Document:

Exhibit 10.24

                         FIRST AMENDMENT OF OFFICE LEASE
                                       AND
                            PARKING LICENSE AGREEMENT

      THIS FIRST AMENDMENT OF OFFICE LEASE AND PARKING LICENSE AGREEMENT (this
"Agreement") is made and executed this 13TH DAY OF December, 1999, by and
between TIAA REALTY, INC., a Delaware corporation, successor-in-interest to
Teachers Insurance and Annuity Association, a New York corporation (hereinafter
referred to as "Landlord") and ADSTAR.COM, INC., a Delaware corporation,
successor-in-interest to Ad-Star Services, Inc., a New York corporation
(hereinafter referred to as "Tenant"), who agree as follows:

                                    RECITALS

A. Teachers Insurance and Annuity Association ("Teachers") and Ad-Star Services
("AdSvc") entered into a written Office Lease made as of January 3, 1996
(hereinafter the "Lease") for the lease of certain premises ("Premises") more
commonly known as Suite 325 in that certain office building ("Building") located
at 4553 Glencoe Avenue in the City of Marina del Rey, County of Los Angeles,
State of California, in a project ("Project"), generally referred to as Marina
Business Center II, all as more particularly set forth in the Lease.

B. On March 18, 1998, Landlord succeeded to all right, title and interest in
said Lease held by Teachers.

C. On August 31, 1999, Tenant succeeded to all right, title and interest in said
Lease held by Ad Svc.

D. Landlord and Tenant desire by this Agreement to extend the term of the Lease
and to amend the Lease to provide for Tenant to lease from Landlord, in addition
to its existing Premises, approximately 5,098 square feet of rentable space more
commonly known as Suite 300 (the "Additional Space") on the third floor of the
Building as delineated on Exhibit A-2 attached hereto and by this reference made
a part hereof.

                                      TERMS

      NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants herein contained, and good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

1.    Terms. All undefined terms when used herein shall have the same respective
      meanings as are given such terms in the Lease unless expressly provided
      otherwise in this Agreement.

2.    Effective as of the date hereof, the Lease is hereby amended as follows:

      2.1   Section 1.1 ("Premises") is amended by deleting the words "2,209
            square feet of rentable area from the fourth line thereof and
            substituting the following in lieu thereof:

                  "2,209 square feet of rentable area ('Original Space') and
                  5,098 square feet of rentable area ('Additional Space')".

      2.2   Section 1.2 ("Term") is amended by adding at the end of the second
            line thereof

<PAGE>

            the following:

                  "The preceding applies to the Original Space. As to the
                  Additional Space, the target 'New Commencement Date' (as such
                  term is hereinafter defined) shall be February 15, 2000. The
                  Lease term as to the Additional Space shall commence on the
                  earlier to occur of (i) the date of substantial completion of
                  Landlord's Work in the Additional Space, or (ii) the date
                  Tenant occupies or commences using any part of the Additional
                  Space (the 'New Commencement Date') and shall expire on the
                  day preceding the fifth anniversary of the New Commencement
                  Date. Thereafter, the Lease term as to the Original Space
                  shall be co-terminus with the Lease term for the Additional
                  Space".

      2.3   Section 1.3 ("Rental") is deleted in its entirety and the following
            substituted in lieu thereof:

                  "As to the Original Space, the Basic Rent shall be Three
                  Thousand Two Hundred Three and 05/100 Dollars; commencing
                  February 19, 2001, the Basic Rent as to the Original Space
                  shall be increased to Four Thousand Five Hundred Twenty-Eight
                  and 45/100 Dollars ($4,528.45) per month. As to the Additional
                  Space, the Basic Rent shall be Eleven Thousand Three Hundred
                  Sixty-Eight and 54/100 Dollars ($11,368.54) per month;
                  commencing in the 31st month of the Lease term for the
                  Additional Space, the Basic Rent shall be increased to Eleven
                  Thousand Eight Hundred Seventy-Eight and 34/100 Dollars
                  ($11,878.34) per month".

      2.4   Section 1.4 ("Expenses") is amended by adding at the end of the
            fourth line thereof, the following:

                  "As to the Original Space, commencing February 19, 2001,
                  Tenant shall pay Tenant's Share of all Expenses that exceed
                  Landlord's Base Year Costs for calendar year 2001. As to the
                  Additional Space, Tenant shall pay Tenant's Share of all
                  Expenses that exceed Landlord's Base Year Costs for calendar
                  year 2000, together with other items of Expense as set forth
                  in Article 6. Tenant's Share is Seven and 1/100ths percent
                  (7.01%) as to the Additional Space".

      2.5   Section 1.7 ("Security Deposit") is deleted in its entirety and the
            following substituted in lieu thereof:

            "1.7  Security Deposit: Sixteen Thousand Four Hundred Six and 79/100
                  Dollars ($16,406.79)".

      2.6   Section 2.1 is amended by adding on the first line thereof between
            the words "premises" and "(the 'Premises')" the following:

                  "including the Original Space and the Additional Space"

      and by adding at the second line of Section 2.1 after the words "Exhibit
      A" the following:

                  "and Exhibit A-2"

      and by deleting the language on the third line which begins "The area of
      the Premises..." and which ends on the fifth line with the words
      "...rentable area." and substituting the

<PAGE>

following in lieu thereof:

                  "The area of the Premises for all purposes hereunder is
                  stipulated to be 1,943 square feet of usable area as to the
                  Original Space and 4,486 square feet of usable area as to the
                  Additional Space; and 2,209 square feet of rentable area as to
                  the Original Space and 5,098 square feet of rentable area as
                  to the Additional Space".

      2.7   Article 3 ("Term")is deleted in its entirety and the following
            substituted in lieu thereof:

            "3.   TERM

                  3.1 New Commencement Date. The Lease term as to the Additional
                  Space shall be for sixty (60) months and shall commence on the
                  earlier to occur of (i) the date Tenant (or any subtenant)
                  takes possession of, occupies or commences using any part of
                  the Additional Space, or (ii) [he date of "substantial
                  completion" (as hereinafter defined), or (iii) the date
                  established by Landlord in the event of a delay as described
                  in Article 10 hereof. The date on which the Lease term of the
                  Additional Space commences pursuant to the foregoing (the "New
                  Commencement Date") shall be confirmed by Landlord and Tenant
                  in the form set forth in Exhibit B when Tenant takes
                  possession of the Additional Space. The term of the Lease for
                  the Additional Space shall be extended to be co-terminus with
                  the Lease term for the Additional Space. Failure of Tenant to
                  execute Exhibit B within ten (10) days after written request
                  from Landlord shall be a material default hereunder. This
                  Agreement shall be a binding contractual agreement effective
                  upon the date of execution hereof by both Landlord and Tenant,
                  notwithstanding the later commencement of the term of the
                  Lease as to the Additional Space".

                  "3.2 Substantial Completion. For purposes hereof, the phrase
                  "substantial completion" means the completion (as determined,
                  in the event of a dispute, by Landlord's architect or space
                  planner in accordance with AIA standards) of the construction
                  work to be performed by Landlord pursuant to the "Plans" (as
                  defined in Exhibit C, "Construction Provisions", attached
                  hereto), except for such items that constitute minor defects
                  or adjustments which can be completed after occupancy by
                  Tenant without causing material interference with Tenant's use
                  of the Additional Space (so-called "punch list" items). On or
                  about the date when Landlord has substantially completed all
                  work to be performed by Landlord in the Additional Space,
                  Landlord and Tenant shall inspect the Additional Space and all
                  punch list items shall be noted in writing on Landlord's punch
                  list form. Damage to the Additional Space caused by Tenant or
                  its agents or contractors shall not constitute punch list
                  items. As soon thereafter as conditions permit, Landlord shall
                  complete all such punch list items, provided Tenant is not
                  then in default hereunder. Upon Landlord's completion of such
                  punch list items, Landlord and Tenant shall reinspect the
                  Additional Space with regard to all punch list items
                  previously noted and shall indicate on Landlord's punch list
                  form if such items have been satisfactorily completed.
                  Tenant's failure to reinspect any such punch list items within
                  fifteen (15) days after Landlord's written request to do so
                  shall constitute an acceptance by Tenant of such items as
                  being satisfactorily completed".

<PAGE>

                  "3.3 Target New Commencement Date. The Target New Commencement
                  Date is an estimated date only and is set forth in Section 1.3
                  hereof. Landlord shall attempt to complete "Landlord's Work"
                  (as defined in Section 10.1) prior to the Target New
                  Commencement Date, but this Agreement shall not be void or
                  voidable nor shall Landlord or its agents be liable to Tenant
                  by reason of Landlord's failure to complete Landlord's Work by
                  such date. Landlord shall use its best efforts to give Tenant
                  sufficient advance notice of the date of substantial
                  completion. Landlord shall use its best efforts to cooperate
                  with Tenant's move-in schedule and, at Landlord's sole
                  discretion, may allow Tenant to have access to the Additional
                  Space prior to completion of Landlord's Work (provided that
                  Landlord may, after having allowed such access, disallow
                  further access) so that Tenant may install its furniture,
                  equipment and fixtures, prior to the New Commencement Date. In
                  such event, however, Tenant shall not interfere with
                  completion of such work and shall be responsible for any
                  delays, costs or expenses incurred by Landlord due to any such
                  interference, and in such event Tenant shall hold Landlord
                  harmless and indemnify Landlord for any loss or damage to
                  Tenant's furniture, equipment, fixtures, or merchandise and
                  for injury to any persons arising out of the performance of
                  such work in the Additional Space unless caused by the
                  negligence of Landlord, its agents or contractors".

      2.7   The Lease is amended by adding the following after Article 43:

            "44.  OPTION TO EXTEND TERM

                  44.1 Option to Extend Term. Landlord hereby grants Tenant one
                  (1) option of five (5) years ("Option") to extend the initial
                  Lease term ("Initial Term") on the same terms and conditions
                  as set forth in this Lease(excepting this Option to Extend)
                  but at a Basic Rent as set forth below. The Option shall be
                  for an additional term of five (5) years commencing upon the
                  expiration of the Initial Term ("Extended Term") and shall be
                  exercised only by written notice ("Option Notice") delivered
                  to Landlord at least six (6) months, but not more than twelve
                  (12) months prior to the expiration of the Initial Term. If
                  Tenant does not deliver the Option Notice for the Option
                  within the time period set forth herein, the Option shall
                  lapse and Tenant shall have no further right to extend the
                  Lease term. Tenant shall have no further right to extend the
                  term beyond the Extended Term.

                  44.2 Personal Option. If Tenant assigns, mortgages, pledges,
                  hypothecates or encumbers this Lease or its interest in the
                  Premises or sublets all or any portion of the Premises
                  ("Assigns" for purposes of this Article 44 only) prior to the
                  exercise of the Option without first obtaining Landlord's
                  written consent, then the Option shall lapse. If Tenant
                  assigns any interest of Tenant in the Lease or the Premises to
                  an entity after the exercise of the Option, but prior to the
                  commencement of the Extended Term, and Landlord's prior
                  written consent has not been obtained, the Option shall lapse
                  and this Lease shall expire as if the Option were not
                  exercised.

                  44.3 Calculation of Basic Rent. The Basic Rent shall be
                  adjusted on the first day of the Extended Term to the then
                  "Fair Market Rental Value of

<PAGE>

                  the Premises" (as defined in this Article 44), but in no event
                  less than the Basic Rent payable immediately preceding the
                  Extended Term. The term "Fair Market Rental Value of the
                  Premises" shall be the then prevailing fair market rental rate
                  per square foot achieved for comparable space and use within
                  the Marina del Rey - Fox Hills - Culver City market as of the
                  commencement of the Extended Term.

                  44.4 Negotiation. After Landlord receives the Option Notice
                  for the Option, the parties shall have thirty (30) days after
                  Landlord receives the Option Notice in which to negotiate, in
                  good faith, to agree on the Fair Market Rental Value of the
                  Premises during the Extended Term. If, within said thirty
                  (30)-day period the parties agree on the Fair Market Rental
                  Value of the Premises, then this Lease shall be amended
                  pursuant to Section 44.5 hereof. However, if the parties are
                  unable to agree upon the Fair Market Value of the Premises
                  during said thirty (30)-day period, then this Lease shall
                  expire upon the end of the Initial Term unless earlier
                  terminated. Neither Landlord nor Tenant shall have the right
                  to have the Court or any other third party set the Fair Market
                  Value of the Premises; however, neither party shall be
                  prevented from having a Court rule on the issue of good faith.

                  44.5 Documentation. Following Landlord and Tenant's agreement
                  as to the Fair Market Rental Value of the Premises as provided
                  in Section 44.4 above, Landlord shall prepare an amendment to
                  this Lease setting forth the terms of this Lease as modified
                  by the terms of this Article 44. Said amendment shall be
                  submitted to Tenant for execution and Tenant shall have thirty
                  (30) days following receipt thereof from Landlord in which to
                  properly execute and deliver to Landlord said amendment. If
                  Tenant should not execute and deliver said amendment as and
                  when required by this Section 44.5, the same shall constitute
                  a material default under this Lease.

                  44.6 Additional Conditions. The Option shall be exercisable by
                  Tenant on the express conditions that at the time of the
                  exercise of the Option and upon the date of the commencement
                  of the Extended Term, Tenant shall not be in default under any
                  of the provisions of this Lease. The Option granted herein is
                  subject to any existing or prior rights of expansion,
                  extension, renewal, negotiation, offer and other rights and
                  options which third parties may have for the Premises."

      2.8   The Lease is further amended by adding thereto, after Exhibit A-1,
            Exhibit A-2, which is attached hereto and by this reference made a
            part hereof.

      2.9   Exhibit "C" ("Construction Provisions") is deleted in its entirety
            and the attached Exhibit "C" substituted in lieu thereof.

      2.10  Section 1 of the License is amended by deleting the words "Nine (9)"
            on the first line thereof and substituting the words "Thirty (30)"
            therefor.

      2.11  Section 2.1 of the License is deleted in its entirety.

3.    Notwithstanding anything to the contrary in the Lease or in Exhibit "C",
      Landlord hereby grants Tenant a remodeling allowance of $9,715 (the
      "Remodeling Allowance") to be used as a credit towards repainting and
      re-carpeting the Original Space. The Remodeling

<PAGE>

      Allowance will be provided to Tenant within thirty (30) days following
      Landlord's receipt of paid invoices totaling or in excess of the
      Remodeling Allowance; provided, however, that the Remodeling Allowance
      will not be available for Tenant's use until February 19, 2001.

4.    This Agreement contains all of the agreements of the parties hereto with
      respect to the matters contained herein, and no prior agreement,
      arrangement or understanding pertaining to any such matter shall be
      effective for any purpose.

<PAGE>

5.    Except as expressly modified by this Agreement, the Lease shall remain
      unchanged and in full force and effect.

6.    This Agreement may be executed in several counterparts, each of which
      shall be deemed an original, but all of which shall constitute one and the
      same Agreement.

7.    The provisions of this Agreement shall bind and inure to the benefit of
      the heirs, representatives, successors and assigns of the parties hereto.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

LANDLORD:                TIAA REALTY, INC., a Delaware corporation
                         By:       TEACHERS INSURANCE AND ANNUITY
                                   ASSOCIATION, a New York corporation,
                                   its authorized representative

                                   By: _________________________________________
                                          James P. Garofalo, Assistant Secretary

                                   Date: _______________________________________

TENANT:                   ADSTAR.COM, INC., a Delaware corporation

                          By: _______________________________________________

                          Name: _____________________________________________

                          Title: ____________________________________________

                          By: _______________________________________________

                          Name: _____________________________________________

                          Title: ____________________________________________

<PAGE>

                                   EXHIBIT A-2

                            MARINA BUSINESS CENTER II
                               4553 GLENCOE AVENUE
                                 MARINA DEL REY

                                   THIRD FLOOR

<PAGE>

                                    EXHIBIT C

                             CONSTRUCTION PROVISIONS

      1. These provisions define the scope of work to be provided by Landlord in
the Additional Space under the terms of the Lease. Words and phrases used herein
which are defined in the Lease have the meanings set forth therein unless
provided otherwise.

      2. It is the intent of these provisions that Tenant shall be permitted
freedom in the interior design and layout of its space so long as same is
consistent with Landlord's policies and structural requirements, applicable
building codes, and with sound architectural and construction practices, and
provided further that no interference is caused to the operation of the
Building's mechanical heating, cooling or electrical systems or structure, or
other Building operations or functions, and that no unusual increase in
maintenance, insurance, taxes, fees or utility charges will be incurred by
Landlord or the other tenants in the Building as a result thereof. Any
additional cost of design, construction, operation, insurance, maintenance,
taxes, fees or utilities which results therefrom shall be charged to Tenant and
paid for by Tenant in accordance with the provisions hereof and of the Lease.

      3. Landlord's Work. Landlord hereby grants Tenant a construction allowance
not to exceed $82,991.00 (the "Additional Space Allowance") which Additional
Space Allowance shall be used only as a credit towards the cost of the following
services and materials (hereinafter referred to as "Landlord's Work"):

            3.1 The services of Landlord's space planner to prepare one (1)
approved space layout and one (1) set of approved working drawings [with five
(5) prints]. One minor revision to the original space layout will be included
without charge. All other revisions and prints as well as all interior design or
decorating fees, shall be at Tenant's sole cost and expense.

            3.2 The construction of the improvements and the installation of the
items shown the "Plans", hereinafter defined (as used in the Lease and this
Exhibit C, the term "Building Standard" refers to the minimum quality of
materials to be used in the construction of the Additional Space).

            3.3 Fees for engineering, construction management by Landlord's
Construction Manager (as hereinafter set forth), and previously installed
materials used in the construction (if any).

            3.4 Permits and license fees relating to the construction of
Tenant's improvements.

      4. Tenant's Work. All costs incurred in excess of the foregoing Additional
Space Allowance (hereinafter referred to as "Tenant's Work") shall be for the
account of Tenant and at Tenant's sole cost and expense. Tenant shall pay
building lifting charges (if any) for Tenant's Work to the extent the same are
not otherwise included in the cost of Landlord's Work.

      5. Space Planner. Tenant shall use the services of the space planner
retained by Landlord to prepare a space layout and working drawings and
specifications for all construction work in the Additional Space. Interior
design, and details and specifications for improvements other than Landlord's
Work, shall be for the account of Tenant and shall be paid by Tenant upon
invoice therefor. Tenant shall devote such time in consultation with Landlord's
space planner as shall be necessary to enable the space planner to develop
complete working drawings and

<PAGE>

specifications (hereinafter referred to as the "Plans") for construction of
improvements in the Additional Space, showing thereon partitions, doors,
electrical and telephone outlets, light fixture locations, wall finishes, floor
coverings and special requirements (if any) for Tenant's review and approval.
Failure of Tenant to approve the Plans within the time limit specified in
Section 7 hereof shall be deemed disapproval. If Tenant requests or necessitates
any changes or revisions in the Plans after they have been approved, Tenant
shall bear all costs associated therewith.

      6. Cost Estimates. As soon as practicable after Tenant's approval of the
Plans, Landlord will advise Tenant of the estimated cost payable by Tenant due
to costs for improvements, services or materials in excess of the Additional
Space Allowance (i.e., the estimated cost for Tenant's Work). Landlord will have
no obligation whatsoever to commence construction of any improvements in the
Additional Space unless Tenant approves same and pays the estimated costs for
Tenant's Work in advance, and Landlord's refusal to proceed under such
circumstances shall not defer the New Commencement Date. Upon Tenant's
authorization to proceed and payment of such estimated costs, Landlord shall
commence the construction of improvements in the Additional Space. Upon
substantial completion of the Additional Space (which in the event of a dispute
shall be determined by Landlord's project architect pursuant to AIA standards),
Tenant shall pay the amount of actual costs in excess of such estimated costs
previously paid by Tenant or, if the actual costs are less than such estimated
costs previously paid by Tenant, Landlord shall reimburse the difference to
Tenant. If Tenant fails to make such payment within ten (10) days after receipt
of a demand therefor, Landlord shall have the same rights and remedies as in the
case of a default by Tenant in the payment of Rent under the Lease, and interest
will accrue thereon at the Agreed Rate.

      7. Time Limits. The following maximum time periods shall be allowed for
the indicated matters:

<TABLE>
<CAPTION>
                                                                                          Time Limit After Completion
Action                       of Preceding Item
------
<S>      <C>                                                                               <C>
(a)      Tenant meets with Landlord's space planner and
                  approves initial space layout.                                           5 days after execution
                                                                                           of this Agreement

         (b)      Tenant furnishes all required working drawing
                  information to Landlord's space planner.                                    10 business days

         (c)      Landlord's space planner submits working drawings
                  to Tenant for review and approval.                                          15 business days

         (d)      Tenant gives Landlord its approval of working drawings,
                  with any required changes in detail.                                        5 business days

         (e)      Landlord quotes estimated cost to Tenant for Tenant's
                  Work.                                                                       10 business days

         (f)      Tenant approves such estimated costs and pays the
                  amount thereof to Landlord and authorizes
                  Landlord to proceed.                                                        5 business days

         (g)      Upon substantial completion of the improvements in the
                  Additional Space (i.e., exclusive of punchlist items) Tenant
                  shall pay the entire then remaining balance of actual costs in
                  excess of the Additional Space Allowance within ten (10) days
                  after its receipt of a billing statement from Landlord.
</TABLE>

<PAGE>

It is expressly acknowledged by Tenant that inaccurate or incomplete information
furnished by Tenant may cause delays and that delays in the time schedule set
forth in this Section 7 attributable to Tenant, its agents or contractors will
result in liquidated damages as set forth in Section 12 hereof.

      8. Construction by Landlord's Contractor. Unless otherwise agreed in
writing in this Exhibit C, all construction work in the Additional Space
including Tenant's Work shall be performed by the Tenant Improvement Contractor
("TI Contractor") retained by Landlord. The TI Contractor shall perform such
work in a good and workmanlike manner and shall construct the improvements in
the Additional Space substantially in accordance with the Plans. All such
construction work shall be performed in accordance with all laws, ordinances and
requirements of government agencies having jurisdiction. If Landlord shall,
pursuant to this Exhibit C, permit Tenant to have any work performed by a
contractor retained by Tenant rather than by the TI Contractor, then (i) Tenant
shall use only such contractor as shall have first been approved by Landlord;
(ii) such contractor shall be bondable, (iii) Landlord will permit entry of such
contractor into the Additional Space for the purpose of performing such work,
prior to commencement of the term of the Lease, and while the TI Contractor is
working at the Additional Space, but only at such time or times as Landlord
shall deem feasible in the circumstances; (iv) such license to enter before
commencement of the term is expressly conditioned upon the contractor retained
by Tenant working in harmony and not interfering with the workmen, mechanics and
contractors of Landlord or of any other tenant in the Building or the Project,
and if at any time such entry or work by Tenant's contractor shall cause any
disharmony or interference, such permission to enter may be withdrawn by
Landlord immediately upon written notice to Tenant; (v) worker's compensation,
public liability and property damage insurance, all in amounts and with
companies and on forms satisfactory to Landlord, shall be provided and at all
times maintained by Tenant's contractor, and before proceeding with the work,
certificates of such insurance shall be furnished to Landlord; (vi) such entry
shall be deemed to be under all the terms, covenants, provisions and conditions
of the Lease, except the covenant to pay Rent and Expenses; and (vii) all
materials, work, installations and decorations of any nature whatsoever brought
on or installed in the Additional Space before the commencement of the term of'
the Lease shall be at Tenant's risk, and neither Landlord nor any party acting
on Landlord's behalf shall be responsible for any damage thereto or loss or
destruction thereof.

      9. Construction Manager. Landlord has designated a "Construction Manager"
who shall be responsible for the management and coordination of all work to be
performed in the Additional Space and coordination with Tenant on all matters
governed by these Construction Provisions. The Construction Manager shall be
paid a fee equal to three percent (3%) of the cost of the improvements, services
and materials furnished as a part of Landlord's Work and Tenant's Work as
reimbursement for the expense of administration and coordination of such work.
With regard to all matters involving such work, Tenant shall communicate with
the Construction Manager rather than the TI Contractor. Landlord shall not be
responsible for any statement, representation or agreement made between Tenant
and TI Contractor. It is hereby expressly acknowledged by Tenant that such TI
Contractor is not Landlord's agent and has no authority whatsoever to enter into
agreements on Landlord's behalf or otherwise bind Landlord. The Construction
Manager will furnish Tenant with notices of substantial completion, cost
estimates for Tenant's Work, Landlord's approvals or disapprovals of Plans and
changes thereto, billings for actual costs of Tenant's Work and other similar
notices. Tenant shall deliver all payments required hereunder to the
Construction Manager unless written notice is given by Landlord to the contrary.

      10. Changes. If Tenant requests or necessitates any change, addition or
deletion to the Additional Space after approval of the Plans, as described in
Section 7 above, a request for the change shall be submitted to the Construction
Manager accompanied by revised plans prepared by Landlord's space planner at
Tenant's sole expense. The Construction Manager shall thereafter notify Tenant
in writing of the estimated cost which will be chargeable to Tenant by

<PAGE>

reason of such change, addition or deletion. Such estimated cost shall include
Landlord's cost of any delay in completion of the Additional Space resulting
from such change (including, but not limited to, loss of income, additional
interest, penalties, and extra labor costs incurred in order to minimize further
delay). Tenant shall within five (5) business days thereafter notify the
Construction Manager in writing whether it desires to proceed with such change.
In the absence of such written authorization within that five (5) day period,
Landlord shall not be obligated to perform such change and shall be deemed to
have been authorized by Tenant to proceed without making such change.

      11. Substitutions. Tenant may select different new materials (except
exterior window levelors which must be installed on all exterior windows, the
ceiling system, parabolic light fixtures, and the doors and frames and hardware)
in substitution for the materials specified as the building standard, provided
the selection is indicated on the approved Plans.

      12. Responsibility for Delays. Tenant hereby expressly agrees that if
Tenant is responsible for any delay in substantial completion of the Additional
Space, whether by reason of (i) failure to meet the time schedule set forth in
Section 7 above, (ii) delays in performance or completion by a party employed by
Tenant, (iii) building code problems arising from Tenant's design, or (iv) an
unapproved change in the work necessitated by Tenant, Landlord will suffer loss
or damage (which loss or damage may include administrative costs, attorneys'
fees, excess interest penalties and loss of income), the amount of which would
be extremely difficult to ascertain. Therefore, it is expressly agreed that for
each day of such delay attributable to Tenant the New Commencement Date shall be
accelerated and Tenant shall pay to Landlord an amount equal to the daily amount
of Basic Rent under the Lease, as liquidated damages for such delay and not as a
penalty. Furthermore, if Tenant fails to approve the Plans within ninety (90)
days after execution of the Agreement or fails to pay the estimated costs of
Tenant's Work within thirty (30) days after the same become due and payable,
Landlord may (but need not) terminate the Lease for default upon written notice
to Tenant and in such event Landlord shall not be precluded by reason of the
foregoing from recovering any additional damages it may suffer as a result of
such termination. It is acknowledged and agreed by Tenant that notwithstanding
the provisions for liquidated damages hereinabove set forth, if the Lease is
terminated for default as set forth above such liquidated damages shall not be
deemed to compensate Landlord for the amount of damage, if any, which Landlord
may incur as a result of such termination, and Landlord will not be precluded,
by reason of such liquidated damages provisions, from pursuing any rights or
remedies available under the law for losses incurred as a result thereof.

      13. Incorporation by Reference. This Exhibit C is and shall be
incorporated by reference in the Lease, and all of the terms and provisions of
the Lease are incorporated herein by this reference. Schedule A to this Exhibit
C is hereby incorporated by this reference in the Lease and in this Exhibit.

      14. Attorneys' Fees. In the event of any action or proceeding initiated by
a party hereto for the enforcement or interpretation of the provisions contained
herein, the prevailing party shall be entitled to recover its costs incurred in
connection therewith, including its reasonable attorneys' fees.LOAN AGREEMENT

      THIS LOAN AGREEMENT ("Loan Agreement") is made and entered in as of the
5th day of January, 2000, by and between the SECURITY FEDERAL BANK & TRUST
EMPLOYEE STOCK OWNERSHIP PLAN TRUST ("Borrower"), a trust forming part of the
Security Federal Bank & Trust Employee Stock Ownership Plan ("ESOP"); and
SECURITY FINANCIAL BANCORP, INC. ("Lender"), a corporation organized and
existing under the laws of the State of Delaware.

                               W I T N E S S E T H

      WHEREAS, the Borrower is authorized to purchase shares of common stock of
Security Financial Bancorp, Inc. ("Common Stock"), either directly from Security
Financial Bancorp, Inc. or in open market purchases in an amount not to exceed
155,076 shares of Common Stock.

      WHEREAS, the Borrower is authorized to borrow funds from the Lender for
the purpose of financing authorized purchases of Common Stock; and

      WHEREAS, the Lender is willing to make a loan to the Borrower for such
purpose:

      NOW, THEREFORE, the parties agree hereto as follows:

                                    ARTICLE I
                                    ---------

                                   DEFINITIONS
                                   -----------

      The following definitions shall apply for purposes of this Loan Agreement,
except to the extent that a different meaning is plainly indicated by the
context:

      Business Day means any day other than a Saturday, Sunday or other day on
      ------------
which banks are authorized or required to close under federal or local law.

      Code means the Internal Revenue Code of 1986 (including the corresponding
      ----
provisions of any succeeding law).

      Default means an event or condition which would constitute an Event of
      -------
Default. The determination as to whether an event or condition would constitute
an Event of Default shall be determined without regard to any applicable
requirements of notice or lapse of time.

      ERISA means the Employee Retirement Income Security Act of 1974, as
      -----
amended (including the corresponding provisions of any succeeding law).

      Event of Default means an event or condition described in Article 5.
      ----------------

      Loan means the loan described in section 2.1
      ----

<PAGE>

      Loan Documents means, collectively, the Loan Agreement, the Promissory
      --------------
Note and the Pledge Agreement and all other documents now or hereafter executed
and delivered in connection with such documents, including all amendments,
modifications and supplements of or to all such documents.

      Pledge Agreement means the agreement described in section 2.8(a).
      ----------------

      Principal Amount means the face amount of the Promissory Note, determined
      ----------------
as set forth in section 2.1(c).

      Promissory Note means the promissory note described in section 2.3.
      ---------------

      Register means the register described in section 2.9.
      --------

                                   ARTICLE II
                                   ----------

                           THE LOAN; PRINCIPAL AMOUNT;
                           ---------------------------
                       INTEREST; SECURITY; INDEMNIFICATION
                       -----------------------------------

      Section 2.1 The Loan; Principal Amount.
                  ---------------------------

      (a) The Lender hereby agrees to lend to the Borrower such amount, and at
such time, as shall be determined under this Section 2.1; provided, however,
that in no event shall the aggregate amount lent under this Loan Agreement from
time to time exceed the greater of (i) $1,550,769 or (ii) the aggregate amount
paid by the Borrower to purchase up to 155,076 shares of Common Stock.

      (b) Subject to the limitations of Section 2.1(a), the Borrower shall
determine the amounts borrowed under this Agreement, and the time at which such
borrowings are effected. Each such determination shall be evidenced in a writing
which shall set forth the amount to be borrowed and the date on which the Lender
shall disburse such amount, and such writing shall be furnished to the Lender by
notice from the Borrower. The Lender shall disburse to the Borrower the amount
specified in each such notice on the date specified therein or, if later, as
promptly as practicable following the Lender's receipt of such notice; provided,
however, that the Lender shall have no obligation to disburse funds pursuant to
this Agreement following the occurrence of a Default or an Event of Default
until such time as such Default or Event of Default shall have been cured.

      (c) For all purposes of this Loan Agreement, the Principal Amount on any
date shall be equal to the excess, if any, of:

      (i) the aggregate amount disbursed by the Lender pursuant to section
      2.1(b) on or before such date; over

                                        2
<PAGE>

      (ii) the aggregate amount of any repayments of such amounts made before
      such date.

The Lender shall maintain on the Register a record of, and shall record in the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.

      Section 2.2 Interest.
                  ---------

      (a) The Borrower shall pay to the Lender interest on the Principal Amount,
for the period commencing with the first disbursement of funds under this Loan
Agreement and continuing until the Principal Amount shall be paid in full, at
the rate of eight and one half percent (8.50%) per annum. Interest payable under
this Agreement shall be computed on the basis of a year of 365 days and actual
days elapsed (including the first day but excluding the last) occurring during
the period to which the computation relates.

      (b) Accrued interest on the Principal Amount shall be payable by the
Borrower on the dates set forth in Schedule I to the Promissory Note. All
interest on the Principal Amount shall be paid by the Borrower in immediately
available funds.

      (c) Anything in the Loan Agreement or the Promissory Note to the contrary
notwithstanding, the obligation of the Borrower to make payments of interest
shall be subject to the limitation that payments of interest shall not be
required to be made to the Lender to the extent that the Lender's receipt
thereof would not be permissible under the law or laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Any
such payment referred to in the preceding sentence shall be made by the Borrower
to the Lender on the earliest interest payment date or dates on which the
receipt thereof would be permissible under the laws applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. Such
deferred interest shall not bear interest.

      Section 2.3 Promissory Note.
                  ----------------

      The Loan shall be evidenced by the Promissory Note of the Borrower
attached hereto as an exhibit payable to the order of the lender in the
Principal Amount and otherwise duly completed.

      Section 2.4 Payment of Trust Loan.
                  ----------------------

      The Principal Amount of the Loan shall be repaid in accordance with
Schedule I to the Promissory Note on the dates specified therein until fully
paid.

                                        3
<PAGE>

      Section 2.5 Prepayment.
                  -----------

      The Borrower shall be entitled to prepay the Loan in whole or in part, at
any time and from time to time; provided, however, that the Borrower shall give
notice to the Lender of any such prepayment; and provided, further, that any
partial prepayment of the Loan shall be in an amount not less than $1,000. Any
such prepayment shall be: (a) permanent and irrevocable; (b) accompanied by all
accrued interest through the date of such prepayment; (c) made without premium
or penalty; and (d) applied on the inverse order of the maturity of the
installment thereof unless the Lender and the Borrower agree to apply such
prepayments in some other order.

      Section 2.6 Method of Payments.
                  -------------------

      (a) All payments of principal, interest, other charges (including
indemnities) and other amounts payable by the Borrower hereunder shall be made
in lawful money of the United States, in immediately available funds, to the
Lender at the address specified in or pursuant to this Loan Agreement for
notices to the Lender, on the date on which such payment shall become due. Any
such payment made on such date but after such time shall, if the amount paid
bears interest, and except as expressly provided to the contrary herein, be
deemed to have been made on, and interest shall continue to accrue and be
payable thereon until, the next succeeding Business Day. If any payment of
principal or interest becomes due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, and when paid, such
payment shall include interest to the day on which payment is in fact made.

      (b) Notwithstanding anything to the contrary contained in this Loan
Agreement or the Promissory Note, the Borrower shall not be obligated to make
any payment, repayment or prepayment on the Promissory Note if doing so would
cause the ESOP to cease to be an employee stock ownership plan within the
meaning of section 4975(e)(7) of the Code or qualified under section 401(a) of
the Code or cause the Borrower to cease to be a tax exempt trust under section
501(a) of the Code or if such act or failure to act would cause the Borrower to
engage in any "prohibited transaction" as such term is defined in the section
4975(c) of the Code and the regulations promulgated thereunder which is not
exempted by section 4975(c)(2) or (d) of the Code and the regulations
promulgated thereunder or in section 406 of ERISA and the regulations
promulgated thereunder which is not exempted by section 408(b) of ERISA and the
regulations promulgated thereunder; provided, however, that in each case, the
Borrower, may act or refrain from acting pursuant to this section 2.6(b) on the
basis of an opinion of counsel, and any opinion of such counsel. The Borrower
may consult with counsel, and any opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such opinion of
counsel. Nothing contained in this section 2.6(b) shall be construed as imposing
a duty on the Borrower to consult with counsel. Any obligation of the Borrower
to make any payment, repayment or prepayment on the Promissory Note or refrain
from taking any other act hereunder or under the Promissory Note which is
excused pursuant to this section 2.6(b) shall be considered a binding obligation
of the Borrower, or both, as the case may be, for the purposes of determined
whether a Default or Event of Default has occurred hereunder or

                                        4
<PAGE>

under the Promissory Note and nothing in this section 2.6(b) shall be construed
as providing a defense to any remedies otherwise available upon a Default or an
Event of Default hereunder (other than the remedy of specific performance).

      Section 2.7 Use of Proceeds of Loan.
                  ------------------------

      The entire proceeds of the Loan shall be used solely for acquiring shares
of Common Stock, and for no other purpose whatsoever.

      Section 2.8 Security.
                  ---------

      (a) In order to secure the due payment and performance by the Borrower of
all of its obligations under this Loan Agreement, simultaneously with the
execution and delivery of this Loan Agreement by the Borrower, the Borrower
shall:

      (i) pledge to the Lender as Collateral (as defined in the Pledge
      Agreement), and grant to the Lender a first priority lien on and security
      interest in, the Common Stock purchased with the Principal Amount, by the
      execution and delivery to the lender of the Pledge Agreement attached
      hereto as an exhibit; and

      (ii) execute and deliver, or cause to be executed and delivered, such
      other agreement, instruments and documents as the Lender may reasonable
      require in order to effect the purposes of the Pledge Agreement and this
      Loan Agreement.

      (b) The Lender shall release from encumbrance under the Pledge Agreement
and transfer to the Borrower, as of the date on which any payment or repayment
of the Principal Amount is made, a number of shares of Common Stock held as
Collateral determined pursuant to the applicable provisions of the ESOP.

      Section 2.9 Registration of the Promissory Note.
                  ------------------------------------

      (a) The Lender shall maintain a Register providing for the registration of
the Principal Amount and any stated interest and of transfer and exchange of the
Promissory Note. Transfer of the Promissory Note may be effected only by the
surrender of the old instrument and either the reissuance by the Borrower of the
old instrument to the new holder or the issuance by the Borrower of a new
instrument to the new holder. The old Promissory Note so surrendered shall be
canceled by the Lender and returned to the Borrower after such cancellation.

      (b) Any new Promissory Note issued pursuant to section 2.9(a) shall carry
the same rights to interest (unpaid and to accrue) carried by the Promissory
Note so transferred or exchanged so that there will not be any loss or gain of
interest on the note surrender. Such new Promissory Note shall be subject to all
of the provisions and entitled to all of the benefits of this Agreement. Prior
to due presentment for registration or transfer, the Borrower may deem and treat
the registered holder of any Promissory Note as the holder thereof for purposes
of payment and other purposes. A notation

                                        5
<PAGE>

shall be made on each new Promissory Note of the amount of all payments of
principal and interest theretofore paid.

                                   ARTICLE III
                                   -----------

                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER
                 ----------------------------------------------

      The Borrower hereby represents and warrants to the Lender as follows:

      Section 3.1 Power, Authority, Consents.
                  ---------------------------

      The Borrower has the power to execute, deliver and perform this Loan
Agreement, the Promissory Note and Pledge Agreements, all of which have been
duly authorized by all necessary and proper corporate or other action.

      Section 3.2 Due Execution, Validity, Enforceability.
                  ----------------------------------------

      Each of the Loan Documents, including, without limitation, this Loan
Agreement, the Promissory Note and the Pledge Agreement, have been duly executed
and delivered by the Borrower; and each constitutes the valid and legally
binding obligation of the Borrower, enforceable in accordance with its terms.

      Section 3.3 Properties, Priority of Liens.
                  ------------------------------

      The liens which have been created and granted by the Pledge Agreement
constitute valid, first liens on the properties and assets covered by the Pledge
Agreement, subject to no prior or equal lien.

      Section 3.4 No Defaults, Compliance with Laws.
                  ----------------------------------

      The Borrower is not in default in any material respect under any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgement to which it is an party or by which it is bound, or any other
agreement or other instrument by which any of the properties or assets owned by
it is materially affected.

      Section 3.5 Purchase of Common Stock.
                  -------------------------

      Upon consummation of any purchase of Common Stock by the Borrower with the
proceeds of the Loan, the Borrower shall acquire valid, legal and marketable
title to all of the Common Stock so purchased, free and clear of any liens,
other than a pledge to the Lender of the Common Stock so purchased pursuant to
the Pledge Agreement. Neither the execution and delivery of the Loan Documents
nor the performance of any obligation thereunder violates any provisions of law
or conflicts with or results in a breach of or creates (with or without the
giving of notice of lapse of

                                        6
<PAGE>

time, or both) a default under any agreement to which the Borrower is a party or
by which it is bound or any of its properties is affected. No consent of any
federal, state, or local governmental authority, agency, or other regulatory
body, the absence of which could have a materially adverse effect on the
Borrower or the Trustee, is or was required to be obtained in connection with
the execution, delivery, or performance of the Loan Documents and the
transaction contemplated therein or in connection therewith, including without
limitation, with respect to the transfer of the shares of Common Stock purchased
with the proceeds of the Loan pursuant thereto.

      Section 3.6 ESOP; Contributions.
                  --------------------

      As of the effective date of the ESOP sponsor's mutual-to-stock conversion,
the ESOP and the Borrower will be duly created, organized and maintained by the
ESOP sponsor in compliance with all applicable laws, regulations and rulings.
The ESOP will qualify as an "employee stock ownership plan" as defined in
section 4975(e)(7) of the Code. The ESOP provides that the ESOP sponsor may make
contributions to the ESOP in an amount necessary to enable the Trustee to
amortize the Loan in accordance with the terms of the Promissory Note; provided,
however, that no such contributions shall be required if they would adversely
affect the qualification of the ESOP under section 401(a) of the Code.

      Section 3.7 Trustee.
                  --------

      The trustees of the ESOP have been duly appointed by the ESOP sponsor.

      Section 3.8 Compliance with Laws; Actions.
                  ------------------------------

      Neither the execution and delivery by the Borrower of this Loan Agreement
or any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the lender, constitutes a violation of any
provision of any law or any regulation, order, writ, injunction or decree or any
court or governmental instrumentality, or an event of default under any
agreement, to which the Borrower is a party of which the Borrower is bound or to
which the Borrower is subject, which violation or event of default would have a
material adverse effect on the Borrower. There is no action or proceeding
pending or threatened against either the ESOP or the Borrower before any court
or administrative agency.

                                        7
<PAGE>

                                   ARTICLE IV
                                   ----------

                  REPRESENTATIONS AND WARRANTIES OF THE LENDER
                  --------------------------------------------

      The Lender hereby represents and warrants to the Borrower as follows:

      Section 4.1 Power, Authority, Consents.
                  ---------------------------

      The Lender has the power to execute, deliver and perform this Loan
Agreement, the Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by all
necessary and proper corporate or other action. No consent, authorization or
approval or other action by any governmental authority or regulatory body, and
no notice by the Lender to, or filing by the Lender with any governmental
authority or regulatory body is required for the due execution, delivery and
performance of this Loan Agreement.

      Section 4.2 Due Execution, Validity, Enforceability.
                  ----------------------------------------

      This Loan Agreement and the Pledge Agreement have been duly executed and
delivered by the Lender, and each constitutes a valid and legally binding
obligation of the Lender, enforceable in accordance with its terms.

                                    ARTICLE V
                                    ---------

                                EVENTS OF DEFAULT
                                -----------------

      Section 5.1 Events of Default under Loan Agreement.
                  ---------------------------------------

      Each of the following events shall constitute an "Event of Default"
hereunder:

      (a) Failure to make any payment or mandatory prepayment of principal of
the Promissory Note when due, or failure to make any payment of interest on the
Promissory Note not later than five (5) Business Days after the date when due.

      (b) Failure by the Borrower to perform or observe any term, condition or
covenant of this Loan Agreement or of any of the other Loan Documents, including
without limitation, the Promissory Note and the Pledge Agreement.

      (c) Any representation or warranty made in writing to the Lender in any of
the Loan Documents, or any certificate, statement or report made or delivered in
compliance with this Loan Agreement, shall have been false or misleading in any
material respect when made or delivered.

                                        8
<PAGE>

      Section 5.2 Lender's Rights upon Event of Default.
                  --------------------------------------

      If an Event of Default under this Loan Agreement shall occur and be
continuing, the Lender shall have no rights to assets of the Borrower other
than: (a) contributions (other than contributions of Common Stock) that are made
by the ESOP sponsor to enable the Borrower to meet its obligations pursuant to
this Loan Agreement and earnings attributable to the investment of such
contributions and (b) "Eligible Collateral" (as defined in the Pledge
Agreement); provided, however, that; (i) the value of the Borrower's assets
transferred to the Lender following an Event of Default in satisfaction of the
due and unpaid amount of the Loan shall not exceed the amount in default
(without regard to amounts owing solely as a result of any acceleration of the
Loan); (ii) the Borrower's assets shall be transferred to the Lender following
an Event of Default only to the extent of the failure of the Borrower to meet
the payment schedule of the Loan; and (iii) all rights of the Lender to the
Common Stock purchased with the proceeds of the Loan covered by the Pledge
Agreement following an Event of Default shall be governed by the terms of the
Pledge Agreement.

                                   ARTICLE VI
                                   ----------

                            Miscellaneous Provisions
                            ------------------------

      Section 6.1 Payments Due to the Lender.
                  ---------------------------

      If any amount is payable by the Borrower to the Lender pursuant to any
indemnity obligation contained herein, then the Borrower shall pay, at the time
or times provided therefor, any such amount and shall indemnify the Lender
against and hold it harmless from any loss of damage resulting from or arising
out of the nonpayment or delay in payment of any such amount. If any amounts as
to which the Borrower has so indemnified the Lender hereunder shall be assessed
or levied against the Lender, the Lender may notify the Borrower and make
immediate payment thereof, together with interest or penalties in connection
therewith, and shall thereupon be entitled to and shall receive immediate
reimbursement therefor from the Borrower together with interest on each such
amount as provided in section 2.2(c). Notwithstanding any other provision
contained in this Loan Agreement, the covenants and agreements of the Borrower
contained in this section 6.1 shall survive: (a) payment of the Promissory Note
and (b) termination of this Loan Agreement.

      Section 6.2 Payments.
                  ---------

      All payments hereunder and under the Promissory Note shall be made without
set-off or counterclaim and in such amounts as may be necessary in order that
all such payments shall not be less than the amounts otherwise specified to be
paid under this Loan Agreement and the Promissory Note, subject to any
applicable tax withholding requirements. Upon payment in full of the Promissory
Note, the Lender shall mark such Promissory Note "Paid" and return it to the
Borrower.

                                        9
<PAGE>

      Section 6.3 Survival.
                  ---------

            All agreements, representations and warranties made herein shall
survive the delivery of this Loan Agreement and the Promissory Note.

      Section 6.4 Modifications, Consents and Waivers; Entire Agreement.
                  ------------------------------------------------------

      No modification, amendment or waiver of or with respect to any provision
of this Loan Agreement, the Promissory Note, the Pledge Agreement, or any of the
other Loan Documents, nor consent to any departure from any of the terms or
conditions thereof, shall in any event be effective unless it shall be in
writing and signed by the party against whom enforcement thereof is sought. Any
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No consent to or demand on a party in any case
shall, of itself, entitle it to any other or further notice or demand in similar
or other circumstances. This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.

      Section 6.5 Remedies Cumulative.
                  --------------------

      Each and every right granted to the Lender hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of the Lender or the holder of the Promissory Note to exercise, and
no delay in exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or future
exercise thereof or the exercise of any other right. The due payment and
performance of the obligations under the Loan Documents shall be without regard
to any counterclaim, right of offset or any other claim whatsoever which the
Borrower may have against the Lender and without regard to any other obligation
of any nature whatsoever which the Lender may have to the Borrower, and no such
counterclaim or offset shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Lender for payment or performance of such
obligations.

      Section 6.6 Further Assurances; Compliance with Covenants.
                  ----------------------------------------------

      At any time and from time to time, upon the request of the Lender, the
Borrower shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and do such
other acts and things as the Lender may reasonably request in order to fully
effect the terms of this Loan Agreement, the Promissory Note, the Pledge
Agreement, the other Loan Documents and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the Loan.

                                       10
<PAGE>

      Section 6.7 Notices.
                  --------

      Except as otherwise specifically provided for herein, all notice,
requests, reports and other communications pursuant to this Loan Agreement shall
be in writing, either by letter (delivered by hand or commercial messenger
service or sent by registered or certified mail, return receipt requested,
except for routine reports delivered in compliance with Article VI hereof which
may be sent by ordinary first-class mail) or telex or telecopier addressed as
follows:

      (a) If to the Borrower:

          Lawrence R. Parducci, Philip T. Rueth and Tula Kavadias, as trustees
          for Security Federal Bank & Trust Employee Stock Ownership Plan
          9321 Wicker Avenue
          St. John, Indiana 46373

      (b) If to the Lender:

          Security Financial Bancorp, Inc.
          9321 Wicker Avenue
          St. John, Indiana 46373
          Attn: John P. Hyland

Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or telecopier, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid. Any party may change the
person or address to whom or which notices are to be given hereunder, by notice
duly given hereunder; provided, however, that any such notice shall be deemed to
have been given only when actually received by the party to whom it is
addressed.

      Section 7.1 Counterparts.
                  -------------

      This Loan Agreement may be signed in any number of counterparts which,
when taken together, shall constitute one and the same document.

      Section 7.2 Construction; Governing Law.
                  ----------------------------

      The headings used in the table of contents and in this Loan Agreement are
for convenience only and shall not be deemed to constitute a part hereof. All
uses herein of any gender or of singular or plural terms shall be deemed to
include uses of the other genders or plural or singular terms, as the context
may require. All references in this Loan Agreement of an Article or section
shall be to an Article or section of this Loan Agreement, unless otherwise
specified. This Loan Agreement, the Promissory Note, the Pledge Agreement and
the other Loan Documents shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Indiana.

                                       11
<PAGE>

      Section 7.3 Severability.
                  -------------

      Wherever possible, each provision of this Loan Agreement shall be
interpreted in such manner as to be effective and valid under applicable law;
however, the provisions of this Loan Agreement are severable, and if any clause
of provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provisions in this Loan Agreement in and jurisdiction. Each of
the covenants, agreements and conditions contained in this Loan Agreement
independent, and compliance by a party with any of them shall not excuse non-
compliance by such party with any other. The Borrower shall not take any action
the effect of which shall constitute a breach or violation of any provision of
this Loan Agreement.

      Section 7.4 Binding Effect: No Assignment or Delegation.
                  --------------------------------------------

      This Loan Agreement shall be binding upon and inure to the benefit of the
Borrower and its successors and the Lender and its successors and assigns. The
rights and obligations of the Borrower under this Agreement shall not be
assigned or delegated without the prior written consent of the Lender, and any
purported assignment or delegation without such consent shall be void.

      IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
executed as of the date first written above.

                              SECURITY FEDERAL BANK & TRUST
                              EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                              /s/ Lawrence R. Parducci   , as TRUSTEE
                              ---------------------------
                              Lawrence R. Parducci

                              /s/ Philip T. Rueth        , as TRUSTEE
                              ---------------------------
                              Philip T. Rueth

                              /s/ Tula Kavadias          , as TRUSTEE
                              ---------------------------
                              Tula Kavadias

                              SECURITY FINANCIAL BANCORP, INC.

                              By: /s/ John P. Hyland
                                  -------------------------------------
                                      John P. Hyland
                                      For the Entire Board of Directors

                                       12
<PAGE>

                                PLEDGE AGREEMENT
                                ----------------

      THIS PLEDGE AGREEMENT ("Pledge Agreement") is made as of the 5th day of
January, 2000 by and between the SECURITY FEDERAL BANK & TRUST EMPLOYEE STOCK
OWNERSHIP PLAN TRUST ("Pledgor"), and SECURITY FINANCIAL BANCORP, INC., a
corporation organized and existing under the laws of the State of Delaware
("Pledgee").

                               W I T N E S S E T H

      WHEREAS, this Pledge Agreement is being executed and delivered to the
Pledgee pursuant to the terms of a Loan Agreement ("Loan Agreement"), by and
between the Pledgor and the Pledgee;

      NOW, THEREFORE, in consideration of the mutual agreements contained herein
and in the Loan Agreement, the parties hereto do hereby covenant and agree as
follows:

      Section 1. Definitions. The following definitions shall apply for purposes
                 ------------
of this Pledge Agreement, except to the extent that a different meaning is
plainly indicated by the context; all capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Loan
Agreement:

      Collateral shall mean the Pledged Shares and, subject to section 5 hereof,
      ----------
and to the extent permitted by applicable law, all rights with respect thereto,
and all proceeds of such Pledged Shares and rights.

      ESOP shall mean the Security Federal Bank & Trust Employee Stock Ownership
      ----
Plan.

      Event of Default shall mean an event so defined in the Loan Agreement.
      ----------------

      Liabilities shall mean all the obligations of the Pledgor to the Pledgee,
      -----------
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due, under the Loan
Agreement and the Promissory Note.

      Pledged Shares shall mean all the Shares of Common Stock of the Pledgee
      --------------
purchased by the Pledgor with the proceeds of the loan made by the Pledgee to
the Pledgor pursuant to the Loan Agreement, but excluding any such shares
previously released pursuant to section 4.

      Section 2. Pledge. To secure the payment of and performance of all the
                 -------
Liabilities, the Pledgor hereby pledges to the Pledgee, and the grants to the
Pledgee, a security interest in, and lien upon, the Collateral.

      Section 3. Representations and Warranties of the Pledgor. The Pledgor
                 ----------------------------------------------
represents, warrants, and covenants to the Pledgee as follows:

<PAGE>

      (a) the execution, delivery and performance of this Pledge Agreement and
the pledging of the Collateral hereunder do not and will not conflict with,
result in a violation of, or constitute a default under, any agreement binding
upon the Pledgor;

      (b) the Pledged Shares are and will continue to be owned by the Pledgor
free and clear of any liens or rights of any other person except the lien
hereunder and under the Loan Agreement in favor of the Pledgee, and the security
interest of the Pledgee in the Pledged Shares and the proceeds thereof is and
will continue to be prior to and senior to the rights of all others;

      (c) this Pledge Agreement is the legal, valid, binding and enforceable
obligation of the Pledgor in accordance with its terms;

      (d) the Pledgor shall, from time to time, upon request of the Pledgee,
promptly deliver to the Pledgee such stock powers, proxies, and similar
documents, satisfactory in form and substance to the Pledgee, with respect to
the Collateral as the Pledgee may reasonable request; and

      (e) subject to the first sentence of section 4(b), the Pledgor shall not,
so long as any Liabilities are outstanding, sell, assign, exchange, pledge or
otherwise transfer or encumber any of its rights in and to any of the
Collateral.

      Section 4. Eligible Collateral.
                 --------------------

      (a) As used herein the term "Eligible Collateral" shall mean the amount of
Collateral which has an aggregate fair market value equal to the amount by which
the Pledgor is in default (without regard to any amounts owing solely as the
result of an acceleration of the Loan Agreement) or such lesser amount of
Collateral as may be required pursuant to section 13 of this Pledge Agreement.

      (b) The Pledged Shares shall be released from this Pledge Agreement in a
manner conforming to the requirements of Treasury Regulations Section
54.4975-7(b)(8), as the same may be from time to time amended or supplemented,
and the applicable provisions of the ESOP. Subject to such Regulations, the
Pledgee may from time to time, after any Default or Event of Default, and
without prior notice to the Pledgor, transfer all or any part of the Eligible
Collateral in the name of the Pledgee or its nominee, without disclosing that
such Eligible Collateral is subject to any rights of the Pledgor and may from
time to time, whether before or after any of the Liabilities shall become due
and payable, without notice to the Pledgor, take all or any of the following
actions: (i) notify the parties obligated on any of the Eligible Collateral to
make payment to the Pledgee of any amounts due or due to become due thereunder,
(ii) release or exchange all or any part of the Eligible Collateral, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligations of any nature of any party with respect
thereto, and (iii) take control of any proceeds of the Eligible Collateral.

                                       2
<PAGE>

      Section 5. Delivery.
                 ---------

      (a) The Pledgor shall deliver to the Pledgee upon execution of this Pledge
Agreement (i) either (A) certificates for the Pledged Shares, each certificate
duly signed in blank by the Pledgor or accompanied by a stock transfer power
duly signed in blank by the Pledgor and each such certificate accompanied by all
required documentary or stock transfer tax stamps or (B) if the Trustee does not
yet have possession of the Pledged Shares, an assignment by the Pledgor of all
the Pledgor's rights to and interest in the Pledged Shares and (ii) an
irrevocable proxy, in form and substance satisfactory to the Pledgee, signed by
the Pledgor with respect to the Pledged Shares.

      (b) So long as no Default or Event of Default shall have occurred and be
continuing, (i) the Pledgor shall be entitled to exercise any and all voting and
other rights pertaining to the Collateral or any part thereof for any purpose
not inconsistent with the terms of this Pledge Agreement, and (ii) the Pledgor
shall be entitled to receive any and all cash dividends or other distributions
paid in respect of the Collateral.

      Section 6. Events of Default.
                 ------------------

      (a) If a Default or Event Default shall be existing, in addition to the
rights it may have under the Loan Agreement, the Promissory Note, and this
Pledge Agreement, or by virtue of any other instrument, (i) the Pledgee may
exercise, with respect to the Eligible Collateral, from time to time, any rights
and remedies available to it under the Uniform Commercial Code as in effect from
time to time in the State of Indiana or otherwise available to it and (ii) the
Pledgee shall have the right, for and in the name, place and stead of the
Pledgor, to execute endorsement, assignments, stock powers and other instruments
of conveyance or transfer with respect to all or any of the Eligible Collateral.
Written notification of intended disposition of any of the Eligible Collateral
shall be given by the Pledgee to the Pledgor at least three (3) Business Days
before such disposition. Subject to section 13 below, any proceeds of any
disposition of Eligible Collateral may be applied by the Pledgee to the payment
of expenses in connection with the Eligible Collateral, including, without
limitation, reasonable attorneys's fees and legal expenses, and any balance of
such proceeds may be applied by the Pledgee toward the payment of such of the
Liabilities as are in Default, and in such order of application, as the Pledgee
may from time to time elect. No action of the Pledgee permitted hereunder shall
impair or affect its rights in and to the Eligible Collateral. All rights and
remedies of the Pledgee expressed hereunder are in addition to all other rights
and remedies possessed by it, including, without limitation, those contained in
the documents referred to in the definition of Liability in section 1 hereof.

      (b) In any sale of any of the Eligible Collateral after a Default or an
Event of Default shall have occurred, the Pledgee is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid violation of applicable law
(including, without limitation, compliance with such procedures as may restrict
the number of prospective bidders and purchasers or further restrict such
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing for their own account

                                       3
<PAGE>

for investment and not with a view to the distribution or resale of such
Eligible Collateral), or in order to obtain such required approval of the sale
or of the purchase by any governmental regulatory authority or official, and the
Pledgor further agrees that such compliance shall not result in such sale's
being considered or deemed not to have been made in a commercially reasonable
manner, nor shall the Pledgee be liable or accountable to the Pledgor for any
discount allowed by reason of the fact that such Eligible Collateral is sold in
compliance with any such limitation or restriction.

      Section 7. Payment in Full. Upon the payment in full of all outstanding
                 ----------------
Liabilities, this Pledge Agreement shall terminate and the Pledgee shall
forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to the Pledge Agreement.

      Section 8. No Waiver. No failure or delay in the part of the Pledgee in
                 ----------
exercising any right or remedy hereunder or under any other document which
confers or grants any rights in the Pledgee in respect of the Liabilities shall
operate as a waiver thereof nor shall any single or partial exercise of any such
rights or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy of the Pledgee.

      Section 9. Binding Effect; No Assignment or Delegation. This Pledge
                 --------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Pledgor, the
Pledgee and their respective successors and assigns, except that the Pledgor may
not assign or transfer it rights hereunder without the prior written consent of
the Pledgee (which consent shall not unreasonably be withheld). Each duty or
obligation of the Pledgor to the Pledgee pursuant to the provisions of this
Pledge Agreement shall be performed in favor of any person or entity designated
by the Pledgee, and any duty or obligation of the Pledgee to the Pledgor may be
performed by any other person or entity designated by the Pledgee.

      Section 10. Governing Law. This Pledge Agreement shall be governed by and
                  --------------
construed in accordance with the laws of the State of Indiana applicable to
agreements to be performed wholly within the State of Indiana.

      Section 11. Notices. All notices, requests, instructions or documents
                  --------
hereunder shall be in writing and delivered personally or sent by United States
mail, registered or certified, return receipt requested, with proper postage
prepaid as follows:

            (a)   If to the Pledgee:

                  Security Financial Bancorp, Inc.
                  9321 Wicker Avenue
                  St. John, Indiana 46373
                  Attn: John P. Hyland

                                       4
<PAGE>

            (b)   If to the Pledgor:

                  Security Federal Bank & Trust Employee Stock Ownership Plan
                  9321 Wicker Avenue
                  St. John, Indiana 46373

or at such other address as either of the parties may designate by written
notice to the other party. If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made, and, if deliver by mail, the sate on which such notice,
request, instruction, or document is deposited in the mail shall be the date of
delivery. Each notice, request, instruction or document shall bear the date on
which it is delivered.

      Section 12. Interpretation. Wherever possible each provision of this
                  ---------------
Pledge Agreements shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision herein shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, with out invalidating the remainder of such
provision or the remaining provisions hereof.

      Section 13. Construction. All provisions hereof shall be construed so as
                  -------------
to maintain (a) the ESOP as a qualified leveraged employee stock ownership plan
under section 401(a) and 4975(e)(7) of the Internal Revenue Code of 1986 (the
"Code"), (b) the Trust as exempt from taxation under section 501(a) of the Code
and (c) the Trust Loan as an exempt loan under section 54.4975-7(b) of the
Treasury Regulations and as described in Department of Labor Regulation section
2550.408b-3.

                                       5
<PAGE>

      IN WITNESS WHEREOF, this Pledge Agreement has been duly executed by the
parties hereto as of the day and year first above written.

                        SECURITY FEDERAL BANK & TRUST
                        EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                              /s/ Lawrence R. Parducci   , as TRUSTEE
                              ---------------------------
                              Lawrence R. Parducci

                              /s/ Philip T. Rueth        , as TRUSTEE
                              ---------------------------
                              Philip T. Rueth

                              /s/ Tula Kavadias          , as TRUSTEE
                              ---------------------------
                              Tula Kavadias

                        SECURITY FINANCIAL BANCORP, INC.

                        By: /s/ John P. Hyland
                            -------------------------------------
                                John P. Hyland
                                For the Entire Board of Directors

                                       6
<PAGE>

                                PROMISSORY NOTE
                                ---------------

$1,550,769                                            January 5, 2000
PRINCIPAL

      FOR VALUE RECEIVED, the undersigned, the SECURITY FEDERAL BANK & TRUST
EMPLOYEE STOCK OWNERSHIP PLAN TRUST ("Borrower"), hereby promises to pay to the
order of SECURITY FINANCIAL BANCORP, INC. ("Lender") one million, five hundred
and fifty thousand, seven hundred and sixty-nine dollars ($1,550,769) payable in
accordance with the Loan Agreement made and entered into between the Borrower
and the Lender of even date herewith ("Loan Agreement") pursuant to which this
Promissory Note is issued.

      The Principal Amount of this Promissory Note shall be payable in
accordance with the schedule attached hereto ("Schedule I").

      This Promissory Note shall bear interest at the rate per annum set for or
established under the Loan Agreement, such interest to be payable in accordance
with Schedule I.

      Anything herein to the contrary notwithstanding, the obligation of the
Borrower to make payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to the Lender to the
extent that the Lender's receipt thereof would not be permissible under the law
or laws applicable to the Lender limiting rates on interest which may be charged
or collected by the Lender. Any such payments on interest which are not made as
a result of the limitation referred to in the preceding sentence shall be made
by the Borrower to the Lender on the earliest interest payment date or dates on
which the receipt thereof would be permissible under the laws applicable to the
Lender limiting rates of interest which may be charges or collected by the
Lender. Such deferred interest shall not bear interest.

      Payments of both principal and interest on this Promissory Note are to be
made at the principal office of the Lender or such other place as the holder
hereof shall designate to the Borrower in writing, in lawful money of the United
States of America in immediately available funds.

      Failure to make any payments of principal on this Promissory Note when
due, or failure to make any payment of interest on this Promissory Note not
later than five (5) Business Days after the date when due, shall constitute a
default hereunder, whereupon the principal amount of accrued interest on this
Promissory Note shall immediately become due and payable in accordance with the
terms of the Loan Agreement.

<PAGE>

      This Promissory Note is secured by a Pledge Agreement between the Borrower
and the Lender of even date herewith and is entitled to the benefits thereof.

                       SECURITY FEDERAL BANK & TRUST
                       EMPLOYEE STOCK OWNERSHIP PLAN TRUST

                              /s/ Lawrence R. Parducci   , as TRUSTEE
                              ---------------------------
                              Lawrence R. Parducci

                              /s/ Philip T. Rueth        , as TRUSTEE
                              ---------------------------
                              Philip T. Rueth

                              /s/ Tula Kavadias          , as TRUSTEE
                              ---------------------------
                              Tula Kavadias

                                       2

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