Document:

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             EXHIBIT 10.18 TO ALASKA AIR GROUP, INC. 1999 FORM 10-K

                           CHANGE OF CONTROL AGREEMENT

         AGREEMENT by and between Alaska Airlines, Inc., an Alaska corporation
(the "Employer"), and < < FIRSTNAME > > < < MI > > < < LASTNAME > > (the
"Executive"), dated as of the 27th day of October, 1999.

         The Board of Directors (the "Board") of Alaska Air Group, Inc. ("Air
Group") has determined that it is in the best interests of Air Group and its
stockholders to ensure that Air Group and its subsidiaries, including the
Employer, will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Change of Control (as defined in
Section 2). The Board believes that it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Employer currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
that ensure that the compensation and benefits expectations of the Executive
will be satisfied, are competitive with those of other corporations, and align
the Executive's interests with those of Air Group's stockholders. Therefore, in
order to accomplish these objectives, the Board has caused the Employer to
enter into this Agreement.

         NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1.       CERTAIN DEFINITIONS

         (a)  "Accrued Obligations" is defined in Section 6(a)(i).

         (b)  "affiliated company" means any company controlled by, controlling
or under common control with Air Group.

         (c)  "Annual Base Salary" is defined in Section 4(b)(i).

         (d)  "Annual Bonus" is defined in Section 4(b)(ii).

         (e)  "Business Combination" means (i) a reorganization, exchange of
securities, merger or consolidation involving Air Group or (ii) the sale or
other disposition of all or substantially all the assets of Air Group.

         (f)  The "Change of Control Period" means the period commencing on the
date hereof and ending on the third anniversary of the date that either the
Employer or Air Group gives notice to the Executive that the Change of Control
Period shall be terminated.

         (g)  "Cause" means basis for termination for reason of admission by
the Executive or substantiation by the Employer of:

              (i)      embezzlement, dishonesty or other fraud, conviction
                       of a felony or conspiracy against the Employer; or

              (ii)     if prior to a Change of Control, any willful or
                       intentional injury to either the Employer, its
                       property, or its employees in connection with the
                       business affairs of the Employer.

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         (h)  "Code" means the Internal Revenue Code of 1986, as amended.

         (i)  "Effective Date" means the first date during the Change of
Control Period on which a Change of Control occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Employer is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect the Change of Control
or (ii) otherwise arose in connection with or anticipation of the Change of
Control, then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of employment.

         (j)  "Employment Period" is defined in Section 3.

         (k)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         (l)  "Good Reason" means the occurrence of one or more of the
following events:

              (i)      the reduction in the Executive's annual base salary
                       or the reduction in the value of other bonus payments
                       or equity awards that Executive is eligible to
                       receive under the Employer's plans;

              (ii)     the material diminution or reduction without the
                       Executive's consent of the Executive's title,
                       authority, duties, responsibilities or perquisites;

              (iii)    the Employer requiring Executive without the
                       Executive's consent to be based at any locations
                       other than the principal location of Executive's
                       employment immediately prior to a Change of Control;
                       or

              (iv)     any breach by the Employer of any other material
                       provision of this Agreement.

         (m)  "Incentive Plan" means Air Group's Management Incentive Plan.

         (n)           "Incumbent Director" means a member of the Board who has
              been either (i) nominated by a majority of the directors of Air
              Group then in office or (ii) appointed by directors so
              nominated, but excluding, for this purpose, any such
              individual whose initial assumption of office occurs as a
              result of either an actual or threatened election contest (as
              such terms are used in Rule 14a-11 of Regulation 14A
              promulgated under the Exchange Act) or other actual or
              threatened solicitation of proxies or consents by or on behalf
              of a Person other than the Board.

        (o)            "Notice of Termination" is defined in Section 5(a).

        (p)   "Person" means any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d) of the Exchange Act).

        (q)   "Recent Average Bonus" is defined in Section 4(b)(ii).

        (r)   "Retirement Plan" means the Employer's funded pension plan or any
successor plan thereto.

        (s)   "Welfare Benefit Continuation" is defined in Section 6(b).

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2.       CHANGE OF CONTROL

         For the purpose of this Agreement, a "Change of Control" means the
occurrence of any of the following:

         (a)  the Board approves (or, if approval of the Board is not required
as a matter of law, the stockholders of Air Group approve):

              (i)      any consolidation or merger of Air Group in which Air
                       Group is not the continuing or surviving corporation
                       or pursuant to which shares of common stock of Air
                       Group would be converted into cash, securities or
                       other property, other than a merger of Air Group in
                       which the holders of common stock of Air Group
                       immediately prior to the merger have the same
                       proportionate ownership of common stock of the
                       surviving corporation immediately after the merger;

              (ii)     any sale, lease, exchange or other transfer (in one
                       transaction or a series of related transactions) of
                       all, or substantially all, the assets of Air Group;
                       or

              (iii)    the adoption of any plan or proposal for the
                       liquidation or dissolution of Air Group;

         (b)  at any time during a period of twenty-four (24) months, fewer
than a majority of the members of the Board are Incumbent Directors. "Incumbent
Directors" means:

              (i)      individuals who constitute the Board at the beginning
                       of such period; and

              (ii)     individuals who were nominated or elected by all of,
                       or a committee composed entirely of, the individuals
                       described in (i); and

              (iii)    individuals who were nominated or elected by
                       individuals described in (ii).

         (c)  any Person shall, as a result of a tender or exchange offer,
              open market purchases, privately-negotiated purchases or
              otherwise, become the beneficial owner (within the meaning of
              Rule 13d-3 under the Exchange Act), directly or indirectly, of
              the then-outstanding securities of Air Group ordinarily (and
              apart from rights accruing under special circumstances) having
              the right to vote in the election of members of the Board
              ("Voting Securities" to be calculated as provided in paragraph
              (d) of Rule 13d-3 in the case of rights to acquire common
              stock of Air Group) representing 20% or more of the combined
              voting power of the then-outstanding Voting Securities.

         Unless the Board shall determine otherwise, a Change of Control shall
not be deemed to have occurred by reason of any corporate reorganization,
merger, consolidation, transfer of assets, liquidating distribution or other
transaction entered into solely by and between Air Group and any Affiliate
thereof, provided such transaction has been approved by at least two-thirds
(2/3) of the Incumbent Directors (as defined above) then in office and voting.

3.       EMPLOYMENT PERIOD

         The Employer hereby agrees to continue the Executive in its employ,
and the Executive hereby agrees to remain in the employ of the Employer, in
accordance with the terms and provisions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary of such
date (the "Employment Period"), in an executive capacity, responsible for,
among other things, duties

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associated with such capacity, and, subject to the general supervision of the
Board as required by the Delaware General Corporation Law, such other duties
and responsibilities as are not inconsistent with the express terms of this
Agreement. Such employment may be with the Employer, Air Group or any of its
principal operating subsidiaries, as appropriate to the management structure
developed by the Employer or Air Group. The Employer agrees that it will not
take any action, or make any demands on the Executive, that may be deemed to
arbitrarily, unreasonably or unnecessarily interfere with the performance of
the services to be rendered by the Executive hereunder.

         Prior to the Effective Date, Executive's employment with the Employer
is at will.

4.       TERMS OF EMPLOYMENT

         (a)  POSITION AND DUTIES.

              (i)  During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be in accordance with Section 3 and (B) the
Executive's services shall be performed within the metropolitan area in which
the Executive was situated immediately prior to the Effective Date, except for
required travel in the Employer business to the extent consistent with the
Executive's duties in Section 3.

              (ii)  During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours to
the business and affairs of the Employer and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions, or (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Employer in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Employer.

         (b)  COMPENSATION.

              (i)   BASE SALARY. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be paid
in equal installments, at least equal to 12 times the highest monthly base
salary paid or payable to the Executive by the Employer in respect of the
12-month period immediately preceding the month in which the Effective Date
occurs. For purposes of this Agreement, Annual Base Salary shall not include
any payments by the Employer on the Executive's behalf pursuant to any
incentive, savings or retirement plans, any welfare benefit plans or any fringe
benefit plans, in each case, of the Employer or any affiliated company, of the
type identified in paragraphs (iii) through (vi) of this Section 4(b), or any
reimbursement of expenses by the Employer or any affiliated company in
accordance with paragraph (v) of this Section 4(b), but shall include vacation
pay in accordance with paragraph (viii) of this Section 4(b). During the
Employment Period, the Annual Base Salary shall be reviewed at least annually
and shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally awarded in the
ordinary course of business to other peer executives of the Employer and any
affiliated companies. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary

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shall not be reduced after any such increase, and the term Annual Base Salary
as utilized in this Agreement shall refer to Annual Base Salary as so increased.

              (ii)   ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, an annual bonus (the "Annual Bonus") in cash at least equal to the
greater of (A) the Executive's target annual bonus (annualized if such target
bonus is based on a period of less than 12 full months) in effect on the
Effective Date and (B) the average annualized (for any fiscal year consisting
of less than 12 full months or with respect to which the Executive has been
employed by the Employer for less than 12 full months) bonus paid or payable,
including by reason of any deferral, to the Executive by the Employer in
respect of the three fiscal years immediately preceding the fiscal year in
which the Effective Date occurs (the "Recent Average Bonus"). Each such Annual
Bonus shall be paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless
the Executive shall elect to defer the receipt of such Annual Bonus.

              (iii)   INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement plans, practices, policies and programs
applicable generally to other peer executives of the Employer, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in
each case, that are less favorable, in the aggregate, than the most favorable
of those provided by the Employer for the Executive under such plans,
practices, policies and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other executives of the Employer.

              (iv)  WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the Employer (including,
without limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Employer, but in no event shall such plans, practices,
policies and programs provide the Executive with benefits that are less
favorable, in the aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Employer.

              (v)  EXPENSES. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable employment
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Employer in effect for the Executive
at any time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Employer.

              (vi)  FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits in accordance with the most
favorable plans, practices, programs and policies of the Employer in effect for
the Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of the Employer.

              (vii)  VACATION. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Employer as in effect for the Executive
at any time during the 90-day period immediately preceding the Effective Date
or, if

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more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Employer.

5.       TERMINATION OF EMPLOYMENT

         (a)  TERMINATION. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. The
Executive's employment may be terminated at any time during the Employment
Period for any reason by either the Executive or by the Employer, communicated
by a notice of termination to the other party hereto given in accordance with
Section 12(b) (a "Notice of Termination").

         (b)  DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Employer or by the Executive, the
date of receipt of the Notice of Termination or any later date specified
therein, as the case may be, and (ii) if the Executive's employment is
terminated by reason of death, the date of death of the Executive.

6.       OBLIGATIONS OF THE EMPLOYER UPON TERMINATION

         If the Executive's employment is terminated during the Employment
Period by the Executive for Good Reason or by the Employer without Cause:

              (a)   the Employer shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the
following amounts:

                    (i)   A lump sum amount equal to all payments to which the
Executive would have been entitled during the Employment Period, but for the
termination, including, without limitation, the aggregate amounts of the
Executive's Annual Base Salary (calculated in accordance with Section 4(b)(i)
hereof) and the aggregate amounts of the Executive's Annual Bonus (calculated
in accordance with Section 4(b)(ii) hereof), payable in each case during the
Employment Period, less any amounts comprising any portion of Annual Base
Salary or Annual Bonus actually received by the Executive during the period
commencing on the Effective Date and ending on the Date of Termination.

                    (ii)  A separate lump sum supplemental retirement benefit
equal to the difference between (1) the actuarial equivalent (utilizing for
this purpose the actuarial assumptions utilized with respect to the Employer
defined benefit retirement plan during the 90-day period immediately preceding
the Effective Date) of the benefits payable under the Employer defined benefit
retirement plans, the 1995 Elected Officers' Supplementary Retirement Plan and
any similar plans providing benefits for the Executive that the Executive would
receive if the Executive's employment continued at the compensation level
provided for in Section 4(b) and for the remainder of the Employment. Assuming
for this purpose that all accrued benefits are fully vested and that benefit
accrual formulas are no less advantageous to the Executive than those in effect
during the 90-day period immediately preceding the Effective Date, and (2) the
actuarial equivalent (utilizing for this purpose the same assumptions as
outlined above) of the Executive's actual benefit paid (or payable), if any,
under the foregoing plans; and

              (b)   for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Employer shall
continue benefits to the Executive and/or the Executive's family at least equal
to those that would have been provided to them in accordance with the plans,
programs, practices and policies described in Sections 4(b)(iv) if the
Executive's employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the Employer as in effect
and applicable generally to other executives and their families during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any

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time thereafter with respect to other peer executives of the Employer and their
families; provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer-provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such continuation of such
benefits for the applicable period herein set forth shall be hereinafter
referred to as "Welfare Benefit Continuation"). For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and to have retired on
the last day of such period; provided, however, that the Executive shall be
entitled to the more favorable of the retiree benefits in effect on the Date of
Termination or the retiree benefits in effect on the date that would have been
the last date of the Employment Period if the Executive had remained employed;

              (c)   to the extent not theretofore paid or provided, the
Employer shall timely pay or provide to the Executive and/or the Executive's
family any other amounts or benefits required to be paid or provided or which
the Executive and/or the Executive's family is eligible to receive pursuant to
this Agreement and under any plan, program, policy or practice or contract or
agreement of the Employer as in effect and applicable generally to other peer
executives and their families during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally thereafter with respect to other peer executives of the Employer and
their families (such other amounts and benefits shall be hereinafter referred
to as the "Other Benefits").

7.       NONEXCLUSIVITY OF RIGHTS

         Nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Employer and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Employer. Amounts that are vested
benefits or that the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Employer
or any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.

8.       FULL SETTLEMENT; RESOLUTION OF DISPUTES

         (a)  The Employer obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action that the Employer may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement, and, except as provided in Section
6(b), such amounts shall not be reduced whether or not the Executive obtains
other employment. The Employer agrees to pay promptly upon invoice, to the full
extent permitted by law, all legal fees and expenses that the Executive may
incur as a result of any contest (regardless of the outcome thereof) by the
Employer, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement).

         (b)  If there shall be any dispute between the Employer and the
Executive (i) in the event of any termination of the Executive's employment by
the Employer, whether such termination was in connection with or in
anticipation of a Change of Control so as to trigger the Effective Date under
Section 1(i), then, unless and until there is a final, nonappealable judgment
by a court of competent jurisdiction declaring that such termination was in
connection with or in anticipation of a Change of Control, the Employer shall
pay all

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amounts, and provide all benefits, to the Executive and/or the Executive's
family or other beneficiaries, as the case may be, that the Employer would be
required to pay or provide pursuant to Section 6 as though such termination
were in connection with or in anticipation of a Change of Control; provided,
however, that the Employer shall not be required to pay any disputed amounts
pursuant to this Section 8(b) except upon receipt of an undertaking by or on
behalf of the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.

9.       CERTAIN ADJUSTMENTS

         (a)  In the event that the Executive becomes entitled to the payments
or other benefits described in Section 6 hereof and the Executive becomes
subject to the tax imposed by Section 4999 of the Code or any successor
provision (the "Excise Tax") as a result of such payments and benefits and any
other payments or benefits from the Employer required to be taken into account
under Code Section 280G(b)(2) (collectively, "Parachute Payments"), the
Employer shall pay to Executive an additional amount (the "Make-Whole Payment")
equal to the sum of (i) the Excise Tax payable to the Executive prior to the
Make-Whole Payment and (ii) the Federal, state and local income tax and Excise
Tax (including any interest or penalties thereon) payable upon all payments
made under subparagraphs (i) and (ii) of this Section 9(a).

         (b)  All determinations required to be made under this Section 9,
including whether the Executive has received a Parachute Payment, shall be made
by Arthur Andersen LLP (the "Accounting Firm") which shall provide detailed
supporting calculations to both the Employer and the Executive within 15
business days of the receipt of notice from the Executive that the Executive
has received a payment under Section 6, or such earlier time as is requested by
the Employer. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control,
the Executive shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Employer. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. As promptly as practicable
following such determination, the Employer shall pay to or distribute for the
benefit of the Executive such payments as are then due to the Executive under
this Agreement. Any determination by the Accounting Firm shall be binding upon
the Employer and Executive.

10.      CONFIDENTIAL INFORMATION

         The Executive shall hold in a fiduciary capacity for the benefit of
the Employer all secret or confidential information, knowledge or data relating
to the Employer or any of its affiliated companies, and their respective
businesses, that shall have been obtained by the Executive during the
Executive's employment by the Employer or any of its affiliated companies and
that shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Employer, the
Executive shall not, without the prior written consent of the Employer or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Employer and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

11.      SUCCESSORS

         (a)  This Agreement is personal to the Executive and without the prior
written consent of the Employer shall not be assignable by the Executive
otherwise than by will or the laws of descent and

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distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.

         (b)  This Agreement shall inure to the benefit of and be binding on
the Employer and its successors and assigns.

         (c)  The Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all the business and/or assets of the Employer to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Employer would be required to perform it if no such
succession had taken place. As used in this Agreement, Employer shall mean the
Employer as hereinbefore defined and any successor to its business and/or
assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law, or otherwise.

12.      MISCELLANEOUS

         (a)  This Agreement shall be governed by and construed in accordance
with the laws of the state of Washington, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.

         (b)  All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

         If to the Executive:

                  -----------------------------
                  -----------------------------
                  -----------------------------
                  -----------------------------

         If to the Employer:

                  Alaska Airlines, Inc.
                  P.O. Box 68947
                  Seattle, WA  98168
                  Attention:  Corporate Secretary

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

         (c)  The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.

         (d)  The Employer may withhold from any amounts payable under this
Agreement such federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

         (e)  The Executive's or the Employer's failure to insist on strict
compliance with any provision hereof or any other provision of this Agreement
or the failure to assert any right the Executive or the

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Employer may have hereunder, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

         (f)  The Executive and the Employer acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Employer, the employment of the Executive by the Employer is "at will"
and, prior to the Effective Date, may be terminated by either the Executive or
the Employer at any time. Moreover, if prior to the Effective Date, the
Executive's employment with the Employer terminates, then the Executive shall
have no further rights under this Agreement.

         (g)  This Agreement may be executed in counterparts, each of which
counterparts shall be deemed an original, but all of which together shall
constitute one and the same instrument.

         IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to authorization from the Board, the Employer has caused
this Agreement to be executed in its name and on its behalf, all as of the day
and year first above written.

                                  ALASKA AIRLINES, INC.

                                  By ___________________________________________
                                  John F. Kelly
                                  Chairman and Chief Executive Officer

                                  ______________________________________________
                                  < < FirstName > > < < MI > > < < LastName > >

                                      -10-<PAGE>
                            FORM OF WARRANT AGREEMENT

         This WARRANT AGREEMENT, dated as of November 5, 1996, is made and
entered into by and among MONARCH BANCORP, a California corporation (the
"Bancorp"), and _____________ ("_________"), with reference to the following
facts:

         WHEREAS, the Bancorp completed a private offering to certain
accredited investors (the "1995 Private Offering") pursuant to a certain
Private Placement Memorandum (the "1995 Private Placement Memorandum");

         WHEREAS, the Bancorp completed a rights and public offering (the
"1995 Public Offering") pursuant to that certain Offering Circular dated July
14, 1996 (the "Public Offering Circular").

         WHEREAS, the Bancorp has retained Belle Plaine Partners, Inc., a
Delaware corporation ("BP Partners"), to act as the Bancorp's financial
advisor with respect to the Public Offering;

         WHEREAS, the Bancorp has agreed to issue to BP Partners, or its
directors, officers or stockholders, warrants to purchase shares of Common
Stock equal to 5% of the issued and outstanding shares of Common Stock as of
the closing of the Offering, as defined in the Offering Circular, and
___________ is a stockholder, officer, director, or beneficiary of a trust
which is a stockholder of BP Partners;

         WHEREAS, if the Bancorp has to increase its authorized shares of
Common Stock in order to issue all of the Warrants to BP Partners, or a
stockholder, officer, director, or beneficiary of a trust which is a
stockholder of BP Partners, the Bancorp shall issue all of the Warrants to BP
Partners, or a stockholder, officer, director, or beneficiary of a trust
which is a stockholder of BP Partners, upon the later of either the closing
of the Offering or the completion of the Bancorp's increase of its authorized
shares of Common Stock in order to issue all of the Warrants to BP Partners,
or a stockholder, officer, director, or beneficiary of a trust which is a
stockholder of BP Partners;

         NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:

SECTION 1.        CERTAIN DEFINITIONS.

         For the purposes of this Agreement,

                  (a) "CLOSING PRICE" means the average of the closing bid
and asked prices of a share of Common Stock as reported by the Bancorp's
principal market maker, or if the Bancorp does not have a principal market
maker, book value per share of Common Stock as of the last business day of
the previous calendar month.

<PAGE>

                  (b) "COMMON STOCK EQUIVALENTS" means securities that are
convertible into or exercisable for shares of Common Stock.

                  (c) "EXERCISE PERIOD" means the period during which the
Warrants may be exercised.

                  (d) "EXERCISE PRICE" has the meaning specified in Section
4.1(b) hereof.

                  (e) "EXPIRATION DATE" has the meaning specified in Section
4.1(a) hereof.

                  (f) "WARRANTS" means this Warrant and all other Warrants
issued pursuant to the terms of the Financial Advisor Agreement.

                  (g) "WARRANT CERTIFICATE" has the meaning specified in
Section 2.1 hereof.

                  (h) "WARRANT SHARES" means the Common Stock and "WARRANT
SHARE" means one share of Common Stock purchased or purchasable upon exercise
of the Warrants.

SECTION 2.        FORM OF WARRANT CERTIFICATE; PURCHASE PRICE.

         2.1      The certificates evidencing the Warrants (the "Warrant
Certificates") (and the forms of election to purchase Warrant Shares and of
assignment to be printed on the reverse thereof) shall be substantially in
the form set forth in Exhibit A hereto and may have such letters, numbers or
other marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Bancorp may
deem appropriate and as are not inconsistent with the provisions of this
Agreement or the Financial Advisor Agreement, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto.

         2.2      Each Warrant shall entitle the holder thereof to purchase
one (1) Warrant Share upon the exercise thereof at the applicable Exercise
Price subject to adjustment as provided in Section 10 hereof during the time
period specified in Section 4 hereof and subject to the limitations specified
in Section 12a hereof; PROVIDED, HOWEVER, that the Warrants are exercisable
only for whole shares; cash will be paid in lieu of fractional shares in
accordance with Section 4.3. Each Warrant Certificate shall be executed on
behalf of the Bancorp by the manual or facsimile signature of the present or
any future President or any authorized officer of the Bancorp, under its
corporate seal, affixed or in facsimile, attested by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary of
the Bancorp. Warrants shall be dated as of the date of their initial issuance.

                                      -2-
<PAGE>

SECTION 3.        REGISTRATION AND COUNTERSIGNATURE.

         Prior to due presentment for registration or transfer of the Warrant
Certificates, the Bancorp may deem and treat the registered holder thereof as
the absolute owner of the Warrant Certificates (notwithstanding any notation
of ownership or other writing thereon made by anyone other than the Bancorp),
for the purpose of any exercise thereof and for all other purposes, and the
Bancorp shall not be affected by any notice to the contrary.

SECTION 4.        DURATION AND EXERCISE OF WARRANTS.

         4.1     (a)   The Warrants may be exercised on or after September
30, 1995, at any time or from time to time and will expire at 5:00 P.M., Los
Angeles time, on September 30, 2000 (the "Expiration Date"). On the
Expiration Date, all rights evidenced by the Warrants shall cease and the
Warrants shall become void.

                 (b)   Subject to the provisions of this Agreement, the
registered holder of each Warrant shall have the right to purchase from the
Bancorp (and the Bancorp shall issue and sell to such registered holder) the
number of fully paid and nonassessable Warrant Shares set forth on such
holder's Warrant Certificate (or such number of Warrant Shares as may result
from adjustments made from time to time as provided in this Agreement), at
the price of $1.62 per Warrant Share in lawful money of the United States of
America (such exercise price per Warrant Share, as adjusted from time to time
as provided herein, being referred to herein as the "Exercise Price"), upon
(i) surrender of the Warrant Certificate to the Bancorp at the Bancorp's
principal office in Laguna Niguel, California with the exercise form on the
reverse thereof duly completed and signed by the registered holder or holders
thereof, and (ii) payment by wire transfer or other immediately available
funds, in lawful money of the United States of America, of the Exercise Price
for the Warrant Shares in respect of which such Warrant is then exercised.
Upon surrender of the Warrant Certificate, and payment of the Exercise Price
as provided above, the Bancorp shall issue and cause to be delivered to or
upon the written order of the registered holder of such Warrants and in such
name or names as such registered holder may designate, a certificate or
certificates for the number of Warrant Shares so purchased upon the exercise
of such Warrants, together with payment in respect of any fraction of a
Warrant Share issuable upon such surrender pursuant to Section 4.3 hereof.
Upon the exercise of any Warrant, the Bancorp may require the registered
holder of any Warrant or the party or parties in whose name or names the
certificate or certificates for the Warrant Shares to be so purchased upon
exercise of such Warrant will be issued to make such representations, and may
place such legends on certificates representing the Warrant Shares, as may be
reasonably required in the opinion of counsel to the Bancorp to permit the
Warrant Shares to be issued without the prior written consent of the
California Department of Corporations.

                  (c)   Each person in whose name any certificate for Warrant
Shares is issued upon the exercise of Warrants shall for all purposes be
deemed to have become the holder of record of the Warrant Shares represented
thereby, and such certificate shall be dated the date

                                      -3-
<PAGE>

upon which the Warrant Certificate evidencing such Warrants was duly
surrendered and payment of the Exercise Price (and any applicable transfer
taxes pursuant to Section 5 hereof) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Common Stock
transfer books of the Bancorp are closed, such person shall be deemed to have
become the record holder of such Warrant Shares on, and such certificate
shall be dated, the next succeeding business day on which the Common Stock
transfer books of the Bancorp are open.

                  (d)   In addition, the holder of any Warrant shall have the
right upon the exercise of such Warrant to surrender for cancellation a
portion of such Warrant to the Bancorp for the number of shares (the
"Surrendered Shares") specified in the holder's notice of exercise, by
delivery to the Bancorp with such exercise notice, written instructions from
such holder to apply the Appreciated Value (as defined below) of the
Surrendered Shares toward payment of the Exercise Price for shares subject to
such Warrant that are being acquired upon such exercise. The term
"Appreciated Value" shall mean the excess of the Closing Price at the time of
such exercise over the Exercise Price.

         4.2   In the event that less than all of the Warrants represented by
a Warrant Certificate are exercised on or prior to the Expiration Date, a new
Warrant Certificate, duly executed by the Bancorp, will be issued for the
remaining number of Warrants exercisable pursuant to the Warrant Certificate
so surrendered, and the Bancorp shall deliver the required new Warrant
Certificate pursuant to the provisions of this Section 4.

         4.3   No fractional shares of Common Stock or scrip shall be issued
to any holder in connection with the exercise of a Warrant. Instead of any
fractional shares of Common Stock that would otherwise be issuable to such
holder, the Bancorp will pay to such holder a cash adjustment in respect of
such fractional interest in an amount equal to that fractional interest of
the then current Closing Price per share of Common Stock.

         4.4   The number of Warrant Shares to be received upon the exercise
of a Warrant and the price to be paid for Warrant Share are subject to
adjustment from time to time as hereinafter set forth.

SECTION 5.        PAYMENT OF TAXES

        The Bancorp will pay all documentary stamp taxes attributable to the
original issuance of the Warrants and of the Warrant Shares issuable upon the
exercise of Warrants; PROVIDED, HOWEVER, that the Bancorp shall not be
required to (a) pay any tax which may be payable in respect of any transfer
involving the transfer and delivery of Warrant Certificates or the issuance
or delivery of certificates for Warrant Shares in a name other than that of
the registered holder of the Warrant Certificate surrendered upon the
exercise of a Warrant or (b) issue or deliver any certificate for Warrant
Shares upon the exercise of any Warrants until any such tax required to be

                                      -4-
<PAGE>

paid under clause (a) shall have been paid, all such tax being payable by the
holder of such Warrant at the time of surrender.

SECTION 6.        MUTILATED OR MISSING WARRANTS.

         In case any of the Warrants shall be mutilated, lost, stolen or
destroyed, the Bancorp may in its discretion issue and deliver in exchange
and substitution for and upon cancellation of, the mutilated Warrant
Certificate, or in substitution for the lost, stolen or destroyed Warrant
Certificate, a new Warrant Certificate of like tenor evidencing the number of
Warrant Shares purchasable upon exercise of the Warrant Certificate so
mutilated, lost, stolen or destroyed, but only upon receipt of evidence
satisfactory to the Bancorp of such loss, theft or destruction of such
Warrant Certificate and an indemnity, if requested, reasonably satisfactory
to it, provided that no indemnity will be requested from __________, any
partner of _________ or any family member or trust for the benefit of any
family member of any partner of _________. Applicants for such substitute
Warrant Certificate shall also comply with such other reasonable regulations
and pay such other reasonable charges as the Bancorp may prescribe. Any such
new Warrant Certificate shall constitute an original contractual obligation
of the Bancorp, whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant Certificate shall be at any time enforceable by anyone.

SECTION 7.        RESERVATION OF WARRANT SHARES.

         The Bancorp shall increase its authorized shares of Common Stock so
as to allow the issuance of all of the Warrant Shares and upon completion of
such increase, the Bancorp shall at all times reserve for issuance and
delivery upon exercise of the Warrants, such number of Warrant Shares or
other shares of capital stock of the Bancorp from time to time issuable upon
exercise of the Warrants. All such shares shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and free and
clear of all liens, security interests, charges and other encumbrances and
free and clear of all preemptive rights. After 5:00 P.M., Los Angeles time,
on the Expiration Date, no shares of Common Stock shall be subject to
reservation in respect of such Warrants.

SECTION 8.        RESTRICTIONS ON TRANSFER.

         Neither the Warrants nor the Warrant Shares may be disposed of,
transferred or encumbered (any such action, a "Transfer") other than by will
or pursuant to the laws of descent and distribution, except to a partner of
BP Partners when BP Partners is a partnership or to a stockholder, officer or
director of BP Partners or beneficiary of a trust which is a stockholder of
BP Partners when BP Partners is a corporation; however, after one year from
the date of issuance of the Warrants a Transfer may occur providing the
Warrants are exercised immediately upon such Transfer. If not exercised
immediately upon a Transfer, the Warrants shall lapse. In addition, either
the exercise of the Warrants, or the resale, transfer and assignment of the
Warrant Shares is prohibited for a period of at least one year from the date
of issuance of the Warrants.

                                      -5-
<PAGE>

SECTION 9.        RIGHTS OF WARRANT CERTIFICATE HOLDER.

         The holder of any Warrant Certificate or Warrant shall not, by
virtue thereof, be entitled to any rights of a stockholder of the Bancorp,
either at law or in equity, and the rights of the holder are limited to those
expressed in this Agreement.

SECTION 10.       ANTIDILUTION PROVISIONS.

         The Exercise Price and the number of Warrant Shares that may be
purchased upon the exercise of a Warrant and the number of Warrants
outstanding will be subject to change or adjustment as follows:

                  (a)   STOCK DIVIDENDS AND STOCK SPLITS. If at any time
after the date of issuance of the Warrants and before 5:00 P.M., Los Angeles
time, on the Expiration Date, (i) the Bancorp shall fix a record date for the
issuance of any dividend payable in shares of its capital stock or (ii) the
number of shares of Common Stock shall have been increased by a subdivision
or split-up of shares of Common Stock, then, on the record date fixed for the
determination of holders of Common Stock entitled to receive such dividend or
immediately after the effective date of such subdivision or split-up, as the
case may be, the number of shares to be delivered upon exercise of any
Warrant will be appropriately increased so that each holder thereafter will
be entitled to receive the number of shares of Common Stock that such holder
would have owned immediately following such action had the Warrant been
exercised immediately prior thereto, and the Exercise Price will be
appropriately adjusted. The time of occurrence of an event giving rise to an
adjustment made pursuant to this Section 10(a) shall, in the case of a
subdivision or split-up, be the effective date thereof and shall, in the case
of a stock dividend, be the record date thereof.

                  (b)   COMBINATION OF STOCK. If the number of shares of
Common Stock outstanding at any time after the date of the issuance of the
Warrants and before 5:00 P.M., Los Angeles time, on the Expiration Date shall
have been decreased by a combination of the outstanding shares of Common
Stock, then, immediately after the effective date of such combination, the
number of shares of Common Stock to be delivered upon exercise of any Warrant
will be appropriately decreased so that each holder thereafter will be
entitled to receive the number of shares of Common Stock that such holder
would have owned immediately following such action had the Warrant been
exercised immediately prior thereto, and the Exercise Price will be
appropriately adjusted.

                  (c)   REORGANIZATION. If any capital reorganization of the
Bancorp, or any reclassification of the Common Stock, or any consolidation of
the Bancorp with or merger of the Bancorp with or into any other corporation
or any sale, lease or other transfer of all or substantially all of the
assets of the Bancorp to any other person (including any individual,
partnership, joint venture, corporation, trust or group thereof) shall be
effected in such a way that the holders of the Common Stock shall be entitled
to receive stock, securities or assets with

                                      -6-
<PAGE>

respect to or in exchange for Common Stock, then, upon exercise of the
Warrants in accordance with the terms of this Agreement and the Warrant
Certificate, each holder shall have the right to receive the kind and amount
of stock, securities or assets receivable upon such reorganization,
reclassification, consolidation, merger or sale, lease or other transfer by a
holder of the number of shares of Common Stock that such Warrant holder would
have been entitled to receive upon exercise of the Warrants pursuant to
Section 2 hereof had the Warrants been exercised immediately prior to such
reorganization, reclassification, consolidation, merger or sale, lease or
other transfer.

                  (d)   SPECIAL DIVIDENDS. If (other than in a dissolution or
liquidation) securities of the Bancorp (other than shares of Common Stock or
securities issued pursuant to any Rights Offering, as defined in the Offering
Circular, or any similar plan of the Bancorp), or assets (other than cash)
are issued by the way of a dividend on outstanding shares of Common Stock,
then the Exercise Price shall be adjusted so that immediately after the date
fixed by the Bancorp as the record date in respect of such issuance, it shall
equal the price determined by multiplying the Exercise Price in effect
immediately prior to the close of business on the record date for the
determination of the share holders entitled to receive such dividend by a
fraction, the numerator of which shall be the Closing Price on such record
date less the then fair market value of the portion of the securities or
assets distributed applicable to one share of Common Stock determined by the
Board of Directors of the Bancorp, whose determination shall be conclusive,
and the denominator of which shall be such Closing Price. Such adjustment
shall become effective immediately prior to the opening of business on the
day following such record date.

                  (e)   NO ADJUSTMENTS TO EXERCISE PRICE. No adjustment in
the Exercise Price in accordance with the provisions of paragraphs (a), (b),
(c) or (d) above need be made if such adjustment would amount to a change in
such Exercise Price of less than $.01; PROVIDED, HOWEVER, that the amount by
which any adjustment is not made by reason of the provisions of this section
shall be carried forward and taken into account at the time of any subsequent
adjustment in the Exercise Price.

                  (f)   READJUSTMENT, ETC. If an adjustment is made under
paragraph (a), (b), (c) or (d) above, and the event to which the adjustment
relates does not occur, then any adjustments in the Exercise Price or Warrant
Shares that were made in accordance with such paragraphs shall be adjusted
back to the Exercise Price and the number of Warrant Shares that were in
effect immediately prior to the record date for such event.

                  (g)   NO ADJUSTMENTS FOR REGULAR CASH DIVIDENDS. There
shall be no adjustment in the Exercise Price as result of any cash dividends
paid out of earnings for the year in which such dividends are paid in respect
of the Common Stock during the Exercise Period.

SECTION 11.         OFFICER'S CERTIFICATE.

                                      -7-
<PAGE>

         Whenever the number of Warrant Shares that may be purchased upon
exercise of the Warrants is adjusted as required by the provisions of this
Agreement, the Bancorp will forthwith file in the custody of its Secretary or
an Assistant Secretary at its principal office an officer's certificate
showing the adjusted number of Warrant Shares that may be purchased upon
exercise of the Warrants and the adjusted Exercise Price (if any), determined
as herein provided, setting forth in reasonable detail the facts requiring
such adjustment and the manner of computing such adjustment. Each such
officer's certificate shall be made available at all reasonable times for
inspection by the holder. The Bancorp shall, forthwith after each such
adjustment, cause a copy of such certificate to be mailed to the holder.

SECTION 12.   LIMITATIONS ON EXERCISABILITY OF WARRANTS.

    12.1    Notwithstanding anything to the contrary contained herein, the
Bancorp may decline to issue any shares of Common Stock upon a requested
exercise of any Warrant if, in the Bancorp's reasonable determination based
on an opinion of the Bancorp's counsel, the holder desiring to exercise such
Warrant is required to obtain prior clearance, approval or nondisapproval
from any state or federal regulatory authority to acquire such shares and has
not, prior to the date of requested exercise, provided evidence of such
clearance, approval or nondisapproval to the Bancorp. In the event the
Bancorp declines to issue any shares of Common Stock upon a requested
exercise of any Warrant pursuant to the provisions of this Section 12.1, the
Bancorp shall use its best efforts to obtain any clearance or approval which
is required for the Bancorp to so issue such shares. In the event the Bancorp
has not obtained such clearance or approval within 60 days after the exercise
of any Warrant has been requested, the Bancorp shall, if so requested by the
holder of such Warrant, pay to such holder the Appreciated Value with respect
to the shares which such holder was not able to purchase upon such exercise.

SECTION 13.   AVAILABILITY OF INFORMATION.

    The Bancorp will comply with all applicable periodic public information
reporting requirements of the Securities Exchange Act of 1934 and the
California Corporations Code to which it may from time to time be subject.

SECTION 14.   SUCCESSORS.

    All covenants and provisions of this Agreement by or for the benefit of
the Bancorp or the holders of the Warrants shall bind and inure to the
benefit of their respective successors, assigns, heirs and personal
representatives.

SECTION 15.   TERMINATION.

    This Agreement shall terminate at 5:00 P.M., Los Angeles time, on the
Expiration Date or upon such earlier date on which all Warrants have been
exercised.

                                      -8-
<PAGE>

SECTION 16.   COUNTERPARTS.

    This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same agreement.

SECTION 17.   HEADINGS.

    The headings of sections of this Agreement have been inserted for
convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 18.   AMENDMENTS.

    This Agreement may be amended by the written consent of the Bancorp and
the affirmative vote or the written consent of the holders of not less than a
majority in interest of the then outstanding Warrants; PROVIDED, HOWEVER,
that, except as expressly provided herein, this Agreement may not be amended
to change (a) the Exercise Price, (b) the Exercise Period, (c) the number or
type of securities to be issued upon the exercise of the Warrants, or (d) the
provisions of this Section 19, without the consent of each holder of the
Warrants so affected.

SECTION 19.   NOTICES.

    Any notice pursuant to this Agreement to be given by the registered
holder of any Warrant to the Bancorp shall be sufficiently given if sent by
first-class mail, postage prepaid, addressed as follows:

                           Monarch Bancorp
                           30000 Town Center Drive
                           Laguna Niguel, California 92677
                           Attention:  Chief Executive Officer

SECTION 20.   BENEFITS OF THIS AGREEMENT.

    Nothing in this Agreement shall be construed to give any person or
corporation, other than the Bancorp and the registered holders of the Warrant
Certificates, any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Bancorp and the registered holders of the Warrants.

SECTION 21.   GOVERNING LAW.

    This Agreement shall be governed by and construed in accordance with the
laws of the State of California.

                                      -9-
<PAGE>

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

MONARCH BANCORP

By:_________________________________
Name:    Hugh S. Smith, Jr.
Title:   Chairman of the Board and Chief
         Executive Officer

____________________________________
[Warrantholder]

                                      -10-
<PAGE>

                     VOID AFTER 5:00 P.M., LOS ANGELES TIME,
                              ON SEPTEMBER 30, 2000

NO. __                                                           ______ WARRANTS

                                 MONARCH BANCORP

                   WARRANTS TO PURCHASE SHARES OF COMMON STOCK

         THIS CERTIFIES THAT, FOR VALUE RECEIVED, ________________ ("the
Warrantholder") or his registered assigns, is the registered holder of the
number of Warrants (the "Warrants") set forth above. Each Warrant entities
the holder thereof to purchase from Monarch Bancorp, a California corporation
(the "Bancorp"), subject to the terms and conditions set forth hereinafter
and in the Warrant Agreement hereinafter referred to, one fully paid share of
Common Stock, no par value, of the Bancorp (the "Common Stock"). The Warrants
may be exercised on or after September 30, 1995 at any time or from time to
time and will expire at 5:00 P.M., Los Angeles time, on September 30, 2000
(the "Expiration Date"). Upon the Expiration Date, all rights evidenced by
the Warrants shall cease and the Warrants shall become void. Subject to the
provisions of the Warrant Agreement, the holder of each Warrant shall have
the right to purchase from the Bancorp until the Expiration Date (and the
Bancorp shall issue and sell to such holder of a Warrant) one fully paid
share of Common Stock (a "Warrant Share") at an exercise price (the "Exercise
Price") of $1.62 per share upon surrender of this Warrant Certificate to the
Bancorp at the Bancorp's offices in Laguna Niguel with the form of election
to purchase appearing on this Warrant Certificate duly completed and signed,
together with payment of the Exercise Price by wire transfer or other
immediately available funds.

         The Exercise Price and the number of Warrant Shares for which the
Warrants are exercisable are subject to change or adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.

         REFERENCE IS MADE TO THE PROVISIONS OF THIS WARRANT CERTIFICATE SET
FORTH BELOW, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH ON THE FRONT OF THIS CERTIFICATE.

         This Warrant shall be governed by and construed in accordance with
the laws of the State of California.

         IN WITNESS WHEREOF, the Bancorp has caused this Warrant Certificate
to be executed by its duly authorized officers.

DATED:  November 5, 1996                     MONARCH BANCORP

                                             By:________________________________
                                                Name:  Hugh S. Smith, Jr.
                                                Title: Chairman of the Board and
                                                       Chief Executive Officer

ATTEST:

________________________________
Arnold Hahn, Corporate Secretary

                                     1 of 4
<PAGE>

         This Warrant Certificate is subject to all of the terms and
conditions of the Warrant Agreement, dated as of November 5, 1996 (the
"Warrant Agreement"), between the Bancorp and ___________, to all of which
terms and conditions the registered holder of the Warrant consents by
acceptance hereof. The Warrant Agreement is incorporated herein by reference
and made a part hereof and reference is made to the Warrant Agreement for a
full description of the rights, limitations of rights, obligations, duties
and immunities of the Bancorp and the registered holders of Warrant
Certificates. Copies of the Warrant Agreement are available for inspection at
the offices of the Bancorp or may be obtained upon written request addressed
to the Bancorp at its offices in Laguna Niguel, California.

         The Bancorp shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractional shares, but shall
make adjustment therefor in cash on the basis of the current market value of
any fractional interest as provided in the Warrant Agreement.

         If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon
surrender hereof another Warrant Certificate or Certificates evidencing the
number of Warrants not so exercised.

         The holder of this Warrant Certificate shall not, by virtue hereof,
be entitled to any of the rights of a stockholder in the Bancorp, either at
law or in equity, and the rights of the holder are limited to those expressed
in the Warrant Agreement.

         If this Warrant Certificate shall be surrendered for exercise within
any period during which the transfer books for the Bancorp's Common Stock are
closed for any purpose, the Bancorp shall not be required to make delivery of
certificates for shares purchasable upon such transfer until the date of the
reopening of said transfer books.

         Every holder of this Warrant Certificate, by accepting the same,
consents and agrees with the Bancorp and with every other holder of a Warrant
Certificate that:

                    (a)    this Warrant Certificate is transferable on the
                           registry books of the Bancorp only upon the terms and
                           conditions set forth in the Warrant Agreement; and

                    (b)    the Bancorp may deem and treat the person in whose
                           name this Warrant Certificate is registered as the
                           absolute owner hereof (notwithstanding any notation
                           of ownership or other writing hereon made by anyone
                           other than the Bancorp) for all purposes whatever and
                           the Bancorp shall not be affected by any notice to
                           the contrary.

         The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations:

         TEN COM -         as tenants in common
         TEN ENT -         as tenants by the entireties
         JT TEN -          as joint tenants with right of survivorship and not
                           as tenants in common

         UNIF GIFT MIN ACT -

___________ Custodian __________ under Uniform Gifts to Minors Act______________
  (Cust)                (Minor)                                      (State)

     Additional abbreviations may also be used though not in the above list.

                                  2 of 4
<PAGE>

     Deliver to: Monarch Bancorp
                           30000 Town Center Drive
                           Laguna Niguel, California 92677

                                     3 of 4
<PAGE>

                              ELECTION TO PURCHASE

                         Dated: _________________, 19___

         The undersigned hereby irrevocably exercises this Warrant to
purchase ______ shares of Common Stock and herewith makes payment of
$________________ in payment of the Exercise Price thereof on the terms and
conditions specified in this Warrant Certificate, surrenders this Warrant
Certificate and all right, title and interest herein to the Bancorp and
directs that the Warrant Shares deliverable upon the exercise of such
Warrants be registered in the name and at the address specified below and
delivered thereto.

         Name:__________________________________________________________________
                                       (Please Print)
         Address:_______________________________________________________________

         City, State and Zip Code:______________________________________________

         If such number of Warrant Shares is less than the aggregate number
if Warrant Shares purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the balance of such Warrant Shares to be
registered in the name and at the address specified below and delivered
thereto.

         Name:__________________________________________________________________
                                       (Please Print)
         Address:_______________________________________________________________

         City, State and Zip Code:______________________________________________

         Taxpayer Identification or Social Security Number:_____________________

                    Signature:__________________________________________________

NOTE:    The above signature must correspond with the name as written upon the
         face of this Warrant Certificate in every particular, without
         alteration or enlargement or any change whatsoever.

                                     4 of 4

<PAGE>
                            FORM OF WARRANT AGREEMENT

         This WARRANT AGREEMENT, dated as of November 5, 1996, is made and
entered into by and among MONARCH BANCORP, a California corporation (the
"Bancorp"), and ___________________ (the "Warrantholder"), with reference to the
following facts:

         WHEREAS, the Bancorp completed a private offering to certain accredited
investors (the "1996 Private Offering") pursuant to a certain Private Placement
Memorandum (the "1996 Private Placement Memorandum");

         WHEREAS, the Bancorp completed a rights and public offering (the "1995
Public Offering") pursuant to that certain Offering Circular dated July 14, 1996
(the "Public Offering Circular").

         WHEREAS, the Bancorp has agreed to issue to Belle Plaine Financial, LLC
("BP Financial"), or its stockholders, warrants to purchase shares of Common
Stock, equal to 3% of the shares sold in the 1996 Private Offering;

         WHEREAS, if the Bancorp has to increase its authorized shares of Common
Stock in order to issue all of the Warrants to BP Financial or its stockholders,
the Bancorp shall issue all of the Warrants to BP Financial or its stockholders
upon the later of either the closing of the Offering or the completion of the
Bancorp's increase of its authorized shares of Common Stock in order to issue
all of the Warrants to BP Financial or its stockholders;

         NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:

SECTION 1.        CERTAIN DEFINITIONS.

         For the purposes of this Agreement,

                  (a) "CLOSING PRICE" means the average of the closing bid
and asked prices of a share of Common Stock as reported by the Bancorp's
principal market maker, or if the Bancorp does not have a principal market
maker, book value per share of Common Stock as of the last business day of
the previous calendar month.

                  (b) "COMMON STOCK EQUIVALENTS" means securities that are
convertible into or exercisable for shares of Common Stock.

                  (c) "EXERCISE PERIOD" means the period during which the
Warrants may be exercised.

                  (d) "EXERCISE PRICE" has the meaning specified in Section
4.1(b) hereof.

<PAGE>

                  (e) "EXPIRATION DATE" has the meaning specified in Section
4.1(a) hereof.

                  (f) "WARRANTS" means this Warrant and all other Warrants
issued pursuant to the terms of the Financial Advisor Agreement.

                  (g) "WARRANT CERTIFICATE" has the meaning specified in
Section 2.1 hereof.

                  (h) "WARRANT SHARES" means the Common Stock and "WARRANT
SHARE" means one share of Common Stock purchased or purchasable upon exercise
of the Warrants.

SECTION 2.        FORM OF WARRANT CERTIFICATE; PURCHASE PRICE.

       2.1   The certificates evidencing the Warrants (the "Warrant
Certificates") (and the forms of election to purchase Warrant Shares and of
assignment to be printed on the reverse thereof) shall be substantially in
the form set forth in Exhibit A hereto and may have such letters, numbers or
other marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Bancorp may
deem appropriate and as are not inconsistent with the provisions of this
Agreement or the Financial Advisor Agreement, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto.

       2.2   Each Warrant shall entitle the holder thereof to purchase one
(1) Warrant Share upon the exercise thereof at the applicable Exercise Price
subject to adjustment as provided in Section 10 hereof during the time period
specified in Section 4 hereof and subject to the limitations specified in
Section 12a hereof; PROVIDED, HOWEVER, that the Warrants are exercisable only
for whole shares; cash will be paid in lieu of fractional shares in
accordance with Section 4.3. Each Warrant Certificate shall be executed on
behalf of the Bancorp by the manual or facsimile signature of the present or
any future President or any authorized officer of the Bancorp, under its
corporate seal, affixed or in facsimile, attested by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary of
the Bancorp. Warrants shall be dated as of the date of their initial issuance.

SECTION 3.        REGISTRATION AND COUNTERSIGNATURE.

         Prior to due presentment for registration or transfer of the Warrant
Certificates, the Bancorp may deem and treat the registered holder thereof as
the absolute owner of the Warrant Certificates (notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Bancorp), for
the purpose of any exercise thereof and for all other purposes, and the Bancorp
shall not be affected by any notice to the contrary.

                                      -2-

<PAGE>

SECTION 4.        DURATION AND EXERCISE OF WARRANTS.

         4.1      (a) The Warrants may be exercised on or after September 30,
1996, at any time or from time to time and will expire at 5:00 P.M., Los Angeles
time, on September 30, 2001 (the "Expiration Date"). On the Expiration Date, all
rights evidenced by the Warrants shall cease and the Warrants shall become void.

                  (b) Subject to the provisions of this Agreement, the
registered holder of each Warrant shall have the right to purchase from the
Bancorp (and the Bancorp shall issue and sell to such registered holder) the
number of fully paid and nonassessable Warrant Shares set forth on such holder's
Warrant Certificate (or such number of Warrant Shares as may result from
adjustments made from time to time as provided in this Agreement), at the price
of $1.98 per Warrant Share in lawful money of the United States of America (such
exercise price per Warrant Share, as adjusted from time to time as provided
herein, being referred to herein as the "Exercise Price"), upon (i) surrender of
the Warrant Certificate to the Bancorp at the Bancorp's principal office in
Laguna Niguel, California with the exercise form on the reverse thereof duly
completed and signed by the registered holder or holders thereof, and (ii)
payment by wire transfer or other immediately available funds, in lawful money
of the United States of America, of the Exercise Price for the Warrant Shares in
respect of which such Warrant is then exercised. Upon surrender of the Warrant
Certificate, and payment of the Exercise Price as provided above, the Bancorp
shall issue and cause to be delivered to or upon the written order of the
registered holder of such Warrants and in such name or names as such registered
holder may designate, a certificate or certificates for the number of Warrant
Shares so purchased upon the exercise of such Warrants, together with payment in
respect of any fraction of a Warrant Share issuable upon such surrender pursuant
to Section 4.3 hereof. Upon the exercise of any Warrant, the Bancorp may require
the registered holder of any Warrant or the party or parties in whose name or
names the certificate or certificates for the Warrant Shares to be so purchased
upon exercise of such Warrant will be issued to make such representations, and
may place such legends on certificates representing the Warrant Shares, as may
be reasonably required in the opinion of counsel to the Bancorp to permit the
Warrant Shares to be issued without the prior written consent of the California
Department of Corporations.

                  (c) Each person in whose name any certificate for Warrant
Shares is issued upon the exercise of Warrants shall for all purposes be deemed
to have become the holder of record of the Warrant Shares represented thereby,
and such certificate shall be dated the date upon which the Warrant Certificate
evidencing such Warrants was duly surrendered and payment of the Exercise Price
(and any applicable transfer taxes pursuant to Section 5 hereof) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date
upon which the Common Stock transfer books of the Bancorp are closed, such
person shall be deemed to have become the record holder of such Warrant Shares
on, and such certificate shall be dated, the next succeeding business day on
which the Common Stock transfer books of the Bancorp are open.

                                      -3-

<PAGE>

                  (d) In addition, the holder of any Warrant shall have the
right upon the exercise of such Warrant to surrender for cancellation a portion
of such Warrant to the Bancorp for the number of shares (the "Surrendered
Shares") specified in the holder's notice of exercise, by delivery to the
Bancorp with such exercise notice, written instructions from such holder to
apply the Appreciated Value (as defined below) of the Surrendered Shares toward
payment of the Exercise Price for shares subject to such Warrant that are being
acquired upon such exercise. The term "Appreciated Value" shall mean the excess
of the Closing Price at the time of such exercise over the Exercise Price.

       4.2   In the event that less than all of the Warrants represented by a
Warrant Certificate are exercised on or prior to the Expiration Date, a new
Warrant Certificate, duly executed by the Bancorp, will be issued for the
remaining number of Warrants exercisable pursuant to the Warrant Certificate so
surrendered, and the Bancorp shall deliver the required new Warrant Certificate
pursuant to the provisions of this Section 4.

       4.3   No fractional shares of Common Stock or scrip shall be issued to
any holder in connection with the exercise of a Warrant. Instead of any
fractional shares of Common Stock that would otherwise be issuable to such
holder, the Bancorp will pay to such holder a cash adjustment in respect of such
fractional interest in an amount equal to that fractional interest of the then
current Closing Price per share of Common Stock.

       4.4   The number of Warrant Shares to be received upon the exercise of a
Warrant and the price to be paid for Warrant Share are subject to adjustment
from time to time as hereinafter set forth.

SECTION 5.        PAYMENT OF TAXES

         The Bancorp will pay all documentary stamp taxes attributable to the
original issuance of the Warrants and of the Warrant Shares issuable upon the
exercise of Warrants; PROVIDED, HOWEVER, that the Bancorp shall not be required
to (a) pay any tax which may be payable in respect of any transfer involving
the transfer and delivery of Warrant Certificates or the issuance or delivery
of certificates for Warrant Shares in a name other than that of the registered
holder of the Warrant Certificate surrendered upon the exercise of a Warrant or
(b) issue or deliver any certificate for Warrant Shares upon the exercise of
any Warrants until any such tax required to be paid under clause (a) shall have
been paid, all such tax being payable by the holder of such Warrant at the time
of surrender.

SECTION 6.        MUTILATED OR MISSING WARRANTS.

         In case any of the Warrants shall be mutilated, lost, stolen or
destroyed, the Bancorp may in its discretion issue and deliver in exchange and
substitution for and upon cancellation of, the mutilated Warrant Certificate, or
in substitution for the lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate of like tenor evidencing the number of Warrant Shares

                                      -4-

<PAGE>

purchasable upon exercise of the Warrant Certificate so mutilated, lost, stolen
or destroyed, but only upon receipt of evidence satisfactory to the Bancorp of
such loss, theft or destruction of such Warrant Certificate and an indemnity,
if requested, reasonably satisfactory to it, provided that no indemnity will be
requested from ________, any stockholder of ________ or any family member or
trust for the benefit of any family member of any partner of _______.
Applicants for such substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Bancorp may prescribe. Any such new Warrant Certificate shall constitute an
original contractual obligation of the Bancorp, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.

SECTION 7.        RESERVATION OF WARRANT SHARES.

         The Bancorp shall increase its authorized shares of Common Stock so as
to allow the issuance of all of the Warrant Shares and upon completion of such
increase, the Bancorp shall at all times reserve for issuance and delivery upon
exercise of the Warrants, such number of Warrant Shares or other shares of
capital stock of the Bancorp from time to time issuable upon exercise of the
Warrants. All such shares shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and free and clear of all liens,
security interests, charges and other encumbrances and free and clear of all
preemptive rights. After 5:00 P.M., Los Angeles time, on the Expiration Date, no
shares of Common Stock shall be subject to reservation in respect of such
Warrants.

SECTION 8.        RESTRICTIONS ON TRANSFER.

         Neither the Warrants nor the Warrant Shares may be disposed of,
transferred or encumbered (any such action, a "Transfer") other than by will or
pursuant to the laws of descent and distribution, except to a partner of BP
Financial when BP Financial is a partnership or to a stockholder, officer or
director of BP Financial or beneficiary of a trust which is a stockholder of BP
Financial when BP Financial is a corporation; however, after one year from the
date of issuance of the Warrants a Transfer may occur providing the Warrants are
exercised immediately upon such Transfer. If not exercised immediately upon a
Transfer, the warrants shall lapse. In addition, either the exercise of the
Warrants, or the resale, transfer and assignment of the Warrant Shares is
prohibited for a period of at least one year from the date of issuance of the
Warrants.

SECTION 9.        RIGHTS OF WARRANT CERTIFICATE HOLDER.

         The holder of any Warrant Certificate or Warrant shall not, by virtue
thereof, be entitled to any rights of a stockholder of the Bancorp, either at
law or in equity, and the rights of the holder are limited to those expressed in
this Agreement.

SECTION 10.         ANTIDILUTION PROVISIONS.

                                      -5-

<PAGE>

         The Exercise Price and the number of Warrant Shares that may be
purchased upon the exercise of a Warrant and the number of Warrants outstanding
will be subject to change or adjustment as follows:

                  (a) STOCK DIVIDENDS AND STOCK SPLITS, If at any time after the
date of issuance of the Warrants and before 5:00 P.M., Los Angeles time, on the
Expiration Date, (i) the Bancorp shall fix a record date for the issuance of any
dividend payable in shares of its capital stock or (ii) the number of shares of
Common Stock shall have been increased by a subdivision or split-up of shares of
Common Stock, then, on the record date fixed for the determination of holders of
Common Stock entitled to receive such dividend or immediately after the
effective date of such subdivision or split-up, as the case may be, the number
of shares to be delivered upon exercise of any Warrant will be appropriately
increased so that each holder thereafter will be entitled to receive the number
of shares of Common Stock that such holder would have owned immediately
following such action had the Warrant been exercised immediately prior thereto,
and the Exercise Price will be appropriately adjusted. The time of occurrence of
an event giving rise to an adjustment made pursuant to this Section 10(a) shall,
in the case of a subdivision or split-up, be the effective date thereof and
shall, in the case of a stock dividend, be the record date thereof.

                  (b) COMBINATION OF STOCK. If the number of shares of Common
Stock outstanding at any time after the date of the issuance of the Warrants and
before 5:00 P.M., Los Angeles time, on the Expiration Date shall have been
decreased by a combination of the outstanding shares of Common Stock, then,
immediately after the effective date of such combination, the number of shares
of Common Stock to be delivered upon exercise of any Warrant will be
appropriately decreased so that each holder thereafter will be entitled to
receive the number of shares of Common Stock that such holder would have owned
immediately following such action had the Warrant been exercised immediately
prior thereto, and the Exercise Price will be appropriately adjusted.

                  (c) REORGANIZATION. If any capital reorganization of the
Bancorp, or any reclassification of the Common Stock, or any consolidation of
the Bancorp with or merger of the Bancorp with or into any other corporation or
any sale, lease or other transfer of all or substantially all of the assets of
the Bancorp to any other person (including any individual, partnership, joint
venture, corporation, trust or group thereof) shall be effected in such a way
that the holders of the Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then,
upon exercise of the Warrants in accordance with the terms of this Agreement
and the Warrant Certificate, each holder shall have the right to receive the
kind and amount of stock, securities or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer by a holder of the number of shares of Common Stock that such Warrant
holder would have been entitled to receive upon exercise of the Warrants
pursuant to Section 2 hereof had the Warrants been exercised immediately prior
to such reorganization, reclassification, consolidation, merger or sale, lease
or other transfer.

                                      -6-

<PAGE>

                  (d) SPECIAL DIVIDENDS. If (other than in a dissolution or
liquidation) securities of the Bancorp (other than shares of Common Stock or
securities issued pursuant to any Rights Offering, as defined in the Offering
Circular, or any similar plan of the Bancorp), or assets (other than cash) are
issued by the way of a dividend on outstanding shares of Common Stock, then the
Exercise Price shall be adjusted so that immediately after the date fixed by the
Bancorp as the record date in respect of such issuance, it shall equal the price
determined by multiplying the Exercise Price in effect immediately prior to the
close of business on the record date for the determination of the share holders
entitled to receive such dividend by a fraction, the numerator of which shall be
the Closing Price on such record date less the then fair market value of the
portion of the securities or assets distributed applicable to one share of
Common Stock determined by the Board of Directors of the Bancorp, whose
determination shall be conclusive, and the denominator of which shall be such
Closing Price. Such adjustment shall become effective immediately prior to the
opening of business on the day following such record date.

                  (e) NO ADJUSTMENTS TO EXERCISE PRICE. No adjustment in the
Exercise Price in accordance with the provisions of paragraphs (a), (b), (c) or
(d) above need be made if such adjustment would amount to a change in such
Exercise Price of less than $.01; PROVIDED, HOWEVER, that the amount by which
any adjustment is not made by reason of the provisions of this section shall be
carried forward and taken into account at the time of any subsequent adjustment
in the Exercise Price.

                  (f) READJUSTMENT, ETC. If an adjustment is made under
paragraph (a), (b), (c) or (d) above, and the event to which the adjustment
relates does not occur, then any adjustments in the Exercise Price or Warrant
Shares that were made in accordance with such paragraphs shall be adjusted back
to the Exercise Price and the number of Warrant Shares that were in effect
immediately prior to the record date for such event.

                  (g) NO ADJUSTMENTS FOR REGULAR CASH DIVIDENDS. There shall be
no adjustment in the Exercise Price as result of any cash dividends paid out of
earnings for the year in which such dividends are paid in respect of the Common
Stock during the Exercise Period.

SECTION 11.         OFFICER'S CERTIFICATE.

         Whenever the number of Warrant Shares that may be purchased upon
exercise of the Warrants is adjusted as required by the provisions of this
Agreement, the Bancorp will forthwith file in the custody of its Secretary or an
Assistant Secretary at its principal office an officer's certificate showing the
adjusted number of Warrant Shares that may be purchased upon exercise of the
Warrants and the adjusted Exercise Price (if any), determined as herein
provided, setting forth in reasonable detail the facts requiring such adjustment
and the manner of computing such adjustment. Each such officer's certificate
shall be made available at all reasonable times for

                                      -7-

<PAGE>

inspection by the holder. The Bancorp shall, forthwith after each such
adjustment, cause a copy of such certificate to be mailed to the holder.

SECTION 12.         LIMITATIONS ON EXERCISABILITY OF WARRANTS.

        12.1   Notwithstanding anything to the contrary contained herein, the
Bancorp may decline to issue any shares of Common Stock upon a requested
exercise of any Warrant if, in the Bancorp's reasonable determination based on
an opinion of the Bancorp's counsel, the holder desiring to exercise such
Warrant is required to obtain prior clearance, approval or nondisapproval from
any state or federal regulatory authority to acquire such shares and has not,
prior to the date of requested exercise, provided evidence of such clearance,
approval or nondisapproval to the Bancorp. In the event the Bancorp declines to
issue any shares of Common Stock upon a requested exercise of any Warrant
pursuant to the provisions of this Section 12.1, the Bancorp shall use its best
efforts to obtain any clearance or approval which is required for the Bancorp to
so issue such shares. In the event the Bancorp has not obtained such clearance
or approval within 60 days after the exercise of any Warrant has been requested,
the Bancorp shall, if so requested by the holder of such Warrant, pay to such
holder the Appreciated Value with respect to the shares which such holder was
not able to purchase upon such exercise.

SECTION 13.         AVAILABILITY OF INFORMATION.

         The Bancorp will comply with all applicable periodic public information
reporting requirements of the Securities Exchange Act of 1934 and the California
Corporations Code to which it may from time to time be subject.

SECTION 14.         SUCCESSORS.

         All covenants and provisions of this Agreement by or for the benefit of
the Bancorp or the holders of the Warrants shall bind and inure to the benefit
of their respective successors, assigns,
heirs and personal representatives.

SECTION 15.         TERMINATION.

         This Agreement shall terminate at 5:00 P.M., Los Angeles time, on the
Expiration Date or upon such earlier date on which all Warrants have been
exercised.

SECTION 16.         COUNTERPARTS.

         This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute but one and the same agreement.

SECTION 17.         HEADINGS.

                                      -8-

<PAGE>

         The headings of sections of this Agreement have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of
the terms or provisions hereof.

SECTION 18.         AMENDMENTS.

         This Agreement may be amended by the written consent of the Bancorp and
the affirmative vote or the written consent of the holders of not less than a
majority in interest of the then outstanding Warrants; PROVIDED, HOWEVER, that,
except as expressly provided herein, this Agreement may not be amended to change
(a) the Exercise Price, (b) the Exercise Period, (c) the number or type of
securities to be issued upon the exercise of the Warrants, or (d) the provisions
of this Section 19, without the consent of each holder of the Warrants so
affected.

SECTION 19.         NOTICES.

         Any notice pursuant to this Agreement to be given by the registered
holder of any Warrant to the Bancorp shall be sufficiently given if sent by
first-class mail, postage prepaid, addressed as follows:

                    Monarch Bancorp
                    30000 Town Center Drive
                    Laguna Niguel, California 92677
                    Attention:  Chief Executive Officer

SECTION 20.         BENEFITS OF THIS AGREEMENT.

         Nothing in this Agreement shall be construed to give any person or
corporation, other than the Bancorp and the registered holders of the Warrant
Certificates, any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Bancorp and the registered holders of the Warrants.

SECTION 21.         GOVERNING LAW.

         This Agreement shall be governed by and construed in accordance with
the laws of the State of California.

                                       -9-
<PAGE>

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

MONARCH BANCORP

By:___________________________________
Name:    Hugh S. Smith, Jr.
Title:   Chairman of the Board and
         Chief Executive Officer

--------------------------------------
[Warrantholder]

                                      -10-
<PAGE>

                     VOID AFTER 5:00 P.M., LOS ANGELES TIME,
                              ON SEPTEMBER 30, 2001

NO. __                                                           ______ WARRANTS

                                 MONARCH BANCORP

                   WARRANTS TO PURCHASE SHARES OF COMMON STOCK

         THIS CERTIFIES THAT, FOR VALUE RECEIVED, _________ (the
"Warrantholder") or its registered assigns, is the registered holder of the
number of Warrants (the "Warrants") set forth above, Each Warrant entities the
holder thereof to purchase from Monarch Bancorp, a California corporation (the
"Bancorp"), subject to the terms and conditions set forth hereinafter and in the
Warrant Agreement hereinafter referred to, one fully paid share of Common Stock,
no par value, of the Bancorp (the "Common Stock"). The Warrants may be exercised
on or after September 30, 1996 at any time or from time to time and will expire
at 5:00 P.M., Los Angeles time, an September 30, 2001 (the "Expiration Date").
Upon the Expiration Date, all rights evidenced by the Warrants shall cease and
the Warrants shall become void. Subject to the provisions of the Warrant
Agreement, the holder of each Warrant shall have the right to purchase from the
Bancorp until the Expiration Date (and the Bancorp shall issue and sell to such
holder of a Warrant) one fully paid share of Common Stock (a "Warrant Share") at
an exercise price (the "Exercise Price") of $1.98 per share upon surrender of
this Warrant Certificate to the Bancorp at the Bancorp's offices in Laguna
Niguel with the form of election to purchase appearing on this Warrant
Certificate duly completed and signed, together with payment of the Exercise
Price by wire transfer or other immediately available funds.

         The Exercise Price and the number of Warrant Shares for which the
Warrants are exercisable are subject to change or adjustment upon the occurrence
of certain events set forth in the Warrant Agreement.

         REFERENCE IS MADE TO THE PROVISIONS OF THIS WARRANT CERTIFICATE SET
FORTH BELOW, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH ON THE FRONT OF THIS CERTIFICATE.

         This Warrant shall be governed by and construed in accordance with the
laws of the State of California.

         IN WITNESS WHEREOF, the Bancorp has caused this Warrant Certificate to
be executed by its duly authorized officers.

DATED:  November 5, 1996                     MONARCH BANCORP

                                             By:
                                                --------------------------------
                                                Name:  Hugh S. Smith, Jr.
                                                Title: Chairman of the Board and
                                                       Chief Executive Officer

ATTEST:

-------------------------------
Arnold Hahn, Corporate Secretary

                                     1 of 4
<PAGE>

         This Warrant Certificate is subject to all of the terms and conditions
of the Warrant Agreement dated as of November 5, 1996 (the "Warrant Agreement"),
between the Bancorp and _____________, to all of which terms and conditions the
registered holder of the Warrant consents by acceptance hereof. The Warrant
Agreement is incorporated herein by reference and made a part hereof and
reference is made to the Warrant Agreement for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Bancorp and the
registered holders of Warrant Certificates. Copies of the Warrant Agreement are
available for inspection at the offices of the Bancorp or may be obtained upon
written request addressed to the Bancorp at its offices in Laguna Niguel,
California.

         The Bancorp shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractional shares, but shall make
adjustment therefor in cash on the basis of the current market value of any
fractional interest as provided in the Warrant Agreement.

         If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.

         The holder of this Warrant Certificate shall not, by virtue hereof, be
entitled to any of the rights of a stockholder in the Bancorp, either at law or
in equity, and the rights of the holder are limited to those expressed in the
Warrant Agreement.

         If this Warrant Certificate shall be surrendered for exercise within
any period during which the transfer books for the Bancorp's Common Stock are
closed for any purpose, the Bancorp shall not be required to make delivery of
certificates for shares purchasable upon such transfer until the date of the
reopening of said transfer books.

         Every holder of this Warrant Certificate, by accepting the same,
consents and agrees with the Bancorp and with every other holder of a Warrant
Certificate that:

                  (a)      this Warrant Certificate is transferable on the
                           registry books of the Bancorp only upon the terms and
                           conditions set forth in the Warrant Agreement; and

                  (b)      the Bancorp may deem and treat the person in whose
                           name this Warrant Certificate is registered as the
                           absolute owner hereof (notwithstanding any notation
                           of ownership or other writing hereon made by anyone
                           other than the Bancorp) for all purposes whatever and
                           the Bancorp shall not be affected by any notice to
                           the contrary.

         The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

         TEN COM -         as tenants in common
         TEN ENT -         as tenants by the entireties
         JT TEN -          as joint tenants with right of survivorship and not
                           as tenants in common

         UNIF GIFT MIN ACT -

__________ Custodian _________ under Uniform Gifts to Minors Act________________
  (Cust)              (Minor)                                        (State)

     Additional abbreviations may also be used though not in the above list.

     Deliver to:       Monarch Bancorp

                                     2 of 4
<PAGE>

                        30000 Town Center Drive
                        Laguna Niguel, California 92677

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<PAGE>

                              ELECTION TO PURCHASE

                         DATED: _________________, 19___

         The undersigned hereby irrevocably exercises this warrant to purchase
_____ shares of Common Stock and herewith makes payment of $_____________ in
payment of the Exercise Price thereof on the terms and conditions specified in
this Warrant Certificate, surrenders this Warrant Certificate and all right,
title and interest herein to the Bancorp and directs that the Warrant Shares
deliverable upon the exercise of such Warrants be registered in the name and at
the address specified below and delivered thereto.

         Name:__________________________________________________________________
                                 (Please Print)
         Address:_______________________________________________________________

         City, State and Zip Code:______________________________________________

         If such number of Warrant Shares is less than the aggregate number if
Warrant Shares purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the balance of such Warrant Shares to be
registered in the name and at the address specified below and delivered thereto.

         Name:__________________________________________________________________
                                 (Please Print)
         Address:_______________________________________________________________

         City, State and Zip Code:______________________________________________

         Taxpayer Identification or Social Security Number:_____________________

                  Signature:____________________________________________________

NOTE:    The above signature must correspond with the name as written upon the
         face of this Warrant Certificate in every particular, without
         alteration or enlargement or any change whatsoever.

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