of deposits or
            other funds acquired by the Bank to fund any such Loan, and a
            certificate as to the amount of any such loss, cost, or expense
            submitted by the Bank to the Company shall be conclusive and binding
            for all purposes, absent manifest error.

            (ii) If either (i) the introduction of, or any change in, or in the
            interpretation of, any law or regulation or (ii) the compliance with
            any guideline or request from

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            any central bank or other governmental authority (whether or not
            having the force of law), affects or would affect the amount of
            capital required or expected to be maintained by the Bank or any
            corporation controlling the Bank and the Bank determines that the
            amount of such capital is increased by or based upon the existence
            of the Loans (or commitment to make the Loans) and other extensions
            of credit (or commitments to extend credit) of similar type, then,
            upon demand by the Bank, the Company shall pay to the Bank from time
            to time as specified by the Bank additional amounts sufficient to
            compensate the Bank in the light of such circumstances, to the
            extent that the Bank reasonably determines such increase in capital
            to be allocable to the existence of the Bank's Loans (or commitment
            to make the Loans). A certificate of the Bank submitted to the
            Company as to such amounts shall be conclusive and binding for all
            purposes, absent manifest error. Upon notice from the Company to the
            Bank within five (5) Business Days after the Bank notifies the
            Company of any such additional costs pursuant to this Section
            2.8(b), the Company may either (A) prepay in full all Loans of any
            types so affected then outstanding, together with interest accrued
            thereon to the date of such prepayment, or (B) convert all Loans of
            any types so affected then outstanding into Loans of any other type
            not so affected upon not less than four (4) Business Days' notice to
            the Bank. If any such prepayment or conversion of any Libor Rate
            Loan occurs on any day other than the last day of the applicable
            Interest Period for such Loan, the Company also shall pay to the
            Bank such additional amounts sufficient to indemnify the Bank
            against any loss, cost, or expense incurred by the Bank as a result
            of such prepayment or conversion, including, without limitation, any
            loss (including loss of anticipated profits), cost, or expense
            incurred by reason of the liquidation or reemployment of deposits or
            other funds acquired by the Bank to fund any such Loan, and a
            certificate as to the amount of any such loss, cost, or expense
            submitted by the Bank to the Company shall be conclusive and binding
            for all purposes, absent manifest error.

      (f) Illegality. Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for the Bank to perform its
obligations hereunder to make, continue, or convert Libor Rate Loans hereunder,
then, (a) on notice thereof by the Bank to the Company, the obligation of the
Bank to make or continue a Loan of a type so affected or to convert any type of
Loan into a Loan of a type so affected shall terminate and the Bank shall
thereafter be obligated to make Prime Rate Loans whenever any written notice
requests any type of Loans so affected and (b) upon demand therefor by the Bank
to the Company, the Company shall either (i) forthwith prepay in full all Loans
of the type so affected then outstanding, together with interest accrued thereon
or (ii) request that the Bank, upon four (4) Business Days' notice, convert all
Loans of the type so affected then outstanding into Loans of a type not so
affected. If any such prepayment or conversion of any Libor Rate Loan occurs on
any day other than the last day of the applicable Interest Period for such Loan,
the Company also shall pay to the Bank such additional amounts sufficient to
indemnify the Bank against any loss, cost, or expense incurred by the Bank as a
result of such prepayment or conversion, including, without limitation, any loss
(including loss of anticipated profits), cost, or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by the Bank
to fund any such Loan, and a certificate as to the

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amount of any such loss, cost, or expense submitted by the Bank to the Company
shall be conclusive and binding for all purposes, absent manifest error.

      Section 1.3. Interest Period. The Company shall pay to the Bank interest
on the unpaid principal balance of each Prime Rate Loan on each date an
installment of principal becomes due and payable in accordance with Section
1.1(c) hereof. The Company shall pay to the Bank interest on the unpaid
principal balance of each Libor Rate loan on (i) the date such Loan is converted
to a Prime Rate Loan, or (ii) the last day of the applicable Interest Period of
such Loan, whichever is earlier.

      Section 1.4. Prepayment. The Company may prepay any Prime Rate Loans in
whole, or in part, in the principal amount of $100,000.00 or any integral
multiple thereof, at any time or times upon not less than one (1) Business Days'
prior notice made by telephone to the Bank. The Company may prepay any Libor
Rate Loan, in whole or in part, in the principal amount of $100,000.00 for a
Libor Rate Loan, or any integral multiple thereof only on the last day of the
Interest Period applicable to such Loan upon not less than three (3) Business
Days' prior written notice given to the Bank. Each principal prepayment
(including any derived from security) shall be applied to the principal
installments of the Note in the inverse order of their respective maturities.

      Section 1.5. Use of Proceeds. The Loan shall be used solely to finance
repayment of existing amounts due from the Company to a subsidiary of the
Company.

      Section 1.6. Fees. The Company shall pay to the Bank a facility fee equal
to $3,500.00 and the Bank's counsel fees in connection with this Agreement on
the date of execution of this Agreement.

      Section 1.7. Computation of Interest and Fees. Interest on each Loan shall
be computed on the basis of a year of 360 days and paid for the actual number of
days elapsed. Interest on unpaid fees and the Prepayment Premium, if any,
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed.

                        Article 2. Conditions of Lending

      Section 2.1. Special Conditions. The obligation of the Bank to make the
Loan hereunder shall be subject to the conditions precedent that at the date of
making such Loan, and after giving effect thereto: (a) no Event of Default shall
have occurred nor shall any event have occurred or failed to occur which, with
the passage of time or service of notice, or both, would constitute an Event of
Default, (b) each representation and warranty set forth in Article 3 below shall
be true and correct as of such date, as if then made, (c) such additional
supporting certificates, opinions, and data as the Bank may reasonably request
have been supplied to the Bank, and (d) the Company shall have paid to the Bank
the fees then due and payable in accordance with Section 1.6 of this Agreement.

                              Article 3. Warranties

      Company represents and warrants to Bank (which representations will
survive the delivery of the Note and the making of the Loan) that:

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      Section 3.1. Authorization. (a) Company is a duly-organized and existing
corporation organized under the laws of the State of Ohio; (b) the execution of
the Loan Documents have been duly authorized by appropriate corporate action;
(c) there is no prohibition, either in law, in its articles of incorporation,
regulations, or in any agreement to which it is a party, which in any way
restricts or prevents the execution of the Loan Documents and completion of the
obligations herein in any respect; (d) this Agreement and the Note have been
duly executed and are valid and binding obligations of Company; and (e) the
Company has no subsidiaries other than those listed on attached Exhibit "B".

      Section 3.2. Financial Condition. Company has furnished to Bank a true and
correct financial statements as of December 31, 2001, which present fairly
Company's financial condition at such date, and that there has been no material
adverse change in such financial condition since that date.

      Section 3.3. Liabilities, Liens. The Company's assets and property are not
subject to any claims, liabilities, liens, or encumbrances except as disclosed
in the financial statements provided under Section 3.2 hereof, or as may be
permitted by Section 5.1 hereto, and there is neither threatened nor pending any
material litigation against Company.

      Section 3.4. Environmental Matters. As of the date of this Agreement, the
Company is and in the opinion of management will continue to be in compliance
with all requirements of applicable federal, state, and local environmental,
health, and safety laws, regulations, ordinances, or rules, except that any
non-compliance that, in the aggregate, will not have a materially adverse effect
on the Company or the ability of Company to fulfill its obligations in
accordance with this Agreement and the Note.

      Section 3.5. Solvency. Company has received consideration that is the
reasonable equivalent value of the obligations and liabilities that Company has
incurred to Bank. Company is not insolvent as defined in any applicable state or
federal statute, nor will Company be rendered insolvent by the execution and
delivery of this Agreement or the Note to Bank. Company is not engaged or about
to engage in any business or transaction for which the assets retained by it
shall be an unreasonably small capital, taking into consideration the
obligations to Bank incurred hereunder. Company does not intend to, nor does it
believe that it will, incur debts beyond its ability to pay them as they mature.

                        Article 4. Affirmative Covenants

      As long as credit is available hereunder or until all principal of and
interest on the Note have been paid in full:

      Section 4.1. Financial Statements. (a) Company shall furnish to Bank
within forty five (45) days after the close of each fiscal quarter, except the
last in each fiscal year, a consolidated statement of condition as of the close
of such period, and consolidated statements of cash flows, capital accounts, and
cash flow for such period, prepared by the Company in accordance with generally
accepted accounting principles and attested to by an authorized officer of
Company, and (b) Company shall furnish to Bank within one hundred fifty (150)
days after the close of each fiscal year complete annual and financial
statements, including a consolidated statement of condition as of the close of
such fiscal year, and consolidated statements of income,

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capital accounts, and cash flow for such period, which statements shall be
accompanied by an unqualified opinion of a certified public accountant selected
by the Company and satisfactory to Bank.

      Section 4.2. Insurance. Company shall (a) maintain insurance upon its
property and such other insurance of such character and amounts as are usually
maintained by companies engaged in like business, (b) furnish to Bank, upon
request, a statement of the insurance coverage, and (c) obtain other or
additional insurance promptly, upon the reasonable request of Bank, to the
extent that such insurance may be available.

      Section 4.3. Inspection. Company shall make available for inspection to
duly authorized representatives of Bank any of its books, records, and
properties when requested so to do, and shall furnish Bank any information
regarding its business affairs and financial condition within a reasonable time
after written request therefore.

      Section 4.4. Taxes and Other Obligations. Company shall pay or cause to be
paid all taxes, assessments, and other governmental charges of any kind levied
upon any of its properties or assets, or in respect of its business, income, or
profits before the same become delinquent, except that no such charges need be
paid if they are being contested in good faith by appropriate proceedings.
Company shall also pay all other legal obligations as they become due or within
any contractual grace period, except to the extent that any of them are being
contested in good faith by appropriate proceedings.

      Section 4.5. Existence; Business. Company will cause to be done all things
necessary to preserve and keep in full force and effect its existence and
rights, to conduct its business in a prudent manner, to maintain in full force
and effect, and renew from time to time, its franchises, permits, licenses,
patents, and trademarks that are necessary to operate its business. Company will
comply in all material respects with all valid laws and regulations now in
effect or hereafter promulgated by any properly constituted governmental
authority having jurisdiction; provided, however, Company shall not be required
to comply with any law or regulation which it is contesting in good faith by
appropriate proceedings as long as either the effect of such law or regulation
is stayed pending the resolution of such proceedings or the effect of not
complying with such law or regulation is not to jeopardize any franchise,
license, permit patent, or trademark necessary to conduct Company's business.

      Section 4.6. Litigation; Adverse Changes. Company will promptly notify the
Bank in writing of (a) any future event which, if it had existed on the date of
this Agreement, would have required qualification of the representations and
warranties set forth in Article 3 hereof and (b) any material adverse change in
the condition, business, or prospects, financial or otherwise, of the Company.

      Section 4.7. Notice of Default. Company will promptly notify the Bank of
any Event of Default or potential default hereunder and any demands made upon
Company by any person for the acceleration and immediate payment of any
indebtedness owed by Company to such person. As used herein, "potential default"
means any condition, action, or failure to act that, with the passage of time,
service of notice, or both, would constitute an Event of Default under this
Agreement.

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      Section 4.8. Environmental Matters. Company:

      (a) Shall comply with all environmental laws.

      (b) Shall deliver promptly to Bank (i) copies of any documents received
from the United States Environmental Protection Agency or any state, county or
municipal environmental or health agency which claim violation of any
environmental laws, and (ii) copies of any documents submitted by Company or any
of its Subsidiaries to the United States Environmental Protection Agency or any
state, county or municipal environmental or health agency concerning its
operations which are in response to claims of any violation of environmental
laws.

As used herein, "environmental laws" shall mean all federal, state, or local
statutes, laws, ordinances, codes, rules, regulations, orders or decrees
regulating, relating to or imposing liability upon Company in connection with
the use, release or disposal of any hazardous toxic or dangerous substance,
waste or material.

      Section 4.9. Financial covenants. The Company shall comply with the
financial covenants set forth on Exhibit "C".

                          Article 5. Negative Covenants

      Except with the prior written consent of the Bank:

      Section 5.1. Liens. Company shall not, nor shall it permit any subsidiary
of the Company to, create or permit the creation or continuance of any lien upon
any of its property (including any stock in their subsidiaries), including but
not limited to mortgages, judgments, security interests, pledges, and liens for
taxes, assessments, or other governmental charges of any kind, other than (a)
any lien for taxes or governmental charges not yet payable, (b) any lien of the
kinds normally incident to and resulting from the usual operations of the
business in which Company is engaged and which secures claims not overdue and
payable, (c) security interests in personal property, provided that they are
limited to those that secure a portion of the purchase price of such property
and the aggregate amount of all such liens does not exceed at any time
$200,000.00, or (d) any lien in favor of the Bank, or (e) Permitted Liens as set
forth on attached Exhibit D.

      Section 5.2. Liquidation and Merger. Company shall not liquidate, or
discontinue or materially reduce its normal operations with intention to
liquidate, shall not merge or consolidate with any corporation, partnership, or
other entity, and shall not sell, lease, transfer, or otherwise dispose of all
or any substantial part of its assets; provided, however, that the Company may
enter into a merger transaction if, after giving effect to such merger, the
Company is the surviving entity and the Company otherwise remains in compliance
with all the covenants and other provisions of this Agreement.

                          Article 6. Events of Default

      The occurrence of any one or more of the following events constitutes a
default by Company under this Agreement (herein called "Event of Default"), and
thereupon and at any time thereafter, Bank may declare by written notice either
delivered or mailed to Company the Note to be immediately due and payable, and
upon any such declaration such principal and

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interest shall become and be forthwith due and payable without further notice,
presentment, or demand of any kind, all of which are hereby expressly waived by
Company; provided, however, that no written notice need be given with regard to
the Events of Default set forth in Section 6.6 below:

      Section 6.1. Principal and Interest. Non-payment of any principal of or
interest on the Note or of any other indebtedness or other obligation of Company
to the Bank when due or within ten (10) calendar days thereafter.

      Section 6.2. Breach. A breach by Company of any provision or covenant of
this Agreement or of document relating to any other obligation of Company to
Bank, which shall not have been cured within thirty (30) days after Bank has
mailed written notice thereof to Company.

      Section 6.3. Misrepresentation. If any representation or warranty made by
Company or any officer thereof, herein or in any written statement or
certificate now or later furnished by or for Company in connection herewith,
shall prove untrue in any material respect as of the date upon which it was
made.

      Section 6.4. Other Debt. If the Company fails to pay when due or within
any contractual grace period any payment of principal or interest of any
promissory note or other debt obligation of Company owed to any other person.

      Section 6.5. Termination of Business; Material Change. If the Company
discontinues a material portion of its business, or if there occurs a material
adverse change in the business, properties, or the condition or operations,
financial or otherwise, of the Company.

      Section 6.6. Insolvency. If the Company shall discontinue business or (a)
is adjudicated a bankrupt or insolvent under any law of any existing
jurisdiction, domestic or foreign, or ceases, is unable, or admits in writing
its inability, to pay its debts generally as they mature, or makes a general
assignment for the benefit of creditors, (b) applies for, or consents to, the
appointment of any receiver, trustee, or similar officer for it or for any
substantial part of its property, or any such receiver, trustee, or similar
officer is appointed without the application or consent of Company, and such
appointment continues thereafter undischarged for a period of thirty (30) days,
(c) institutes, or consents to the institution of any bankruptcy, insolvency,
reorganization, arrangement, readjustment or debt, dissolution, liquidation, or
similar proceeding relating to it under the laws of any jurisdiction, (d) any
such proceeding is instituted against Company and remains thereafter undismissed
for a period of thirty (30) days, or (e) any judgment, writ, warrant of
attachment or execution, or similar process is issued or levied against a
substantial part of the property of Company and such judgment, writ, or similar
process is not effectively stayed within thirty (30) days after its issue or
levy, or any guarantor becomes deceased.

                            Article 7. Miscellaneous

      Section 7.1. Right of Set Off. In the event that the Company is, or is
declared to be, in default under this Agreement pursuant to Article 6 above, the
Bank has the right, in addition to all other rights and remedies available to
it, to set off the unpaid balance of the Note or any other indebtedness payable
to the Bank held by it against any debt owing the Company by the Bank,
including, without limitation, any funds held by the Bank at any time, whether
collected or in the

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process or collection, or in any time or demand deposit account maintained by
the Company with the Bank, or any certificate of deposit issued by the Bank.

      Section 7.2. Notices. All written notices, requests, or other
communications provided for in this Agreement must be addressed to the Company
or the Bank, as the case may be, at their respective address set forth above, or
at such other address as either party may designate to the other in writing.
Such communication will be effective (i) if by telex, when such telex is
transmitted and the appropriate answerback is received, (ii) if given by mail,
72 hours after such communication is deposited in the U.S. mail certified mail
return receipt requested, or (iii) if given by other means, when delivered at
the address specified in this Section 7.2. Notice shall be deemed to have been
properly given to Company when delivered or deposited in certified or registered
U.S. mail, postage prepaid, and addressed to Company at the address set forth
above or such other address as Company may from time to time file with Bank.

      Section 7.3. No Waiver. The remedies in this Agreement are in addition to,
not in limitation of, any other right, power, privilege, or remedy, either in
law, in equity, or otherwise, to which the Bank may be entitled. No failure or
delay on the part of the Bank in exercising any right, power, or remedy will
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right hereunder.

      Section 7.4. Amendments. No waiver of any provision of this Agreement or
the Note, or consent to departure therefrom, is effective unless in writing and
signed by the Bank. No such consent or waiver extends beyond the particular case
and purpose involved. No amendment to this Agreement is effective unless in
writing and signed by the Company and the Bank.

      Section 7.5. Costs and Expenses. The Company agrees to pay all costs and
expenses, including, but not limited to, reasonable fees and expenses of
counsel, incurred by or for the account of the Bank in connection with the
enforcement of the Loan Documents.

      Section 7.6. Construction. This Agreement and the Note will be governed
and construed in accordance with the laws of the State of Ohio, without regard
to principles of conflict of laws. Headings and titles herein are for
convenience only and will not influence construction or interpretation.

      Section 7.7. Extension of Time. Whenever any payment hereunder or under
the Note becomes due on a date which the Bank is not open for the transaction of
business, such payment will be due on the next succeeding business day and such
extension of time will be included in computing interest in connection with such
payment.

      Section 7.8. Survival of Agreements; Relationship. All agreements,
representations, and warranties made herein will survive the making of the
Loan(s) hereunder and will bind and inure to the benefit of the Company and the
Bank and their respective successors and assigns; provided, that no subsequent
holder of the Note shall by reason of acquiring that Note become obligated to
make any Loan hereunder and no successor to or assignee of the Company may
borrow hereunder without the Bank's written assent. The relationship between the
Company and the Bank with respect to this Agreement, the Note and any other Loan
Document is and shall be solely that of debtor and creditor, respectively, and
the Bank has no fiduciary obligation toward the Company with respect to any such
document or the transactions contemplated thereby.

                                       10
<PAGE>

      Section 7.9. Severability. If any provision of this Agreement or the Note,
or any action taken hereunder, or any application thereof, is for any reason
held to be illegal or invalid, such illegality or invalidity shall not affect
any other provision of this Agreement or the Note, each of which shall be
construed and enforced without reference to such illegal or invalid portion and
shall be deemed to be effective or taken in the manner and to the full extent
permitted by law.

      Section 7.10. Entire Agreement. This Agreement, the Note and any other
Loan Document integrate all the terms and conditions mentioned herein or
incidental hereto and supersede all oral representations and negotiations and
prior writings with respect to the subject matter hereof.

      Section 7.13. JURY TRIAL WAIVER. COMPANY AND BANK EACH WAIVE ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE, BETWEEN BANK AND COMPANY ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO. THIS WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR
MODIFY BANK'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT
OR COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT BETWEEN BANK AND COMPANY.

      IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date set
forth above.

COMPANY:                         NATIONAL INTERSTATE CORPORATION

                                 By: /s/ Gary N. Monda
                                     -------------------------------------

                                 Name: Gary N. Monda

                                 Title: Vice President and CFO

BANK:                            KEYBANK NATIONAL ASSOCIATION

                                 By: /s/ Jay P. McKelvey
                                     -------------------------------------
                                     Jay P. McKelvey, Senior Vice President

                                       11
<PAGE>

                                   EXHIBIT "A"

                                 PROMISSORY NOTE

$ 5,000,000.00                                                   August 28, 2002
                                                                 Cleveland, Ohio

      For value received, NATIONAL INTERSTATE CORPORATION (the "Company")
promises to pay to the order of KEYBANK NATIONAL ASSOCIATION, Cleveland, Ohio,
(the "Bank"), its successor and assigns, at its main office, on the date or
dates and in the manner specified in Article 1 of the Loan Agreement (as defined
below), the principal amount of the Loan as shown on any ledger or other record
of the Bank, which shall be rebuttably presumptive evidence of the principal
amount owing and unpaid on this Note.

      The Company promises to pay to the order of the Bank interest on the
unpaid principal amount of the Loan made pursuant to the Loan Agreement from the
date of such Loan until such principal amount is paid in full at such interest
rate(s) and at such times as are specified in Article 1 of the Loan Agreement.

      This Note is the Note referred to in, and is entitled to the benefits of,
the Term Loan Agreement by and between the Bank and the Company dated August 28,
2002, as the same may be hereafter amended from time to time (the "Loan
Agreement"). Each defined term used in this Note shall have the meaning ascribed
thereto in the Loan Agreement.

      This Note may be declared forthwith due and payable in the manner and with
the effect provided in the Loan Agreement, which contains provisions for
acceleration of the maturity hereof upon the happening of any Event of Default
and also for prepayment on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.

      The Company expressly waives presentment, demand, protest, and notice of
dishonor.

      The Company authorizes any attorney-at-law to appear in any court of
record in the State of Ohio or any other state or territory in the United States
after this Note becomes due, whether by lapse of time or acceleration, waive the
issuance and service of process, admit the maturity of this Note, confess
judgment against the Company in favor of any holder of this Note for the amount
then appearing due hereon together with interest thereon and costs of suit, and
thereupon release all errors and waive all rights of appeal and stay of
execution. The foregoing warrant of attorney shall survive any judgment, and if
any judgment be vacated for any reason, the holder hereof nevertheless may
thereafter use the foregoing warrant of attorney to obtain any additional
judgment or judgments against the Company. Company agrees that the holder's
attorney may confess judgment pursuant to the foregoing warrant of attorney.
Company further agrees that the attorney confessing judgment pursuant to the
foregoing warrant of attorney may receive a legal fee or other compensation from
the holder.

      The Company acknowledges that this Note was signed in Cuyahoga County, in
the State of Ohio.

      WARNING: BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.

COMPANY:  NATIONAL INTERSTATE CORPORATION

By: /s/ Gary N. Monda                                         Exhibit____
    ---------------------
Name: Gary N. Monda
Title: Vice President and CFO

                                       12
<PAGE>

                                   EXHIBIT "B"

                          KEYBANK NATIONAL ASSOCIATION
                                      AND
                        NATIONAL INTERSTATE CORPORATION

                              List of Subsidiaries
                         Pursuant to Section 3.1 of the
                               Term Loan Agreement
                              Dated August 28, 2008

      American Highways Insurance Agency, Inc.
      Explorer RV Insurance Agency, Inc.
      Hudson Indemnity, Ltd.
      National Interstate Insurance Company
      National Interstate Insurance Agency, Inc.
      National Interstate Insurance Company of HI, Inc.
      Safety, Claims, and Litigation Services, Inc.

                                       13
<PAGE>

                                   EXHIBIT "C"

                          KEYBANK NATIONAL ASSOCIATION
                                      and
                        NATIONAL INTERSTATE CORPORATION

                               Financial Covenants
                         Pursuant to Section 4.9 of the
                               Term Loan Agreement
                              Dated August 28, 2008

LIQUIDITY RATIO: The Company shall maintain the ratio of (a) its cash plus
investments plus premium receivables plus prepaid reinsurance premiums to (b)
its total liabilities at no less than .85 to 1.00, calculated at end of each
fiscal quarter, beginning with the quarter ending September 30, 2002.

ADJUSTED TANGIBLE CAPITAL: The Company shall maintain its Adjusted Tangible
Capital at no less than $18,000,000.00 for the fiscal quarter ending June 30,
2002, and at no less than the sum $18,000,000.00 plus fifty percent (50%) of the
Company's consolidated net earnings for each fiscal quarter ending after June
30, 2002, calculated at the end of each fiscal quarter, beginning with the
quarter ending September 30, 2002.

      "Adjusted Tangible Capital" means Tangible Capital less investments in,
      advances to, promissory notes, and any receivables from, any affiliate or
      other related entity of Company. "Tangible Capital" means Tangible Net
      Worth plus Subordinated Debt. "Tangible Net Worth" means Company's total
      assets excluding all intangible assets (i.e., goodwill, trademarks,
      patents, copyrights, organizational expenses, and similar intangible
      items, but including leaseholds and leasehold improvements) less Total
      Debt. "Total Debt" means all of Company's liabilities including
      Subordinated Debt. "Subordinated Debt" means indebtedness and liabilities
      of Company which have been subordinated by written agreement to
      indebtedness owed by Company to Lender in form and substance acceptable
      to Lender.

CASH FLOW COVERAGE RATIO: The Company shall maintain its Cash Flow Coverage
Ratio at no less than 2.00 to 1.00, calculated at the end of each fiscal quarter
for the period of the previous four fiscal quarters, beginning with the quarter
ending September 30, 2002.

      "Cash Flow Coverage Ratio" means (a) the sum of net income after tax
      distributions, plus depreciation and amortization, minus dividends,
      divided by (b) the sum of the current maturities of long term debt
      (including lease) plus treasury stock repurchases.

All calculations made concerning the above financial covenants shall be
determined by generally accepted accounting principals as then in effect, which
shall include the official interpretations thereof by the Financial Accounting
Standards Board, consistently applied.

                                       14<PAGE>
                                                                   EXHIBIT 10.11

                          MASTER DEMAND PROMISSORY NOTE

$2,000,000.00                    CLEVELAND, OHIO                 AUGUST 28, 2002

         ON DEMAND, the undersigned, NATIONAL INTERSTATE CORPORATION (herein
called "Borrower") promises to pay to the order of KEYBANK NATIONAL ASSOCIATION,
Cleveland, Ohio at its main office (herein called "Bank"), the lesser of (1) Two
Million Dollars ($2,000,000.00) or (2) the aggregate unpaid principal amount of
all advances made by Bank to Borrower pursuant to a line of credit evidenced by
the Bank's letter to Borrower dated August 28, 2002, including all
reaffirmations, renewals, and modifications thereof, the terms, conditions, and
provisions of which are hereby incorporated by reference as though fully
rewritten herein (herein called "Line Facility"), together with interest
(calculated on the basis of a year of 360 days for the actual number of days
elapsed) on the daily unpaid principal balance hereof from the respective date
or dates upon which such advances are made, payable on the first day of each
month beginning September 1, 2002, and on demand, at a rate per annum determined
in accordance with the attached "Interest Rate Appendix", which is incorporated
herein as if fully rewritten.

         Prior to a demand for payment of the entire unpaid balance due upon
this Note, if any payment of principal or interest is not paid when due Borrower
shall pay Bank a late fee equal to the greater of ten percent (10%) of the
amount of such payment or twenty five dollars ($25). After demand, the unpaid
principal of and accrued interest on this Note shall, until paid, bear interest
(calculated on the basis of a year of 360 days for the actual number of days
elapsed) at a rate per annum equal to the greater of three percent (3%) in
excess of the Prime Rate, which rate shall be adjusted immediately and
correspondingly with each change in the Prime Rate, but in no event shall the
interest rate on this Note exceed the highest rate permitted by law on the date
of demand for payment of this Note. The Prime Rate of Bank is defined as that
rate established from time to time by Bank as Bank's Prime Rate, whether or not
such rate is publicly announced. The Prime Rate may not be the lowest interest
rate charged by Bank for commercial or other extensions of credit.

         This Note shall serve as a master note and shall evidence all advances
to Borrower under the Line Facility. Bank is authorized to endorse on a schedule
to be attached to this Note or on other business records of the Bank an
appropriate notation evidencing each advance made by Bank and each payment of
principal and interest received by Bank. In the event of any discrepancy between
the principal balance indicated on such records of the Bank and in any records
of Borrower, the principal balance indicated on such records of the Bank shall
prevail absent manifest error.

         Without limitation upon Bank's right at any time and for any reason to
demand payment on this Note, at the option of Bank, all Obligations shall become
immediately due and payable without notice or demand upon the occurrence of any
of the following Events of Default: (a) default in the payment or performance of
any Obligation when it becomes due, (b) untruthfulness, proved to the
satisfaction of Bank, of any statement, representation, or certification
contained in any financial statement, credit application, or other document
given by Borrower in connection with any advance evidenced by this Note, (c)
material breach by Borrower of any provision, agreement, warranty, or covenant
set forth in this Note, in any other instrument, document, or agreement
evidencing or relating to any Obligation, or in any mortgage deed, assignment,
pledge, or security agreement given as or evidencing security for any Obligation
of Borrower, or (d) dissolution, termination of existence, insolvency,
appointment of a receiver of any part of the property of, assignment for the
benefit of creditors by, failure or inability of Borrower to pay its debts as
they come due, or the commencement of any proceedings under any bankruptcy or
insolvency laws by or against Borrower. "Obligations" means this Note and every
other obligation, indebtedness, and liability of the Borrower to Bank, whether
joint or several, absolute or contingent, due or to become due, and whether
heretofore or hereafter contracted or existing and in whatsoever manner acquired
by or accruing to Bank, whether before or after maturity and whether the same
may have been or shall be participated, in whole or in part to others, and
including all amendments, extensions, and renewals thereof, and "Obligation
means any of the Obligations".

         Wherever used in this Note, the term "Bank" shall include any holder of
this Note. Borrower waives presentment, demand, notice, protest, and all other
demands and notices in connection with delivery, acceptance, performance,
default, or enforcement of this Note, assents to any extension or postponement
of the time of payment or any other indulgence, and to the addition or release
of any other person primarily or secondarily liable, Borrower

                                      -1-
<PAGE>

understands and agrees that this Note is subject to and shall be construed
according to the laws of the State of Ohio, without regard to principles of
conflict of laws.

         Any deposits or sums at any time credited by or due from Bank to the
Borrower and any securities or other personal property of the Borrower in the
possession of Bank may at all times be held and treated as additional security
for the payment of the Obligations. Upon the occurrence and continuance of an
Event of Default (as defined above), Bank may apply or set off such deposits or
other sums against the Obligations at any time in the case of Borrower.

         Any waiver of Bank's rights hereunder must be in writing and signed by
Bank. A waiver on any one occasion shall not be construed as a bar to or waiver
of any such right or remedy on a future occasion.

         Any notice required or authorized to be given to Borrower pursuant to
the provisions of this Note shall be sufficiently given when such notice is
either delivered, sent by telegram, or mailed (deposited for delivery, postage
prepaid, by U.S. registered or certified mail, return receipt requested) to
Borrower either at the address set forth below (as modified by any change
therein which Borrower has supplied in writing to Bank) or at any other address
at which Bank customarily communicates with Borrower.

         If any provision of this Note, or any covenant, stipulation,
obligation, agreement, act, or action, or part thereof made, assumed, entered
into, or taken hereunder or any application thereof, is for any reason held to
be illegal or invalid, such illegality or invalidity shall not affect any other
provision or any other covenant, stipulation, obligation, agreement, act, or
action or part thereof, made, assumed, entered into, or taken, each of which
shall be construed and enforced as if such illegal or invalid portion were not
contained herein. Such illegality or invalidity of any application of any
provision hereof shall not affect any legal and valid application thereof, and
each such provision, covenant, stipulation, obligation, agreement, act, or
action, or part shall be deemed to be effective, operative, made, entered into,
or taken in the manner and to the full extent permitted by law.

         The relationship between Borrower and Bank with respect to this Note
and any writing executed or delivered in connection herewith is and shall be
solely that of debtor and creditor, respectively, and Bank has no fiduciary
obligation toward Borrower with respect to any such document or the transactions
contemplated thereby.

         This Note and any agreement, document or instrument referred to herein
or executed on or as of the date hereof integrate all of the terms and
conditions mentioned herein or incidental hereto and supersede all oral
representations and negotiations and prior writings with respect to the subject
matter hereof.

         Borrower agrees to promptly reimburse Bank for all reasonable costs and
expenses, including reasonable attorney's fees, incurred by Bank in connection
with any collection proceedings as a result of nonpayment of this Note, as and
when due and payable.

         Borrower has received consideration that is the reasonable equivalent
value of the obligations and liabilities that Borrower has incurred to Bank.
Borrower is not insolvent as defined in any applicable state or federal statute,
nor will Borrower be rendered insolvent by the execution and delivery of this
Note to Bank. Borrower is not engaged or about to engage in any business or
transaction for which the assets retained by it shall be an unreasonably small
capital, taking into consideration the obligations to Bank incurred hereunder.
Borrower does not intend to, nor does it believe that it will, incur debts
beyond its ability to pay them as they mature.

         Borrower authorizes any attorney-at-law to appear for Borrower in any
court of record in the State of Ohio after this Note becomes due and waive the
issuing and service of process and confess judgment against Borrower in favor of
Bank for the amount then appearing due, together with costs of suit, and
thereupon to waive all errors and all rights of appeal and stay of execution.
The foregoing warrant of attorney shall survive any judgment, and if any
judgment is vacated for any reason. Bank may thereafter use the foregoing
warrant of attorney to obtain any additional judgments against Borrower.
Borrower agrees that Bank's attorney may confess judgment pursuant to the
foregoing warrant of attorney. Borrower further agrees that the attorney
confessing judgment pursuant to the foregoing warrant of attorney may receive a
legal fee or other compensation from Bank.

                                      -2-
<PAGE>

         Borrower, to the extent permitted by law, waives any right to have a
jury participate in resolving any dispute, whether sounding in contract, tort,
or otherwise, between Bank and Borrower arising out of, in connection with,
related to, or incidental to the relationship established between Borrower and
Bank in connection with this Note or any other agreement, instrument or document
executed or delivered in connection therewith or the transactions related
thereto. This waiver shall not in any way affect waive, limit, amend or modify
Bank's ability to pursue remedies pursuant to any confession of judgment or
cognovit provision contained in this Note, or any other agreement, instrument or
document related thereto.

         WARNING: BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE. FOR THE PURPOSES OF THIS NOTICE "YOU" AND "YOUR" MEANS THE
BORROWER, AND "HIS" AND "CREDITOR"MEANS THE BANK.

BORROWER:                                   NATIONAL INTERSTATE CORPORATION

                                            By:  /s/ Gary N. Monda
                                                 ---------------------------
                                                 Name:  Gary N. Monda
                                                        --------------------
                                                 Title: Vice President & CFO
                                                        --------------------
                                            Address:   3250 Interstate Drive
                                                       Richfield, Ohio 44286

                                      -3-
<PAGE>

                             INTEREST RATE APPENDIX
                                       TO
                          MASTER DEMAND PROMISSORY NOTE
                              DATED AUGUST 28, 2002
                         NATIONAL INTERSTATE CORPORATION

A.       Interest Rate.

(a)      Defined Terms. As used herein:

         "Business Day" means a day of the year on which banks are not required
or authorized to close in Cleveland, Ohio and, if the applicable Business Day
relates to any Libor Rate Loan, on which dealings are carried on in the London
interbank Eurodollar market.

         "Interest Period" means, with respect to any Libor Rate Loan, the
period commencing on the date such Loan is made, continued, or convened and
ending on the last day of such period as selected by the Borrower pursuant to
the provisions below and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the last day
of such period as selected by the Borrower pursuant to the provisions below. The
duration of each Interest Period for any Libor Rate Loan shall be one, two, or
three months, in each case as the Borrower may select upon notice, as set forth
in (c) below, provided that whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall occur on the next succeeding Business Day; provided that
if such extension of time would cause the last day of such Interest period for a
Libor Rate Loan to occur in the next following calendar month, the last day of
such Interest Period shall occur on the next preceding Business Day.

         "Libor Rate" means, for any interest Period for any Libor Rate Loan, an
interest rate per annum (rounded upwards to the next higher whole multiple of
1/16% if such rate is not such a multiple) equal at all times during such
interest Period to the quotient of (a) the rate per annum (rounded upwards to
the next higher whole multiple of 1/16% if such rate is not such a multiple) at
which deposits in United States dollars are offered at 11:00 a.m. (London,
England time) (or as soon thereafter as is reasonably practicable) by prime
banks in the London interbank eurodollar market two Business Days prior to the
first day of such Interest Period in an amount and maturity of such Libor Rate
Loan, divided by (b) a number equal to 1.00 minus the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of the Libor Reserve
Requirements current on the date two Business Days prior to the first day of
such Interest Period.

         "Libor Rate Loan" means any Loan that bears interest with reference to
the Libor Rate.

         "Libor Reserve Requirements" means, for any Interest Period for any
Libor Rate Loan, the maximum reserves (whether basic, supplemental, marginal,
emergency, or otherwise) prescribed by the Board of Governors of the Federal
Reserve System (or any successor) with respect to liabilities or assets
consisting of or including "Eurocurrency Liabilities" (as defined in Regulation
D of the Board of Governors of the Federal Reserve System) having a term equal
to such Interest Period.

         "Loan" means any Libor Rate Loan or Prime Rate Loan evidenced by the
Note.

         "Note" means the Master Demand Promissory Note in the amount of
$2,000,000.00, dated August 28, 2002, executed by the Borrower in favor of the
Bank.

         "Prime Rate Loan" means any Loan that bears interest with reference to
the Prime Rate.

         "Prime Rate" of Bank is defined as that rate established from time to
time by the Bank as the Bank's Prime Rate, whether or not such rate is publicly
announced; the Prime Rate may not be the lowest interest rate charged by Bank
for commercial or other extensions of credit. In the event of any change in the
Prime Rate, the rate of interest upon such Loan shall be adjusted to immediately
correspond with such change, except such interest rate shall not exceed the
highest rate permitted by law.

                                      -4-
<PAGE>

(b)            Interest Rate. The Loan shall bear interest prior to maturity at
a rate per annum, selected by the Borrower pursuant to (c) below, equal to (i)
the Prime Rate minus one half of one percent (.50%) or (ii) the Libor Rate plus
two and one half percent (2.50%).

(c)            Loans; Loan Conversions. The outstanding principal amount of the
Loan may be made or converted into a Prime Rate Loan on such Business Day and in
such amount as the Borrower shall request by written notice given to the Bank no
later than 11:00 a.m. (Cleveland, Ohio time) on the date of disbursement of or
conversion into the requested Prime Rate Loan. Provided that no Event of Default
or any potential default as defined in the Note, has occurred and is continuing,
the outstanding principal amount of the Loan may be made or continued as or
converted into a Libor Rate Loan on such Business Day, in such amount (equal to
$100,000.00 or an integral multiple thereof), and with such an Interest Period
as the Borrower shall request by written notice given to the Bank no later than
11:00 a.m. (Cleveland, Ohio time) on the second Business Day prior to the date
of disbursement or continuation of or conversion into the requested Libor Rate
Loan. Each written notice of any Libor Rate Loan shall be irrevocable and
binding on the Borrower and Borrower shall indemnify the Bank against any loss
or expense incurred by the Bank as a result of any failure by the Borrower to
consummate such transaction, including, without limitation, any loss (including
loss of anticipated profits) or expense incurred by reason of liquidation or
reemployment of deposits or other funds acquired by the Bank to fund the Loan. A
certificate as to the amount of such loss or expense submitted by the Bank to
the Borrower shall be conclusive and binding for all purposes, absent manifest
error. In the event that the Borrower fails to provide the Bank with the
required written notice, the Borrower shall be deemed to have given a written
notice that such Loan shall be converted to a Prime Rate Loan on the last day of
the applicable Interest Period. The Borrower may not elect the Libor Rate if
U.S. dollar deposits are not available to the Bank in the London Eurodollar
Interbank Market for the period and in the amount requested by the Borrower.

(d)               Additional Costs.

                  (i) If, due to either (i) the introduction of, or any change
         in, or in the interpretation of, any law or regulation or (ii) the
         compliance with any guideline or request from any central bank or other
         governmental authority (whether or not having the force of law), there
         shall be any increase in the cost to the Bank of making, funding or
         maintaining Loans, then the Borrower shall from time to time, upon
         demand by the Bank pay to the Bank additional amounts sufficient to
         reimburse the Bank for any such additional costs. A certificate of the
         Bank submitted to the Borrower as to the amount of such additional
         costs, shall be conclusive and binding for all purposes, absent
         manifest error. Upon notice from the Borrower to the Bank within five
         (5) Business Days after the Bank notifies the Borrower of any such
         additional costs pursuant to this paragraph (b), the Borrower may
         either (A) prepay in full all Loans of any types so affected then
         outstanding, together with interest accrued thereon to the date of such
         prepayment, or (B) convert all Loans of any types so affected then
         outstanding into Loans of any other type not so affected upon not less
         than four (4) Business Days' notice to the Bank. If any such prepayment
         or conversion or any Libor Rate Loan occurs on any day other than the
         last day of the applicable Interest Period for such Loan, the Borrower
         also shall pay to the Bank such additional amounts sufficient to
         indemnify the Bank against any loss, cost, or expense incurred by the
         Bank as a result of such prepayment or conversion, including, without
         limitation, any loss (including loss of anticipated profits), cost, or
         expense incurred by reason of the liquidation or reemployment of
         deposits or other funds acquired by the Bank to fund any such Loan, and
         a certificate as to the amount of any such loss, cost, or expense
         submitted by the Bank to the Borrower shall be conclusive and binding
         for all purposes, absent manifest error.

                  (ii) If either (i) the introduction of, or any change in, or
         in the interpretation of, any law or regulation or (ii) the compliance
         with any guideline or request from any central bank or other
         governmental authority (whether or not having the force of law),
         affects or would affect the amount of capital required or expected to
         be maintained by the Bank or any corporation controlling the Bank and
         the Bank determines that the amount of such capital is increased by or
         based upon the existence of the Loans (or commitment to make the Loans)
         and other extensions of credit (or commitments to extend credit) of
         similar type, then, upon demand by the Bank, the Borrower shall pay to
         the Bank from time to time as specified by the Bank additional amounts
         sufficient to compensate the Bank in the light of such circumstances,
         to the extent that the Bank reasonably determines such increase in
         capital to be allocable to the existence of the Bank's Loans

                                      -5-
<PAGE>

         (or commitment to make the Loans). A certificate of the Bank submitted
         to the Borrower as to such amounts shall be conclusive and binding for
         all purposes, absent manifest error. Upon notice from the Borrower to
         the Bank within five (5) Business Days after the Bank notifies the
         Borrower of any such additional costs pursuant to this paragraph (b),
         the Borrower may either (A) prepay in full all Loans of any types so
         affected then outstanding, together with interest accrued thereon to
         the date of such prepayment, or (B) convert all Loans of any types so
         affected then outstanding into Loans of any other type not so affected
         upon not less than four (4) Business Days' notice to the Bank. If any
         such prepayment or conversion of any Libor Rate Loan occurs on any day
         other than the last day of the applicable Interest Period for such
         Loan, the Borrower also shall pay to the Bank such additional amounts
         sufficient to indemnify the Bank against any loss, cost, or expense
         incurred by the Bank as a result of such prepayment or conversion,
         including, without limitation, any loss (including loss of anticipated
         profits), cost, or expense incurred by reason of the liquidation or
         reemployment of deposits or other funds acquired by the Bank to fund
         any such Loan, and a certificate as to the amount of any such loss,
         cost, or expense submitted by the Bank to the Borrower shall be
         conclusive and binding for all purposes, absent manifest error.

(e)      Illegality. Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for the Bank to perform its
obligations hereunder to make, continue, or convert Libor Rate Loans hereunder,
then, (a) on notice thereof by the Bank to the Borrower, the obligation of the
Bank to make or continue a Loan of a type so affected or to convert any type of
Loan into a Loan of a type so affected shall terminate and the Bank shall
thereafter be obligated to make Prime Rate Loans whenever any written notice
requests any type of Loans so affected and (b) upon demand therefor by the Bank
to the Borrower, the Borrower shall either (i) forthwith prepay in full all
Loans of the type so affected then outstanding, together with interest accrued
thereon or (ii) request that the Bank, upon four (4) Business Days' notice,
convert all Loans of the type so affected then outstanding into Loans of a type
not so affected. If any such prepayment or conversion of any Libor Rate Loan
occurs on any day other than the last day of the applicable Interest Period for
such Loan, the Borrower also shall pay to the Bank such additional amounts
sufficient to indemnify the Bank against any loss, cost, or expense incurred by
the Bank as a result of such prepayment or conversion, including, without
limitation, any loss (including loss of anticipated profits), cost, or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by the Bank to fund any such Loan, and a certificate as to the amount
of any such loss, cost, or expense submitted by the Bank to the Borrower shall
be conclusive and binding for all purposes, absent manifest error.

B.       Interest Payments.

         The Borrower shall pay to the Bank interest on the unpaid principal
balance of each Prime Rate Loan on the first day of each month, beginning
September 1, 2002. The Borrower shall pay to the Bank interest on the unpaid
principal balance of each Libor Rate loan on (i) the date such Loan is converted
to a Prime Rate Loan, or (ii) the last day of the applicable Interest Period of
such Loan, whichever is earlier.

C.       Prepayment.

         The Borrower may prepay any Prime Rate Loans in whole, or in part, at
any time or times upon not less than one (1) Business Days' prior notice made by
telephone to the Bank. The Borrower may prepay any Libor Rate Loan, in whole or
in part, in the minimum principal amount of $100,000.00, only on the last day of
the Interest Period applicable to such Loan upon not less than three (3)
Business Days' prior written notice given to the Bank.

D.       Computation of Interest and Fees.

         Interest on each Loan shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed. Interest on unpaid fees and
the Prepayment Premium, if any, hereunder shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed.

                                      -6-

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