Document:

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                                                                    Exhibit 10.1

                                 LEASE AGREEMENT
                                 by and between
                           PWE (MULTI) QRS 14-85 INC,
                             a Delaware corporation
                                   as LANDLORD
                                       and
                                 PW EAGLE, INC.,
                            a Minnesota corporation,
                                    as TENANT
                                    Premises:
                                   Tacoma, WA,
                                West Jordan, UT,
                                   Perris, CA,
                                   Eugene, OR

                         Dated as of: February 28, 2002
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                                TABLE OF CONTENTS

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                                                                                                          Page
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<S>  <C>                                                                                                    <C>
1.   Demise of Premises......................................................................................1
2.   Certain Definitions.....................................................................................1
3.   Title and Condition.....................................................................................7
4.   Use of Leased Premises; Quiet Enjoyment.................................................................8
5.   Term....................................................................................................9
6.   Basic Rent.............................................................................................10
7.   Additional Rent........................................................................................10
8.   Net Lease; Non-Terminability...........................................................................11
9.   Payment of Impositions.................................................................................12
10.  Compliance with Laws and Easement Agreements; Environmental Matters....................................13
11.  Liens; Recording.......................................................................................15
12.  Maintenance and Repair.................................................................................15
13.  Alterations and Improvements...........................................................................16
14.  Permitted Contests.....................................................................................17
15.  Indemnification........................................................................................17
16.  Insurance..............................................................................................18
17.  Casualty and Condemnation..............................................................................22
18.  Termination Events.....................................................................................23
19.  Restoration............................................................................................24
20.  Procedures Upon Purchase...............................................................................26
21.  Assignment and Subletting; Prohibition against Leasehold Financing.....................................27
22.  Events of Default......................................................................................29
23.  Remedies and Damages Upon Default......................................................................32
24.  Notices................................................................................................36
25.  Estoppel Certificate...................................................................................36
26.  Surrender..............................................................................................36
27.  No Merger of Title.....................................................................................37
28.  Books and Records......................................................................................37
29.  Determination of Value.................................................................................38
30.  Non-Recourse as to Landlord............................................................................39
31.  Financing..............................................................................................40
32.  Subordination, Non-Disturbance and Attornment..........................................................41
33.  Operating Covenants....................................................................................41
34.  Sale of Related Premises by Landlord...................................................................41
35.  Tax Treatment; Reporting...............................................................................41
36.  Security Deposit.......................................................................................41
37.  Miscellaneous..........................................................................................43
38.  Option to Purchase.....................................................................................44
</TABLE>

EXHIBITS
--------
     Exhibit "A"    - Premises
     Exhibit "B"    - Machinery and Equipment
     Exhibit "C"    - Schedule of Permitted Encumbrances
     Exhibit "D"    - Rent Schedule
     Exhibit "E"    - Acquisition Costs

                                      -i-
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     Exhibit "F"    - Percentage Allocation of Basic Rent
     Exhibit "G"    - Covenants

                                      -ii-
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LEASE AGREEMENT, made as of February 28, 2002 between PWE (MULTI) QRS 14-85
INC., a Delaware corporation ("Landlord"), with an address c/o W. P. Carey & Co.
                               --------
LLC, 50 Rockefeller Plaza, 2nd Floor, New York, New York 10020, and PW EAGLE,
INC., a Minnesota corporation ("Tenant") with an address at 222 South Ninth
                                ------
Street, Suite 2880, Minneapolis, Minnesota 55402.

In consideration of the rents and provisions herein stipulated to be paid and
performed, Landlord and Tenant hereby covenant and agree as follows:

     Demise of Premises. Landlord hereby demises and lets to Tenant, and Tenant
hereby takes and leases from Landlord, for the term and upon the provisions
hereinafter specified, the following described property (hereinafter referred to
collectively as the "Leased Premises" and individually as the "Tacoma Premises",
                     ---------------
"West Jordan Premises", "Perris Premises", and "Eugene Premises" each of which
premises is more particularly described in the applicable description in Exhibit
                                                                         -------
"A" attached hereto (collectively the "Land"), together with (a) the
 -                                     ----
Appurtenances; (b) the buildings, structures and other improvements now or
hereafter constructed on the Land (collectively, the "Improvements"); and (c)
                                                      ------------
the fixtures, machinery, equipment and other property described in Exhibit "B"
                                                                   ----------
hereto (collectively, the "Equipment").
                           ---------

     Certain Definitions.

               "Acquisition Cost" of each of the Related Premises shall mean the
amount set forth opposite such premises on Exhibit "E" hereto.
                                           ----------

               "Additional Rent" shall mean Additional Rent as defined in
Paragraph 7.

               "Affected Premises" shall mean the Affected Premises as defined
in Paragraph 18.

               "Affiliate" of any Person shall mean any Person which shall (1)
control, (2) be under the control of, or (3) be under common control with such
Person (the term "control" as used herein shall be deemed to mean ownership of
more than 50% of the outstanding voting stock of a corporation, or other
majority equity and control interest if such Person is not a corporation.

               "Alterations" shall mean all changes, additions, improvements or
repairs to, all alterations, reconstructions, renewals, replacements or removals
of and all substitutions or replacements for any of the Improvements or
Equipment, both interior and exterior, structural and non-structural, and
ordinary and extraordinary.

               "Appurtenances" shall mean all tenements, hereditaments,
easements, rights-of-way, rights, privileges in and to the Land, including (a)
easements over other lands granted by any Easement Agreement and (b) any
streets, sidewalks, driveways, curbs, ways, alleys, vaults, gores or strips of
land adjoining the Land.

               "Assignment" shall mean any assignment of rents and leases from
Landlord to a Lender which (a) encumbers any of the Leased Premises and (b)
secures Landlord's obligation to repay a Loan, as the same may be amended,
supplemented or modified from time to time.

               "Basic Rent" shall mean Basic Rent as defined in Paragraph 6.

               "Basic Rent Payment Dates" shall mean the Basic Rent Payment
Dates as defined in Paragraph 6.

               "Casualty" shall mean any damage to or destruction of or which
affects the Leased Premises.

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               "Commencement Date" shall mean Commencement Date as defined in
Paragraph 5.

               "Condemnation" shall mean a Taking.

               "Condemnation Notice" shall mean notice or knowledge of the
institution of or intention to institute any proceeding for Condemnation.

               "Costs" of a Person or associated with a specified transaction
shall mean all reasonable costs and expenses incurred by such Person or
associated with such transaction, including without limitation, attorneys' fees
and expenses, court costs, brokerage fees, escrow fees, title insurance
premiums, mortgage commitment fees, mortgage points, recording fees and transfer
taxes, as the circumstances require.

               "Covenants" shall mean the covenants and agreements described on
Exhibit "G" hereto.
----------

               "CPI" shall mean CPI as defined in Exhibit "D" hereto.
                                                  ----------

               "Default Rate" shall mean the Default Rate as defined in
Paragraph 7(a)(iv).

               "Default Termination Amount" shall mean the Default Termination
Amount as defined in Paragraph 23(a)(iii).

               "Easement Agreement" shall mean any conditions, covenants,
restrictions, easements, declarations, licenses and other agreements listed as
Permitted Encumbrances or as may hereafter affect any Related Premises.

               "Environmental Law" shall mean (I) whenever enacted or
promulgated, any applicable federal, state, foreign and local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any governmental entity, (x) relating to pollution (or the cleanup thereof), or
the protection of air, water vapor, surface water, groundwater, drinking water
supply, land (including land surface or subsurface), plant, aquatic and animal
life from injury caused by a Hazardous Substance or (y) concerning exposure to,
or the use, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, handling, labeling,
production, disposal or remediation of any Hazardous Substance, Hazardous
Condition or Hazardous Activity, in each case as amended and as now or hereafter
in effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations or
injuries or damages due to or threatened as a result of the presence of,
exposure to, or ingestion of, any Hazardous Substance. The term Environmental
Law includes, without limitation, the federal Comprehensive Environmental
Response Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the federal Water Pollution Control Act, the federal Clean
Air Act, the federal Clean Water Act, the federal Resources Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to
RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance Control
Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal
Occupational Safety and Health Act of 1970, the federal National Environmental
Policy Act and the federal Hazardous Materials Transportation Act, each as
amended and as now or hereafter in effect and any similar state or local Law.

               "Environmental Violation" shall mean (a) any direct or indirect
discharge, disposal, spillage, emission, escape, pumping, pouring, injection,
leaching, release, seepage, filtration or transporting of any Hazardous
Substance at, upon, under, onto or within the Leased

                                       2
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Premises, or from the Leased Premises to the environment, in violation of any
Environmental Law or in excess of any reportable quantity established under any
Environmental Law or which could result in any liability to Landlord, Tenant or
Lender, any Federal, state or local government or any other Person for the costs
of any removal or remedial action or natural resources damage or for bodily
injury or property damage, (b) any deposit, storage, dumping, placement or use
of any Hazardous Substance at, upon, under or within the Leased Premises in
violation of any Environmental Law or in excess of any reportable quantity
established under any Environmental Law or which could result in any liability
to any Federal, state or local government or to any other Person for the costs
of any removal or remedial action or natural resources damage or for bodily
injury or property damage, (c) the abandonment or discarding of any barrels,
containers or other receptacles containing any Hazardous Substances in violation
of any Environmental Laws, (d) any activity, occurrence or condition which could
result in any liability, cost or expense to Landlord or Lender or any other
owner or occupier of the Leased Premises, or which could result in a creation of
a lien on any Related Premises under any Environmental Law or (e) any violation
of or noncompliance with any Environmental Law.

               "Equipment" shall mean the Equipment as defined in Paragraph 1.

               "Event of Default" shall mean an Event of Default as defined in
Paragraph 22(a).

               "Fair Market Value" of either the Leased Premises or any Related
Premises, as the case may be, and the context may require, shall mean the higher
of (a) the fair market value of the Leased Premises or any Related Premises, as
the case may be, as of the Relevant Date as if unaffected and unencumbered by
this Lease or (b) the fair market value of the Leased Premises or Related
Premises, as the case may be, as of the Relevant Date as affected and encumbered
by this Lease and assuming that the Term has been extended for all extension
periods provided for herein. For all purposes of this Lease, Fair Market Value
shall be determined in accordance with the procedure specified in Paragraph 29.

               "Fair Market Value Date" shall mean the date when the Fair Market
Value is determined in accordance with Paragraph 29.

               "Federal Funds" shall mean federal or other immediately available
funds which at the time of payment are legal tender for the payment of public
and private debts in the United States of America.

               "Hazardous Activity" means any activity, process, procedure or
undertaking which directly or indirectly (i) procures, generates or creates any
Hazardous Substance; (ii) causes or results in (or threatens to cause or result
in) the release, seepage, spill, leak, flow, discharge or emission of any
Hazardous Substance into the environment (including the air, ground water,
watercourses or water systems), (iii) involves the containment or storage of any
Hazardous Substance; or (iv) would cause any of the Leased Premises or any
portion thereof to become a hazardous waste treatment, recycling, reclamation,
processing, storage or disposal facility within the meaning of any Environmental
Law.

               "Hazardous Condition" means any condition which would support any
claim or liability under any Environmental Law, including the presence of
underground storage tanks.

               "Hazardous Substance" means (i) any substance, material, product,
petroleum, petroleum product, derivative, compound or mixture, mineral
(including asbestos), chemical, gas, medical waste, or other pollutant, in each
case whether naturally occurring, man-made or the by-product of any process,
that is toxic, harmful or hazardous or acutely hazardous

                                       3
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to the environment or public health or safety or (ii) any substance supporting a
claim under any Environmental Law, whether or not defined as hazardous as such
under any Environmental Law. Hazardous Substances include, without limitation,
any toxic or hazardous waste, pollutant, contaminant, industrial waste,
petroleum or petroleum-derived substances or waste, radon, radioactive
materials, asbestos, asbestos containing materials, urea formaldehyde foam
insulation, lead, polychlorinated biphenyls.

               "Impositions" shall mean the Impositions as defined in Paragraph
9(a).

               "Improvements" shall mean the Improvements as defined in
Paragraph 1.

               "Indemnitee" shall mean an Indemnitee as defined in Paragraph 15.

               "Insurance Requirements" shall mean the requirements of all
insurance policies maintained in accordance with this Lease.

               "Land" shall mean the Land as defined in Paragraph 1.

               "Law" shall mean any constitution, statute, rule of law, code,
ordinance, order, judgment, decree, injunction, rule, regulation, policy,
requirement or administrative or judicial determination, even if unforeseen or
extraordinary, of every duly constituted governmental authority, court or
agency, now or hereafter enacted or in effect.

               "Lease" shall mean this Lease Agreement.

               "Lease Year" shall mean, with respect to the first Lease Year,
the period commencing on the Commencement Date and ending at midnight on the
last day of the twelfth (12th) consecutive calendar month following the month in
which the Commencement Date occurred, and each succeeding twelve (12) month
period during the Term.

               "Leased Premises" shall mean the Leased Premises as defined in
Paragraph 1.

               "Legal Requirements" shall mean the requirements of all present
and future Laws
(including but not limited to Environmental Laws and Laws related to
accessibility to, usability by, and discrimination against, disabled
individuals) and all covenants, restrictions and conditions now or hereafter of
record which may be applicable to Tenant or to any of the Related Premises, or
to the use, manner of use, occupancy, possession, operation, maintenance,
alteration, repair or restoration of any of the Related Premises, even if
compliance therewith necessitates structural changes or improvements or results
in interference with the use or enjoyment of any of the Leased Premises or
requires Tenant to carry insurance other than as required by this Lease.

               "Lender" shall mean any person or entity (and its respective
successors and assigns) which may, on or after the date hereof, make a Loan to
Landlord or be the holder of a Note.

               "Loan" shall mean any loan made by one or more Lenders to
Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by
a Note.

               "Monetary Obligations" shall mean Rent and all other sums payable
by Tenant under this Lease to Landlord, to any third party on behalf of Landlord
or to any Indemnitee.

               "Mortgage" shall mean any mortgage or deed of trust from Landlord
to a Lender which (a) encumbers any of the Leased Premises and (b) secures
Landlord's obligation to repay a Loan, as the same may be amended, supplemented
or modified.

               "Net Award" shall mean (a) the entire award payable to Landlord
or Lender by reason of a Condemnation whether pursuant to a judgment or by
agreement or otherwise, or (b) the entire proceeds of any insurance required
under clauses (i), (ii) (to the extent

                                       4
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payable to Landlord or Lender), (iv), (v) or (vi) of Paragraph 16(a), as the
case may be, less any expenses incurred by Landlord and Lender in collecting
such award or proceeds.

               "Non-Preapproved Assignee" shall have the meaning set forth in
Paragraph 21.

               "Non-Preapproved Assignment" shall have the meaning set forth in
Paragraph 21.

               "Note" shall mean any promissory note evidencing Landlord's
obligation to repay a

Loan, as the same may be amended, supplemented or modified.

               "Offer Amount" shall mean the greater of (a) the sum of the Fair
Market Value of the Leased Premises or Sale Premises as of the Relevant Date and
the applicable Prepayment Premium which Landlord will be required to pay in
prepaying any Loan with proceeds of any such Offer Amount or (b) the sum of the
Acquisition Cost and the applicable Prepayment Premium which Landlord will be
required to pay in prepaying any Loan with proceeds of any such Offer Amount.

               "Partial Casualty" shall mean any Casualty which does not
constitute a Termination Event.

               "Partial Condemnation" shall mean any Condemnation which does not
constitute a Termination Event.

               "Permitted Encumbrances" shall mean those covenants,
restrictions, reservations, liens, conditions and easements and other
encumbrances, other than any Mortgage or Assignment, listed on Exhibit "C"
                                                               ----------
hereto (but such listing shall not be deemed to revive any such encumbrances
that have expired or terminated or are otherwise invalid or unenforceable).

               "Person" shall mean an individual, partnership, association,
corporation or other entity.

               "Preapproved Assignee" shall have the meaning set forth in
Paragraph 21.

               "Preapproved Assignment" shall have the meaning set forth in
Paragraph 21.

               "Preapproved Sublet" shall have the meaning set forth in
Paragraph 21.

               "Prepayment Premium" shall mean any payment required to be made
by Landlord to a Lender under a Note or other document evidencing or securing a
Loan (other than payments of principal and/or interest which Landlord is
required to make under a Note or a Mortgage) solely by reason of any prepayment
by Landlord of any principal due under a Note or Mortgage, and which may,
without limitation, take the form of (i) a "make whole" or yield maintenance
clause requiring a prepayment premium or (ii) a defeasance payment (such
defeasance payment to be an amount equal to the positive difference between (a)
the total amount required to defease a Loan and (b) the outstanding principal
balance of the Loan as of the date of such defeasance plus reasonable Costs of
Landlord and Lender; provided that, Landlord shall in good faith endeavor to
obtain a Loan with then customary market terms and conditions with respect to
any such Prepayment Premium.

               "Present Value" of any amount shall mean such amount discounted
by a rate per annum which is the lower of (a) the Prime Rate at the time such
present value is determined or (b) seven percent (7%) per annum.

               "Prime Rate" shall mean the interest rate per annum as published,
from time to time, in The Wall Street Journal as the "Prime Rate" in its column
entitled "Money Rate". The Prime Rate may not be the lowest rate of interest
charged by any "large U.S. money center commercial banks" and Landlord makes no
representations or warranties to that effect. In the

                                       5
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event The Wall Street Journal ceases publication or ceases to publish the "Prime
Rate" as described above, the Prime Rate shall be the average per annum discount
rate (the "Discount Rate") on ninety-one (91) day bills ("Treasury Bills")
issued from time to time by the United States Treasury at its most recent
auction, plus three hundred (300) basis points. If no such 91-day Treasury Bills
are then being issued, the Discount Rate shall be the discount rate on Treasury
Bills then being issued for the period of time closest to ninety-one (91) days.

               "Related Premises" shall mean any one of the Tacoma Premises,
West Jordan Premises, Perris Premises, and Eugene Premises.

               "Relevant Amount" shall mean the Termination Amount or the
Default Termination Amount, as the case may be.

               "Relevant Date" shall mean (a) the date immediately prior to the
date on which the applicable Condemnation Notice is received, in the event of a
Termination Notice under Paragraph 18 which is occasioned by a Taking, (b) the
date immediately prior to the date on which the applicable Casualty occurs, in
the event of a Termination Notice under Paragraph 18 which is occasioned by a
Casualty, (c) the date when Fair Market Value is redetermined, in the event of a
redetermination of Fair Market Value pursuant to Paragraph 20(c), (d) the date
immediately prior to the Event of Default giving rise to the need to determine
Fair Market Value in the event Landlord provides Tenant with notice of its
intention to require Tenant to make a termination offer under Paragraph
23(a)(iii) and (e) the date that Tenant delivers an Option Notice to Landlord
pursuant to Paragraph 38 hereof.

               "Remaining Premises" shall mean the Related Premises which are
not Affected Premises under Paragraph 18.

               "Renewal Term" shall mean Renewal Term as defined in Paragraph 5.

               "Rent" shall mean, collectively, Basic Rent and Additional Rent.

               "Security Deposit" shall mean Security Deposit as defined in
Paragraph 36.

               "Site Assessment" shall mean a Site Assessment as defined in
Paragraph 10(c). "State" shall mean, with respect to each Related Premises, the
State or Commonwealth in which the applicable Related Premises is located.

               "Surviving Obligations" shall mean any obligations of Tenant
under this Lease, actual or contingent, which arise on or prior to the
expiration or prior termination of this Lease or which survive such expiration
or termination by their own terms.

               "Taking" shall mean any taking of all or a portion of any of the
Leased Premises (i) in or by condemnation or other eminent domain proceedings
pursuant to any Law, general or special, or (ii) by reason of any agreement with
any condemnor in settlement of or under threat of any such condemnation or other
eminent domain proceeding, or (iii) by any other means effectuated by a
governmental or quasi-governmental authority under applicable Law. The Taking
shall be considered to have taken place as of the later of the date actual
physical possession is taken by the condemnor, or the date on which the right to
compensation and damages accrues under the law applicable to the Related
Premises.

               "Term" shall mean the Term as defined in Paragraph 5.

               "Termination Amount" shall mean the greater of (a) the sum of the
Fair Market Value and the applicable Prepayment Premium which Landlord will be
required to pay in prepaying any Loan with proceeds of the Termination Amount or
(b) the sum of the Acquisition

                                       6
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Cost and the applicable Prepayment Premium which Landlord will be required to
pay in prepaying any Loan with proceeds of the Termination Amount.

               "Termination Date" shall mean the Termination Date as defined in
Paragraph 18.

               "Termination Event" shall mean a Termination Event as defined in
Paragraph 18.

               "Termination Notice" shall mean Termination Notice as defined in
Paragraph 18(a).

               "Third Party Purchaser" shall mean the Third Party Purchaser as
defined in Paragraph 21(g).

               "Warrant Agreement" shall mean the Warrant Agreement by and
between Tenant and Landlord, dated as of the date of this Lease.

               "Warranties" shall mean Warranties as defined in Paragraph 3(e).

     Title and Condition.
     -------------------

     The Leased Premises are demised and let subject to (i) the rights of any
Persons in possession of the Leased Premises, (ii) the existing state of title
of any of the Leased Premises, including any Permitted Encumbrances, (iii) any
state of facts which an accurate survey or physical inspection of the Leased
Premises might show, (iv) all Legal Requirements, including any existing
violation of any thereof, and (v) the condition of the Leased Premises as of the
commencement of the Term, without representation or warranty by Landlord.

     Tenant acknowledges that Tenant has been and shall remain (subject to
Tenant's assignment and subletting rights in Paragraph 21) in physical
possession of the Leased Premises and that the Leased Premises are in good
condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL
LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS WHERE IS AND WITH
                                                         -----
ALL FAULTS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD
HEREUNDER OR IN ANY OTHER CAPACITY) HAS NOT MADE AND WILL NOT MAKE, NOR SHALL
LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, INCLUDING ANY WARRANTY OR
REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE
OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE
EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD'S TITLE THERETO, (v)
VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix)
CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii)
DURABILITY (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, OR
(xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND
ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT
THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE
LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND ARE SATISFACTORY TO IT. IN THE
EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE,
WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO OR FOR ANY

                                       7
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INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE
PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A
COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE
UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING
OTHERWISE.

     Tenant represents to Landlord that Tenant has examined the title to the
Leased Premises prior to the execution and delivery of this Lease and has found
the same to be satisfactory for the purposes contemplated hereby. Tenant
acknowledges that (i) fee simple title (both legal and equitable) to the Leased
Premises is in Landlord and that Tenant has only the leasehold right of
possession and use of the Leased Premises as provided herein, (ii) the
Improvements conform to all material Legal Requirements and all Insurance
Requirements, (iii) all easements necessary or appropriate for the use or
operation of the Leased Premises have been obtained, (iv) all contractors and
subcontractors who have performed work on or supplied materials to the Leased
Premises have been fully paid or are being paid on a current basis as such work
progresses, and all materials and supplies have been fully paid for or are being
paid on a current basis, (v) the Improvements have been fully completed in all
material respects in a workmanlike manner, and (vi) all Equipment necessary or
appropriate for the current use or operation of the Leased Premises has been
installed and is presently operative in all material respects.

     Landlord and Tenant agree that it is their mutual intent to create, and
that this Lease constitutes, a master lease with respect to each and every
parcel of Land, and all Improvements and Equipment therein including any and all
of the Leased Premises (wherever located), that this Lease is not intended and
shall not be construed to be separate leases and that all the terms and
conditions hereof shall govern the rights and obligations of Landlord and Tenant
with respect thereto. Any Event of Default hereunder in connection with any
Leased Premises shall be deemed to be an Event of Default with respect to the
entire Leased Premises (wherever located).

     Landlord hereby assigns to Tenant, without recourse or warranty whatsoever,
all assignable warranties, guaranties, indemnities and similar rights
(collectively "Warranties") which Landlord may have against any manufacturer,
               ----------
seller, engineer, contractor or builder in respect of any of the Leased
Premises. Such assignment shall remain in effect until the expiration or earlier
termination of this Lease, whereupon such assignment shall cease and all of said
Warranties, guaranties, indemnities and other rights shall automatically revert
to Landlord. In confirmation of such reversion Tenant shall execute and deliver
promptly any certificate or other document reasonably required by Landlord.
Landlord shall also retain the right to enforce any guaranties upon the
occurrence and during the continuance of an Event of Default. Tenant shall
enforce all Warranties in accordance with their respective terms.

     Use of Leased Premises; Quiet Enjoyment.
     ---------------------------------------

     Tenant may occupy and use the Leased Premises for industrial/manufacturing
and related warehousing and distribution and for office use incidental thereto,
except that the Eugene Premises shall be used solely for general, executive and
administrative offices and uses incidental thereto, and for no other purpose
without the prior written consent of Landlord, which

                                       8
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consent shall not be unreasonably withheld; provided that, in no event shall
Tenant shall use or occupy or permit any of the Leased Premises to be used or
occupied, nor do or permit anything to be done in or on any of the Leased
Premises, in a manner which would or is likely to (i) violate any Law or Legal
Requirement, (ii) make void or voidable or cause any insurer to cancel any
insurance required by this Lease, or make it difficult or impossible to obtain
any such insurance at then current commercially reasonable rates for the uses
permitted hereunder, (iii) make void or voidable, cancel or cause to be
cancelled or release any of the Warranties, (iv) cause structural injury to any
of the Improvements or (v) constitute a public or private nuisance or waste and,
in the case of any such use wherein any of clauses (i)-(v) hereof are
applicable, Landlord's consent may be granted or withheld in Landlord's sole and
absolute discretion.

     Subject to the provisions hereof, so long as no Event of Default has
occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the
Leased Premises throughout the Term, without any hindrance, ejection or
molestation by Landlord with respect to matters that arise after the date
hereof, provided that Landlord or its agents may enter upon and examine any of
the Leased Premises at such reasonable times as Landlord may select and upon
reasonable notice as required under Paragraph 24 (but not less than 24 hours) to
Tenant (except in the case of any emergency, in which event no notice shall be
required) for the purpose of inspecting the Leased Premises, verifying
compliance or non-compliance by Tenant with its obligations hereunder and the
existence or non-existence of an Event of Default or event which with the
passage of time and/or notice would constitute an Event of Default, showing the
Leased Premises to prospective Lenders and purchasers and taking such other
action with respect to the Leased Premises as is permitted by any provision
hereof.

     Term.
     ----

     Subject to the provisions hereof, Tenant shall have and hold the Leased
Premises for an initial term (such term, as extended or renewed in accordance
with the provisions hereof, being called the "Term") commencing on the date
                                              ----
hereof (the "Commencement Date") and ending on the last day of the two hundred
             -----------------
fortieth (240th)calendar month next following the date hereof (the "Expiration
                                                                    ----------
Date").
----

     Provided that if, on or prior to the Expiration Date or any other Renewal
Date (as hereinafter defined) this Lease shall not have been terminated pursuant
to any provision hereof, then on the Expiration Date and on the tenth (10th)
anniversary of the Expiration Date (each of the Expiration Date and such
anniversary being referred to herein as a "Renewal Date"), the Term shall be
                                           ------------
deemed to have been automatically extended for an additional period of ten (10)
years (each such extension, a "Renewal Term"), unless Tenant shall notify
                               ------------
Landlord in writing at least eighteen (18) months prior to the next Renewal Date
that Tenant is terminating this Lease as of the next Renewal Date. Any such
extension of the Term shall be subject to all of the provisions of this Lease,
as the same may be amended, supplemented or modified (except that Tenant shall
not have the right to any further Renewal Terms).

     If Tenant exercises its option pursuant to Paragraph 5(b) not to have the
Term automatically extended, or if an Event of Default occurs and is continuing,
then Landlord shall have the right during the remainder of the Term then in
effect and, in any event, Landlord shall have the right during the last year of
the Term, to (i) advertise the availability of any of the Leased Premises for

                                       9
<PAGE>

sale or reletting and to erect upon any of the Leased Premises signs reasonably
acceptable to Tenant indicating such availability and (ii) show any of the
Leased Premises to prospective purchasers or tenants or their agents at such
reasonable times as Landlord may select upon reasonable notice in accordance
with Paragraph 24 (but not less than 24 hours) to Tenant .

     Basic Rent. Tenant shall pay to Landlord, as annual rent for the Leased
     ----------
Premises during the Term, the amounts determined in accordance with Exhibit "D"
                                                                    ----------
hereto ("Basic Rent"), commencing on the twenty-fifth day of March, 2002 (the
         ----------
"First Full Basic Rent Payment Date") and continuing on the same day of each
 ----------------------------------
March, June, September and December thereafter during the Term (each such day
being a "Basic Rent Payment Date"). Each such rental payment shall be made, at
         -----------------------
Landlord's sole discretion, (a) to Landlord at its address set forth above
and/or to such one or more other Persons, at such addresses and in such
proportions as Landlord may direct by fifteen (15) days' prior written notice to
Tenant (in which event Tenant shall give Landlord notice of each such payment
concurrent with the making thereof), and (b) by a check hand delivered at least
five (5) business days before or mailed at least ten (10) days before the
applicable Basic Rent Payment Date, or wire transfer in Federal Funds on the
applicable Basic Rent Payment Date. Pro rata Basic Rent for the period from the
date hereof through the twenty-fourth day of March, 2002 shall be paid on the
date hereof, and pro rata Basic Rent for the period from the twenty-fifth day of
the last month of the Term through the last day of the last month of the Term
shall be paid with the final quarterly installment of Basic Rent.

     Additional Rent.
     ---------------

     Tenant shall pay and discharge, as additional rent (collectively,
"Additional Rent"):
 ---------------

     except as otherwise specifically provided herein (including, without
limitation, Paragraphs 20 and 31), all costs and expenses of Tenant, Landlord
and any other Persons specifically referenced herein which are incurred in
connection or associated with (A) the ownership, use, non-use, occupancy,
monitoring, possession, operation, condition, design, construction, maintenance,
alteration, repair or restoration of any of the Leased Premises, (B) the
performance of any of Tenant's obligations under this Lease, (C) any sale or
other transfer of any of the Leased Premises to Tenant under this Lease,
including costs and expenses incurred in connection with the payment of a
Prepayment Premium, (D) any Condemnation proceedings, (E) the adjustment,
settlement or compromise of any insurance claims involving or arising from any
of the Leased Premises, (F) the prosecution, defense or settlement of any
litigation involving or arising from any of the Leased Premises, this Lease, or
the sale of the Leased Premises to Landlord, (G) the exercise or enforcement by
Landlord, its successors and assigns, of any of its rights under this Lease, (H)
any amendment to or modification or termination of this Lease made at the
request of Tenant, (I) Costs of Landlord's counsel and reasonable internal Costs
of Landlord incurred in connection with the preparation, negotiation and
execution of this Lease, or incurred in connection with any act undertaken by
Landlord (or its counsel) at the request of Tenant, or incurred in connection
with any act of Landlord performed on behalf of Tenant, and (J) the reasonable
internal Costs of Landlord incurred in connection with any act undertaken by
Landlord at the request of Tenant or Tenant's failure to act promptly in an
emergency situation and (K) any other items specifically required to be paid by
Tenant under this Lease;

                                       10
<PAGE>

     after the date all or any portion of any installment of Basic Rent is due
and not paid by the applicable Basic Rent Payment Date, an amount equal to five
percent (5%) of the amount of such unpaid installment or portion thereof;
provided, however, that with respect to the first late payment of all or any
portion of any installment of Basic Rent in any Lease Year, the Late Charge
shall not be due and payable unless the Basic Rent has not been paid within five
(5) days' following the due date thereof;

     a sum equal to any additional sums (including any late charge, default
penalties, interest and fees of Lender's counsel) which are payable by Landlord
to any Lender under any Note by reason of Tenant's late payment or non-payment
of Basic Rent or by reason of an Event of Default; and

     interest at the rate (the "Default Rate") of five percent (5%) over the
                                ------------
Prime Rate per annum on the following sums until paid in full: (A) all overdue
installments of Basic Rent from and after the expiration of any applicable
notice and cure period under Paragraph 22(b) of this Lease, (B) all overdue
amounts of Additional Rent relating to obligations which Landlord shall have
paid on behalf of Tenant, from the date of payment thereof by Landlord, and (C)
all other overdue amounts of Additional Rent, from and after the expiration of
any applicable notice and cure period under Paragraph 22(b) of this Lease.

     Tenant shall pay and discharge (i) any Additional Rent referred to in
Paragraph 7(a)(i) when the same shall become due, provided that amounts which
are billed to Landlord or any third party, but not to Tenant, shall be paid
within ten (10) days after Landlord's demand for payment thereof, and (ii) any
other Additional Rent, within ten (10) days after Landlord's demand for payment
thereof.

     In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and (iv)
exceed the maximum amount permitted by applicable Law. In addition, Tenant and
Landlord acknowledge and agree that the amounts due or to become due under
Paragraph 7 (a) (ii), (iii) and (iv) have been specifically negotiated by the
parties hereto and represent that such amounts represent the parties' best
estimate of actual losses, costs and expenses to be suffered by Landlord under
the circumstances meriting the application of such provisions and do not
constitute a penalty.

     Net Lease: Non-Terminability.
     ----------------------------

     This is a net lease and all Monetary Obligations shall be paid without
notice or demand and without set-off, counterclaim, recoupment, abatement,
suspension, deferment, diminution, deduction, reduction or defense
(collectively, a "Set-Off").
                  -------

     This Lease and the rights of Landlord and the obligations of Tenant
hereunder shall not be affected by any event or for any reason or cause
whatsoever foreseen or unforeseen.

     The obligations of Tenant hereunder shall be separate and independent
covenants and agreements, all Monetary Obligations shall continue to be payable
in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and
the obligations of Tenant hereunder shall continue unaffected unless the
requirement to pay or perform the same shall have been terminated pursuant to an
express provision of this Lease. The obligation to pay Rent or amounts equal
thereto shall not be affected by any collection of any amounts by any
governmental body pursuant to a tax lien or otherwise that arises through no
fault of Landlord,

                                       11
<PAGE>

even though such obligation results in the payment of additional amounts
denominated as "rent". All Rent payable by Tenant hereunder shall constitute
"rent" for all purposes (including Section 502(b)(6) of the Federal Bankruptcy
Code).

     Except as otherwise expressly provided herein, Tenant shall have no right
and hereby waives all rights which it may have under any Law (i) to quit,
terminate or surrender this Lease or any of the Leased Premises, or (ii) to any
Set-Off of any Monetary Obligations.

     Payment of Impositions.
     ----------------------

     Tenant shall, before interest or penalties are due thereon, pay and
discharge all taxes (including real and personal property, franchise, sales,
use, gross receipts and rent taxes), all charges for any easement or agreement
maintained for the benefit of any of the Leased Premises, all assessments and
levies, all permit, inspection and license fees, all rents and charges for
water, sewer, utility and communication services relating to any of the Leased
Premises, all ground rents and all other public charges whether of a like or
different nature, even if unforeseen or extraordinary, imposed upon or assessed
against (i) Tenant, (ii) Tenant's possessory interest in the Leased Premises,
(iii) any of the Leased Premises, or (iv) Landlord as a result of or arising in
respect of the acquisition, ownership, occupancy, leasing, use, or possession of
any of the Leased Premises, or the sale of any of the Leased Premises to Tenant
pursuant to this Lease, any activity conducted on any of the Leased Premises, or
the Rent, (collectively, the "Impositions"); provided, that nothing herein shall
                              -----------
obligate Tenant to pay (A) income, excess profits or other taxes of Landlord (or
Lender) which are determined on the basis of Landlord's (or Lender's) net income
or net worth (unless such taxes are in lieu of or a substitute for any other
tax, assessment or other charge upon or with respect to the Leased Premises
which, if it were in effect, would be payable by Tenant under the provisions
hereof or by the terms of such tax, assessment or other charge), (B) any estate,
inheritance, succession, gift or similar tax imposed on Landlord or (C) any
capital gains tax imposed on Landlord in connection with the sale of the Leased
Premises to any Person. If any Imposition may be paid in installments without
same being delinquent, Tenant shall have the option to pay such Imposition in
installments; in such event, Tenant shall be liable only for those installments
which accrue or become due and payable during the Term. Tenant shall prepare and
file all tax reports required by governmental authorities which relate to the
Impositions. Tenant shall deliver to Landlord (1) copies of all settlements and
notices pertaining to the Impositions which may be issued by any governmental
authority within ten (10) days after Tenant's receipt thereof, (2) receipts for
payment of all taxes required to be paid by Tenant hereunder within thirty (30)
days after the due date thereof and (3) receipts for payment of all other
Impositions within ten (10) days after Landlord's request therefor.

     Following the occurrence of an Event of Default, or if Landlord is required
by a Lender, Tenant shall pay to Landlord such amounts (each an "Escrow
                                                                 ------
Payment") monthly or as required by such Lender (but not more often than
-------
monthly) so that there shall be in an escrow account an amount sufficient to pay
the Escrow Charges (as hereinafter defined) as they become due. As used herein,
"Escrow Charges" shall mean real estate taxes and assessments on or with respect
 --------------
to the Leased Premises or payments in lieu thereof and premiums on any insurance
required by this Lease and any reserves for capital improvements, deferred
maintenance, repair and/or tenant improvements and leasing commissions required
by any Lender. Landlord shall, in good faith, determine the amount of the Escrow
Charges (it being agreed that if required by a Lender, such

                                       12
<PAGE>

amount shall equal any corresponding escrow installments required to be paid by
Landlord) and the amount of each Escrow Payment; provided that Landlord shall in
good faith endeavor to obtain from Lender a waiver of Escrow Charges so long as
no Event of Default has occurred under this Lease, Tenant is paying taxes and
insurance premiums as required by this Lease and is maintaining the Leased
Premises in accordance with this Lease; provided further that, with respect to
any such Event of Default that is subsequently cured by Tenant, if Lender does
not require continuing Escrow Payment with respect thereto, then Landlord shall
not require such continuing Escrow Payment. The Escrow Payments may be
commingled with other funds of Landlord or other Persons and no interest thereon
shall be due or payable to Tenant. Landlord shall apply the Escrow Payments to
the payment of the Escrow Charges in such order or priority as Landlord shall
determine or as required by law. If at any time the Escrow Payments theretofore
paid to Landlord shall be insufficient for the payment of the Escrow Charges,
Tenant, within ten (10) days after Landlord's demand therefor, shall pay the
amount of the deficiency to Landlord.]

     Compliance with Laws and Easement Agreements; Environmental Matters.
     -------------------------------------------------------------------

     Tenant shall, at its expense, comply with and conform to, and cause the
Leased Premises and any other Person occupying any part of the Leased Premises
to comply with and conform to, all Insurance Requirements and Legal Requirements
(including all applicable Environmental Laws). Tenant shall not at any time (i)
cause, permit or suffer to occur any Environmental Violation or (ii) permit any
sublessee, assignee or other Person occupying the Leased Premises under or
through Tenant to cause, permit or suffer to occur any Environmental Violation
and, at the request of Landlord or Lender, Tenant shall promptly (x) remediate
or undertake any other appropriate response action to correct any existing
Environmental Violation or (y) obtain a written determination from all
applicable governmental authorities having jurisdiction that no remedial action
is required in connection with such Environmental Violation. Any and all reports
prepared for or by Landlord with respect to the Leased Premises shall be for the
sole benefit of Landlord and Lender and no other Person shall have the right to
rely on any such reports except that to the extent such reports are paid for by
Tenant then, unless prohibited by Lender, Tenant shall be entitled to rely on
such reports, and, in any event, copies of such reports shall be given to Tenant
upon request.

     Tenant, at its sole cost and expense, will at all times promptly and
faithfully abide by, discharge and perform all of the covenants, conditions and
agreements contained in any Easement Agreement on the part of Landlord or the
occupier to be kept and performed thereunder. Tenant will not alter, modify,
amend or terminate any Easement Agreement, give any consent or approval
thereunder, or enter into any new Easement Agreement without, in each case,
prior written consent of Landlord which consent shall not be unreasonably
withheld.

     Upon prior written notice from Landlord, Tenant shall permit such persons
as Landlord may designate ("Site Reviewers") to visit the Leased Premises and
                            --------------
perform, as agents of Tenant, environmental site investigations and assessments
("Site Assessments") on the Leased Premises (i) in connection with any sale,
  ----------------
financing or refinancing of the Leased Premises, (ii) within the six month
period prior to the expiration of the Term, (iii) if required by Lender or the
terms of any credit facility to which Landlord is bound, (iv) if an Event of
Default under this Paragraph 10 then exists, or (v) at any other time that, in
the opinion of Landlord or Lender, a reasonable

                                       13
<PAGE>

basis exists to believe that an Environmental Violation or any condition that
could reasonably be expected to result in any Environmental Violation exists.
Such Site Assessments may include both above and below the ground testing for
Environmental Violations and such other tests as may be necessary, in the
opinion of the Site Reviewers, to conduct the Site Assessments. Tenant shall
supply to the Site Reviewers such historical and operational information
regarding the Leased Premises as may be reasonably requested by the Site
Reviewers to facilitate the Site Assessments, and shall make available for
meetings with the Site Reviewers appropriate personnel having knowledge of such
matters. The cost of performing and reporting Site Assessments under clauses
(ii) and (iv) in all circumstances, and under clauses (i) and (v) if an
Environmental Violation is discovered, shall be paid by Tenant.

     If an Environmental Violation occurs or is found to exist at any Related
Premises and, in Landlord's reasonable judgment, the cost of remediation of, or
other response action with respect to the same is likely to exceed $500,000.00,
then Tenant shall provide to Landlord, within ten (10) days after Landlord's
request therefor, adequate financial assurances that Tenant will effect such
remediation in accordance with applicable Environmental Laws. Such financial
assurances may be a bond or letter of credit satisfactory to Landlord in form
and substance and in an amount equal to or greater than Landlord's reasonable
estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of
the anticipated cost of such remedial action or such other evidence reasonably
acceptable to Landlord of Tenant's ability to pay the Costs of such remedial
action.

     Notwithstanding any other provision of this Lease, if an Environmental
Violation occurs or is found to exist and the Term would otherwise terminate or
expire, then, at the option of Landlord, the Term shall be automatically
extended beyond the date of termination or expiration and this Lease shall
remain in full force and effect beyond such date until the earlier to occur of
(i) the completion of all remedial action in accordance with applicable
Environmental Laws, (ii) the receipt by Landlord of a written determination from
all applicable governmental authorities having jurisdiction over the Leased
Premises that either no remedial action is required or that no further action is
required in connection with such Environmental Violation or (iii) the date
specified in a written notice from Landlord to Tenant terminating this Lease.

     If Tenant shall be in default under this Lease beyond any applicable notice
and cure period with respect to the failure to comply with any requirement of
any Environmental Law in connection with any Environmental Violation which
occurs or is found to exist, Landlord shall have the right (but no obligation)
to take any and all actions as Landlord shall deem necessary or advisable in
order to cure such Environmental Violation.

     Tenant shall notify Landlord immediately after becoming aware of any
Environmental Violation (or alleged Environmental Violation) or noncompliance
with any of the covenants contained in this Paragraph 10 and shall forward to
Landlord immediately upon receipt thereof copies of all orders, reports,
notices, permits, applications or other communications relating to any such
violation or noncompliance.

     All future leases, subleases or concession agreements relating to the
Leased Premises entered into by Tenant shall contain covenants of the other
party thereto which are identical to the covenants contained in this Paragraph
10.

                                      -14-
<PAGE>

     Liens; Recording.
     ----------------

     Tenant shall not, directly or indirectly, create or permit to be created or
to remain and shall promptly discharge or remove any lien, levy or encumbrance
on any of the Leased Premises or on any Rent or any other sums payable by Tenant
under this Lease, other than any Mortgage or Assignment, the Permitted
Encumbrances and any mortgage, lien, encumbrance or other charge created by or
resulting solely from any act or omission of Landlord. NOTICE IS HEREBY GIVEN
THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED
PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS' OR OTHER LIENS FOR ANY
SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF
LANDLORD IN AND TO ANY OF THE LEASED PREMISES. LANDLORD MAY AT ANY TIME POST ANY
NOTICES ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD
(including any notice permitted by or required for compliance with, ORS 87.030).

     Tenant shall execute, deliver and record, file or register (collectively,
"record") all such instruments as may be required or permitted by any present or
future Law in order to evidence the respective interests of Landlord and Tenant
in any of the Leased Premises, and shall cause a memorandum of this Lease (or,
if such a memorandum cannot be recorded, this Lease), and any supplement hereto
or thereto, to be recorded in such manner and in such places as may be required
or permitted by any present or future Law in order to protect the validity and
priority of this Lease.

     Maintenance and Repair.
     ----------------------

     Tenant shall at all times maintain each Related Premises in as good repair
and appearance as each is in on the date hereof and fit to be used for their
intended use in accordance with the better of the practices generally recognized
as then acceptable by other companies in its industry or observed by Tenant with
respect to the other real properties owned or operated by it, and, in the case
of the Equipment, in as good mechanical condition as it was on the later of the
date hereof or the date of its installation, except for ordinary wear and tear.
Tenant shall take every other action necessary or appropriate for the
preservation and safety of each Related Premises. Tenant shall promptly make all
Alterations of every kind and nature, whether foreseen or unforeseen, which may
be required to comply with the foregoing requirements of this Paragraph 12(a).
Landlord shall not be required to make any Alteration, whether foreseen or
unforeseen, or to maintain any of the Related Premises in any way, and Tenant
hereby expressly waives any right which may be provided for in any Law now or
hereafter in effect to make Alterations at the expense of Landlord or to require
Landlord to make Alterations, including with respect to the Perris Premises,
California Civil Code Sections 1941 an 1942. Any Alteration made by Tenant
pursuant to this Paragraph 12 shall be made in conformity with the provisions of
Paragraph 13.

     If any Improvement, now or hereafter constructed, shall (i) encroach upon
any setback or any property, street or right-of-way adjoining any of the Leased
Premises, (ii) violate the provisions of any restrictive covenant affecting any
of the Leased Premises, (iii) hinder or obstruct any easement or right-of-way to
which any of the Leased Premises is subject or (iv) impair the rights

                                      -15-
<PAGE>

of others in, to or under any of the foregoing, Tenant shall, promptly after
receiving notice or otherwise acquiring knowledge thereof, either (A) obtain
from all necessary parties waivers or settlements of all claims, liabilities and
damages resulting from each such encroachment, violation, hindrance, obstruction
or impairment, whether the same shall affect Landlord, Tenant or both, or (B)
take such action as shall be necessary to remove all such encroachments,
hindrances or obstructions and to end all such violations or impairments,
including, if necessary, making Alterations.

     Alterations and Improvements.
     ----------------------------

     Tenant shall have the right, without having obtained the prior written
consent of Landlord and Lender and provided that no Event of Default then
exists, (i) to make non-structural Alterations or a series of related
non-structural Alterations that, as to any such Alterations or series of related
Alterations, do not cost in excess of $250,000.00 with respect to any Related
Premises and (ii) to install Equipment in the Improvements or accessions to the
Equipment at any Related Premises that, as to such Equipment or accessions, do
not cost in excess of $250,000.00, so long as at the time of construction or
installation of any such Equipment or Alterations no Event of Default exists and
the value and utility of the Leased Premises is not diminished thereby. If the
cost of any non-structural Alterations, series of related non-structural
Alterations, Equipment or accessions thereto is in excess of $250,000.00 or if
Tenant desires to make structural Alterations to any Related Premises, the prior
written approval of Landlord and Lender shall be required, which approval shall
not be unreasonably withheld. Tenant shall not construct upon the Land any
additional buildings without having first obtained the prior written consent of
Landlord and Lender, which consent may be granted or withheld by Landlord or
Lender in their sole discretion. Landlord shall have the right to require Tenant
to remove any Alterations performed after the date of this Lease that would
require Landlord's consent under the terms of this Paragraph 13(a) except for
those Alterations required by Law or for which Landlord has agreed in writing
that removal will not be required.

     If Tenant makes any Alterations pursuant to this Paragraph 13 or as
required by Paragraph 12 or 17 (such Alterations and actions being hereinafter
collectively referred to as "Work"), then (i) the market value of the Leased
                             ----
Premises shall not be lessened by any such Work or its usefulness impaired, (ii)
all such Work shall be performed by Tenant in a good and workmanlike manner,
(iii) all such Work shall be expeditiously completed in compliance with all
Legal Requirements, (iv) all such Work shall comply with the requirements of all
insurance policies required to be maintained by Tenant hereunder, (v) if any
such Work involves the replacement of Equipment or parts thereto, all
replacement Equipment or parts shall have a value and useful life equal to the
greater of (A) the value and useful life on the date hereof of the Equipment
being replaced or (B) the value and useful life of the Equipment being replaced
immediately prior to the occurrence of the event which required its replacement
(assuming such replaced Equipment was then in the condition required by this
Lease), (vi) Tenant shall promptly discharge or remove all liens filed against
any of the Leased Premises arising out of such Work, (vii) Tenant shall procure
and pay for all permits and licenses required in connection with any such Work,
(viii) all such Work shall be the property of Landlord and shall be subject to
this Lease, and Tenant shall execute and deliver to Landlord any document
requested by Landlord evidencing the assignment to Landlord of all estate,
right, title and interest (other than the leasehold estate created hereby) of
Tenant or any other Person thereto or therein, and (ix) Tenant shall comply, to
the extent requested by

                                      -16-
<PAGE>

Landlord or required by this Lease, with the provisions of Paragraphs 12(a) and
19(a), whether or not such Work involves restoration of the Leased Premises.

     Permitted Contests. Notwithstanding any other provision of this Lease,
     ------------------
Tenant shall not be required to (a) pay any Imposition, (b) comply with any
Legal Requirement, (c) discharge or remove any lien referred to in Paragraph 11,
13 or 19, or (d) take any action with respect to any encroachment, violation,
hindrance, obstruction or impairment referred to in Paragraph 12(b) (such
non-compliance with the terms hereof being hereinafter referred to collectively
as "Permitted Violations"), so long as at the time of such non-compliance no
    --------------------
Event of Default exists and so long as Tenant shall contest, in good faith, the
existence, amount or validity thereof, the amount of the damages caused thereby,
or the extent of its or Landlord's liability therefor by appropriate proceedings
which shall operate during the pendency thereof to prevent or stay (i) the
collection of, or other realization upon, the Permitted Violation so contested,
(ii) the sale, forfeiture or loss of any of the Leased Premises or any Rent to
satisfy or to pay any damages caused by any Permitted Violation, (iii) any
interference with the use or occupancy of any of the Leased Premises, (iv) any
interference with the payment of any Rent, or (v) the cancellation or increase
in the rate of any insurance policy or a statement by the carrier that coverage
will be denied or (vi) the enforcement or execution of any injunction, order or
Legal Requirement with respect to the Permitted Violation. Upon the request of
Landlord, Tenant shall provide Landlord such security or such assurances as
shall be satisfactory, in Landlord's reasonable judgment, to assure that such
Permitted Violation is corrected, including all Costs, interest and penalties
that may be incurred or become due in connection therewith. While any
proceedings which comply with the requirements of this Paragraph 14 are pending
and any required security is held by Landlord, Landlord shall not have the right
to correct any Permitted Violation thereby being contested unless Landlord is
required by Law to correct such Permitted Violation and Tenant's contest does
not prevent or stay such requirement as to Landlord. Each such contest shall be
promptly and diligently prosecuted by Tenant to a final conclusion, except that
Tenant, so long as the conditions of this Paragraph 14 are at all times complied
with, has the right to attempt to settle or compromise such contest through
negotiations. Tenant shall pay any and all losses, judgments, decrees and Costs
in connection with any such contest and shall, promptly after the final
determination of such contest, fully pay and discharge the amounts which shall
be levied, assessed, charged or imposed or be determined to be payable therein
or in connection therewith, together with all penalties, fines, interest and
Costs thereof or in connection therewith, and perform all acts the performance
of which shall be ordered or decreed as a result thereof. No such contest shall
subject Landlord to the risk of any civil or criminal liability.

     Indemnification.
     ---------------

     Except to the extent arising solely from the negligent acts (but not
omissions or alleged omissions) or willful misconduct of any Indemnitee, Tenant
shall pay, protect, indemnify, defend, save and hold harmless Landlord, Lender
and all other Persons described in Paragraph 30 (each an "Indemnitee") from and
                                                          ----------
against any and all liabilities, losses, damages (including punitive damages),
penalties, Costs (including reasonable attorneys' fees and costs), causes of
action, suits, claims, demands or judgments of any nature whatsoever, howsoever
caused, without regard to the form of action and whether based on strict
liability, gross negligence, negligence or any other theory of recovery at law
or in equity (any of the foregoing, a "Claim"), arising from (i) any matter
                                       -----
pertaining to the acquisition (or the negotiations leading thereto),

                                      -17-
<PAGE>

ownership, leasing, use, non-use, occupancy, operation, management, condition,
design, construction, maintenance, repair or restoration of any of the Leased
Premises, (ii) any casualty in any manner arising from any of the Leased
Premises, whether or not Indemnitee has or should have knowledge or notice of
any defect or condition causing or contributing to said casualty, (iii) any
violation by Tenant of any provision of this Lease, any contract or agreement to
which Tenant is a party, any Legal Requirement or any Permitted Encumbrance or
any encumbrance Tenant consented to or the Mortgage or Assignment or (iv) any
alleged, threatened or actual Environmental Violation, including (A) liability
for response costs and for costs of removal and remedial action incurred by the
United States Government, any state or local governmental unit or any other
Person, or damages from injury to or destruction or loss of natural resources,
including the reasonable costs of assessing such injury, destruction or loss,
incurred pursuant to Section 107 of CERCLA, or any successor section or act or
provision of any similar state or local Law, (B) liability for costs and
expenses of abatement, correction or clean-up, fines, damages, response costs or
penalties which arise from the provisions of any of the other Environmental Laws
and (C) liability for personal injury or property damage arising under any
statutory or common-law tort theory, including damages assessed for the
maintenance of a public or private nuisance or for carrying on of a dangerous
activity; provided that to the extent any Claim is alleged to have resulted in
part from the negligent acts (but not omissions or alleged omissions) or willful
misconduct of Landlord, Tenant shall nevertheless defend Landlord in the first
instance (including any appeals), at Tenant's cost and expense, and Landlord
shall be responsible only for its share of any final non-appealable judicially
determined culpability.

     In case any action or proceeding is brought against any Indemnitee by
reason of any such claim, (i) Tenant may, except in the event of a conflict of
interest or a dispute between Tenant and any such Indemnitee or during the
continuance of an Event of Default, retain its own counsel and defend such
action (it being understood that Landlord may employ counsel of its choice to
monitor the defense of any such action, the reasonable cost of which shall be
paid by Tenant) and (ii) such Indemnitee shall notify Tenant to resist or defend
such action or proceeding by retaining counsel reasonably satisfactory to such
Indemnitee, and such Indemnitee will cooperate and assist in the defense of such
action or proceeding if reasonably requested to do so by Tenant. In the event of
a conflict of interest or dispute or during the continuance of an Event of
Default, Landlord shall have the right to select counsel, and the reasonable
cost of such counsel shall be paid by Tenant.

     The obligations of Tenant under this Paragraph 15 shall survive any
termination, expiration or rejection in bankruptcy of this Lease. Tenant agrees
that it shall not assert any claim or right to industrial insurance immunity
(under Title 51 RCW) if and to the extent any such assertion would be
inconsistent with Landlord's right to indemnification under this Paragraph 15.

     Insurance.
     ---------

     Tenant shall maintain the following insurance on or in connection with the
Leased Premises:

     Insurance against physical loss or damage to the Improvements and Equipment
as provided under a standard "All Risk" property policy including but not
limited to flood (to the extent that a Related Premises is in a flood zone) and
earthquake coverage in amounts not less than the actual replacement cost of the
Improvements and Equipment. Such policies shall contain Replacement

                                      -18-
<PAGE>

Cost and Agreed Amount Endorsements and shall contain deductibles not more than
$25,000 per occurrence for the "All Risk" policy and a deductible of not more
than five percent (5%) of actual replacement cost of the Improvements for the
earthquake policy.

     Commercial General Liability Insurance (including but not limited to
Incidental Medical Malpractice and Host Liquor Liability) and Business
Automobile Liability Insurance (including Non-Owned and Hired Automobile
Liability) against claims for personal and bodily injury, death or property
damage occurring on, in or as a result of the use of the Leased Premises, in an
amount not less than $15,000,000 per occurrence/annual aggregate and all other
coverage extensions that are usual and customary for properties of this size and
type provided, however, that the Landlord shall have the right to require such
higher limits as may be reasonable and customary for properties of this size and
type.

     Worker's compensation insurance covering all persons employed by Tenant in
connection with any work done on or about any of the Leased Premises for which
claims for death, disease or bodily injury may be asserted against Landlord or
Tenant or, in lieu of such Workers' Compensation Insurance, a program of
self-insurance complying with the rules, regulations and requirements of the
appropriate agency of the State or States in which the Leased Premises are
located.

     Comprehensive Boiler and Machinery Insurance on any of the Equipment or any
other equipment on or in the Leased Premises in an amount not less than
$5,000,000 per accident for damage to property. Either such Boiler and Machinery
policy or the All-Risk policy required in (i) above shall include Off-Premises
Service Interruption, Expediting Expenses, Ammonia Contamination, and Hazardous
Materials Clean-up Expense and may contain a deductible not to exceed $25,000.

     Business Interruption and Extra Expense Insurance at limits to cover 100%
of losses and/or expenses incurred over the period of indemnity not less than
twelve (12) months from time of loss. Such insurance shall name Landlord as loss
payee, but only to the extent of the Rent payable to or for the benefit of the
Landlord under this Lease.

     During any period in which substantial Alterations at any Related Premises
are being undertaken, builder's risk insurance covering the total completed
value including any "soft costs" with respect to the Improvements being altered
or repaired (on a completed value, non-reporting basis), replacement cost of
work performed and equipment, supplies and materials furnished in connection
with such construction or repair of Improvements or Equipment, together with
such "soft cost" endorsements and such other endorsements as Landlord may
reasonably require and general liability, workers' compensation and automobile
liability insurance with respect to the Improvements being constructed, altered
or repaired.

     Such other insurance (or other terms with respect to any insurance required
pursuant to this Paragraph 16, including without limitation amounts of coverage,
deductibles, form of mortgagee clause) on or in connection with any of the
Leased Premises as Landlord or Lender may reasonably require and which at the
time is usual and commonly obtained in connection with properties similar in
type of building, size, use and location to the Leased Premises; including,
without limitation, Ordinance or Law Coverage or an "Enforcement" endorsement if
any of the

                                      -19-
<PAGE>

Improvements or the use of any of the Related Premises shall at any time
constitute legal non-conforming structures or uses.

     The insurance required by Paragraph 16(a) shall be written by companies
which have a Best's rating of A:X or above and a claims paying ability assigned
by Standard & Poor's Corporation ("S&P"), or equivalent rating agency approved
by Landlord and Lender, of at least "A", and are legally permitted to write
insurance policies by, the State Insurance Department for the states in which
the Leased Premises are located; provided that, Landlord acknowledges that
Tenant's current insurance company for its flood and earthquake policies has a
Best's rating of A:IX and is not currently rated by S&P and Landlord agrees to
accept such insurance company; provided and on condition that, if Tenant elects
to change its insurance company for its flood and earthquake policies at any
time during the Term of the Lease, then such new insurance company shall either
meet the requirements set forth in the first sentence of this Paragraph 16(b) or
such company shall be reinsured by a reinsurance company that maintains an S&P
rating of at least "A". The insurance policies (i) shall be for such terms as
Landlord may reasonably approve and (ii) shall be in amounts sufficient at all
times to satisfy any coinsurance requirements thereof. The insurance referred to
in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord as Owner and
Lender as loss payee and Tenant as its interest may appear. The insurance
referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional
insureds, and the insurance referred to in Paragraph 16(a)(v) shall name
Landlord as additional insured and Lender and Landlord as loss payee to the
extent of the Rent due under the Lease. If said insurance or any part thereof
shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any
reason, including a breach of any condition thereof by Tenant or the failure or
impairment of the capital of any insurer, or if for any other reason whatsoever
said insurance shall become reasonably unsatisfactory to Landlord, Tenant shall
immediately obtain new or additional insurance reasonably satisfactory to
Landlord.

     Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of
Paragraph 16(a) shall contain industry standard non-contributory mortgagee
clauses in favor of and acceptable to Lender. Each policy required by any
provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it
may not be cancelled substantially modified or allowed to lapse on any renewal
date except after thirty (30) days' prior notice to Landlord and Lender. Each
such policy shall also provide that any loss otherwise payable thereunder shall
be payable notwithstanding (i) any act or omission of Landlord or Tenant which
might, absent such provision, result in a forfeiture of all or a part of such
insurance payment, (ii) the occupation or use of any of the Leased Premises for
purposes more hazardous than those permitted by the provisions of such policy,
(iii) any foreclosure or other action or proceeding taken by Lender pursuant to
any provision of the Mortgage, Note, Assignment or other document evidencing or
securing the Loan upon the happening of an event of default therein or (iv) any
change in title to or ownership of any of the Leased Premises, subject to timely
notification thereof in accordance with the provisions of such policy.

     Tenant shall pay as they become due all premiums for the insurance required
by Paragraph 16(a), and Tenant shall renew or replace each policy and deliver to
Landlord annually evidence of the payment of the full premium within thirty (30)
days prior to the expiration date of such policy, or if paid in installments
then, upon the request of Landlord shall deliver evidence of such

                                      -20-
<PAGE>

payments, and shall promptly deliver to Landlord all original certificates of
insurance or, if required by Lender, original or certified copies of such
policies.

     Anything in this Paragraph 16 to the contrary notwithstanding, any
insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be
carried under a "blanket" or umbrella policy or policies covering other
properties or liabilities of Tenant, provided that such "blanket" or umbrella
policy or policies otherwise comply with the provisions of this Paragraph 16 and
provided further that Tenant shall provide to Landlord a Statement of Values
which shall be reviewed annually and amended as necessary based on Replacement
Cost Valuations. The original or a certified copy of each such "blanket" or
umbrella policy shall promptly be delivered to Landlord.

     Tenant shall have the replacement cost and insurable value of the
Improvements and Equipment determined from time to time as required by the
replacement cost and agreed amount endorsements and shall deliver to Landlord
the new replacement cost and agreed amount endorsement or certificate evidencing
such endorsement promptly upon Tenant's receipt thereof.

     Tenant shall promptly comply with and conform to (i) all provisions of each
insurance policy required by this Paragraph 16 and (ii) all requirements of the
insurers thereunder applicable to Landlord, Tenant or any of the Leased Premises
or to the use, manner of use, occupancy, possession, operation, maintenance,
alteration or repair of any of the Leased Premises, even if such compliance
necessitates Alterations or results in interference with the use or enjoyment of
any of the Leased Premises.

     Tenant shall not carry separate insurance concurrent in form or
contributing in the event of a Casualty with that required in this Paragraph 16
unless (i) Landlord and Lender are included therein as named insureds, with loss
payable as provided herein, and (ii) such separate insurance complies with the
other provisions of this Paragraph 16. Tenant shall immediately notify Landlord
of such separate insurance and shall deliver to Landlord the original policies
or certified copies thereof.

     All policies shall contain effective waivers by the carrier against all
claims for insurance premiums against Landlord and shall contain full waivers of
subrogation against the Landlord.

     All proceeds of any insurance required under Paragraph 16(a) shall be
payable as follows:

     Proceeds payable under clauses (ii), (iii) and (iv) of Paragraph 16(a) and
proceeds attributable to the general liability coverage of Builder's Risk
insurance under clause (vi) of Paragraph 16(a) shall be payable to the Person
entitled to receive such proceeds.

               (ii) Proceeds of insurance required under clause (i) of Paragraph
16(a) and proceeds attributable to Builder's Risk insurance (other than its
general liability coverage provisions) under clause (vi) of Paragraph 16(a)
shall be payable to Landlord or Lender and applied as set forth in Paragraph 17
or, if applicable, Paragraph 18. Tenant shall apply the Net Award to restoration
of the Leased Premises in accordance with the applicable provisions of this
Lease unless a Termination Event shall have occurred and Tenant has given a
Termination Notice.

                                      -21-
<PAGE>

     Casualty and Condemnation.
     --------------------------

          (a) If any Casualty to any of the Related Premises occurs the
insurance proceeds for which are reasonably estimated by Tenant to be equal to
or in excess of Five Hundred Thousand ($500,000) Dollars (or such lesser amount
as Lender may require, but not less than $250,000), Tenant shall give Landlord
and Lender immediate notice thereof. So long as no Event of Default then exists
Tenant is hereby authorized to adjust, collect and compromise all claims under
any of the insurance policies required by Paragraph 16(a) (except public
liability insurance claims payable to a Person other than Tenant, Landlord or
Lender) under the amount of $500,000 (or such lesser amount as Lender may
require, but not less than $250,000) and to execute and deliver on behalf of
Landlord all necessary proofs of loss, receipts, vouchers and releases required
by the insurers and Landlord shall have the right to join with Tenant therein.
Any final adjustment, settlement or compromise of any such claim shall be
subject to the prior written approval of Landlord (not to be unreasonably
withheld), and Landlord shall have the right to prosecute or contest, or to
require Tenant to prosecute or contest, any such claim, adjustment, settlement
or compromise. If an Event of Default then exists, Tenant shall not be entitled
to adjust, collect or compromise any such claim or to participate with Landlord
in any adjustment, collection and compromise of the Net Award payable in
connection with a Casualty. Tenant agrees to sign, upon the request of Landlord,
all such proofs of loss, receipts, vouchers and releases. To the extent required
under Paragraph 16(j), each insurer is hereby authorized and directed to make
payment under said policies, including return of unearned premiums, directly to
Landlord or, if required by the Mortgage, to Lender instead of to Landlord and
Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as
Tenant's attorneys-in-fact to endorse any draft therefor. The rights of Landlord
under this Paragraph 17(a) shall be extended to Lender if and to the extent that
any Mortgage so provides.

          (b) Tenant, immediately upon receiving a Condemnation Notice, shall
notify Landlord and Lender thereof. So long as no Event of Default then exists,
Tenant is authorized to collect, settle and compromise the amount of any Net
Award that is not in excess of $500,000 (or such lesser amount as Lender may
require, but not less than $250,000), and Landlord shall have the right to join
with Tenant therein. If an Event of Default then exists, Landlord shall be
authorized to collect, settle and compromise the amount of any Net Award and
Tenant shall not be entitled to participate with Landlord in any Condemnation
proceeding or negotiations under threat thereof or to contest the Condemnation
or the amount of the Net Award therefor. No agreement with any condemnor in
settlement or under threat of any Condemnation shall be made by Tenant without
the written consent of Landlord, which shall not be unreasonably withheld.
Subject to the provisions of this Paragraph 17(b), Tenant hereby irrevocably
assigns to Landlord any award or payment to which Tenant is or may be entitled
by reason of any Condemnation, whether the same shall be paid or payable for
Tenant's leasehold interest hereunder or otherwise; but nothing in this Lease
shall impair Tenant's right to any award or payment on account of Tenant's trade
fixtures, equipment or other tangible property which is not part of the
Equipment, moving expenses or loss of business, if available, to the extent that
and so long as (i) Tenant shall have the right to make, and does make, a
separate claim therefor against the condemnor and (ii) such claim does not in
any way reduce either the amount of the award otherwise payable to Landlord for
the Condemnation of Landlord's fee interest in the Leased Premises or the amount
of the award (if any) otherwise payable for the Condemnation of

                                      -22-
<PAGE>

Tenant's leasehold interest hereunder. The rights of Landlord under this
Paragraph 17(b) shall also be extended to Lender if and to the extent that any
Mortgage so provides. (c) If any Partial Casualty (whether or not insured
against) or Partial Condemnation shall occur to any Related Premises, this Lease
shall continue, notwithstanding such event, and there shall be no abatement or
reduction of any Monetary Obligations. Promptly after such Partial Casualty or
Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence and
diligently continue to restore the Leased Premises as nearly as possible to
their value, condition and character immediately prior to such event (assuming
the Leased Premises to have been in the condition required by this Lease). So
long as no Event of Default exists, any Net Award up to and including $500,000
(or such lesser amount as Lender may require, but not less than $250,000), shall
be paid by Landlord to Tenant and Tenant shall restore the Leased Premises in
accordance with the requirements of Paragraph 13(b) of this Lease. Any Net Award
in excess of $500,000 (or such lesser amount as Lender may require, but not less
than $250,000), shall (unless such Casualty resulting in the Net Award is a
Termination Event) be made available by Landlord (or Lender if the terms of the
Mortgage so require) to Tenant for the restoration of any of the Leased Premises
pursuant to and in accordance with and subject to the provisions of Paragraph 19
hereof. If any Casualty or Condemnation which is not a Partial Casualty or
Partial Condemnation shall occur, Tenant shall comply with the terms and
conditions of Paragraph 18. If and to the extent applicable, Landlord and Tenant
waive the provisions of California Civil Code Sections 1932 and 1933 and
California Code of Civil Procedure Section 1265.130

     Termination Events.
     ------------------

     If (i) all of any Related Premises shall be taken by a Taking or (ii) any
substantial portion of any Related Premises shall be taken by a Taking or all or
any substantial portion of any Related Premises shall be totally damaged or
destroyed by a Casualty and, in any such case, Tenant certifies and covenants to
Landlord that it will abandon operations of Tenant's business at the applicable
Related Premises for a period of not less than five (5) years from the date of
such Casualty or Taking (any one or all of the Related Premises described in the
above clauses (i) and (ii) above being hereinafter referred to as the "Affected
                                                                       ---------
Premises" and each of the events described in the above clauses (i) and (ii)
--------
shall hereinafter be referred to as a "Termination Event"), then (x) in the case
                                       -----------------
of (i) above, Tenant shall be obligated, within thirty (30) days after Tenant
receives a Condemnation Notice and (y) in the case of (ii) above, Tenant shall
have the option, within forty-five (45) days after Tenant receives a
Condemnation Notice or forty-five (45) days after the Casualty, as the case may
be, to give to Landlord written notice (a "Termination Notice") in the form
                                           ------------------
described in Paragraph 18(b) of the Tenant's election to terminate this Lease as
to the Affected Premises.

     A Termination Notice shall contain (i) notice of Tenant's intention to
terminate this Lease as to the Affected Premises on the first Basic Rent Payment
Date which occurs at least thirty (30) days after the Fair Market Value Date
(the "Termination Date"), (ii) a binding and irrevocable offer of Tenant to pay
      ----------------
the Termination Amount and (iii) if the Termination Event is an event described
in Paragraph 18(a)(ii), the certification and covenant described therein and a
certified resolution of the Board of Directors of Tenant authorizing the same.
Promptly upon the delivery to Landlord of a Termination Notice, Landlord and
Tenant shall commence to determine Fair Market Value.

     If Landlord shall reject such offer to accept payment of the Termination
Amount as to the Affected Premises pursuant to Paragraph 18(b) above by written
notice to Tenant (a "Rejection") which Rejection shall contain the written
                     ---------
consent of Lender to reject Tenant's offer to pay the

                                      -23-
<PAGE>

Termination Amount, not later than thirty (30) days following the Fair Market
Value Date, then this Lease shall terminate as to the Affected Premises on the
Termination Date; provided that, if Tenant has not satisfied all Monetary
Obligations and all other obligations and liabilities under this Lease which
have arisen as to the Affected Premises (collectively, "Remaining Obligations")
                                                        ---------------------
on or prior to the Termination Date, then Landlord may, at its option, extend
the date on which this Lease may terminate as to the Affected Premises to a date
which is no later than the first Basic Rent Payment Date after the Termination
Date on which Tenant has satisfied all Remaining Obligations. Upon such
termination (i) all obligations of Tenant hereunder as to the Affected Premises
shall terminate except for any Surviving Obligations, (ii) Tenant shall
immediately vacate and shall have no further right, title or interest in or to
any of the Affected Premises and (iii) the Net Award shall be retained by
Landlord. Notwithstanding anything to the contrary hereinabove contained, if
Tenant shall have received a Rejection and, on the date when this Lease would
otherwise terminate with respect to the Affected Premises as provided above,
Landlord shall not have received the full amount of the Net Award payable by
reason of the applicable Termination Event through no fault of Landlord, then
the date on which this Lease is to terminate with respect to the Affected
Premises shall be automatically extended to the first Basic Rent Payment Date
after the receipt by Landlord of the full amount of the Net Award provided that,
if Tenant has not satisfied all Remaining Obligations on such date, then
Landlord may, at its option, extend the date on which this Lease may terminate
as to the Affected Premises to a date which is no later than the first Basic
Rent Payment Date after such date on which Tenant has satisfied all such
Remaining Obligations.

     Unless Tenant shall have received a Rejection not later than the thirtieth
(30th) day following the Fair Market Value Date, Landlord shall be conclusively
presumed to have accepted such offer from Tenant to pay the Termination Amount.
If such offer from Tenant to pay the Termination Amount is accepted by Landlord
then, on the Termination Date, Tenant shall pay to Landlord the Termination
Amount and all Remaining Obligations and, if requested by Tenant, Landlord shall
convey to Tenant or its designee the Affected Premises or the remaining portion
thereof, if any, all in accordance with Paragraph 20, together with all of
Landlord's rights or interest in and to the Net Award.

     In the event of the termination of this Lease as to the Affected Premises
as hereinabove provided, (i) this Lease shall remain in full force and effect as
to the Remaining Premises; provided, that the Basic Rent for the Remaining
Premises to be paid after such termination shall be the Basic Rent otherwise
payable hereunder with respect to the Leased Premises multiplied by a percentage
equal to the sum of the percentages set forth on Exhibit "F" for the Remaining
                                                 ----------
Premises and (ii) Tenant shall not have the right or option to purchase such
Related Premises pursuant to Paragraph 38 hereof..

     Restoration.
     -----------

     Landlord (or Lender if required by any Mortgage) shall hold any Net Award
in excess of $500,000 (or such lesser amount as may be required by Lender, but
not less than $250,000) in a fund (the "Restoration Fund") and disburse amounts
                                        ----------------
from the Restoration Fund only in ,accordance with the following conditions:

                                      -24-
<PAGE>

     prior to commencement of restoration, (A) the architects, contracts,
contractors, plans and specifications and a budget for the restoration shall
have been approved by Landlord, which approval shall not be unreasonably
withheld, (B) Landlord and Lender shall be provided with mechanics' lien
insurance (if available) and if the estimated cost of such restoration is in
excess of $1,000,000 then, if requested by Landlord or Lender, acceptable
performance and payment bonds or a letter of credit which insure satisfactory
completion of and payment for the restoration, are in an amount and form and
have a surety or bank, as applicable, acceptable to Landlord, and name Landlord
and Lender as additional dual obligees, and (C) to the extent permitted under
applicable Laws, appropriate waivers of mechanics' and materialmen's liens shall
have been filed;

     at the time of any disbursement, no Event of Default shall exist and no
mechanics' or materialmen's liens shall have been filed against any of the
Leased Premises and remain undischarged or removed of record (by bond or
otherwise);

     disbursements shall be made from time to time in an amount not exceeding
the cost of the work completed since the last disbursement, upon receipt of (A)
satisfactory evidence, including architects' certificates, of the stage of
completion, the estimated total cost of completion and performance of the work
to date in a good and workmanlike manner in accordance with the contracts, plans
and specifications, (B) waivers of liens, (C) the general contractors' sworn
statements as to completed work and the cost thereof for which payment is
requested and the payment of all subcontractors' for work performed to date, (D)
a satisfactory `clean" contingency search of title revealing no intervening
liens or encumbrances and (E) other evidence of cost and payment so that
Landlord and Lender can verify that the amounts disbursed from time to time are
represented by work that is completed, in place and free and clear of mechanics'
and materialmen's lien claims that remain undischarged or removed of record (by
bond or otherwise);

     each request for disbursement shall be accompanied by a certificate of
Tenant, signed by the president or a vice president of Tenant, describing the
work for which payment is requested, stating the cost incurred in connection
therewith, stating that Tenant has not previously received payment for such work
and, upon completion of the work, also stating that the work has been fully
completed and complies with the applicable requirements of this Lease;

     Landlord may retain ten percent (10%) of the Restoration Fund until the
restoration is fully completed;

     the Restoration Fund shall not be commingled with Landlord's other funds
and shall bear interest at a rate agreed to by Landlord and Tenant; and

     such other reasonable conditions as Landlord or Lender may impose.

     Prior to commencement of restoration and at any time during restoration, if
the estimated cost of completing the restoration work free and clear of all
liens, as reasonably determined by Landlord, exceeds the amount of the Net Award
available for such restoration, the amount of such excess shall, upon demand by
Landlord, be paid by Tenant to Landlord to be added to the Restoration Fund. Any
sum so added by Tenant which remains in the Restoration Fund upon completion of
restoration shall be refunded to Tenant. For purposes of determining the source
of

                                      -25-
<PAGE>

funds with respect to the disposition of funds remaining after the completion of
restoration, the Net Award shall be deemed to be disbursed prior to any amount
added by Tenant.

     If any sum remains in the Restoration Fund after completion of the
restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum (the
"Remaining Sum)" shall be retained by Landlord or, if required by a Note or
Mortgage, paid by Landlord to a Lender. If the Remaining Sum is (i) retained by
Landlord, each installment of Basic Rent payable on or after the Retention Date
shall be reduced by a fraction, the denominator of which shall be the total
amount of all Basic Rent due from such date to and including the last Basic Rent
Payment Date for the then existing Term and the numerator of which shall be the
Remaining Sum, or (ii) paid to Lender, then each installment of Basic Rent
thereafter payable shall be reduced in the same amount as payments are reduced
under any Note if the Loan corresponding to such Note is reamortized to reflect
such payment, in each case until such Remaining Sum has been applied in full or
until the Term has expired, whichever occurs first. Upon the expiration of the
Term, any portion of the Remaining Sum which has not been so applied shall be
paid to Tenant.

     Procedures Upon Purchase.
     ------------------------

     If the Leased Premises or any of the Related Premises are purchased by
Tenant pursuant to any provision of this Lease, Landlord need not convey any
better title thereto than that which was conveyed to Landlord, and Tenant or its
designee shall accept such title, subject, however, to the Permitted
Encumbrances and to all other liens, exceptions and restrictions on, against or
relating to any of the Leased Premises or the applicable Related Premises and to
all applicable Laws, but free of the lien of and security interest created by
any Mortgage or Assignment and liens, exceptions and restrictions on, against or
relating to the Leased Premises or the applicable Related Premises which have
been created by or resulted from acts of Landlord after the date of this Lease,
unless the same are Permitted Encumbrances or customary utility easements
benefiting the Leased Premises or were created with the concurrence of Tenant or
as a result of a default by Tenant under this Lease.

     Upon the date fixed for any such purchase of the Leased Premises or any of
the Related Premises pursuant to any provision of this Lease (any such date the
"Purchase Date"), Tenant shall pay to Landlord, or to any Person to whom
--------------
Landlord directs payment, the Relevant Amount therefor specified herein, in
Federal Funds, less a credit to Tenant against the Relevant Amount for any
portion of the Net Award received and retained by Landlord or a Lender against
the Relevant Amount, and Landlord shall deliver to Tenant (i) a special or
limited warranty deed with covenants only as to grantor's acts (in the required
statutory form for such State, if applicable) which describes the premises being
conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such
other instruments as shall be necessary to transfer to Tenant or its designee
any other property (or rights to any Net Award not yet received by Landlord or a
Lender) then required to be sold by Landlord to Tenant pursuant to this Lease
and (iii) any Net Award received by Landlord, not credited to Tenant against the
Relevant Amount and required to be delivered by Landlord to Tenant pursuant to
this Lease; provided, that if any Monetary Obligations remain outstanding on
such date, then Landlord may deduct from the Net Award the amount of such
Monetary Obligations; and further provided, that if Landlord shall have received
written notice of any claim which, in Landlord's reasonable judgment, is likely
to subject any Indemnitee to any liability which Tenant is required to indemnify
against pursuant to

                                      -26-
<PAGE>

Paragraph 15, then an amount shall be deducted from the Net
Award which, in Landlord's reasonable judgment, is sufficient to satisfy such
liability, which amount shall be deposited in an escrow account with a financial
institution reasonably satisfactory to Landlord and Tenant pending resolution of
such matter. If on the Purchase Date any Monetary Obligations remain outstanding
and no Net Award is payable to Tenant by Landlord or the amount of such Net
Award is less than the amount of the Monetary Obligations, then Tenant shall pay
to Landlord on the Purchase Date the amount of such Monetary Obligations. Upon
the completion of such purchase, this Lease and all obligations and liabilities
of Tenant hereunder with respect to the applicable Related Premises (but not
with respect to the Remaining Premises) shall terminate, except any Surviving
Obligations.

     If the completion of such purchase shall be delayed for more than one
hundred eighty (180) days after (i) the Termination Date, in the event of a
purchase pursuant to Paragraph 18 or, (ii) the date scheduled for such purchase,
in the event of a purchase under any other provision of this Lease then (x) Rent
shall continue to be due and payable until completion of such purchase and (y)
at Landlord's sole option, Fair Market Value shall be redetermined and the
Relevant Amount payable by Tenant pursuant to the applicable provision of this
Lease shall be adjusted to reflect such redetermination.

     To the extent required, any warranties previously assigned or sold to
Landlord shall be reassigned or reconveyed to Tenant, and any prepaid Monetary
Obligations paid to Landlord shall be prorated as of the Purchase Date, and the
prorated unapplied balance shall be deducted from the Relevant Amount due to
Landlord; provided, that no apportionment of any Impositions shall be made upon
any such purchase.

     Assignment and Subletting: Prohibition against Leasehold Financing.
     ------------------------------------------------------------------

     Except as otherwise expressly provided to the contrary in this Paragraph
21, Tenant may not, without the prior written consent of Landlord, (i) assign
this Lease, voluntarily or involuntarily, whether by operation of law or
otherwise (including through merger or consolidation) to any Person other than
an Affiliate or a Credit Entity, or (ii) sublet any of the Leased Premises at
any time to any other Person other than an Affiliate or Credit Entity, which
consent may be granted or withheld by Landlord in accordance with the provisions
of Paragraph 21(b) and 21(c) below. Any purported sublease or assignment in
violation of this Paragraph 21 shall be null and void. In addition,
notwithstanding anything to the contrary contained in this Paragraph 21, Tenant
shall not have the right assign this Lease (voluntarily or involuntarily,
whether by operation of law or otherwise), or sublet any of the Leased Premises
to any Person (including any Affiliate or Credit Entity) at any time that an
Event of Default beyond any applicable notice and cure period shall have
occurred and then be continuing under this Lease. As used herein, a "Credit
Entity" shall mean any Person that immediately following such assignment or
subletting will have a publicly traded unsecured senior debt rating of "Baa3" or
better from Moody's Investors Services, Inc. or a rating of "BBB-" or better
from Standard & Poor's Corporation (or, if such Person does not then have rated
debt, a determination that its unsecured senior debt would be so rated by such
rating agencies), and in the event all of such rating agencies cease to furnish
such ratings, then a comparable rating by any rating agency acceptable to
Landlord and Lender.

                                      -27-
<PAGE>

     If Tenant desires to assign this Lease, whether by operation of law or
otherwise, to a Person ("Non-Preapproved Assignee") that is not a Credit Entity
                         ------------------------
or Affiliate ("Non-Preapproved Assignment") then Tenant shall, not less than
               --------------------------
sixty (60) days prior to the date on which it desires to make a Non-Preapproved
Assignment submit to Landlord and Lender information regarding the following
with respect to the Non-Preapproved Assignee (collectively, the "Review
                                                                 ------
Criteria"): (A) credit, (B) capital structure, (C) management, (D) operating
--------
history, (E) proposed use of the Leased Premises and (F) risk factors associated
with the proposed use of the Leased Premises by the Non-Preapproved Assignee,
taking into account factors such as environmental concerns, product liability
and the like. Landlord and Lender shall review such information and shall
approve or disapprove the Non-Preapproved Assignee no later than the thirtieth
(30th) day following receipt of all such information, and Landlord and Lender
shall be deemed to have acted reasonably in granting or withholding consent if
such grant or disapproval is based on their review of the Review Criteria
applying prudent business judgment. If a response is not received by Landlord
and Lender by the expiration of such thirty (30) day period, such
non-Preapproved Assignee shall be deemed disapproved.

     Tenant shall have the right, upon thirty (30) days prior written notice to
Landlord and Lender, to enter into one or more subleases that demise, in the
aggregate, up to, but not to exceed, either (i) twenty five percent (25%) of the
aggregate gross space in the Improvements at the Leased Premises or (ii) the
entirety of any one (1) Related Premises, in either case, with no consent or
approval of Landlord being required or necessary ("Preapproved Sublet"). Other
                                                   ------------------
than pursuant to Preapproved Sublets, at no time during the Term shall subleases
exist for more than twenty five percent (25%) of the aggregate gross space in
the Leased Premises or for more than the entirety of any one (1) Related
Premises without the prior written consent of Landlord, which consent shall not
be unreasonably withheld and shall be granted or withheld based on a review of
the Review Criteria as they relate to the proposed sublessee and the terms of
the proposed sublease.

     If Tenant assigns all its rights and interest under this Lease, the
assignee under such assignment shall expressly assume all the obligations of
Tenant hereunder, actual or contingent, including obligations of Tenant which
may have arisen on or prior to the date of such assignment, by a written
instrument delivered to Landlord at the time of such assignment and each
sublease of any of the Related Premises shall be subject and subordinate to the
provisions of this Lease. Except for an assignment to a Credit Entity, in which
case Tenant shall be released from its obligations under this Lease, (upon a
written request for such release from Tenant to Landlord and upon such
assignee's compliance with the preceding sentence), no assignment or sublease
shall affect or reduce any of the obligations of Tenant hereunder, and all such
obligations shall continue in full force and effect as obligations of a
principal and not as obligations of a guarantor, as if no assignment or sublease
had been made. No assignment or sublease shall impose any additional obligations
on Landlord under this Lease.

     Tenant shall, within ten (10) days after the execution and delivery of any
assignment or sublease, deliver a duplicate original copy thereof to Landlord
which, in the event of an assignment, shall be in recordable form. With respect
to any assignment to an Affiliate or Credit Entity or Preapproved Sublet, Tenant
shall provide to Landlord information reasonably required by Landlord to
establish that the Person involved in any such proposed assignment or sublet
satisfies the criteria set forth in this Lease.

                                      -28-
<PAGE>

     As security for performance of its obligations under this Lease, Tenant
hereby grants, conveys and assigns to Landlord all right, title and interest of
Tenant in and to all subleases now in existence or hereafter entered into for
any or all of the Leased Premises, any and all extensions, modifications and
renewals thereof and all rents, issues and profits therefrom. Landlord hereby
grants to Tenant a license to collect and enjoy all rents and other sums of
money payable under any sublease of any of the Leased Premises, provided,
however, that Landlord shall have the absolute right at any time following the
occurrence and during the continuance of an Event of Default to revoke said
license and to collect such rents and sums of money and to retain the same.
Tenant shall not consent to, cause or allow any modification or alteration of
any of the terms, conditions or covenants of any of the subleases or the
termination thereof, without the prior written approval of Landlord which
consent shall not be unreasonably withheld nor shall Tenant accept any rents
more than thirty (30) days in advance of the accrual thereof nor do nor permit
anything to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or default in the
terms of any of the subleases.

     Tenant shall not have the power to mortgage, pledge or otherwise encumber
its interest under this Lease or any sublease of any of the Related Premises,
and any such mortgage, pledge or encumbrance made in violation of this Paragraph
21 shall be void and of no force and effect. Any assignment of Tenant's interest
in this Lease by operation of law as a result of any merger or consolidation by
Tenant shall be deemed an assignment of this Lease and shall only be permitted
as provided by the provisions of Paragraph 1 of Exhibit "G".
                                                ----------

     Landlord may sell or transfer the Leased Premises at any time without
Tenant's consent to any third party (each a "Third Party Purchaser"). In the
                                              --------------------
event of any such transfer, Tenant shall attorn to any Third Party Purchaser as
Landlord so long as such Third Party Purchaser and Landlord notify Tenant in
writing of such transfer. At the request of Landlord, Tenant will execute such
documents confirming the agreement referred to above and such other agreements
as Landlord may reasonably request, provided that such agreements do not
increase the liabilities and obligations of Tenant hereunder and provided same
are at no material cost or expense to Tenant.

     Events of Default.
     -----------------

     The occurrence of any one or more of the following (after expiration of any
applicable cure period as provided in Paragraph 22(b)) shall, at the sole option
of Landlord, constitute an "Event of Default" under this Lease:
                            ----------------

     a failure by Tenant to make any payment of any Monetary Obligation,
regardless of the reason for such failure;

     a failure by Tenant duly to perform and observe, or a violation or breach
of, any other provision hereof not otherwise specifically mentioned in this
Paragraph 22(a);

     any representation or warranty made by Tenant herein or in any certificate,
demand or request made pursuant hereto proves to be incorrect, now or hereafter,
in any material respect;

                                      -29-
<PAGE>

     a default beyond any applicable cure period or at maturity by Tenant in any
payment of principal or interest on any obligations for borrowed money having an
original principal balance of $5,000,000 or more in the aggregate, or in the
performance of any other provision contained in any instrument under which any
such obligation is created or secured (including the breach of any covenant
thereunder), but only if (A) such payment is a payment at maturity or a final
payment (and no waiver, forbearance or extension has been granted or is then in
effect), or (y) an effect of such default is to cause such obligation to be
accelerated and to become due prior to its stated maturity payment (and no
waiver, forbearance or extension has been granted or is then in effect);
provided that, any waiver, forbearance or extension granted by the applicable
obligee, whether granted before or after any such acceleration, shall be deemed
to cure such default hereunder;

     a default by Tenant beyond any applicable cure period in the payment of
rent under, or in the performance of any other material provision of, any other
lease or leases that have, in the aggregate, rental obligations over the terms
thereof of $5,000,000 or more if the Landlord under any such lease or leases
commences to exercise its remedies thereunder;

     a final, non-appealable judgment or judgments for the payment of money in
excess of $5,000,000 in the aggregate shall be rendered against Tenant and the
same shall remain undischarged for a period of sixty (60) consecutive days;
     Tenant shall (A) voluntarily be adjudicated a bankrupt or insolvent, (B)
seek or consent to the appointment of a receiver or trustee for itself or for
any of the Related Premises, (C) file a petition seeking relief under the
bankruptcy or other similar laws of the United States, any state or any
jurisdiction, (D) make a general assignment for the benefit of creditors, or (E)
be unable to pay its debts as they mature;

     a court shall enter an order, judgment or decree appointing, without the
consent of Tenant, a receiver or trustee for it or for any of the Related
Premises or approving a petition filed against Tenant which seeks relief under
the bankruptcy or other similar laws of the United States, any state or any
jurisdiction, and such order, judgment or decree shall remain undischarged or
unstayed sixty (60) days after it is entered;

     any of the Related Premises shall have been (A) vacated for a period in
excess of thirty (30) consecutive days, other than (i) during a reasonable
period for repair or restoration following a Casualty or Taking and (ii)
economic circumstances under which Tenant has elected to cease or substantially
diminish business operations at the applicable Related Premises, but only if
Tenant shall have established a plan for the repair, maintenance and security of
such Related Premises approved by Landlord or (B) abandoned;

     Tenant shall be liquidated or dissolved or shall begin proceedings towards
its liquidation or dissolution;

     the estate or interest of Tenant in any of the Related Premises shall be
levied upon or attached in any proceeding and such estate or interest is about
to be sold or transferred or such process shall not be vacated or discharged
within sixty (60) days after it is made;

                                      -30-
<PAGE>

     a failure by Tenant to perform or observe, or a violation or breach of, or
a misrepresentation by Tenant under, any provision of any Assignment or any
other document between Tenant and Lender or from Tenant to Lender, if such
failure, violation, breach or misrepresentation gives rise to a default beyond
any applicable cure period with respect to any Loan;

     a failure by Tenant to maintain in effect any license or permit necessary
for the use, occupancy or operation of any of the Related Premises;

     Tenant shall (A) sell or transfer all or substantially all of its assets or
in violation of Paragraph 21 or Exhibit G of this Lease or (b) enter into an
agreement to sell or transfer all or substantially all of its assets unless such
agreement is subject to the terms and limitations of this Lease and Landlord's
approval rights hereunder;

     the breach of any Covenant shall occur;

     Tenant shall fail to deliver the estoppel described in Paragraph 25 within
the time period specified therein;

     intentionally omitted; or

     Tenant shall fail to renew the Letter of Credit or replenish the Security
Deposit in accordance with the requirements of Paragraph 36.

     No notice or cure period shall be required in any one or more of the
following events: (A) the occurrence of an Event of Default under clause (i)
(except as otherwise set forth below), (iii), (iv), (v), (vi), (vii), (viii),
(ix), (x), (xi), (xii), (xiii), (xiv), (xv), (xvii) or (xviii) of Paragraph
22(a); (B) the default consists of a failure to pay Basic Rent, a failure to
provide any insurance required by Paragraph 16 or an assignment or sublease
entered into in violation of Paragraph 21; or (C) the default is such that any
delay in the exercise of a remedy by Landlord could reasonably be expected to
cause irreparable harm to Landlord. If the default consists of the failure to
pay any Monetary Obligation under clause (i) of Paragraph 22(a) the applicable
cure period shall be three (3) days from the date on which notice is given, but
Landlord shall not be obligated to give notice of, or allow any cure period for
any such default with respect to the payment of Basic Rent more than one (1)
time within any Lease Year. If the default consists of a default under clause
(ii) of Paragraph 22(a), other than the events specified in clauses (B) and (C)
of the first sentence of this Paragraph 22(b), the applicable cure period shall
be twenty (20) days from the date on which notice is given or, if the default
cannot be cured within such twenty (20) day period and delay in the exercise of
a remedy would not (in Landlord's reasonable judgment) cause any material
adverse harm to Landlord or any of the Leased Premises, the cure period shall be
extended for the period required to cure the default (but such cure period,
including any extension, shall not in the aggregate exceed sixty (60) days),
provided that Tenant shall commence to cure the default within the said
twenty-day period and shall actively, diligently and in good faith proceed with
and continue the curing of the default until it shall be fully cured. If and to
the extent applicable, the notices described in this Paragraph 22(b) are in lieu
of, and not in addition to, any notice required under California Civil Code
Section 1161.

                                      -31-
<PAGE>

     Remedies and Damages Upon Default.
     ----------------------------------

     If an Event of Default shall have occurred and is continuing, Landlord
shall have the right, at its sole option, then or at any time thereafter, to
exercise its remedies and to collect damages from Tenant in accordance with this
Paragraph 23, subject in all events to applicable Law, without demand upon or
notice to Tenant except as otherwise provided in Paragraph 22(b) and this
Paragraph 23.

     Landlord may at its option give Tenant notice of Landlord's intention to
terminate this Lease or Tenant's right of possession of the Leased Premises on a
date specified in such notice. Upon such date, this Lease, the estate hereby
granted and all rights of Tenant hereunder shall expire and terminate or
Tenant's right to a possessory interest in the Leased Premises shall terminate,
as elected by Landlord. Upon such termination, Tenant shall immediately
surrender and deliver possession of the Leased Premises to Landlord in
accordance with Paragraph 26. If Tenant does not so surrender and deliver
possession of all of the Leased Premises, Landlord may re-enter and repossess
any of the Leased Premises not surrendered, with or without legal process, by
peaceably entering any of the Leased Premises and changing locks or by summary
proceedings (including an action for unlawful detainer under RCW Chapter 59.12
and forcible entry and wrongful detainer under ORS 105.105-168), ejectment or
any other lawful means or procedure. Upon or at any time after taking possession
of any of the Leased Premises, Landlord may, by peaceable means or legal
process, remove any Persons or property therefrom. Landlord shall be under no
liability for or by reason of any such entry, repossession or removal.
Notwithstanding such entry or repossession, Landlord may (A) exercise the remedy
set forth in and collect the damages permitted by Paragraph 23(a)(iii) or (B)
collect the damages set forth in Paragraph 23(b)(i) or 23(b)(ii).

     After repossession of any of the Leased Premises pursuant to clause (i)
above, Landlord shall have the right to relet any of the Leased Premises to such
tenant or tenants, for such term or terms, for such rent, on such conditions and
for such uses as Landlord in its sole discretion may determine (subject to
applicable Laws), and collect and receive any rents payable by reason of such
reletting. Landlord may make such Alterations in connection with such reletting
as it may deem advisable in its sole discretion. Notwithstanding any such
reletting, Landlord may collect the damages set forth in Paragraph 23(b)(ii).

     To the extent permitted under applicable Laws, Landlord may, upon notice to
Tenant, require Tenant to make an irrevocable offer to terminate this Lease in
its entirety for an amount (the "Default Termination Amount") specified in the
                                 --------------------------
next sentence. The "Default Termination Amount" shall be the greatest of (A) the
sum of the Fair Market Value of the Leased Premises and the applicable
Prepayment Premium which Landlord will be required to pay in prepaying any Loan
with proceeds of the Default Termination Amount or (B) the sum of the
Acquisition Cost and the applicable Prepayment Premium which Landlord will be
required to pay in prepaying any Loan with proceeds of the Default Termination
Amount. Upon such notice to Tenant, Tenant shall be deemed to have made such
offer and shall, if requested by Landlord, within ten (10) days following such
request, deposit with Landlord as payment against the Default Termination Amount
the amount described in (B) above, Landlord and Tenant shall promptly commence
to determine Fair Market Value. Within thirty (30) days after the Fair Market
Value Date, Landlord shall accept or reject such offer. If Landlord accepts such
offer

                                      -32-
<PAGE>

then, on the tenth (10th) business day after such acceptance, Tenant shall pay
to Landlord the Default Termination Amount and, at the request of Tenant,
Landlord will convey the Leased Premises to Tenant or its designee in accordance
with Paragraph 20. Any rejection by Landlord of such offer shall have no effect
on any other remedy Landlord may have under this Lease.

     To the extent permitted under applicable Laws, Landlord may declare by
notice to Tenant the entire Basic Rent (in the amount of Basic Rent then in
effect) for the remainder of the then current Term to be immediately due and
payable. Tenant shall immediately pay to Landlord all such Basic Rent discounted
to its Present Value, all accrued Rent then due and unpaid, all other Monetary
Obligations which are then due and unpaid and all Monetary Obligations which
arise or become due by reason of such Event of Default (including any Costs of
Landlord). Upon receipt by Landlord of all such accelerated Basic Rent and
Monetary Obligations, this Lease shall remain in full force and effect and
Tenant shall have the right to possession of the Leased Premises from the date
of such receipt by Landlord to the end of the Term, and subject to all the
provisions of this Lease, including the obligation to pay all increases in Basic
Rent and all Monetary Obligations that subsequently become due, except that (A)
no Basic Rent which has been prepaid hereunder shall be due thereafter during
the said Term, and (B) Tenant shall have no option to extend or renew the Term.

     The following constitute damages to which Landlord shall be entitled if
Landlord exercises its remedies under Paragraph 23(a)(i) or 23(a)(ii):

     If Landlord exercises its remedy under Paragraph 23(a)(i) but not its
remedy under Paragraph 23(a)(ii) (or attempts to exercise such remedy and is
unsuccessful in reletting the Leased Premises) then, upon written demand from
Landlord, Tenant shall pay to Landlord, as liquidated and agreed final damages
for Tenant's default and in lieu of all current damages beyond the date of such
demand (it being agreed that it would be impracticable or extremely difficult to
fix the actual damages), an amount equal to the Present Value of the excess, if
any, of (A) all Basic Rent from the date of such demand to the date on which the
Term is scheduled to expire hereunder in the absence of any earlier termination,
re-entry or repossession over (B) the then fair market rental value of the
Leased Premises for the same period. Tenant shall also pay to Landlord all of
Landlord's Costs in connection with the repossession of the Leased Premises and
any attempted reletting thereof, including all brokerage commissions, legal
expenses, reasonable attorneys' fees, employees' expenses, costs of Alterations
and expenses and preparation for reletting.

     If Landlord exercises its remedy under Paragraph 23(a)(i) or its remedies
under Paragraph 23(a)(i) and 23(a)(ii), then Tenant shall, until the end of what
would have been the Term in the absence of the termination of the Lease, and
whether or not any of the Leased Premises shall have been relet, be liable to
Landlord for, and shall pay to Landlord, as liquidated and agreed current
damages all Monetary Obligations which would be payable under this Lease by
Tenant in the absence of such termination less the net proceeds, if any, of any
reletting pursuant to Paragraph 23(a)(ii), after deducting from such proceeds
all of Landlord's Costs (including the items listed in the last sentence of
Paragraph 23(b)(i) hereof) incurred in connection with such repossessing and
reletting; provided, that if Landlord has not relet the Leased Premises, such
Costs of Landlord shall be considered to be Monetary Obligations payable by
Tenant. Tenant shall be and remain liable for all sums aforesaid, and to the
fullest extent permitted under applicable Laws, Landlord may recover such
damages from Tenant and institute and maintain

                                      -33-
<PAGE>

successive actions or legal proceedings against Tenant for the recovery of such
damages. Nothing herein contained shall be deemed to require Landlord to wait to
begin such action or other legal proceedings until the date when the Term would
have expired by its own terms had there been no such Event of Default.

     (a) With respect to the Perris Premises only, if Landlord elects to
terminate this Lease upon the occurrence of an Event of Default and it is
judicially determined that the Laws of the State of California shall apply with
respect to the extent of Landlord's damages and/or remedies with respect to such
Related Premises, then Landlord may collect from Tenant damages computed in
accordance with the following provisions in addition to Landlord's other
remedies under this Lease:

               (i) the worth at the time of award of any unpaid Rent which has
been earned at the time of such termination; plus

               (ii) the worth at the time of award of the amount by which any
unpaid Rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; plus

               (iii) the worth at the time of award of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; plus

               (iv) any other reasonable Cost necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom including, without limitation, brokerage commissions,
the cost of repairing and reletting the Leased Premises and reasonable
attorneys' fees; plus

               (v) at Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
state law. Damages shall be due and payable from the date of termination.

For purposes of clauses (i) and (ii) of this Paragraph 23(c), the "worth at the
time of award" shall be computed by adding interest at the Default Rate to the
past due Rent. For the purposes of clause (iii) of this Paragraph 23 (d), the
"worth" at the time of award" shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
the award, plus one percent (1%).

     Notwithstanding anything to the contrary herein contained, in lieu of or in
addition to any of the foregoing remedies and damages, Landlord may exercise any
remedies and collect any damages available to it at law or in equity. If
Landlord is unable to obtain full satisfaction pursuant to the exercise of any
remedy, it may pursue any other remedy which it has hereunder or at law or in
equity.

     Except to the extent required by the Laws of the State in which the
applicable Related Premises is located, Landlord shall not be required to
mitigate any of its damages hereunder. If any Law shall validly limit the amount
of any damages provided for herein to an amount which is less than the amount
agreed to herein, Landlord shall be entitled to the maximum amount available
under such Law.

                                       34
<PAGE>

     No termination of this Lease, repossession or reletting of any of the
Leased Premises, exercise of any remedy or collection of any damages pursuant to
this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

     TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WITH RESPECT TO ANY
REMEDY OR PROCEEDING OF LANDLORD OR TENANT HEREUNDER, LANDLORD AND TENANT HEREBY
WAIVE THE SERVICE OF NOTICE WHICH MAY BE REQUIRED BY ANY APPLICABLE LAW AND ANY
RIGHT TO A TRIAL BY JURY. If and to the extent applicable, Landlord and Tenant
agree that this Lease constitutes a written consent to waiver of trial by jury
under the applicable Laws of each State in which a Related Premises is located,
and each of Landlord and Tenant does appoint the other Person as its true and
lawful attorney-in-fact, which appointment is coupled with an interest, and does
hereby authorize and empower the other Person, in its name, place and stead, to
file this Lease with the clerk of any court of competent jurisdiction as
statutory written consent to waiver of trial by jury.

     Upon the occurrence of any Event of Default, Landlord shall have the right
(but no obligation) to perform any act required of Tenant hereunder and, if
performance of such act requires that Landlord enter the Leased Premises,
Landlord may enter the Leased Premises for such purpose

     No failure of Landlord (i) to insist at any time upon the strict
performance of any provision of this Lease or (ii) to exercise any option,
right, power or remedy contained in this Lease shall be construed as a waiver,
modification or relinquishment thereof. A receipt by Landlord of any sum in
satisfaction of any Monetary Obligation with knowledge of the breach of any
provision hereof shall not be deemed a waiver of such breach, and no waiver by
Landlord of any provision hereof shall be deemed to have been made unless
expressed in a writing signed by Landlord.

     To the fullest extent permitted by applicable Law, Tenant hereby waives and
surrenders, for itself and all those claiming under it, including creditors of
all kinds, (i) any right and privilege which it or any of them may have under
any present or future Law to redeem any of the Leased Premises, to seek relief
against forfeiture, or to have a continuance of this Lease after termination of
this Lease or of Tenant's right of occupancy or possession pursuant to any court
order or any provision hereof, and (ii) the benefits of any present or future
Law which exempts property from liability for debt or for distress for rent.

     Except as otherwise provided herein, all remedies are cumulative and
concurrent and no remedy is exclusive of any other remedy. Each remedy may be
exercised at any time an Event of Default has occurred and is continuing and may
be exercised from time to time. No remedy shall be exhausted by any exercise
thereof.

          (l) In addition to its other rights under this Lease, in the event it
is judicially determined that the Laws of the State of California shall apply
with respect to the extent of Landlord's remedies and/or damages for the Perris
Premises, Landlord shall have the remedy described in California Civil Code
Section 1951.4 which provides substantially as follows: Landlord may continue
the Lease in effect after Tenant's breach and abandonment and recover the Rent
as it becomes due, if Tenant has the right to sublet or assign, subject only to
reasonable limitations. Tenant acknowledges that in the event Tenant breaches
this Lease and abandons the Leased Premises, this Lease shall continue in effect
for so long as Landlord does not terminate Tenant's right to possession, and
Landlord may enforce all of

                                       35
<PAGE>

its rights and remedies under this Lease, including the right to recover the
Rent as it becomes due under this Lease. Tenant acknowledges that the
limitations on subletting and assignment set forth in Paragraph 21 are
reasonable. Acts of maintenance or preservation or efforts to relet the Leased
Premises or the appointment of a receiver upon initiative of Landlord to protect
Landlord's interest under this Lease shall not constitute a termination of
Tenant's right to possession.

     Notices. All notices, demands, requests, consents, approvals, offers,
     -------
statements and other instruments or communications required or permitted to be
given pursuant to the provisions of this Lease shall be in writing and shall be
deemed to have been given and received for all purposes when delivered in person
or by Federal Express or other reliable 24-hour delivery service or five (5)
business days after being deposited in the United States mail, by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
other party at its address stated above or when delivery is refused. A copy of
any notice given by Tenant to Landlord shall simultaneously be given by Tenant
to Reed Smith LLP, One Liberty Place, Philadelphia, PA 19103, Attention:
Chairman, Real Estate Department. A copy of any Notice given by Landlord to
Tenant shall simultaneously be given to Tenant at PW Eagle, Inc., 1550 Valley
River Drive, P.O. Box 10049, Eugene, OR 97440, Attn: Roger Robb, CFO; and in the
case of any physical entry upon the Leased Premises by Landlord or its agents or
representatives for purposes of any inspection, assessment or visit to which
Landlord is permitted or entitled under this Lease, a copy of such notice shall
also be sent to the applicable Related Premises, attention "Plant Manager"
(except that notice by facsimile shall be acceptable). For the purposes of this
Paragraph, any party may substitute another address stated above (or substituted
by a previous notice) for its address by giving fifteen (15) days' notice of the
new address to the other party, in the manner provided above.

     Estoppel Certificate. At any time upon not less than ten (10) business
     ---------------------
days' prior written request by either Landlord or Tenant (the "Requesting
                                                               ----------
Party") to the other party (the "Responding Party"), the Responding Party shall
-----                            ----------------
deliver to the Requesting Party a statement in writing, executed by an
authorized officer of the Responding Party, certifying (a) that, except as
otherwise specified, this Lease is unmodified and in full force and effect, (b)
the dates to which Basic Rent, Additional Rent and all other Monetary
Obligations have been paid, (c) that, to the knowledge of the signer of such
certificate and except as otherwise specified, no default by either Landlord or
Tenant exists hereunder, (d) such other matters as the Requesting Party may
reasonably request, and (e) if Tenant is the Responding Party that, except as
otherwise specified, there are no proceedings pending or, to the knowledge of
the signer, threatened, against Tenant before or by an court or administrative
agency which, if adversely decided, would materially and adversely affect the
financial condition and operations of Tenant. Any such statements by the
Responding Party may be relied upon by the Requesting Party, any Person whom the
Requesting Party notifies the Responding Party in its request for the
Certificate is an intended recipient or beneficiary of the Certificate, any
Lender or their assignees and by any prospective purchaser or mortgagee of any
of the Leased Premises. Any certificate required under this Paragraph 25 and
delivered by Tenant shall state that, in the opinion of each person signing the
same, he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to the subject matter of such certificate,
and shall briefly state the nature of such examination or investigation.

     Surrender. Upon the expiration or earlier termination of this Lease, Tenant
     ---------
shall peaceably leave and surrender the Leased Premises or Affected Premises, as
applicable, to Landlord in the

                                       36
<PAGE>

same condition in which the Leased Premises or Affected Premises, if applicable,
was at the commencement of this Lease, except as repaired, rebuilt, restored,
altered, replaced or added to as permitted or required by any provision of this
Lease, and except for ordinary wear and tear and for damage resulting from any
Casualty for which Tenant is not obligated to repair or restore under this
Lease. Upon such surrender, Tenant shall (a) remove from the Leased Premises or
Affected Premises, if applicable, all property which is owned by Tenant or third
parties other than Landlord and (b) repair any damage caused by such removal.
Property not so removed shall become the property of Landlord, and Landlord may
thereafter cause such property to be removed from the Leased Premises or
Affected Premises, if applicable. The cost of removing and disposing of such
property and repairing any damage to any of the Leased Premises or Affected
Premises, if applicable, caused by such removal shall be paid by Tenant to
Landlord upon demand. Landlord shall not in any manner or to any extent be
obligated to reimburse Tenant for any such property which becomes the property
of Landlord pursuant to this Paragraph 26.

     No Merger of Title. There shall be no merger of the leasehold estate
     -------------------
created by this Lease with the fee estate in any of the Leased Premises by
reason of the fact that the same Person may acquire or hold or own, directly or
indirectly, (a) the leasehold estate created hereby or any part thereof or
interest therein and (b) the fee estate in any of the Leased Premises or any
part thereof or interest therein, unless and until all Persons having any
interest in the interests described in (a) and (b) above which are sought to be
merged shall join in a written instrument effecting such merger and shall duly
record the same.

     Books and Records.
     -----------------

     Tenant shall keep adequate records and books of account with respect to the
finances and business of Tenant generally and with respect to the Leased
Premises, in accordance with generally accepted accounting principles ("GAAP")
                                                                        ----
consistently applied, and shall permit Landlord and Lender by their respective
agents, accountants and attorneys, upon not less than twenty-four (24) hours
prior notice to Tenant in accordance with Paragraph 24 during Tenant's normal
business hours, to visit and inspect the Leased Premises and examine (and make
copies of) the records and books of account and to discuss the finances and
business with the officers of Tenant, at such reasonable times as may be
requested by Landlord. Upon the request of Lender or Landlord (either
telephonically or in writing), Tenant shall provide the requesting party with
copies of any information to which such party would be entitled in the course of
a personal visit.

     Tenant shall deliver to Landlord and to Lender within ninety (90) days of
the close of each fiscal year, annual audited financial statements of Tenant
prepared by nationally recognized independent certified public accountants.
PriceWaterhouseCoopers is hereby approved by Landlord as Tenant's accountants.
Tenant shall also furnish to Landlord within forty-five (45) days after the end
of each of the three remaining quarters unaudited financial statements and all
other quarterly reports of Tenant, certified by Tenant's chief financial
officer, and all filings, if any, of Form 10-K, Form 10-Q and other required
filings with the Securities and Exchange Commission pursuant to the provisions
of the Securities Exchange Act of 1934, as amended, or any other Law. All
financial statements of Tenant shall be prepared in accordance with GAAP
consistently applied. All annual financial statements shall be accompanied (i)
by an opinion of said accountants stating that (A) there are no qualifications
as to the scope of the audit and (B)

                                       37
<PAGE>

the audit was performed in accordance with GAAP and (ii) by the affidavit of the
president or a vice president of Tenant, dated within five (5) days of the
delivery of such statement, stating that (C) the affiant knows of no Event of
Default, or event which, upon notice or the passage of time or both, would
become an Event of Default which has occurred and is continuing hereunder or, if
any such event has occurred and is continuing, specifying the nature and period
of existence thereof and what action Tenant has taken or proposes to take with
respect thereto and (D) except as otherwise specified in such affidavit, that
Tenant has fulfilled all of its obligations under this Lease which are required
to be fulfilled on or prior to the date of such affidavit.

     All quarterly and annual financial statements shall be accompanied by a
certification ("Covenant Certification") of the chief financial officer of
                ----------------------
Tenant that Tenant is in compliance with the Covenants (except as otherwise
specified in the Covenant Certification), together with a calculation of the
Covenants described in Section 2 of Exhibit "G".
                                    -----------

     Determination of Value.
     ----------------------

     Whenever a determination of Fair Market Value is required pursuant to any
provision of this Lease, such Fair Market Value shall be determined in
accordance with the following procedure:

     Landlord and Tenant shall endeavor to agree upon such Fair Market Value
within thirty (30) days after the date (the "Applicable Initial Date") on which
                                             -----------------------
(A) Tenant provides Landlord with notice of its intention to terminate this
Lease and purchase the Affected Premises pursuant to Paragraph 18,(B) Landlord
provides Tenant with notice of its intention to redetermine Fair Market Value
pursuant to Paragraph 20(c),(C) Landlord provides Tenant with notice of
Landlord's intention to require Tenant to make an offer to purchase the Leased
Premises pursuant to Paragraph 23(a)(iii), or(D) Tenant provides Landlord with
an Option Notice pursuant to Paragraph 38 hereof. Upon reaching such agreement,
the parties shall execute an agreement setting forth the amount of such Fair
Market Value.

     If the parties shall not have signed such agreement within thirty (30) days
after the Applicable Initial Date, Tenant shall within fifty (50) days after the
Applicable Initial Date select an appraiser and notify Landlord in writing of
the name, address and qualifications of such appraiser. Within twenty (20) days
following Landlord's receipt of Tenant's notice of the appraiser selected by
Tenant, Landlord shall select an appraiser and notify Tenant of the name,
address and qualifications of such appraiser. Such two appraisers shall endeavor
to agree upon Fair Market Value based on a written appraisal made by each of
them as of the Relevant Date (and given to Landlord by Tenant). If such two
appraisers shall agree upon a Fair Market Value, the amount of such Fair Market
Value as so agreed shall be binding and conclusive upon Landlord and Tenant.

     If such two appraisers shall be unable to agree upon a Fair Market Value
within twenty (20) days after the selection of an appraiser by Landlord, then
such appraisers shall advise Landlord and Tenant of their respective
determination of Fair Market Value and shall select a third appraiser to make
the determination of Fair Market Value. The selection of the third appraiser
shall be binding and conclusive upon Landlord and Tenant.

                                       38
<PAGE>

     If such two appraisers shall be unable to agree upon the designation of a
third appraiser within ten (10) days after the expiration of the twenty (20) day
period referred to in clause (iii) above, or if such third appraiser does not
make a determination of Fair Market Value within twenty (20) days after his
selection, then such third appraiser or a substituted third appraiser, as
applicable, shall, at the request of either party hereto (with respect to the
other party), be appointed by the President or Chairman of the American
Arbitration Association in New York, New York. The determination of Fair Market
Value made by the third appraiser appointed pursuant hereto shall be made within
twenty (20) days after such appointment.

     If a third appraiser is selected, Fair Market Value shall be the average of
the determination of Fair Market Value made by the third appraiser and the
determination of Fair Market Value made by the appraiser (selected pursuant to
Paragraph 29(a)(ii) hereof) whose determination of Fair Market Value is nearest
to that of the third appraiser. Such average shall be binding and conclusive
upon Landlord and Tenant.

     All appraisers selected or appointed pursuant to this Paragraph 29(a) shall
(A) be independent qualified MAI appraisers (B) have no right, power or
authority to alter or modify the provisions of this Lease, (C) utilize the
definition of Fair Market Value hereinabove set forth above, and (D) be
registered in the State if the State provides for or requires such registration.

     The Cost of the procedure described in this Paragraph 29(a) above shall be
paid as follows: Each party shall pay the cost of its own appraiser and the cost
of the third appraiser shall be split equally between Landlord and Tenant.

     If, by virtue of any delay, Fair Market Value is not determined by the
expiration or termination of the then current Term, then the date on which the
Term would otherwise expire or terminate shall be extended with respect to the
Leased Premises or the Affected Premises, as applicable, to the date specified
for termination in the particular provision of this Lease pursuant to which the
determination of Fair Market Value is being made.

     In determining Fair Market Value as defined in clause (b) of the definition
of Fair Market Value, the appraisers shall add (a) the present value of the Rent
for the remaining Term, assuming the Term has been extended for all extension
periods provided herein (with assumed increases in the CPI to be determined by
the appraisers) using a discount rate (which may be determined by an investment
banker retained by each appraiser) based on the creditworthiness of Tenant and
(b) the present value of the Leased Premises as of the end of such Term (having
assumed the Term has been extended for all extension periods provided herein).
The appraisers shall further assume that no default then exists under the Lease,
that Tenant has complied (and will comply) with all provisions of the Lease.

     Non-Recourse as to Landlord.
     ---------------------------

     Anything contained herein to the contrary notwithstanding, any claim based
on or in respect of any liability of Landlord under this Lease shall be limited
to actual damages and shall be enforced only against the Leased Premises and not
against any other assets, properties or funds of (a) Landlord, (b) any director,
member, officer, general partner, limited partner, employee or agent of
Landlord, or any general partner of Landlord, any of its general partners or
shareholders

                                       39
<PAGE>

(or any legal representative, heir, estate, successor or assign of any thereof),
(c) any predecessor or successor partnership or corporation (or other entity) of
Landlord, or any of its general partners, either directly or through Landlord or
its general partners or any predecessor or successor partnership or corporation
or their shareholders, officers, directors, employees or agents (or other
entity), or (d) any other Person (including Carey Property Advisors, Carey
Fiduciary Advisors, Inc., W. P. Carey & Co., LLC, Carey Management LLC, and any
Person affiliated with any of the foregoing, or any director, officer, employee
or agent of any thereof).

     Notwithstanding the foregoing, Tenant shall not be precluded from
instituting legal proceedings for the purpose of making a claim against Landlord
on account of an alleged violation of Landlord's obligations under this Lease,
subject, however, to Paragraph 30(a) above.

     Financing.
     ---------

     Tenant agrees to pay upon demand all costs and expenses incurred by
Landlord in connection with (i) the purchase and leasing of the Leased Premises
and (ii) the financing of the initial charges and premiums, Loan, in either
case, including, without limitation, the cost of appraisals, environmental
reports, title insurance, surveys, transfer and recording fees and taxes, legal
fees and expenses of Landlord's and Lender's counsel and Lender's commitment
fees and points; provided that, Tenants obligations under this Paragraph 31(a)
shall not exceed, in the aggregate, $350,000 plus the cost of transfer and
recording fees and taxes and title insurance premiums and charges.

     Tenant agrees to pay, within three (3) business days of written demand
thereof, any cost, charge or expense (other than the principal of the Note and
interest thereon at the contract rate of interest specified therein) imposed
upon Landlord by Lender pursuant to the Note, the Mortgage or the Assignment
which is caused by any act or omission of Tenant, or any breach or default by
Tenant of its obligations under this Lease, and which is not otherwise
reimbursed by Tenant to Landlord pursuant to any other provision of this Lease.

     If Landlord desires to obtain or refinance any Loan, Tenant shall negotiate
in good faith with Landlord concerning any request made by any Lender or
proposed Lender for changes or modifications in this Lease. In particular,
Tenant shall agree, upon request of Landlord, to supply any such Lender with
such notices and information as Tenant is required to give to Landlord hereunder
and to extend the rights of Landlord hereunder to any such Lender and to consent
to such financing if such consent is requested by such Lender. Tenant shall
provide any other consent or statement and shall execute any and all other
documents that such Lender reasonably requires in connection with such
financing, including any environmental indemnity agreement and subordination,
non-disturbance and attornment agreement, so long as the same do not materially
adversely affect any right, benefit or privilege of Tenant under this Lease or
materially increase Tenant's obligations under this Lease. Such subordination,
nondisturbance and attornment agreement may require Tenant to confirm that (a)
Lender and its assigns will not be liable for any misrepresentation, act or
omission of Landlord and (b) Lender and its assigns will not be subject to any
counterclaim, demand or offsets which Tenant may have against Landlord.

                                       40
<PAGE>

     Subordination, Non-Disturbance and Attornment. This Lease and Tenant's
     ---------------------------------------------
interest hereunder shall be subordinate to any Mortgage or other security
instrument hereafter placed upon the Leased Premises by Landlord, and to any and
all advances made or to be made thereunder, to the interest thereon, and all
renewals, replacements and extensions thereof and Tenant agrees to attorn to any
Lender or purchaser that shall succeed to Landlord's interest in this Lease
following a foreclosure or the delivery of a deed-in-lieu of foreclosure and
subsequent sale of the Leased Premises; provided that, any such Mortgage or
other security instrument (or a separate instrument in recordable form duly
executed by the holder of any such Mortgage or other security instrument and
delivered to Tenant) shall provide for the recognition of this Lease and all
Tenant's rights hereunder unless and until an Event of Default exists or
Landlord shall have the right to terminate this Lease pursuant to any applicable
provision hereof.

     Operating Covenants. Tenants hereby covenants and agrees to comply with all
     -------------------
the covenants and agreements described in Exhibit "G" hereto.
                                          ----------

     Sale of Related Premises by Landlord. If at any time or from time to time
     ------------------------------------
Landlord sells any one or more of the Related Premises (any such premises, a
"Landlord Sale Premises") either to Tenant or to a Third Party Purchaser, then
------------------------
Landlord and Tenant agree that (i) the Lease shall be bifurcated with respect to
the remaining Leased Premises and the Landlord Sale Premises; (ii) Tenant will
attorn to any purchaser with respect to the Landlord Sale Premises purchased so
long as such purchaser assumes the obligations of Landlord under the Lease with
respect to the Landlord Sale Premises; and (iii) the terms of the Lease will
remain in full force and effect with respect to the Landlord Sale Premises
except that the Basic Rent will be that percentage of the then Basic Rent which
is allocated to the Landlord Sale Premises as set forth on Exhibit "F" attached
                                                           ----------
hereto and made a part hereof; and (iv) the terms of the Lease will remain in
full force and effect with respect to the remaining Related Premises except that
the Basic Rent will be the sum of the percentages of the then Basic Rent which
is allocated to the remaining Related Premises as set forth on Exhibit "F"
                                                               -----------
attached hereto and made a part hereof. At the request of Landlord, Tenant will
execute such documents confirming the agreements referred to above and such
other agreements as Landlord may reasonably request; provided that neither any
such sale by Landlord nor Tenant's execution of such agreements shall (i)
require Tenant to incur any costs or (ii) increase the liabilities and
obligations of Tenant hereunder.

     Tax Treatment; Reporting. Landlord and Tenant each acknowledge that each
     ------------------------
shall treat this transaction as a true lease for state law purposes and shall
report this transaction as a Lease for Federal income tax purposes. For Federal
income tax purposes each shall report this Lease as a true lease with Landlord
as the owner of the Leased Premises and Equipment and Tenant as the lessee of
such Leased Premises and Equipment including: (i) treating Landlord as the owner
of the property eligible to claim depreciation deductions under Section 167 or
168 of the Internal Revenue Code of 1986 (the "Code") with respect to the Leased
                                               ----
Premises and Equipment, (ii) Tenant reporting its Rent payments as rent expense
under Section 162 of the Code, and (iii) Landlord reporting the Rent payments as
rental income.

     Security Deposit.
     ----------------

     Concurrently with the execution of this Lease, Tenant shall deliver to
Landlord within ten (10) days following receipt of Landlord's written request of
security deposit (the "Security
                       --------

                                       41
<PAGE>

Deposit") in the amount of $1,650,875.00. The Security Deposit shall be in the
-------
form of an irrevocable letter of credit (the "Letter of Credit") and shall be
                                              ----------------
issued by a bank acceptable to Landlord and in form and substance satisfactory
to Landlord. Landlord hereby approves Fleet Bank as a bank acceptable to
Landlord. The Letter of Credit shall remain in full force and effect during the
Term as security for the payment by Tenant of the Rent and all other charges or
payments to be paid hereunder and the performance of the covenants and
obligations contained herein, and the Letter of Credit shall be renewed at least
thirty (30) days prior to any expiration thereof. If Tenant fails to renew the
Letter of Credit by such date, time being of the essence, Landlord shall have
the right at any time after the thirtieth (30th) day before such expiration date
to draw on the Letter of Credit and to deposit the Security Deposit in any
account for the benefit of Landlord or to declare an Event of Default. The
Security Deposit shall not be commingled with other funds of Landlord or other
Persons and no interest thereon shall be due and payable to Tenant.

     If at any time an Event of Default shall have occurred and be continuing,
Landlord shall be entitled, at its sole discretion, to draw on the Letter of
Credit or to withdraw the Cash Security Deposit from the above-described account
and to apply the proceeds in payment of (i) any Rent or other charges for the
payment of which Tenant shall be in default, (ii) prepaid Basic Rent, (iii) any
expense incurred by Landlord in curing any default of Tenant, and/or (iv) any
other sums due to Landlord in connection with any default or the curing thereof,
including, without limitation, any damages incurred by Landlord by reason of
such default, including any rights of Landlord under Paragraph 23 or to do any
combination of the foregoing, all in such order or priority as Landlord shall so
determine in its sole discretion and Tenant acknowledges and agrees that such
proceeds shall not constitute assets or funds of Tenant or its estate, or be
deemed to be held in trust for Tenant, but shall be, for all purposes, the
property of Landlord (or Lender, to the extent assigned). Tenant further
acknowledges and agrees that (1) Landlord's application of the proceeds of the
Letter of Credit or Cash Security Deposit towards the payment of Basic Rent,
Additional Rent or the reduction of any damages due Landlord in accordance with
Paragraph 23 of this Lease, constitutes a fair and reasonable use of such
proceeds, and (2) the application of such proceeds by Landlord towards the
payment of Basic Rent, Additional Rent or any other sums due under this Lease
shall not constitute a cure by Tenant of the applicable default provided that an
Event of Default shall not exist if Tenant restores the Security Deposit to its
full amount within five (5) days and in accordance with the requirements of this
Paragraph 36, so that the original amount of the Security Deposit shall be again
on deposit with Landlord.

     At the expiration of the Term and so long as no Event of Default exists the
Letter of Credit or the cash Security Deposit, as the case may be, shall be
returned to Tenant.

     Landlord shall have the right to designate Lender or any other holder of a
Mortgage as the beneficiary of the Letter of Credit during the term of the
applicable Loan, and such Lender or other holder of a Mortgage shall have all of
the rights of Landlord under this Paragraph 36. Tenant covenants and agrees to
execute such agreements, consents and acknowledgments as may be requested by
Landlord from time to time to change the holder of the Security Deposit as
hereinabove provided.

                                       42
<PAGE>

     Miscellaneous.
     -------------

     The paragraph headings in this Lease are used only for convenience in
finding the subject matters and are not part of this Lease or to be used in
determining the intent of the parties or otherwise interpreting this Lease.

     As used in this Lease, the singular shall include the plural and any gender
shall include all genders as the context requires and the following words and
phrases shall have the following meanings: (i) "including" shall mean "including
without limitation"; (ii) "provisions" shall mean "provisions, terms,
agreements, covenants and/or conditions"; (iii) "lien" shall mean "lien, charge,
encumbrance, title retention agreement, pledge, security interest, mortgage
and/or deed of trust"; (iv) "obligation" shall mean "obligation, duty,
agreement, liability, covenant and/or condition"; (v) "any of the Leased
Premises" shall mean "the Leased Premises or any part thereof or interest
therein"; (vi) "any of the Land" shall mean "the Land or any part thereof or
interest therein"; (vii) "any of the Improvements" shall mean "the Improvements
or any part thereof or interest therein"; (viii) "any of the Equipment" shall
mean "the Equipment or any part thereof or interest therein"; and (ix) "any of
the Adjoining Property" shall mean "the Adjoining Property or any part thereof
or interest therein".

     Any act which Landlord is permitted to perform under this Lease may be
performed at any time and from time to time by Landlord or any person or entity
designated by Landlord. Each appointment of Landlord as attorney-in-fact for
Tenant hereunder is irrevocable and coupled with an interest. Landlord shall not
unreasonably withhold or delay its consent whenever such consent is required
under this Lease, except that with respect to any assignment of this Lease or
subletting of any Related Premises not expressly permitted by the terms of this
Lease, Landlord may withhold its consent for any reason or no reason. Time is of
the essence with respect to the performance by Tenant of its obligations under
this Lease.

     Landlord shall in no event be construed for any purpose to be a partner,
joint venturer or associate of Tenant or of any subtenant, operator,
concessionaire or licensee of Tenant with respect to any of the Leased Premises
or otherwise in the conduct of their respective businesses.

     This Lease and any documents which may be executed by Tenant on or about
the effective date hereof at Landlord's request constitute the entire agreement
between the parties and supersede all prior understandings and agreements,
whether written or oral, between the parties hereto relating to the Leased
Premises and the transactions provided for herein. Landlord and Tenant are
business entities having substantial experience with the subject matter of this
Lease and have each fully participated in the negotiation and drafting of this
Lease. Accordingly, this Lease shall be construed without regard to the rule
that ambiguities in a document are to be construed against the drafter.

     This Lease may be modified, amended, discharged or waived only by an
agreement in writing signed by the party against whom enforcement of any such
modification, amendment, discharge or waiver is sought.

     The covenants of this Lease shall run with the land and bind Tenant, its
successors and assigns and all present and subsequent encumbrancers and
subtenants of any of the Leased

                                       43
<PAGE>

Premises, and shall inure to the benefit of Landlord, its successors and
assigns. If there is more than one Tenant, the obligations of each shall be
joint and several.

     Notwithstanding any provision in this Lease to the contrary, all Surviving
Obligations of Tenant shall survive the expiration or termination of this Lease
with respect to any Related Premises.

     If any one or more of the provisions contained in this Lease shall for any
reason be held to be invalid, illegal or unenforceable in any respect as applied
to the circumstances arising under this Lease, such invalidity, illegality or
unenforceability shall not affect any other provision of this Lease or the
application of such provision to any other circumstance, but this Lease shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein with respect to the specific circumstance under which such
provision is invalid, illegal or unenforceable.

     All exhibits attached hereto are incorporated herein as if fully set forth.

     Each of Landlord and Tenant hereby agree that the State of Utah has a
substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects (including, without limiting the generality
of the foregoing, matters of construction, validity and performance) this Lease
and the obligations arising hereunder shall be governed by, and construed in
accordance with, the laws of the State of Utah applicable to contracts made and
performed therein and any applicable law of the United States of America; except
that, at all times, the provisions for the creation of the leasehold estate,
enforcement of Landlord's rights and remedies with respect to right of re-entry
and repossession, surrender, delivery, ejectment, dispossession, eviction or
other in-rem proceeding or action regarding any Related Premises pursuant to
Paragraph 23 hereof shall be governed by and construed according to the Laws of
the State in which the applicable Related Premises is located, it being
understood that, to the fullest extent permitted by law of such State, the law
of the State of Utah shall govern the validity and the enforceability of the
Lease, and the obligations arising hereunder. To the fullest extent permitted by
law, Tenant (and each of them) hereby unconditionally and irrevocably waives any
claim to assert that the law of any other jurisdiction governs this Lease. Any
legal suit, action or proceeding against Tenant arising out of or relating to
this Lease may be instituted in any federal or state court in the State of Utah,
and Tenant waives any objection which it may now or hereafter have to the laying
of venue of any such suit, action or proceeding, and Tenant hereby irrevocably
submits to the jurisdiction of any such court in any suit, action or proceeding.
Notwithstanding the foregoing, nothing herein shall prevent or prohibit Landlord
from instituting any suit, action or proceeding in any other proper venue or
jurisdiction in which Tenant is located or where service of process can be
effectuated.

     38.  Option to Purchase.
          ------------------

         (a) So long as no Event of Default shall have occurred and then be
continuing hereunder, Landlord does hereby give and grant to Tenant the option
to purchase all, but not less than all, of the Leased Premises for a purchase
price (the "Purchase Price") equal to the Offer Amount only on any date (an
            --------------
"Option Purchase Date") occurring during the period (i) commencing two months
---------------------
prior the (A) maturity date of the initial Loan or the maturity date of

                                       44
<PAGE>

any subsequent ten (10) year Loan (in any case, the "Loan Maturity Date") and
ending the Loan Maturity Date, or (ii) commencing two months prior the scheduled
Expiration Date of the initial Term or any Renewal Term and ending on the
applicable Expiration Date, in either case, which date is mutually agreeable to
Landlord and Tenant, but in any event not sooner than fifteen (15) days after
the Fair Market Value Date; provided that, it is the intent of the parties
hereto that the Option Purchase Date shall occur during the refinance period of
any such Loan, so that such Loan can be repaid at par and the parties hereto
agree to cooperate with each other in respect thereof; provided further, that,
in no event shall the Option Purchase Date occur after the Expiration Date of
the initial Term of this Lease unless Tenant shall have executed written
agreement acceptable to Landlord extending such Term to the date of the actual
closing of the purchase of the Leased Premises as contemplated herein. If Tenant
intends to exercise such option, Tenant shall give written notice to Landlord to
such effect (the "Option Notice") not later than six (6) months prior to either
                  -------------
(A) the tenth (10th) anniversary of the First Basic Rent Payment Date, or (B)
the scheduled Expiration Date, as applicable. Promptly upon receipt of such
notice by Landlord, the parties shall commence to determine Fair Market Value.
NOTWITHSTANDING THE FOREGOING, TENANT HEREBY ACKNOWLEDGES AND AGREES THAT TIME
SHALL BE OF THE ESSENCE WITH RESPECT TO THE TIMING OF THE DELIVERY OF THE OPTION
NOTICE BY TENANT.

          (b) If Tenant shall exercise the foregoing option to purchase the
Leased Premises, on the later to occur of (i) the Option Purchase Date or (ii)
the date when Tenant has paid the Offer Amount and has satisfied all other
Monetary Obligations, Landlord shall convey the Leased Premises to Tenant in
accordance with Paragraph 20 hereof; provided, that if an Event of Default has
occurred and is continuing on the Option Purchase Date, Landlord, at its sole
option, may terminate Tenant's option to purchase hereunder. IF THIS LEASE SHALL
TERMINATE FOR ANY REASON PRIOR TO THE DATE ORIGINALLY FIXED HEREIN FOR THE
EXPIRATION OF THE TERM, OR IF TENANT SHALL FAIL TO TIMELY GIVE THE OPTION
NOTICE, THE OPTION PROVIDED IN THIS PARAGRAPH 38 AND ANY EXERCISE THEREOF BY
TENANT SHALL AUTOMATICALLY CEASE AND TERMINATE AND SHALL BE NULL AND VOID. IN
SUCH EVENT TENANT SHALL EXECUTE A QUITCLAIM DEED AND SUCH OTHER DOCUMENTS AS
LANDLORD SHALL REASONABLY REQUEST EVIDENCING THE TERMINATION OF ITS PURCHASE
OPTION HEREUNDER.

                                       45
<PAGE>

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed under seal as of the day and year first above written.

                                              LANDLORD:
                                              PWE (MULTI)QRS 14-85, INC.,
                                              a Delaware corporation

                                              By:
                                                 -------------------------------
                                              Title:
                                                    ----------------------------

ATTEST:                                       TENANT:
                                              PW EAGLE, INC.,
                                              a Minnesota corporation

By:                                           By:
   ------------------------------------          -------------------------------
Title:                                        Title:
      ---------------------------------             ----------------------------

                                       46
<PAGE>

                                 ACKNOWLEDGEMENT

STATE OF NEW YORK                   )
                                    )
COUNTY OF                           )
          --------------------------

     I certify that I know have satisfactory evidence that
                                                          ----------------------
 is the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to execute the
instrument and acknowledged it as the                                 of PW
                                     ---------------------------------
EAGLE, INC. to be the free and voluntary act of such party for the uses and
purposes mentioned in the instrument.

     Dated:
           -------------------------

                                            ------------------------------------
                                            Notary Public
                                            Print Name
                                                      --------------------------
                                            My commission expires
                                                                 ---------------

STATE OF New York                   )
                                    )
COUNTY OF                           )
         ---------------------------

     I certify that I know have satisfactory evidence that Edward V. LaPuma is
the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to execute the
instrument and acknowledged it as the
                                     ------------------------------------------
of PWE (MULTI) QRS 14-85, INC. to be the free and voluntary act of such party
for the uses and purposes mentioned in the instrument.

         Dated:
               ---------------------

                                            ------------------------------------
                                            Notary Public

                                            Print Name
                                                      --------------------------
                                            My commission expires
                                                                 ---------------

                                    EXHIBIT A
                                    PREMISES

                                       47
<PAGE>

                                    EXHIBIT B
                                    EQUIPMENT

All fixtures, machinery, apparatus, equipment, fittings and appliances of every
kind and nature whatsoever now or hereafter affixed or attached to or installed
in any of the Leased Premises (except as hereafter provided), including all
electrical, anti-pollution, heating, lighting (including hanging fluorescent
lighting), incinerating, power, air cooling, air conditioning, humidification,
sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and
ventilating systems, devices and machinery and all engines, pipes, pumps, tanks
(including exchange tanks and fuel storage tanks), motors, conduits, ducts,
steam circulation coils, blowers, steam lines, compressors, oil burners,
boilers, doors, windows, loading platforms, lavatory facilities, stairwells,
fencing (including cyclone fencing), passenger and freight elevators, overhead
cranes and garage units, together with all additions thereto, substitutions
therefor and replacements thereof required or permitted by this Lease.

Notwithstanding the foregoing, the definition of "Equipment" shall specifically
exclude all personal property and all trade fixtures, machinery, office,
manufacturing and warehouse equipment which are not necessary to the operation
of the buildings which constitute part of the Leased Premises for the uses
permitted under Paragraph 4(a) of this Lease as buildings ("Tenant's Property"),
including, without limitation, all equipment used in Tenant's material handling,
blending, extrusion, fabricating and reclaim processes and all electrical
transformers owned by the utility company, including (i) material handling
silos, blowers, motors, pipe, air compressors and air lines, chillers, water
tanks and piping in the cooling water system, and (ii) floor mounted extrusion
motors whether or not readily moveable; provided further, that nothing herein
shall relieve Tenant of its obligation to remove all of Tenant's Property upon
the expiration or earlier termination of this Lease.
<PAGE>

                                    EXHIBIT C
                             PERMITTED ENCUMBRANCES
<PAGE>

                                    EXHIBIT D
                               BASIC RENT PAYMENTS

1. Basic Rent. Subject to the adjustments provided for in Paragraphs 2, 4 and 5
   ----------
below, Basic Rent payable in respect of the Term (including any Renewal Term)
shall be $1,650,875.00 per annum, payable quarterly in advance on each Basic
Rent Payment Date, in equal installments of $412,718.75 each.

     CPI Adjustments to Basic Rent. The Basic Rent shall be subject to
     -----------------------------
adjustment, in the manner hereinafter set forth, for increases in the index
known as United States Department of Labor, Bureau of Labor Statistics, Consumer
Price Index, All Urban Consumers, United States City Average, All Items,
(1982-84=100) ("CPI") or the successor index that most closely approximates the
                ---
CPI. If the CPI shall be discontinued with no successor or comparable successor
index, Landlord and Tenant shall attempt to agree upon a substitute index or
formula, but if they are unable to so agree, then the matter shall be determined
by arbitration in accordance with the rules of the American Arbitration
Association then prevailing in New York City. Any decision or award resulting
from such arbitration shall be final and binding upon Landlord and Tenant and
judgment thereon may be entered in any court of competent jurisdiction. In no
event will the Basic Rent as adjusted by the CPI adjustment be less than the
Basic Rent in effect for the two (2) year period immediately preceding such
adjustment.

     Arbitration of Disputes. NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE
     -----------------------
AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN PARAGRAPH 2
ABOVE DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY APPLICABLE LAW AND YOU ARE
GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT
OF JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL
RIGHTS TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN
PARAGRAPH 2 ABOVE. If YOU REFUSE TO SUBMIT THE ARBITRATION AFTER AGREEING TO
THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
APPLICABLE CODE OR RULES OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION
PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO
SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN PARAGRAPH 2 ABOVE TO
NEUTRAL ARBITRATION.

                                     Initial:
                                                               -----------------
                                      (Tenant)

                                     Initial:
                                                               -----------------
                                      (Landlord)

                                      -1-
<PAGE>

     Effective Dates of CPI Adjustments. Basic Rent shall not be adjusted to
     ---------------------------------
reflect changes in the CPI until the second (2nd) anniversary of the First Full
Basic Rent. As of the second (2nd) anniversary of the First Full Basic Rent
Payment Date and thereafter on the fourth (4th), sixth (6th), eighth (8th),
tenth (10th), twelfth (12th), fourteenth (14th), sixteenth (16th) and eighteenth
(18th) and, if the initial Term is extended, on the twentieth (20th),
twenty-second (22nd), twenty-fourth (24th), twenty-sixth (26th), twenty-eighth
(28th), thirtieth (30th), thirty-second (32nd), thirty-fourth (34th),
thirty-sixth (36th) and thirty-eighth (38th) anniversaries of the First Full
Basic Rent Payment Date, Basic Rent shall be adjusted to reflect increases in
the CPI during the most recent two (2) year period immediately preceding each of
the foregoing dates (each such date being hereinafter referred to as the "Basic
                                                                          -----
Rent Adjustment Date").
--------------------

     Method of Adjustment for CPI Adjustment.
     ----------------------------------------

     As of each Basic Rent Adjustment Date when the average CPI determined in
clause (i) below exceeds the Beginning CPI (as defined in this Paragraph 5(a)),
the Basic Rent in effect immediately prior to the applicable Basic Rent
Adjustment Date shall be multiplied by a fraction, the numerator of which shall
be the difference between (i) the average CPI for the three (3) most recent
calendar months (the "Prior Months") ending prior to such Basic Rent Adjustment
                      ------------
Date for which the CPI has been published on or before the forty-fifth (45th)
day preceding such Basic Rent Adjustment Date and (ii) the Beginning CPI, and
the denominator of which shall be the Beginning CPI. The product of such
multiplication shall be added to the Basic Rent in effect immediately prior to
such Basic Rent Adjustment Date. As used herein, "Beginning CPI" shall mean the
                                                  -------------
average CPI for the three (3) calendar months corresponding to the Prior Months,
but occurring two (2) years earlier. If the average CPI determined in clause (i)
is the same or less than the Beginning CPI, the Basic Rent will remain the same
for the ensuing two (2) year period.

     Effective as of a given Basic Rent Adjustment Date, Basic Rent payable
under this Lease until the next succeeding Basic Rent Adjustment Date shall be
the Basic Rent in effect after the adjustment provided for as of such Basic Rent
Adjustment Date.

     Notice of the new annual Basic Rent shall be delivered to Tenant on or
before the twentieth (20th) day preceding each Basic Rent Adjustment Date, but
any failure to do so by Landlord shall not be or be deemed to be a waiver by
Landlord of Landlord's rights to collect such sums. Tenant shall pay to
Landlord, within ten (10) days after a notice of the new annual Basic Rent is
delivered to Tenant, all amounts due from Tenant, but unpaid, because the stated
amount as set forth above was not delivered to Tenant at least twenty (20) days
preceding the Basic Rent Adjustment Date in question.

                                      -2-
<PAGE>

                                    EXHIBIT E
                                ACQUISITION COST

Tacoma Premises                     $4,295,487
West Jordan Premises:
Developed Parcel (Lot 5)            $3,597,470
Excess Land                         $1,986,663
Perris Premises                     $2,255,131
Eugene Premises                     $2,577,292
                                    ----------

Total:                              $14,712,043
<PAGE>

                                    EXHIBIT F
                       PERCENTAGE ALLOCATION OF BASIC RENT

Tacoma Premises:                    29.20%
West Jordan Premises:
Developed Parcel (Lot 5)            24.45%
         Excess Land                13.50%
Perris Premises                     15.33%
Eugene Premises                     17.52%
                                   -------
Total:                             100.00%

If any of the Related Premises ceases to be subject to this Lease, the
percentage shown on this Exhibit F for each of the Related Premises which
remains subject to this Lease shall be adjusted proportionately so that the
total of such percentages shall be 100%.
<PAGE>

                                    EXHIBIT G
                                    COVENANTS

               1.   Transfers; Change of Control.
                    -----------------------------

                    (a) The Tenant shall not in a single transaction or series
     of related transactions, sell or convey, transfer, abandon or lease all or
     substantially all of its assets to any Person. Notwithstanding the
     foregoing, Tenant shall have the right in a single transaction or a series
     of related transactions to sell or convey all or substantially all of its
     assets to a Person if the following conditions are met: (i) the assignment
     is to a Credit Entity or is otherwise expressly permitted (without the
     consent of Landlord) under the Lease and is otherwise in accordance with
     Paragraph 21 of the Lease; and (ii) this Lease is assigned to such Person.

                    (b) At no time during the Term shall any Person or "group"
     (within the meaning of Section 13(d) or Section 14(d) of the Securities
     Exchange Act of 1934, as amended) (i) acquire, directly or indirectly, more
     than 50% of Tenant's Voting Stock or (ii) obtain the power (whether or not
     exercised) to elect a majority of Tenant's directors, unless (1) the
     purchaser of such Voting Stock or Person who acquires such power shall meet
     the qualifications of a Credit Entity or (2) such purchaser is approved as
     an assignee by Landlord under the provisions of Paragraph 21(b) of this
     Lease.

               2.   Financial Covenants.
                    -------------------

     (a) Tenant (and any successor or assign) shall: (i) have a Consolidated Net
Worth as set forth below as of the respective dates set forth below:

Period                       Net Worth

3/1/02                     $15.3 Million
6/30/02                    $17.3 Million
9/30/02                    $17.5 Million
12/31/02                   $15.5 Million
3/31/03                    $14.0 Million
6/30/03                    $15.2 Million
9/30/03                    $15.1 Million
12/31/03                   $14.8 Million
3/31/04                    $13.4 Million
6/30/04 and each
June 30th thereafter
through the Expiration Date $14.0 Million; and

     (ii) as of the dates set forth below, maintain a Fixed Charge Coverage
     Ratio for the then most recently completed calendar quarter (except as
     otherwise specifically set forth below) of not more than:

          3/31/02 (three months ended):      00.4:1
          6/30/02 (six months ended):        1.05:1
          9/30/02 (nine months ended):       1.25:1
          12/31/02 (twelve months ended):    1.00:1
          3/31/03 and each calendar quarter thereafter
          through the Expiration Date:       1.05:1

                                       1
<PAGE>

(b) Tenant's compliance with the forgoing covenants shall, in each case, be
demonstrated to the reasonable satisfaction of Landlord and any Lender, and
Tenant shall provide such financials and other supporting documentation as shall
be reasonably necessary to demonstrate Tenant's compliance with the requisite
criteria. )

(c) Notwithstanding anything to the contrary contained herein or
elsewhere in the Lease, a breach by Tenant of the covenants contained in Section
(a) of this Section 2 shall not constitute a default under the Lease to the
extent a breach or default by Tenant under the corresponding covenant contained
in Tenant's senior secured credit facility is waived or consented to by the
holder or holders of Tenant's senior secured debt, if any such senior secured
credit facility is then in place, so long as in connection with any such consent
or waiver Tenant does not, directly or indirectly, pay or cause to be paid to
such holder or holders (or any affiliates thereof) any remuneration (whether by
way of supplemental or additional interest, fee or otherwise), or agree to any
modification of such credit facility that is materially more advantageous to
such holder or holders, as an inducement to or consideration for such consent or
waiver, unless Landlord shall also receive commensurate pro rata remuneration
(based upon the principal amount outstanding under the Loam and Security
Agreement relative to the Acquisition Cost set forth on Exhibit E of this
Lease).

               3. Definitions. For the purpose of this Exhibit "G" the following
                  -----------
     terms shall have the following meanings:

     "Capitalized Lease Obligation" shall mean, any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP (provided that, if Tenant's Lenders
(as defined below) adjust the covenants contained in the Loan and Security
Agreement or modify the definitions therein solely due to accounting treatment
of this Lease, in either case, within ninety (90) days of the date hereof, then
Landlord agrees that it shall adjust the covenants and/or definitions contained
herein to properly reflect the accounting treatment of this Lease in the same
manner as Lenders).

          "Consolidated Net Income" shall mean, with respect to Tenant and its
Subsidiaries for any fiscal period, the net income (or loss) of Tenant and its
Subsidiaries for such period taken as a whole (determined in accordance with
GAAP on a consolidated basis), but excluding in any event: (a) any gains or
losses on the sale or other dispositions of investments or fixed or capital
assets or from any transaction classified as extraordinary under GAAP, any taxes
on such excluded gains and any tax deductions or credits on account of any such
excluded losses; (b) the proceeds of any life insurance policy; (c) net earnings
and losses of any business entity, substantially all the assets of which have
been acquired in any manner by Tenant, realized by such business entity prior to
the date of acquisition; (d) net earnings and losses of any business entity
which shall have merged into Tenant earned or incurred prior to the date of such
merger; (e) net earnings of any business entity (other than a consolidated
subsidiary) in which Tenant has an ownership interest unless such net earnings
shall have been received by Tenant in the form of cash distributions; (f)
earnings resulting from a reappraisal, revaluation or write-up of assets; (g)
any charge to net earnings resulting from the amortization of the value of stock
options given to employees to the extent required by FASB 25; (h) any increase
or decrease of net income arising from a change in Tenant's accounting methods;
(i) any gains resulting from the forgiveness of funded debt or the retirement of
funded debt at a discount; (j) any gains arising from the acquisition of any
securities of Tenant; and (k) any reversal of any contingency reserve, except
that provision for such contingency reserve shall have been made from income
arising during such period.

          "EBITDA" shall mean, with respect to any fiscal period, the sum of
Tenant's

                                       2
<PAGE>

Consolidated Net Income plus amounts deducted in determining Consolidated Net
Income in respect of: (a) any provision for (or less any benefits from) income
taxes whether current or deferred; (b) amortization and depreciation expense;
and (c) Interest Expense for such period.

          "Fixed Charges" means, for any period of determination, the sum of:
(a) scheduled principal payments of Funded Debt; (b) Interest Expense paid in
cash included in the determination of Consolidated Net Income; and (c) dividends
paid on Tenant's capital stock.

          "Fixed Charge Coverage Ratio" shall mean, with respect to any period
of determination, the ratio of (i) EBITDA of Tenant for such periods minus
income taxes paid in cash and non-financed capital expenditures during such
period to (ii) Fixed Charges.

          "Funded Debt" means (i) Indebtedness arising from the lending of money
by any Person to Tenant, including, without limitation, the Obligations; (ii)
Indebtedness, whether or not any such case arising from the lending by any
Person of money to Tenant (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (C) upon which
interest charges are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii) Indebtedness
that constitutes a Capitalized Lease Obligation; (iv) reimbursement obligations
with respect to letters of credit or guaranties of letters of credit; and (v)
Indebtedness of Tenant under any guaranty of obligations that would constitute
Funded Debt under clauses (i) through (iv) hereof if owed directly by Tenant or
any guaranty having the economic effect of guaranteeing any of the obligations
of any other Person. In computing the amount of Funded Debt, the Subordinated
Notes will be valued at full face value (less any payments thereon) without
giving effect to any original issue discount.

          "GAAP" shall mean generally accepted accounting principles as in
effect from time to time in the United States of America, applied on a
consistent basis.

          "Indebtedness" as applied to a Person means, without duplication:

          (i)  all items which in accordance with GAAP would be included in
               determining total liabilities as shown on the liability side of a
               balance sheet of such Person as at the date as of which
               Indebtedness is to be determined, including, without limitation,
               Capitalized Lease Obligations;

          (ii) all obligations of other Persons which such Person has
               guaranteed; (iii) all reimbursement obligations in connection
               with letters of credit or letter of credit guaranties issued for
               the account of such Person, and

          (iv) in the case of Tenant (without duplication), the Obligations.

     "Interest Expense" means, with respect to any fiscal period, the interest
expense incurred for such period excluding interest income as determined in
accordance with GAAP.

          "Loans" means, all loans and advances of any kind made by Lenders
pursuant to the Agreement.

     "Net Worth" shall mean the book net worth of the Tenant as determined in
accordance with GAAP. Net Worth shall include any unamortized value assigned to
the warrants issued in connection with the subordinated notes which value was
calculated in accordance with GAAP and is contained in Tenant's consolidated
financial statements.

                                       3
<PAGE>

     "Obligations" shall mean (i) all Loans and all other advances, debts,
liabilities, obligations, covenants and duties, together with all interest, fees
and other charges thereon, owing, arising, due or payable from Tenant to Fleet
Capital Corporation, Fleet National Bank, Harris Trust & Savings Bank, The CIT
Group Business Credit, Inc., or U.S. Bank National Association (the "Lenders")
of any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether arising under the Second Amended and
Restated Loan & Security Agreement dated September 20, 1999, as amended, by and
among Tenant and the Lenders (the "Loan and Security Agreement"), (ii) any and
all agreements, instruments and documents heretofore, now or hereafter executed
by Tenant, any subsidiary of Tenant or any other third party and delivered to
any Lender in respect of the transactions contemplated by the Loan and Security
Agreement, and (iii) any interest rate protection agreement, swaps or caps or
otherwise, whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, due or to become due, now existing
or hereafter arising and however acquired.

     "Person" shall mean an individual, partnership, association, corporation or
other entity.

     "Subordinated Notes" shall mean, those certain subordinated promissory
notes dated on or about September 20, 1999 in the original aggregate principal
amount of $32,500,000 executed by Tenant in favor of the purchasers hereof.

     "Subsidiary or "Subsidiaries"" of any Person means any corporation a
majority of the Voting Stock of which is at the time owned, or the management of
which is otherwise controlled, directly or indirectly, through one or
intermediaries, or both, by such Person.

          "Voting Stock" means shares of stock of a corporation having ordinary
          voting power to elect the board of directors or other managers of such
          corporation.

                                       4<PAGE>
                                                                 Exhibit 10.1
                                                                 ------------

                                 $38,000,000.00

                               TERM LOAN AGREEMENT

                                      AMONG

                            ALLEGIANT BANCORP, INC.,

                                    BORROWER

                         U.S. BANK NATIONAL ASSOCIATION,

                                      AGENT

                                       AND

                         U.S. BANK NATIONAL ASSOCIATION,
                         THE NORTHERN TRUST COMPANY, AND
                   FIRST TENNESSEE BANK NATIONAL ASSOCIATION,

                                    LENDERS.

                                   DATED AS OF

                               SEPTEMBER 28, 2001

<PAGE>
<PAGE>
                            TERM LOAN AGREEMENT
                            -------------------

         THIS TERM LOAN AGREEMENT (this "Agreement") is made and entered
into as of September 28, 2001, by and between ALLEGIANT BANCORP, INC., a
Missouri corporation ("Borrower"), each of the Lenders from time to time
party hereto, including U.S. BANK NATIONAL ASSOCIATION, formerly known as
Firstar Bank, N.A., a national banking association, in its capacity as a
Lender and Agent under this Agreement.

                                   WITNESSETH:

         WHEREAS, Borrower has applied for a term loan from Lenders in the
principal amount of $38,000,000.00;

         WHEREAS, U.S. Bank National Association wishes to act as Agent to
the Lenders under this Agreement; and

         WHEREAS, Lenders are willing to make said term loan to Borrower
upon, and subject to, the terms, provisions and conditions hereinafter set
forth;

         NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, Agent and Lenders mutually agree and promise as
follows:

SECTION 1.  TERM.
----------------

         The "Term" of this Agreement shall commence on September 28, 2001,
and shall end on September 27, 2002, or when Borrower's Obligations shall be
paid in full. All representations and warranties made herein shall survive
termination and termination shall not affect a party's rights with respect
to any prior breach of any term, agreement, covenant, representation or
warranty contained herein.

SECTION 2.  DEFINITIONS.
-----------------------

         In addition to the terms defined elsewhere in this Agreement or in
any Exhibit or Schedule hereto, when used in this Agreement, the following
terms shall have the following meanings (such meanings shall be equally
applicable to the singular and plural forms of the terms used, as the
context requires):

         Agency Fee shall have the meaning ascribed thereto in
         ----------
Section 3.03(b).

         Agent shall mean U.S. Bank National Association, formerly known as
         -----
Firstar Bank, N.A., a national banking association, its successors and
assigns.

         Agreement shall mean this Term Loan Agreement as the same may be
         ---------
amended, supplemented, restated or modified from time to time.

         Applicable LIBOR Margin shall mean Two and 25/100 Percent (2.25%)
         -----------------------
per annum.

         Assignee shall have the meaning ascribed thereto in Section
         --------
10.16(c).

         Attorneys' Fees shall mean the reasonable value of the services
         ---------------
(and costs, charges and expenses related thereto) (a) of the attorneys
employed by Agent in connection with the negotiation, preparation,
execution, delivery, amendment, modification, extension, renewal and/or
administration of this Agreement and/or

                                   - 2 -

<PAGE>
<PAGE>

any of the other Transaction Documents, (b) of the attorneys employed by
Agent and/or Lenders from time to time to represent Agent and/or Lenders in
any litigation, contest or proceeding or to take any other action in or with
respect to any litigation, contest or proceeding (whether instituted by
Agent, any Lender, Borrower or any other Person and whether in bankruptcy or
otherwise) in any way or respect relating to the Collateral, this Agreement
or any of the other Transaction Documents, Borrower, Subsidiary Banks, any
other Obligor, (c) of the attorneys employed by Agent and/or Lenders from
time to time to protect, collect, lease, sell, take possession of or
liquidate any of the Collateral and/or (d) of the attorneys employed by
Agent and/or Lenders from time to time to enforce any of Agent's or any
Lender's rights to collect any of Borrower's Obligations.

         Borrower shall mean Allegiant Bancorp, Inc., a Missouri
         --------
corporation, its successors and assigns.

         Business Day shall mean any day except a Saturday, Sunday or legal
         ------------
holiday observed by Agent.

         Capitalized Lease shall mean any lease which, in accordance with
         -----------------
generally accepted accounting principles consistently applied, is required
to be capitalized on the balance sheet of the lessee.

         Closing Fee shall have the meaning ascribed thereto in
         -----------
Section 3.03(a).

         Code shall mean the Internal Revenue Code of 1986, as amended, and
         ----
any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to
sections of the Code shall be construed to also refer to any successor
sections.

         Collateral shall mean all property and interests in property now
         ----------
owned or hereafter acquired by Borrower in or upon which a security
interest, lien or other encumbrance is granted to Agent or Lenders by
Borrower, whether under the Pledge Agreement, any of the other Transaction
Documents or any other agreements, documents, instruments or writings
heretofore, now or hereafter executed by Borrower and delivered to Agent or
any Lender.

         Controlled Bank shall mean any state or federally chartered bank,
         ---------------
savings bank and/or thrift and/or any bank holding company which Borrower
controls. For purposes of this definition, "control" shall have the meaning
ascribed thereto in Section 225.2(e) of Regulation Y of The Board of
Governors of The Federal Reserve System, as from time to time amended.

         Default shall mean an event or condition the occurrence of which
         -------
would, with the lapse of time, the giving of notice, or both, become or
constitute an Event of Default as defined in Section 8 hereof.

         Distribution in respect of any corporation shall mean:
         ------------
(a) dividends or other distributions on or with respect to any capital stock
of such corporation; and (b) the redemption, repurchase or other acquisition
of any capital stock of such corporation or of any warrants, rights or other
options to purchase any of such stock (except when solely in exchange for
such stock).

         Environmental Laws shall have the meaning ascribed thereto in
         ------------------
Section 10.05.

         Equity Capital shall mean, with respect to any Person, the sum of
         --------------
(a) the common stockholders' equity (meaning common stock, related surplus
and retained earnings, net of any treasury stock) of such Person, plus
                                                                  ----
(b) the noncumulative perpetual preferred stock (meaning preferred stock
that does not have a maturity date, that can not be redeemed at the option
of the holder and that has no other provisions that will require future
redemption of such preferred stock) of such Person minus (c) the total
                                                   -----
goodwill of such Person, all determined in accordance with generally
accepted accounting principles consistently applied.

                                   - 3 -

<PAGE>
<PAGE>

         ERISA shall mean the Employee Retirement Income Security Act of
         -----
1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.

         ERISA Affiliate shall mean any corporation, trade or business that
         ---------------
is, along with Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b)
and 414(c), respectively, of the Code or Section 4001 of ERISA.

         Eurodollar Business Day shall mean any Business Day on which
         -----------------------
commercial banks are open for international business (including dealings in
dollar deposits) in London.

         Event of Default shall have the meaning ascribed thereto in
         ----------------
Section 8.

         Guarantee by any Person shall mean any obligation, contingent or
         ---------
otherwise, of such Person guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by agreement to keep-well, to purchase assets, goods, securities or
services, or to take-or-pay or otherwise); provided that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb shall have a
correlative meaning.

         Indebtedness of any Person shall mean and include (a) any and all
         ------------
indebtedness, liabilities and/or obligations of such Person which in
accordance with generally accepted accounting principles consistently
applied should be classified upon a balance sheet of such Person as
liabilities of such Person, (b) any and all contingent indebtedness,
liabilities and/or obligations of such Person, whether or not reflected on
the balance sheet of such Person and (c) any and all obligations of such
Person as a lessee under any Capitalized Lease.

         Indemnified Liabilities shall have the meaning ascribed thereto in
         -----------------------
Section 10.06.

         Indemnitees shall have the meaning ascribed thereto in
         -----------
Section 10.06.

         Insider shall mean any Person to whom, with respect to Borrower,
         -------
Subsidiary Banks and/or the , the provisions of Regulation O of The Board of
Governors of the Federal Reserve System, as from time to time amended,
apply.

         Interest Period shall mean with respect to each portion of the Loan
         ---------------
subject to the LIBOR Rate: (a) initially, the period commencing on the date,
and ending 1, 2 or 3 months thereafter, as Borrower may elect in the
applicable Interest Rate Selection Notice and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable
to such portion of the Loan and ending 1, 2 or 3 months thereafter, as
Borrower may elect pursuant to Section 3.02(a); provided that: (c) subject
to clauses (d) and (e) below, any Interest Period which would otherwise end
on a day which is not a Eurodollar Business Day shall be extended to the
next succeeding Eurodollar Business Day unless such Eurodollar Business Day
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Eurodollar Business Day; (d) subject to clause (e)
below, any Interest Period which begins on the last Eurodollar Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Eurodollar Business Day of a calendar month; and (e)
no Interest Period shall extend beyond September 27, 2002.

         Interest Rate Selection Notice shall have the meaning ascribed
         ------------------------------
thereto in Section 3.02(a).

         Lender shall mean each lender listed on the signature pages hereof,
         ------
and its successors and permitted assigns; and Lenders shall mean all
                                              -------
Lenders.

                                   - 4 -

<PAGE>
<PAGE>

         LIBOR Base Rate shall mean, with respect to the applicable Interest
         ---------------
Period, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available or (b) if the LIBOR Index Rate is not available, the average
(rounded upward, if necessary, to the next higher 1/10,000 of 1%) of the
respective rates per annum of interest at which deposits in U.S. Dollars are
offered to Agent in the London interbank market by two (2) Eurodollar
dealers of recognized standing, selected by Agent in its sole discretion, at
or about 11:00 a.m. (London time) on the date two (2) Eurodollar Business
Days before the first day of such Interest Period, for delivery on the first
day of the applicable Interest Period for a number of days comparable to the
number of days in such Interest Period and in an amount approximately equal
to the principal amount of the Loan to which such Interest Period is to
apply.

         LIBOR Index Rate shall mean, with respect to the applicable
         ----------------
Interest Period, a rate per annum (rounded upwards, if necessary, to the
next higher 1/10,000 of 1%) equal to the British Bankers' Association
interest settlement rates for U.S. Dollar deposits for such Interest Period
as of 11:00 a.m. (London time) on the day two (2) Eurodollar Business Days
before the first day of such Interest Period as published by Bloomberg
Financial Services, Dow Jones Market Service, Telerate, Reuters or any other
service from time to time used by Agent.

         LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base Rate
         ----------
divided by (ii) one minus the applicable LIBOR Reserve Percentage plus (b)
                                                                  ----
the Applicable LIBOR Margin. The LIBOR Rate shall be adjusted automatically
on and as of the effective date of any change in the LIBOR Reserve
Percentage and/or the Applicable LIBOR Margin.

         LIBOR Reserve Percentage shall mean for any day that percentage
         ------------------------
(expressed as a decimal) which is in effect on such day, as prescribed by
The Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special or marginal reserves) with
respect to "Eurocurrency liabilities" as defined in Federal Reserve
Regulation D or with respect to any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR loans is
determined, whether or not Lender has any Eurocurrency liabilities subject
to such reserve requirement at such time. LIBOR loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without the benefit of any credits for proration,
exceptions or offsets which may be available from time to time to Lender.
The LIBOR Rate shall be adjusted automatically on and as of the effective
date of any change in the LIBOR Reserve Percentage.

         Lien shall mean any interest in Property securing an obligation
         ----
owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract,
including, without limitation, any security interest, mortgage, deed of
trust, pledge, lien or other encumbrance of any kind or nature whatsoever,
any conditional sale or trust receipt and any lease, consignment or bailment
for security purposes.

         Loan shall have the meaning ascribed thereto in Section 3.01.
         ----

         Loan Commitment shall mean, subject to any assignments of any
         ---------------
portion of the Loan Commitment by Lenders to the extent permitted by Section
10.17(c), $38,000,000.00 in the aggregate for all Lenders, and with respect
to each Lender, shall mean the amount set forth next to its signature line
as its Loan Commitment on the signature pages hereof or on the signature
pages of any applicable Assignment and Assumption Agreement executed by such
Bank as an assignor or assignee pursuant to Section 10.17(c) after the date
hereof.

         Multiemployer Plan shall mean a "multiemployer plan" as defined in
         ------------------
Section 4001(a)(3) of ERISA which is maintained for employees of Borrower,
any other Obligor, any ERISA Affiliate and Subsidiary Banks.

                                   - 5 -

<PAGE>
<PAGE>

         Net Income shall mean, with respect to any Person for any period,
         ----------
the aggregate net income (or net loss) of such Person for such period equal
to net revenues and other proper income less the aggregate amount of any and
all items which are properly treated as expenses under generally accepted
accounting principles consistently applied, and less Federal, state and
local income taxes, but excluding from the definition of Net Income any
extraordinary gains and/or losses and any gains and/or losses from the sale
or disposition of assets other than in the ordinary course of business, all
determined in accordance with generally accepted accounting principles
consistently applied.

         Non-Performing Assets shall mean (a) assets which constitute "other
         ---------------------
real estate owned" (as such term is defined in the guidelines, rules and
regulations of The Board of Governors of the Federal Reserve System or other
applicable Regulatory Agency pertaining to capital adequacy in effect from
time to time) and (b) assets which are classified as a loan or other
extension of credit (1) which has been placed on nonaccrual status or has
been required to be so placed by any Regulatory Agency or (2) with respect
to which any payment of any principal or interest is past due for a period
of ninety (90) days or more.

         Note and Notes shall have the meanings ascribed thereto in
         ----     -----
Section 3.01.

         Obligations shall mean any and all indebtedness (principal,
         -----------
interest, fees, collection costs and expenses and other amounts),
liabilities and obligations of Borrower to Lenders under the Notes, this
Agreement, the Pledge Agreement, any of the other Transaction Documents or
any other agreement, instrument or document heretofore, now or hereafter
executed and delivered by Borrower to Agent and Lenders, in each case
whether now existing or hereafter arising, absolute or contingent, joint
and/or several, secured or unsecured, direct or indirect, expressed or
implied in law, contractual or tortious, liquidated or unliquidated, at law
or in equity, or otherwise, and whether created directly or acquired by
Agent or Lenders by assignment or otherwise, and any and all costs of
collection and/or Attorneys' Fees incurred or to be incurred in connection
therewith.

         Obligor shall mean Borrower and each other Person who is or shall
         -------
become primarily or secondarily liable on any of Borrower's Obligations or
who grants Agent or any Lender a Lien upon any Property or assets of such
Person as collateral for any of Borrower's Obligations.

         Other Taxes shall have the meaning ascribed thereto in
         -----------
Section 3.14(b).

         Participant shall have the meaning ascribed thereto in
         -----------
Section 10.17(b).

         PBGC shall mean the Pension Benefit Guaranty Corporation and any
         ----
entity succeeding to any or all of its functions under ERISA.

         Pension Plan shall mean any "pension plan" as such term is defined
         ------------
in Section 3(2) of ERISA which is established or maintained by Borrower, any
other Obligor, any ERISA Affiliate, Subsidiary Banks, or any Subsidiary,
other than a Multiemployer Plan.

         Person shall mean an individual, partnership, corporation, trust,
         ------
unincorporated organization or association, and a government or agency or
political subdivision thereof.

         Pledge Agreement shall mean that certain General Pledge and
         ----------------
Security Agreement dated as of September 28, 2001, and executed by Borrower
in favor of Agent, for the benefit of Lenders, as the same may from time to
time be amended, modified, extended or renewed.

         Primary Capital shall mean: (a) with respect to Borrower, the
         ---------------
Equity Capital of Borrower, plus the total allowance for possible loan and
                            ----
lease losses of Borrower, plus the total amount of all trust preferred
                          ----
securities of Borrower allowable as Tier 1 capital under the Risk-Based
Capital Adequacy Guidelines for Bank

                                   - 6 -

<PAGE>
<PAGE>

Holding Companies of The Board of Governors of the Federal Reserve System as
set forth in Appendix A to 12 C.F.R. Part 225, as amended (or in any
successor law, rule or regulation of similar import), minus the good will of
                                                      -----
Borrower, all as determined in accordance with generally accepted accounting
principles consistently applied; and (b) with respect to any Person that is
a Subsidiary Bank or other Subsidiary of Borrower, the Equity Capital of
such Person plus the total allowance for possible loan and lease losses of
            ----
such Person, all as determined in accordance with generally accepted
accounting principles consistently applied.

         Prime Rate shall mean the interest rate announced from time to time
         ----------
by Agent as its "prime rate" on commercial loans, which rate shall fluctuate
as and when said prime rate shall change.

         Property shall mean any interest in any kind of property or asset,
         --------
whether real, personal or mixed, or tangible or intangible. Properties shall
                                                            ----------
mean the plural of Property. For purposes of this Agreement, each of
Borrower, Subsidiary Banks and the shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for
security purposes.

         Regulatory Agency shall mean any Federal, state or local
         -----------------
governmental, regulatory or administrative agency, authority, entity or
official having jurisdiction over the banking or other related activities of
Borrower, Subsidiary Banks and/or the , including, without limitation (to
the extent applicable), The Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation, and the Missouri
Director of Finance.

         Regulatory Change shall have the meaning ascribed thereto in
         -----------------
Section 3.11.

         Related Party shall mean any Person which directly or indirectly
         -------------
through one or more intermediaries controls, or is controlled by or is under
common control with, Borrower and/or Subsidiary Banks. The term "control"
shall mean the possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the capital stock of any Person or the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or
otherwise.

         Reportable Event shall have the meaning given to such term in
         ----------------
ERISA.

         Required Lenders shall mean at any time Lenders having greater than
         ----------------
Fifty Percent (50%) of the aggregate amount of the Loan then outstanding;
provided, however, that if there are three (3) or fewer Lenders, Required
Lenders shall mean all Lenders.

         Subordinated Indebtedness shall mean, as of the date of any
         -------------------------
determination thereof, the aggregate principal amount of all Indebtedness of
Borrower to one or more shareholders and/or directors of Borrower
outstanding as of such date which is subordinated in writing (either by its
terms or pursuant to a subordination agreement) to the payment and priority
of all of the Borrower's Obligations in form and substance satisfactory to
Lender in its sole and absolute discretion.

         Subsidiary shall mean, with respect to any Person, any corporation
         ----------
of which fifty percent (50%) or more of the issued and outstanding capital
stock entitled to vote for the election of directors (other than by reason
of default in the payment of dividends) is at the time owned directly or
indirectly by such Person.

         Subsidiary Banks shall mean collectively: Allegiant Bank, a
         ----------------
Missouri banking corporation; The Bank of St. Charles, a Missouri banking
corporation; Bank of Ste. Genevieve, a Missouri banking corporation; South
Side National Bank, a national banking association; and State Bank of
Jefferson County, a Missouri banking corporation.

                                   - 7 -

<PAGE>
<PAGE>

         Taxes shall have the meaning ascribed thereto in Section 3.14(a).
         -----

         Term shall have the meaning ascribed thereto in Section 1.
         ----

         Transaction Documents shall mean this Agreement, the Note, the
         ---------------------
Pledge Agreement, and all other agreements, documents, instruments and
certificates connected with or otherwise relating to this Agreement or the
Loan made hereunder, all as the same may from time to time be amended,
modified, extended or renewed.

SECTION 3.  THE LOAN.
--------------------

         3.01    Term Loan. Lenders have agree to make a term loan to
                 ---------
Borrower in the aggregate principal amount of Thirty Eight Million Dollars
($38,000,000.00) (the "Loan"). The Loan shall be made by Lenders ratably in
proportion to their respective Loan Commitments. The Loan is evidenced by:
that certain Term Loan Promissory Note of Borrower dated September 28, 2001,
and payable to the order of U.S. Bank National Association, in the original
principal amount equal to the Loan Commitment of said Lender; that certain
Term Loan Promissory Note of Borrower dated September 28, 2001, and payable
to the order of The Northern Trust Company, in the original principal amount
equal to the Loan Commitment of said Lender; and the certain Term Loan
Promissory Note of Borrower dated September 28, 2001, and payable to the
order of First Tennessee Bank National Association, in the original
principal amount equal to the Loan Commitment of said Lender (each, as the
same may from time to time be amended, modified, extended or renewed, a
"Note"; collectively, the "Notes"; the form of the Notes is attached hereto
and incorporated by reference as Exhibit A). The Notes mature on September
                                 ---------
27, 2002 (on which date all unpaid principal and all accrued and unpaid
interest thereon shall become due and payable). The principal amount of and
interest on the Loan shall be payable as set forth in the Notes. In addition
to the scheduled principal payments described in the Notes, all proceeds of
the sale(s) of any of the stock or substantially all of the Property of any
Subsidiary shall be delivered to Agent and applied to the principal balance
of the Loan, subject to the other provisions of this Agreement. All
principal payments and prepayments on the Loan shall, unless otherwise
directed by Borrower in writing at or prior to the time of such payment or
prepayment, be applied first to that portion of the Loan, if any, accruing
interest based on the Prime Rate and then to those portions of the Loan, if
any, accruing interest based on the LIBOR Rate (and among those portions of
the Loan, if any, accruing interest based on the LIBOR Rate, being applied
to the Interest Periods in the order of their respective expiration dates
(i.e. earliest expiration date first)).

         3.02    Interest Rates.
                 --------------

         (a)     The Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Prime Rate. So
long as no Default or Event of Default under this Agreement has occurred
and is continuing, Borrower may from time to time fix the interest rate on
all or any portion of the Loan in an amount not less than $10,000,00.00 or
any larger multiple of $1,000,000.00 at the LIBOR Rate for the Interest
Period selected by Borrower (subject to the definition of Interest Period);
provided that at all times during the Term of this Agreement, the aggregate
portion of the Loan bearing interest at the Prime Rate must be an amount of
at least Seven Hundred Fifty Thousand Dollars ($750,000.00). If Borrower
elects to have any portion of the Loan bear interest at the LIBOR Rate,
Borrower shall give oral or written notice (an "Interest Rate Selection
Notice") to Lender by 12:00 noon (St. Louis time) at least three (3)
Eurodollar Business Days before any date (which must be a Eurodollar
Business Day) upon which Borrower desires to fix the interest rate on any
portion of the Loan, which Interest Rate Selection Notice shall specify the
portion of the Loan which is to bear interest at the LIBOR Rate and the
initial Interest Period applicable thereto. Borrower may not revoke or
rescind any Interest Rate Selection Notice. Unless Borrower shall have
otherwise notified Lender in accordance with this Section 3.02(a), upon the
expiration of any Interest Period, that portion of the Loan bearing
interest at the LIBOR Rate during such Interest Period shall bear interest
at the Prime Rate from and after the expiration of such Interest Period.

         (b)     So long as any Event of Default has occurred and is
continuing, each portion of the Loan

                                   - 8 -

<PAGE>
<PAGE>

subject to the Prime Rate shall bear interest on the outstanding principal
amount thereof for each day until paid at a rate per annum equal to Three
Percent (3%) over and above the Prime Rate. From and after the maturity of
the Notes, whether by reason of acceleration or otherwise, each portion of
the Loan subject to the Prime Rate shall bear interest, payable on demand,
for each day until paid at a rate per annum equal to Three Percent (3%) over
and above the Prime Rate.

         (c)     So long as any Event of Default has occurred and is
continuing, each each portion of the Loan subject to the LIBOR Rate shall
bear interest on the outstanding principal amount thereof for each Interest
Period applicable thereto at a rate per annum equal to Three Percent (3%)
over and above the applicable LIBOR Rate. Interest shall be payable for
each Interest Period on the last day thereof. From and after the maturity
of the Notes, whether by reason of acceleration or otherwise, each each
portion of the Loan subject to the LIBOR Rate shall bear interest, payable
on demand, for each day until paid, at a rate per annum equal to Three
Percent (3%) over and above the higher of (i) the applicable LIBOR Rate for
the immediately preceding Interest Period or (ii) the Prime Rate.

         (d)     Agent shall determine each interest rate applicable
to the Loan and its determination thereof shall be conclusive in the
absence of manifest error.

         (e)     Interest on each portion of the Loan subject to the
Prime Rate shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but
excluding the last day). Interest on each portion of the Loan subject to
the LIBOR Rate shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed, calculated as to each Interest
Period from and including the first day thereof to but excluding the last
day thereof.

         3.03    Fees.
                 ----

         (a)     Borrower shall pay each Lender a closing fee equal to
25/100 Percent (.25%) of the Loan Commitment of each Lender, due and
payable contemporaneously with the execution of this Agreement (the
"Closing Fee").

         (b)     Borrower shall pay Agent the agency fee described in
the separate fee letter executed by Agent and Borrower, due and payable
contemporaneously with the execution of this Agreement (the "Agency Fee").

         (c)     If Borrower fails to make any payment of any
principal of or interest on the Loan within ten (10) days after the date
the same shall become due and payable, whether by reason of maturity,
acceleration or otherwise, in addition to all of the other rights and
remedies of Agent and Lenders under this Agreement and at law or in equity,
Borrower shall pay Lenders on demand with respect to each such late payment
a late fee in an amount equal to Five Percent (5%) of the amount of each
such late payment.

         3.04    Prepayment.
                 ----------

         (a)     Borrower shall have the right to prepay all at any
time or any portion from time to time of the unpaid principal of the Notes
subject to the Prime Rate prior to maturity, without penalty or premium,
provided that: (i) partial prepayments shall be applied to the installments
of principal of the Notes in the inverse order of their stated maturities;
(ii) on each prepayment date, Borrower shall pay to the order of each
Lender all accrued and unpaid interest on the principal portion of the
Notes being prepaid to and including the date of such prepayment; and (iii)
partial prepayments shall be in integral multiples of One Thousand Dollars
($1,000.00).

         (b)     Borrower may, upon at least three (3) Eurodollar
Business Day's notice to Agent specifying that it is paying a portion or
portions of the Loan subject to the LIBOR Rate, pay said portions to which
a given Interest Period applies, in whole, or in part in amounts
aggregating $5,000,000.00 or any larger multiple of

                                   - 9 -

<PAGE>
<PAGE>

$1,000,000.00, by paying the principal amount to be paid together with all
accrued and unpaid interest thereon to and including the date of payment and
any funding losses and other amounts payable under Section 3.08.

         3.05    Payments not on a Business Day. In the event any installment
                 ------------------------------
of principal or interest under the Notes shall become due on a day which is
not a Business Day, such principal and interest shall be payable on the next
succeeding Business Day.

         3.06    Place of Payment. Both principal and interest under the
                 ----------------
Notes are payable to Lenders in lawful currency of the United States in
Federal or other immediately available funds at Agent's banking office at
One Firstar Plaza, 7th & Washington Streets, St. Louis, Missouri 63101.

         3.07    Sharing of Payments. Lenders agree among themselves that,
                 -------------------
in the event that any Lender shall directly or indirectly obtain any payment
(whether voluntary, involuntary, through the exercise of any right of
setoff, banker's lien or counterclaim, through the realization, collection,
sale or liquidation of any Collateral or otherwise) on account of or in
respect of the Loan or any other Borrower's Obligations in excess of its pro
rata share of all such payments, such Lender(s) shall immediately purchase
from the other Lender(s) participations in the Loan or other Borrower's
Obligations owed to such other Lenders in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that the
Lenders share such payment ratably in accordance with their respective pro
rata shares of the outstanding Loan and other Borrower's Obligations.
Lenders further agree among themselves that if any such excess payment to a
Lender shall be rescinded or must otherwise be restored, the other Lender(s)
which shall have shared the benefit of such payment shall, by repurchase of
participation theretofore sold, or otherwise, return its share of that
benefit to the Lender whose payment shall have been rescinded or otherwise
restored. Borrower agrees that any Lender so purchasing a participation in
the Loan or other Borrower's Obligations to the other Lenders may exercise
all rights of setoff, banker's lien and/or counterclaim as fully as if such
Lender was a holder of the Loan or other Borrower's Obligations in the
amount of such participation. If under any applicable bankruptcy, insolvency
or other similar law any Bank receives a secured claim in lieu of a setoff
to which this Section 3.07 would apply, such Lenders shall, to the extent
practicable, exercise their rights in respect of such secured claim in a
manner consistent with the rights of Lenders entitled under this Section
3.07 to share in the benefits of any recovery of such secured claim.

         3.08    Funding Losses. Notwithstanding any provision contained in
                 --------------
this Agreement to the contrary, (a) if Borrower makes any payment of
principal with respect to any portion of the Loan subject to the LIBOR Rate
on any day other than the last day of the Interest Period applicable
thereto, or if Borrower fails to borrow or pay any portion of the Loan
subject to the LIBOR Rate after notice has been given to by Borrower to
Agent in accordance with Section 3.02, 3.04, or otherwise, Borrower shall
reimburse Agent and Lenders on demand for any resulting losses and expenses
incurred by them, including, without limitation, any losses incurred in
obtaining, liquidating or employing deposits from third parties and any loss
of margin for the period after any such payment, provided that Agent shall
have delivered to Borrower a certificate setting forth in reasonable detail
the calculation of the amount of such losses and expenses, which calculation
shall be conclusive in the absence of demonstrable error.

         3.09    Basis for Determining Interest Rate Inadequate or Unfair.
                 --------------------------------------------------------
If with respect to any Interest Period: (a) deposits in dollars (in the
applicable amounts) are not being offered to Agent or Lenders in the
relevant market for such Interest Period, or (b) Agent or any Lender
determines that the LIBOR Rate as determined pursuant to the definition
thereof will not adequately and fairly reflect the cost to Lenders of
maintaining or funding the portion of the Loan subject to the LIBOR rate for
such Interest Period, Agent shall forthwith give notice thereof to Borrower
which notice shall set forth in detail the basis for such notice, whereupon
until Agent notifies Borrower that the circumstances giving rise to such
suspension no longer exist, (i) the LIBOR Rate shall not be available to
Borrower as an interest rate option on the Loan, and (ii) all of the then
outstanding portions of the Loan subject to the LIBOR rate shall
automatically convert to the Prime Rate on the last day of the then current
Interest Period applicable to each such portion. Interest accrued on each
such portion of the Loan subject to the LIBOR rate prior to

                                   - 10 -

<PAGE>
<PAGE>

any such conversion shall be due and payable on the date of such conversion
together with any funding losses and other amounts due under Section 3.08.

         3.10    Illegality. If, after the date of this Agreement, the adoption
                 ----------
of any applicable law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any governmental
or regulatory authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or Lenders
with any request or directive (whether or not having the force of law) of
any such governmental or regulatory authority, central bank or comparable
agency shall make it unlawful or impossible for Lender to make, maintain or
fund the Loan with the LIBOR Rate to Borrower, Agent shall forthwith give
notice thereof to Borrower. Upon receipt of such notice, Borrower shall
convert all of the then outstanding portions of the Loan subject to the
LIBOR Rate on either (a) the last day of the then current Interest Period if
Lenders may lawfully continue to maintain and fund the LIBOR Rate to such
day or (b) immediately if Lenders may not lawfully continue to fund and
maintain such portion to such day, to the Prime Rate in an equal principal
amount. Interest accrued on each such portions of the Loan subject to the
LIBOR rate prior to any such conversion shall be due and payable on the date
of such conversion together with any funding losses and other amounts due
under Section 3.08.

         3.11    Increased Cost.
                 --------------

         (a)     If (i) Federal Reserve Regulation D or (ii) after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration
thereof by any governmental or regulatory authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by Agent or Lenders with any request or directive
(whether or not having the force of law) of any such governmental or
regulatory authority, central bank or comparable agency (a "Regulatory
Change"): (A) shall subject Agent or Lenders to any tax, duty or other
charge with respect to the LIBOR Rate, the Notes or its obligation to fund
any portion of the Loan subject to the LIBOR Rate, or shall change the
basis of taxation of payments to Agent or Lenders of the principal of or
interest on any portion of the Loan subject to the LIBOR Rate or any other
amounts due under this Agreement in respect of any portion of the Loan
subject to the LIBOR Rate (except for taxes on or changes in the rate of
tax on the overall net income of Agent or Lender); or (B) shall impose,
modify or deem applicable any reserve (including, without limitation, any
reserve imposed by the Board of Governors of the Federal Reserve System),
special deposit, capital or similar requirement against assets of, deposits
with or for the account of, or credit extended or committed to be extended
by, Agent or Lenders or shall, with respect to Agent or Lenders impose,
modify or deem applicable any other condition affecting the any portion of
the Loan subject to the LIBOR Rate, the Notes or Lenders' obligations to
fund any portion of the Loan subject to the LIBOR Rate; and the result of
any of the foregoing is to increase the cost to (or in the case of Federal
Reserve Regulation D, to impose a cost on or increase the cost to) Agent or
Lenders of making or maintaining the LIBOR Rate for any portion of the
Loan, or to reduce the amount of any sum received or receivable by Agent or
Lenders under this Agreement or under any of the Notes with respect
thereto, by an amount deemed by Required Lenders to be material, and if
Lenders are not otherwise fully compensated for such increase in cost or
reduction in amount received or receivable by virtue of the inclusion of
the reference to "LIBOR Reserve Percentage" in the calculation of the LIBOR
Rate, then upon notice by Agent to Borrower, which notice shall set forth
Agent's supporting calculations and the details of the Regulatory Change,
Borrower shall pay Lenders, as additional interest, such additional amount
or amounts as will compensate Lenders for such increased cost or reduction.
The determination by Agent or Required Lenders under this Section of the
additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. In determining such amount or amounts,
Agent and Lenders may use any reasonable averaging and attribution methods.

         (b)     If Agent or any Lender demands compensation under
Section 3.11(a) above, Borrower may at any time, upon at least three (3)
Eurodollar Business Day's prior notice to Agent, convert its then
outstanding portion of the Loan subject to the LIBOR Rate to the Prime Rate
in an equal principal amount. Interest accrued on each such outstanding
portion(s) of the Loan subject to the LIBOR Rate prior to any such
conversion shall be due and payable on the date of such conversion together
with any funding losses and other amounts due under Section 3.08 and this
Section 3.11.

                                   - 11 -

<PAGE>
<PAGE>

         3.12    Capital Adequacy. If, after the date of this Agreement,
                 ----------------
Agent or any Lender shall have determined in good faith that the adoption of
any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental or regulatory authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Lenders with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or will have the effect of
reducing the rate of return on Lenders' capital in respect of its
obligations under this Agreement to a level below that which Lenders could
have achieved but for such adoption, change or compliance (taking into
consideration Lenders' policies with respect to capital adequacy), then from
time to time Borrower shall pay to Lenders upon demand such additional
amount or amounts as will compensate Lenders for such reduction. All
determinations made in good faith by Agent of the additional amount or
amounts required to compensate Lenders in respect of the foregoing shall be
conclusive in the absence of manifest error. In determining such amount or
amounts, Lenders may use any reasonable averaging and attribution methods.

         3.13    Survival of Indemnities. All indemnities and all
                 -----------------------
provisions relating to reimbursement to Lender of amounts sufficient to
protect the yield to Lenders with respect to the Loan, including, without
limitation, Sections 3.08, 3.09, 3.10, 3.11 and 3.12 hereof, shall survive
the payment of the Notes, the other Borrower's Obligations and the
termination of this Agreement.

         3.14    Taxes.
                 -----

         (a)     Any and all payments by Borrower to or for the account of
any Lender under or in respect of this Agreement, any Note and/or any other
Transaction Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of Lenders, taxes imposed on or measured by
         ---------
its net income, and franchise taxes imposed on it, by the jurisdiction under
the laws of which Lenders are organized or any political subdivisions
thereof (all such non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as
"Taxes"). If Borrower shall be required by law to deduct any Taxes from or
in respect of any sum payable by Borrower to Lenders under or in respect of
this Agreement, any Note and/or any other Transaction Document, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.14(a)) each Lender receive an amount equal to the sum it
would have received had no such deduction of Taxes been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and (iv) Borrower shall furnish to Lenders, the original
or a certified copy of a receipt evidencing payment thereof.

         (b)     In addition, Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or
charges or similar levies which arise from any payment made under or in
respect of this Agreement, any Note and/or any other Transaction Document or
from the execution or delivery of, or otherwise with respect to, this
Agreement, any Note and/or any other Transaction Document (hereinafter
referred to as "Other Taxes").

         (c)     Borrower agrees to indemnify Lenders for the full amount of
Taxes or Other Taxes, respectively (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 3.14), paid by Lenders and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
This indemnification shall be made within fifteen (15) days from the date
any Lender makes demand therefor, accompanied by a certificate of such
Lender setting forth in reasonable detail its computation of the amount or
amounts to be paid to it hereunder.

                                   - 12 -

<PAGE>
<PAGE>

         (d)     The provisions of this Section 3.14 shall survive any
expiration or termination of this Agreement and the payment of the Notes and
the other Borrower's Obligations.

SECTION 4.  PRECONDITIONS TO LOAN
---------------------------------

         Notwithstanding any provision contained herein to the contrary,
Lenders shall have no obligation to make the Loan hereunder unless the
following conditions shall have first been met:

         1.      Agent shall have received this Agreement and the Notes
(which shall then be delivered to each Lender), each executed by a duly
authorized officer of Borrower;

         2.      Agent shall have received the duly executed Pledge
Agreement, collateral schedules, stock powers and such other documents as
Agent may require in connection with the Pledge Agreement;

         3.      Agent shall have received from Borrower the shares
representing 100% of the common stock of each Subsidiary Bank (as verified
by the Secretary of each Subsidiary Bank) as described in Schedule 5.14
                                                          -------------
attached hereto and incorporated by reference, all said shares to be
issued in Borrower's name and accompanied by stock powers duly executed in
blank by an authorized officer of Borrower;

         4.      Agent shall have received a Federal Reserve Form U-1,
executed by a duly authorized officer of Borrower;

         5.      Agent shall have received a copy of resolutions of the
Board of Directors of Borrower, duly adopted, which authorize the
execution, delivery and performance of this Agreement, the Notes, the
Pledge Agreement and the other Transaction Documents, certified by the
President and Secretary of Borrower;

         6.      Agent shall have received a copy of the Certificate or
Articles of Incorporation of Borrower, including any amendments thereto,
certified by the Secretary of the Borrower.

         7.      Agent shall have received a copy of the By-Laws of Borrower,
including any amendments thereto, certified by the Secretary of Borrower;

         8.      Agent shall have received a certificate of corporate good
standing of Borrower issued by the Secretary of State of the State of
Missouri;

         9.      Borrower shall provide Lenders with evidence that Borrower
has raised a minimum of $40,000,000.00 from the issuance of trust
preferred securities by Allegiant Capital Trust II;

         10.     No material adverse change in the financial condition of
Borrower or any of the Subsidiary Banks shall have occurred since December
31, 2000;

         11.     No pending or threatened litigation or other proceeding or
investigation shall exist which might materially and adversely affect the
prospects, operation or condition (financial or otherwise) of Borrower or
any Subsidiary Bank;

         12.     Neither Borrower nor any Subsidiary Bank shall have
defaulted, or shall have taken or failed to take any action which, unless
corrected, would give rise to a default, on any of their Indebtedness; and

         13.     Agent shall have first received such other agreements,
documents, instruments, certificates and assurances as Agent may
reasonably request.

                                  - 13 -

<PAGE>
<PAGE>

         14.     Lenders shall have received the Closing Fee and Agent shall
have received the Agency Fee.

SECTION 5.  REPRESENTATIONS AND WARRANTIES.
------------------------------------------

         To induce Agent and Lenders to make the Loan, Borrower hereby
represents and warrants to Agent and Lenders that:

         5.01    Corporate Existence and Power. Borrower, each Subsidiary
                 -----------------------------
Bank, and each other Subsidiary of Borrower: (a) is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation; (b) has all requisite corporate powers and all
governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted; and (c) is duly qualified to do
business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure to so
qualify would have a material adverse effect on its business, financial
condition or operations. Borrower is a "bank holding company" as defined
in and within the meaning of 12 U.S.C. Section 1841 et seq., and as such
                                                    -- ---
Borrower has filed all necessary reports with and received all necessary
approvals from The Board of Governors of the Federal Reserve System. Each
Subsidiary Bank is an "insured bank" as defined in and within the meaning
of 12 U.S.C. Section 1813.

         5.02    Corporate Authorization. The execution, delivery and
                 -----------------------
performance by Borrower of this Agreement, the Notes, the Pledge Agreement,
and the other Transaction Documents are within the corporate powers of
Borrower and have been duly authorized by all necessary corporate action.

         5.03    Binding Effect. This Agreement, the Notes, the Pledge
                 --------------
Agreement, and the other Transaction Documents have been duly authorized,
executed and delivered by Borrower and constitute the legal, valid and
binding obligations of Borrower enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights in
general.

         5.04    Financial Statements. Borrower has furnished Lenders with
                 --------------------
the following financial statements, identified by the principal financial
officer of Borrower: (1) consolidated and consolidating balance sheets,
income statements and cash flow statements of Borrower and its
Subsidiaries as of December 31, 2000, all certified by Borrower's
independent certified public accountants, which financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied; and (2) an unaudited consolidated balance sheet and
an unaudited consolidated income statement of Borrower and its
Subsidiaries as of June 30, 2001, certified by the principal financial
officer of Borrower as being true and correct to the best of his or her
knowledge and as being prepared in accordance with Borrower's normal
accounting procedures. Borrower further represents and warrants to Lender
that: (1) said balance sheets and their accompanying notes fairly present
the condition of Borrower and its Subsidiaries as of the dates thereof,
(2) there has been no material adverse change in the condition or
operation, financial or otherwise, of Borrower or any of its Subsidiaries
since June 30, 2001, and (3) neither Borrower nor any of its Subsidiaries
has any direct or contingent liabilities which are not disclosed on said
financial statements.

         5.05    Litigation. Except as disclosed in Schedule 5.05, there
                 ----------                         -------------
is no action or proceeding pending or, to the knowledge of Borrower,
threatened against or affecting Borrower, any Subsidiary Bank, or any
other Subsidiary of Borrower before any court, arbitrator or governmental,
regulatory or administrative body, agency or official which could result
in any material adverse change in the condition or operation, financial or
otherwise, of Borrower, any Subsidiary Bank, any other Subsidiary of
Borrower, and none of Borrower, any Subsidiary Bank, or any other
Subsidiary of Borrower is in default with respect to any order, writ,
injunction, decision or decree of any court, arbitrator or governmental,
regulatory or administrative body, agency or official,

                                  - 14 -

<PAGE>
<PAGE>

a default under which could have a material adverse effect on the
condition or operation, financial or otherwise, of Borrower, any
Subsidiary Bank, or any other Subsidiary of Borrower.

         5.06    Pension and Welfare Plans. Each Pension Plan complies
                 -------------------------
with all applicable statutes and governmental rules and regulations; no
Reportable Event has occurred and is continuing with respect to any
Pension Plan; none of Borrower, any ERISA Affiliate, any Subsidiary Bank,
or any other Subsidiary of Borrower has withdrawn from any Multiemployer
Plan in a "complete withdrawal" or a "partial withdrawal" as defined in
Sections 4203 or 4205 of ERISA, respectively; no steps have been
instituted by Borrower, any ERISA Affiliate, any Subsidiary Bank, or any
other Subsidiary of Borrower to terminate any Pension Plan; no condition
exists or event or transaction has occurred in connection with any Pension
Plan or Multiemployer Plan which could result in the incurrence by
Borrower, any ERISA Affiliate, any Subsidiary Bank, or any other
Subsidiary of Borrower of any material liability, fine or penalty; and
none of Borrower, any ERISA Affiliate, any Subsidiary Bank, or any other
Subsidiary of Borrower is a "contributing sponsor" as defined in Section
4001(a)(13) of ERISA of a "single-employer plan" as defined in Section
4001(a)(15) of ERISA which has two or more contributing sponsors at least
two of whom are not under common control. None of Borrower, any Subsidiary
Bank, or any other Subsidiary of Borrower has any contingent liability
with respect to any "employee welfare benefit plans", as such term is
defined in Section 3(a) of ERISA, which covers retired employees and their
beneficiaries.

         5.07    Tax Returns and Payment. Borrower, Subsidiary Banks, and
                 -----------------------
each other Subsidiary of Borrower have filed all Federal, state and local
income tax returns and all other tax returns which are required to be
filed and has paid all taxes due pursuant to such returns or pursuant to
any assessment received by Borrower, Subsidiary Banks, or such other
Subsidiary of Borrower, as the case may be, except for the filing of such
returns, if any, in respect of which an extension of time for filing is in
effect.

         5.08    Subsidiaries. Borrower has no Subsidiaries other than
                 ------------
Subsidiary Banks and Subsidiary Banks have no Subsidiaries except those
Subsidiaries described in Schedule 5.08 attached hereto and incorporated by
                          -------------
reference.

         5.09    Compliance With Other Instruments; None Burdensome. None of
                 --------------------------------------------------
the execution and delivery by Borrower of the Transaction Documents, the
consummation of the transactions therein contemplated or the compliance with
the provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Borrower, Subsidiary Banks,
or any other Subsidiary of Borrower, or any of the provisions of Borrower's
Articles of Incorporation or By-Laws or any of the provisions of any
indenture, agreement, document, instrument or undertaking to which Borrower,
Subsidiary Banks, or any other Subsidiary of Borrower is a party or subject,
or by which it or its Property is bound. No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental, regulatory,
administrative or public body or authority, or any subdivision thereof, or
any other Person is required to authorize, or is otherwise required in
connection with, the execution, delivery or performance of, or the legality,
validity, binding effect or enforceability of, any of the Transaction
Documents.

         5.10    Other Loans and Guarantees. Except as disclosed on
                 --------------------------
Schedule 5.10 attached hereto, none of Borrower, Subsidiary Banks, or any
-------------
other Subsidiary of Borrower is borrower, guarantor or obligor with
respect to any loan transaction, Guarantee or other Indebtedness for
borrowed money.

         5.11    Title to Property. Borrower, Subsidiary Banks, and each
                 -----------------
other Subsidiary of Borrower are the sole and absolute owners of, or have
the legal right to use and occupy, all Property they claim to own or which
is necessary for Borrower, Subsidiary Banks, or such other Subsidiary of
Borrower to conduct their business. None of Borrower, Subsidiary Banks, or
any other Subsidiary of Borrower has signed any financing statements,
security agreements or chattel mortgages with respect to any of its
Property, has granted or permitted any Liens with respect to any of its
Property or has any knowledge of any Liens with respect to any of its
Property, except as disclosed on Schedule 5.11 attached hereto.
                                 -------------

                                  - 15 -

<PAGE>
<PAGE>

         5.12    Regulation U. No part of the proceeds of the Loan will be
                 ------------
used, whether directly or indirectly, and whether immediately, incidentally
or ultimately (a) to purchase or carry margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock, or to refund
or repay indebtedness originally incurred for such purpose or (b) for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of any of the Regulations of The Board of Governors of the
Federal Reserve System, including, without limitation, Regulations G, U, T
or X thereof, as amended. If requested by Lender, Borrower shall furnish to
Lender a statement in conformity with the requirements of Federal Reserve
Form U-1 referred to in Regulation U.

         5.13    Environmental Matters. There are no disputes pending (nor,
                 ---------------------
to the knowledge of Borrower, are there any disputes threatened nor, to
the knowledge of Borrower, is there any basis therefor) affecting
Borrower, any Subsidiary Bank, or any other Subsidiary of Borrower,
whether or not in or before any court or arbitrator of any kind or
involving any governmental or regulatory body, which, if adversely
determined, could, singly or in the aggregate, have a material adverse
effect on the business, Properties, assets, liabilities, financial
condition, results of operations or business prospects of Borrower, any
Subsidiary Bank, or any other Subsidiary of Borrower or on the ability of
Borrower to perform its obligations hereunder or under the Notes or any of
the other Transaction Documents, relating to environmental matters,
including, without limitation, any notice from any agency, state or
Federal, that Borrower, any Subsidiary Bank, or any other Subsidiary of
Borrower is a potentially responsible party for the cleanup of any
environmental waste site, that Borrower, any Subsidiary Bank, or any other
Subsidiary of Borrower is in violation of any environmental permit or
regulation, that Borrower, Subsidiary Banks, or any other Subsidiary of
Borrower has been placed on any registry of solid or hazardous waste
disposal sites, or of the expiration, revocation or denial of any
environmental permit or other loss of interim status or other current
authorization to operate any unit or portion of the facilities of
Borrower, any Subsidiary Bank, or any other Subsidiary of Borrower.

         5.14    Shares of Subsidiary Banks. The authorized capital of each
                 --------------------------
Subsidiary Bank consists solely of the number of shares of common stock
having the par value described in Schedule 5.14 attached hereto and
                                  -------------
incorporated by reference. As of the date hereof, Borrower is the sole legal
and beneficial owner of all of the shares of common stock of each Subsidiary
Bank, representing One Hundred Percent (100%) of all of the outstanding and
issued shares of common stock of each Subsidiary Bank, subject to no Liens,
warrants, options, proxies or restrictions on transfer, resale or other
disposition (except those in favor of Agent or Lenders); that all of such
shares are all validly issued, fully paid and nonassessable; and that
Borrower has the unqualified right and power to grant a security interest in
such shares without the consent of any other Person being required therefor.
As of the date hereof, there are no warrants or options, or any agreements
to issue any warrants or options, outstanding with respect to any class of
capital stock of each Subsidiary Bank.

SECTION 6.  AFFIRMATIVE COVENANTS.
---------------------------------

         Borrower covenants and agrees that, so long as any of Borrower's
Obligations are outstanding, it will:

         6.01    Insurance. (a) Keep adequately insured, and cause each
                 ---------
Subsidiary Bank, and each other Subsidiary of Borrower to keep adequately
insured, by financially sound and reputable insurers acceptable to Lender
and in amounts reasonably acceptable to Agent and Required Lenders, all
Property of Borrower, each Subsidiary Bank, and the other Subsidiaries of
Borrower of the character usually insured by corporations engaged in the
same or similar businesses similarly situated, against loss or damage of the
kind customarily insured against by such corporations and acceptable to
Agent, (b) Provide, and cause Borrower, each Subsidiary Bank and the other
Subsidiaries of Borrower to provide their directors and officers with
directors and officers insurance from financially sound and reputable
insurers acceptable to Lender and in amounts reasonably acceptable to Agent
and Required Lenders, and (c) Cause each Subsidiary Bank to maintain
coverage under a

                                  - 16 -

<PAGE>
<PAGE>

banker's blanket bond in an amount equal to the greater of the amount of
coverage currently maintained by each Subsidiary Bank or the minimum
coverage recommended by the American Banker's Association, plus such
excess fidelity coverage as Agent may reasonably request from time to
time. Promptly after Agent's or any Lender's request therefor, Borrower
shall provide Agent and Lenders with evidence that Borrower maintains, and
that Subsidiary Banks, and the other Subsidiaries of Borrower maintain,
the insurance required under this Section 6.01, and evidence of the
payment of all premiums therefor.

         6.02    Payment of Taxes. Duly file, and cause each Subsidiary
                 ----------------
Bank, and each other Subsidiary of Borrower to duly file, all Federal,
state and local income tax returns and all other tax returns and reports
of Borrower, each Subsidiary Bank, or such other Subsidiary of Borrower,
as the case may be, which are required to be filed; and pay, and cause
each Subsidiary Banks, and each other Subsidiary of Borrower to pay, when
due, all taxes and governmental charges assessed against or upon Borrower,
each Subsidiary Bank, or such other Subsidiary of Borrower, as the case
may be, or upon their respective Properties, assets, income or franchises.

         6.03    Financial Data. Deliver to Agent and Lenders:
                 --------------

         (a)     As soon as practicable and in any event within forty five
(45) days after the end of each fiscal quarter of Borrower (other than the
last fiscal quarter of each fiscal year of Borrower) an unaudited
consolidated statement of earnings and retained earnings of Borrower and
its Subsidiaries for the period from the beginning of the current fiscal
year to the end of such fiscal quarter, and an unaudited consolidated
balance sheet of Borrower and its Subsidiaries as at the end of such
fiscal quarter, setting forth in each case in comparative form figures for
the corresponding period in the preceding fiscal year, all in reasonable
detail and prepared in accordance with generally accepted accounting
principles consistently applied and certified to Agent and Lenders by the
principal financial officer of Borrower, subject to changes resulting from
normal year-end adjustments;

         (b)     As soon as practicable and in any event within ninety (90)
days after the end of each fiscal year of Borrower, consolidated and
consolidating statements of earnings and retained earnings of Borrower and
its Subsidiaries for such year, consolidated and consolidating statements
of cash flows of Borrower and its Subsidiaries for such year and
consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as at the end of such year, setting forth in each case in
comparative form corresponding figures from the preceding fiscal year, all
such statements to be prepared in accordance with generally accepted
accounting principles consistently applied and reported on and accompanied
by the unqualified opinion of independent certified public accountants
selected by Borrower and acceptable to Required Lenders together with (i)
a certificate from such accountants to the effect that, in making the
examination necessary for the signing of such annual audit report, such
accountants have not become aware of any Default or Event of Default that
has occurred and is continuing, or, if such accountants have become aware
of any such event, describing it and the steps, if any, being taken to
cure it and (ii) the computations evidencing Borrower's compliance with
the financial covenants contained in this Agreement;

         (c)     Contemporaneously with the delivery of the financial
statements pursuant to Sections 6.03(a) and (b) hereof, a certificate in
substantially the form of that attached hereto and made a part hereof as
Exhibit B (with appropriate insertions), executed by two (2) of the
---------
following officers of Borrower: Chief Executive Officer, or Chief
Financial Officer, or Chief Credit Officer;

         (d)     Promptly after filing with any Regulatory Agency, and in
any event within ten (10) days after the filing thereof, copies of all
financial statements, reports, filings and other documents which Borrower,
any Subsidiary Banks, or any other Subsidiary of Borrower shall file with
any Regulatory Agency;

                                  - 17 -

<PAGE>
<PAGE>

         (e)     Within ten (10) days after the transmission or receipt
thereof, copies of all correspondence, memoranda or other written
communication between any Regulatory Agency and Borrower, any Subsidiary
Banks, or any other Subsidiary of Borrower relating to any safety and
soundness issues;

         (f)     With reasonable promptness, such other financial
information and data regarding Borrower, Subsidiary Banks, and/or any
other Subsidiary of Borrower as Agent and Lenders may from time to time
reasonably request.

         Agent and Lenders are hereby authorized to deliver a copy of any
financial statement or other information made available by Borrower, any
Subsidiary Bank, or any other Subsidiary of Borrower to any Regulatory
Agency having jurisdiction over Agent and Lenders, pursuant to any request
therefor.

         6.04    Maintenance of Property. Maintain, and cause Subsidiary
                 -----------------------
Banks, the and each other Subsidiary of Borrower to maintain, all
Property, plants and equipment (except obsolete equipment) of Borrower,
Subsidiary Banks, and each other Subsidiary of Borrower in good operating
order, and from time to time make, and cause Subsidiary Banks, the and
each other Subsidiary of Borrower to make, all needful and proper repairs,
renewals, replacements, additions, betterments and improvements thereto so
that at all times the efficiency thereof shall be fully preserved and
maintained.

         6.05    Inspection. Permit, and cause each Subsidiary Bank, and
                 ----------
each other Subsidiary of Borrower to permit, any person designated by
Agent or any Lender to visit, inspect and audit any of the Properties,
corporate books, loan documentation, loan portfolios, loan files and
financial records of Borrower, any Subsidiary Bank, and each other
Subsidiary of Borrower and to discuss the affairs, finances and accounts
of Borrower, any Subsidiary Bank, and each other Subsidiary of Borrower
with the principal officers of Borrower, any Subsidiary Bank, and each
other Subsidiary of Borrower, all at such reasonable times and as often as
Lender may from time to time reasonably request.

         6.06    Corporate Existence. Do or cause to be done all things
                 -------------------
necessary to (a) preserve and keep in full force and effect the corporate
existence, rights and franchises of itself, Subsidiary Banks, and each other
Subsidiary of Borrower, (b) duly qualify itself, Subsidiary Banks, and each
other Subsidiary of Borrower to do business in all jurisdictions where the
nature of Property owned or leased by Borrower, Subsidiary Banks, or such
other Subsidiary of Borrower or the nature of the business of Borrower,
Subsidiary Banks, the or such other Subsidiary of Borrower requires such
qualification, (c) maintain its status as a "bank holding company" under and
within the meaning of 12 U.S.C. Section 1841 et seq., (d) cause any
                                             -- ---
Subsidiary Bank that is a Missouri banking corporation to preserve and
keep in full force and effect its existence, franchise and right to do
business as a state bank under the laws of the State of Missouri, (e)
cause any Subsidiary Bank that is a national banking association to
preserve and keep in full force and effect its existence, franchise and
right to do business as a national banking association under the laws of
the United States of America, and (f) maintain each Subsidiary Bank's
status as an "insured bank" as defined in, and within the meaning of, 12
U.S.C. Section 1813, and to otherwise maintain Subsidiary Banks's
eligibility for Federal deposit insurance.

         6.07    Compliance with Law. Comply with, and cause each
                 -------------------
Subsidiary Bank, and each other Subsidiary of Borrower to comply with, any
and all laws (including all Environmental Laws), ordinances and
governmental and regulatory rules and regulations to which it, each
Subsidiary Bank, or such other Subsidiary of Borrower is subject; and
obtain, and cause each Subsidiary Bank, and each other Subsidiary of
Borrower to obtain, any and all licenses, permits, franchises and other
governmental and regulatory authorizations necessary to the ownership of
the Properties of itself, each Subsidiary Bank, or such other Subsidiary
of Borrower, or to the conduct of the business of itself, each Subsidiary
Bank, or such other Subsidiary of Borrower, which violation or failure to
obtain might materially adversely affect the business, prospects, profits,
Properties or condition (financial or otherwise) of Borrower, each
Subsidiary Bank, or any other Subsidiary of Borrower.

                                  - 18 -

<PAGE>
<PAGE>

         6.08    ERISA Compliance. If Borrower, Subsidiary Banks, or any
                 ----------------
other Subsidiary of Borrower shall have, or in the future create, any
Pension Plan, Borrower shall comply with, and shall cause Subsidiary
Banks, and/or such other Subsidiary of Borrower, as the case may be, to
comply with, all requirements of ERISA relating to such plan. Without
limiting the generality of the foregoing, Borrower will not: (a) permit,
or cause or allow Subsidiary Banks, or any other Subsidiary of Borrower to
permit, any Pension Plan maintained by it, Subsidiary Banks, or any other
Subsidiary of Borrower, as the case may be, to engage in any nonexempt
"prohibited transaction", as such term is defined in Section 4975 of the
Code; (b) permit, or cause or allow Subsidiary Banks, or any other
Subsidiary of Borrower to permit, any Pension Plan maintained by it,
Subsidiary Banks, or any other Subsidiary of Borrower, as the case may be,
to incur any "accumulated funding deficiency," as such term is defined in
Section 302 of ERISA, 29 U.S.C. Section 1082, whether or not waived; (c)
terminate, or cause or allow Subsidiary Banks, or any other Subsidiary of
Borrower to terminate, any such Pension Plan in a manner which could
result in the imposition of a Lien on the Property of Borrower, Subsidiary
Banks, or any other Subsidiary of Borrower, as the case may be, pursuant
to Section 4068 of ERISA, 29 U.S.C. Section 1368; or (d) take, or cause or
allow Subsidiary Banks, the or any other Subsidiary of Borrower to take,
any action which would constitute or give rise to a complete or partial
withdrawal from a Multiemployer Plan within the meaning of Sections 4203
and 4205 of Title IV of ERISA. Notwithstanding any provision contained in
this Section 6.08 to the contrary, an act by Borrower, Subsidiary Banks,
or any other Subsidiary of Borrower shall not be deemed to constitute a
violation of subparagraphs (a) through (d) hereof unless Required Lenders
determines in good faith that said action, individually or cumulatively
with other acts of Borrower, Subsidiary Banks, and the other Subsidiaries
of Borrower, does have or is likely to cause a significant adverse
financial effect upon Borrower, Subsidiary Banks, or any other Subsidiary
of Borrower. Borrower shall have the affirmative obligation hereunder to
report to Lenders any of those acts identified in subparagraphs (a)
through (d) hereof, regardless of whether said act does or is likely to
cause a significant adverse financial effect upon Borrower, Subsidiary
Banks, or any other Subsidiary of Borrower, and failure by Borrower to
report such act promptly upon Borrower's becoming aware of the existence
thereof shall constitute an Event of Default hereunder.

         6.09    Risk-Based Capital Adequacy Guidelines. Comply with, and
                 --------------------------------------
remain "well capitalized" as defined in, and cause each Subsidiary Bank, and
each other Subsidiary of Borrower to comply with, and to remain "well
capitalized" as defined in, as to the extent applicable (a) the Risk-Based
Capital Adequacy Guidelines for Bank Holding Companies of The Board of
Governors of the Federal Reserve System as set forth in Appendix A to 12
C.F.R. Part 225, as from time to time amended, or in any successor law, rule
or regulation of similar import, (b) the Risk-Based Capital Adequacy
Guidelines for National Banking Associations of the Office of the
Comptroller of the Currency as set forth in Appendix A to 12 C.F.R. Part 3,
as from time to time amended, or in any successor law, rule or regulation of
similar import, (c) the Capital Adequacy Guidelines for State Member Banks
of The Board of Governors of the Federal Reserve System as set forth in
Appendix A to 12 C.F.R. Part 208, as from time to time amended, or in any
successor law, rule or regulation of similar import, (d) the Statement of
Policy on Risk-Based Capital for State Nonmember Banks of the Federal
Deposit Insurance Corporation as set forth in Appendix A to 12 C.F.R. Part
325, as from time to time amended, or in any successor law, rule or
regulation of similar import and (e) the Capital Adequacy Guidelines of the
Office of Thrift Supervision as set forth in 12 C.F.R. Part 367, as from
time to time amended, or in any successor law, rule or regulation of similar
import.

         6.10    Ratio of Loan and Lease Loss Reserve to all Loans.
                 -------------------------------------------------
Maintain as of the last day of each fiscal quarter during the Term of this
Agreement an allowance for possible loan and lease losses (determined on a
consolidated basis for Borrower and all of its Subsidiaries and in
accordance with generally accepted accounting principles consistently
applied) in an amount which equals or exceeds One Percent (1%) of the then
aggregate principal amount of all outstanding loans of Borrower
(determined on a consolidated basis for Borrower and all of its
Subsidiaries and in accordance with generally accepted accounting
principles consistently applied). Borrower will cause Subsidiary Banks,
and each other Subsidiary which is a state bank, thrift, savings and loan,
trust company, Federal savings bank or national banking association to
maintain at all times during the Term of this Agreement an allowance for
loan and lease losses in an amount which equals or exceeds the amount
required

                                  - 19 -

<PAGE>
<PAGE>

by or by reason of any law, regulation, rule or order of any Regulatory
Agency having jurisdiction over Borrower or such Subsidiary of Borrower.

         6.11    Ratio of Loan and Lease Loss Reserve to all Non-Performing
                 ----------------------------------------------------------
Loans. Maintain as of the last day of each fiscal quarter during the Term of
-----
this Agreement an allowance for possible loan and lease losses (determined
on a consolidated basis for Borrower and all of its Subsidiaries and in
accordance with generally accepted accounting principles consistently
applied) in an amount which equals or exceeds One Hundred Percent (100%) of
the aggregate amount of all Non-Performing Assets consisting of loans or
extensions of credit (determined on a consolidated basis for Borrower and
all of its Subsidiaries and in accordance with generally accepted accounting
principles consistently applied). Borrower will cause Subsidiary Banks, and
each other Subsidiary which is a state bank, thrift, savings and loan, trust
company, Federal savings bank or national banking association to maintain at
all times during the Term of this Agreement an allowance for loan and lease
losses in an amount which equals or exceeds the amount required by or by
reason of any law, regulation, rule or order of any Regulatory Agency having
jurisdiction over Borrower or such Subsidiary of Borrower.

         6.12    Ratio of Net Income to Total Assets. Maintain at all times
                 -----------------------------------
during the Term of this Agreement a ratio of Net Income to average total
assets of at least 75/100 Percent (.75%) (determined on a consolidated basis
for Borrower and all of its Subsidiaries and in accordance with generally
accepted accounting principles consistently applied), for each four (4)
consecutive fiscal quarter period of Borrower commencing with the four (4)
consecutive fiscal quarter period ending December 31, 2001.

         6.13    Notices. Notify Agent and Lenders in writing of any of
                 -------
the following immediately upon learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken by the
Person(s) affected with respect thereto:

                 (a)    Default.  The occurrence of any Default or Event of
                        -------
         Default under this Agreement or any default or event of default
         by Borrower, any other Obligor, any Subsidiary Bank, or any other
         Subsidiary of Borrower under any note, indenture, loan agreement,
         mortgage, deed of trust, security agreement, lease or other
         similar agreement, document or instrument to which Borrower, any
         other Obligor, any Subsidiary Bank, or any other Subsidiary of
         Borrower, as the case may be, is a party or by which it is bound
         or to which it is subject;

                 (b)    Litigation.  The institution of any litigation,
                        ----------
         arbitration proceeding or governmental or regulatory proceeding
         affecting Borrower, any other Obligor, any Subsidiary Bank, any
         other Subsidiary of Borrower or any Collateral, whether or not
         considered to be covered by insurance;

                 (c)    Judgment.  The entry of any judgment or decree
                        --------
         against Borrower, any other Obligor, any Subsidiary Bank, or any
         other Subsidiary of Borrower;

                 (d)    Pension Plans.  The occurrence of a Reportable Event
                        -------------
         with respect to any Pension Plan; the filing of a notice of
         intent to terminate a Pension Plan by Borrower, any ERISA
         Affiliate, any other Obligor, any Subsidiary Bank, or any other
         Subsidiary of Borrower; the institution of proceedings to
         terminate a Pension Plan by the PBGC or any other Person to
         terminate any Pension Plan; the withdrawal in a "complete
         withdrawal" or a "partial withdrawal" as defined in Sections 4203
         and 4205, respectively, of ERISA by Borrower, any ERISA
         Affiliate, any other Obligor, any Subsidiary Bank, or any other
         Subsidiary of Borrower from any Multiemployer Plan; or the
         incurrence of any material increase in the contingent liability
         of Borrower, any other Obligor, any Subsidiary Bank, or any other
         Subsidiary of Borrower with respect to any "employee welfare
         benefit plan" as defined in Section 3(1) of ERISA which covers
         retired employees and their beneficiaries;

                                  - 20 -

<PAGE>
<PAGE>

                 (e)    Change of Name.  Any proposed change in the name of
                        --------------
         Borrower, any other Obligor, any Subsidiary Bank, or any other
         Subsidiary of Borrower;

                 (f)    Change in Place(s) of Business.  Any proposed
                        ------------------------------
         opening, closing or other change of any place of business of
         Borrower, any Subsidiary Bank, or any other Subsidiary of
         Borrower;

                 (g)    Environmental Matters.  Receipt of any notice that
                        ---------------------
         the operations of Borrower, any other Obligor, any Subsidiary
         Bank, or any other Subsidiary of Borrower are not in full
         compliance with any of the requirements of any applicable
         Federal, state or local environmental, health or safety law, rule
         or regulation; receipt of notice that Borrower, any other
         Obligor, any Subsidiary Bank, or any other Subsidiary of Borrower
         is subject to any Federal, state or local investigation
         evaluating whether any remedial action is needed to respond to
         the release of any hazardous or toxic waste, substance or
         constituent or other substance into the environment; or receipt
         of notice that any of the Properties or assets of Borrower, any
         other Obligor, Subsidiary Banks, or any other Subsidiary of
         Borrower are subject to an "Environmental Lien." For purposes of
         this Section 5.14, "Environmental Lien" shall mean a Lien in
         favor of any governmental or regulatory agency, entity, authority
         or official for (i) any liability under Federal, state or local
         environmental laws, rules or regulations or (ii) damages arising
         from or costs incurred by any such governmental or regulatory
         agency, entity, authority or official in response to a release of
         a hazardous or toxic waste, substance or constituent or other
         substance into the environment;

                 (h)    Material Adverse Change.  The occurrence of any
                        -----------------------
         material adverse change in the business, operations or condition,
         financial or otherwise, of Borrower, any other Obligor, any
         Subsidiary Bank, or any other Subsidiary of Borrower; and

                 (i)    Regulatory Matters.  The issuance of any cease and
                        ------------------
         desist order against Borrower, any Subsidiary Bank, or any other
         Subsidiary of Borrower by any Regulatory Agency and/or the entry
         of any memorandum of understanding or other agreement between
         Borrower, any Subsidiary Bank, and/or any other Subsidiary of
         Borrower and any Regulatory Agency, regardless of whether the
         same is voluntary or involuntary.

SECTION 7.  NEGATIVE COVENANTS.
------------------------------

         Borrower covenants and agrees that, as long as any of its
Obligations are outstanding, it will not, and it will not cause or permit
any Subsidiary Bank, or any other Subsidiary of Borrower to, without the
prior written consent of Required Lenders to:

         7.01    Indebtedness. Create or incur any Indebtedness except
                 ------------
(a) to Lenders as described in this Agreement, (b) Indebtedness of
Subsidiary Banks and to creditors in the ordinary course of their
respective banking businesses and (c) Indebtedness of Borrower which
constitutes Subordinated Indebtedness.

         7.02    Merger or Consolidation, etc. Merge into, consolidate
                 ----------------------------
with any other Person, or change its name, or permit any other Person to
merge into, consolidate with it, or change its name; provided, that South
Side National Bank of St. Louis may merge into Allegiant Bank; and
provided further that, the branch offices and other Property acquired from
Guardian Savings Bank may be merged into or combined with Allegiant Bank.

                                  - 21 -

<PAGE>
<PAGE>

         7.03    Sale of Property. Sell, lease, transfer or otherwise dispose
                 ----------------
of any Property or assets except in the ordinary course of business.

         7.04    Distributions. Declare or incur any liability to make any
                 -------------
Distribution in respect of the capital stock of Borrower, the capital stock
of any Subsidiary Bank, and the capital stock of or the capital stock of any
other Subsidiary of Borrower, except that (a) Subsidiary Banks, and each
other Subsidiary of Borrower shall be permitted to pay cash dividends to
Borrower to the extent necessary to pay Borrower's Obligations then due and
payable to Lenders and which are actually applied toward payment of
Borrower's Obligations and (b) so long as (i) no Default or Event of Default
under this Agreement has occurred and is continuing or would be created by
or result from the payment of such dividends and (ii) Required Lenders have
consented in writing to the payment of such dividends, Borrower shall be
permitted to declare and pay cash dividends on its capital stock in an
aggregate amount of not more than Twenty Five Percent (25%) of Borrower's
Net Income during each fiscal year.

         7.05    Issuance of Stock, etc. Authorize or issue any new types,
                 ----------------------
varieties or classes of capital stock of any Subsidiary Bank, or any other
Subsidiary of Borrower, either preferred or common, voting or nonvoting, or
any bonds or debentures, subordinated or otherwise, or any stock warrants or
options, or authorize or issue any additional shares of stock of any
existing class of stock of any Subsidiary Bank, or any other Subsidiary of
Borrower, or grant any person other than Lender any proxy for existing
shares, or cause or allow or declare any stock splits or take any other
action which could, directly or indirectly, decrease Borrower's ownership
interest in any Subsidiary Bank, or any other Subsidiary of Borrower;
provided, that, Borrower may implement a stock incentive program for the
officers and employees of Borrower, any Subsidiary Bank, or any other
Subsidiary of Borrower.

         7.06    Default. Allow to occur, or to continue unremedied, any
                 -------
act, event or condition which constitutes a default or event of default,
or which, with the passage of time or giving of notice, or both, would
constitute a default or event of default under, any agreement, document or
instrument to which Borrower, any Subsidiary Bank, or any other Subsidiary
of Borrower is a party or by which Borrower, any Subsidiary Bank, or any
other Subsidiary of Borrower may be bound.

         7.07    Investments. Make any advances or loans or extensions of
                 -----------
credit to, purchase any stock, bonds, notes, debentures or other securities
of, make any expenditures on behalf of or in any manner assume liability
(direct, contingent or otherwise) for the Indebtedness of, any Person,
except (a) such Guarantees, loans, advances and/or investments made by
Subsidiary Banks, and the other Subsidiaries of Borrower in the ordinary
course of their respective banking and/or mortgage businesses, (b) loans or
advances from Borrower and/or to the Subsidiary Banks, (c) investments in
certificates of deposit, repurchase agreements or other short-term direct
obligations of any commercial bank located in the United States of America
having capital resources in excess of $20,000,000.00 (provided, however,
that such certificates of deposit, repurchase agreements and/or other
short-term direct obligations shall mature not more than one (1) year from
the date of acquisition thereof), (d) investments in obligations of the
United States government or any agency thereof which are backed by the full
faith and credit of the United States (provided, however, that such
obligations shall mature not more than one (1) year from the date of
acquisition thereof) and (e) shares of stock, obligations and/or other
securities received in settlement of claims arising in the ordinary course
of business.

         7.08    Liens. Create, incur, assume, permit the imposition of or
                 -----
allow the continuance of any Lien on any of the Property of Borrower, any
Subsidiary Bank, or any other Subsidiary of Borrower, except for (a) Liens
securing government deposits at Subsidiary Banks, (b) Liens on Property or
assets acquired by any Subsidiary Bank, or any other Subsidiary of Borrower
by foreclosure or by deed in lieu of foreclosure and (c) the Liens existing
as of the date of this Agreement which are listed on Schedule 5.11 attached
                                                     -------------
hereto.

                                  - 22 -

<PAGE>
<PAGE>

         7.09    Subsidiaries and Related Companies. (a) Transfer any
                 ----------------------------------
Property to any Related Party, (b) purchase or sign any agreement to
purchase any securities of any Related Party (whether debt, equity or
otherwise), underwrite or Guarantee the same, or otherwise become
obligated with respect thereto or (c) take any other action or permit any
action to be taken with respect to any Related Party which would
jeopardize either Borrower's ability to repay the Loan, or any portion
thereof, as the same becomes due and payable, or the security given to
Agent and Lenders with respect to the Loan.

         7.10    Use of Proceeds. Use or permit any proceeds of the Loan
                 ---------------
to be used either directly or indirectly for the purpose (whether
immediate, incidental or ultimate) of "purchasing or carrying any margin
stock" within the meaning of Regulation U of The Board of Governors of the
Federal Reserve System, as from time to time amended.

         7.11    Insider Loans. Allow, cause or permit the total amount of
                 -------------
Indebtedness of Insiders to any Subsidiary Bank then outstanding plus the
then outstanding total amount of participations of Controlled Banks in
Indebtedness of which any Subsidiary Bank is a party, participant or agent,
to at any time equal or exceed any maximum amount then established by any
Regulatory Agency having jurisdiction over Borrower or Subsidiary Banks, or
by applicable law, regulation, rule or order.

         7.12    Non-Performing Assets. Allow, cause or permit as of the
                 ---------------------
last day of each fiscal quarter during the Term of this Agreement: (a) the
aggregate amount of the Non-Performing Assets for any Subsidiary Bank to
equal or exceed Eighteen Percent (18%) of the then Primary Capital of any
Subsidiary Bank (determined in accordance with generally accepted
accounting principles consistently applied) at any time during the Term of
this Agreement; and (b) the aggregate amount of Borrower's Non-Performing
Assets (determined on a consolidated basis for Borrower and all of its
Subsidiaries and in accordance with generally accepted accounting
principles consistently applied) to equal or exceed Fifteen Percent (15%)
of Borrowers' then Primary Capital (determined on a consolidated basis for
Borrower and all of its Subsidiaries and in accordance with generally
accepted accounting principles consistently applied) at any time during
the Term of this Agreement.

         7.13    Nature of Business. Conduct or engage in any business if,
                 ------------------
as a result thereof, the general nature of the business which would
thereafter be engaged in by Borrower, any Subsidiary Bank, or any other
Subsidiary of Borrower, as the case may be, would be substantially changed
from the general nature of the business engaged in on the date of this
Agreement by Borrower, any Subsidiary Bank, or any other Subsidiary of
Borrower, as the case may be.

         7.14    Other Agreements. Enter into any agreement containing any
                 ----------------
provision which would be violated or breached by the performance of its
obligations hereunder or under any of the other Transaction Documents.

         7.15    Sale and Leaseback. Enter into any sale and leaseback of any
                 ------------------
Property.

SECTION 8.  EVENTS OF DEFAULT.
-----------------------------

         If any of the following ("Events of Default") shall occur and be
continuing:

         8.01    Borrower shall fail to pay any of Borrower's Obligations
as and when the same shall become due and payable, whether by reason of
demand, maturity, acceleration or otherwise;

         8.02    Any representation or warranty of Borrower made in this
Agreement or in any of the other Transaction Documents or in any
certificate, agreement, instrument or statement furnished or made or
delivered pursuant hereto or thereto or in connection herewith or therewith,
shall prove to have been untrue or incorrect in any material respect when
made or effected;

                                  - 23 -

<PAGE>
<PAGE>

         8.03    Borrower shall fail to perform or observe any term,
covenant or provision contained in Sections 6 and 7 hereof;

         8.04    Borrower shall fail to perform or observe any other term,
covenant or provision contained in this Agreement and any such failure shall
remain unremedied for thirty (30) days after the earlier of (a) written
notice of default is given to Borrower by Agent or any Lender, or (b) an
officer of Borrower obtaining knowledge of such default;

         8.05    This Agreement or any of the other Transaction Documents
shall at any time for any reason cease to be in full force and effect or
shall be declared to be null and void by a court of competent
jurisdiction, or if the validity or enforceability hereof or thereof shall
be contested or denied by Borrower, or if Borrower shall deny that it has
any further liability or obligation hereunder or thereunder or if Borrower
shall fail to comply with or observe any of the terms, provisions or
conditions contained in any of the Transaction Documents (other than this
Agreement);

         8.06    Any "Event of Default" (as defined therein) shall occur
under or within the meaning of the Pledge Agreement;

         8.07    Borrower, any Subsidiary Bank, any other Subsidiary of
Borrower or any other Obligor shall (a) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States Code
or any other Federal, state or foreign bankruptcy, insolvency, receivership,
liquidation or similar law, (b) consent to the institution of, or fail to
contravene in a timely and appropriate manner, any such proceeding or the
filing of any such petition, (c) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator or similar official of itself,
himself or herself or of a substantial part of its, his or her Property or
assets, (d) file an answer admitting the material allegations of a petition
filed against itself, himself or herself in any such proceeding, (e) make a
general assignment for the benefit of creditors, (f) become unable, admit in
writing its, his or her inability or fail generally to pay its, his or her
debts as they become due, (g) become insolvent in either the equity or
bankruptcy sense of the term or (h) take any corporate or other action for
the purpose of effecting any of the foregoing;

         8.08    An involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking (a) relief in respect of Borrower, any Subsidiary Bank, any other
Subsidiary of Borrower or any other Obligor, or of a substantial part of
the Property or assets of Borrower, any Subsidiary Bank, any other
Subsidiary of Borrower or any other Obligor, under Title 11 of the United
States Code or any other Federal, state or foreign bankruptcy, insolvency,
receivership, liquidation or similar law, (b) the appointment of a
receiver, trustee, custodian, sequestrator or similar official of
Borrower, any Subsidiary Bank, any other Subsidiary of Borrower or any
other Obligor or of a substantial part of the Property or assets of
Borrower, any Subsidiary Bank, any other Subsidiary of Borrower or any
other Obligor or (c) the winding-up or liquidation of Borrower, any
Subsidiary Bank, any other Subsidiary of Borrower or any other Obligor;
and any such proceeding or petition shall continue undismissed for thirty
(30) consecutive days or an order or decree approving or ordering any of
the foregoing shall continue unstayed and in effect for thirty (30)
consecutive days;

         8.09    Borrower, any Subsidiary Bank, or any other Subsidiary of
Borrower shall be placed in receivership by any Regulatory Agency, or any
regulatory action or proceeding shall be commenced against Borrower, any
Subsidiary Bank, or any other Subsidiary of Borrower, or any cease and
desist order shall be entered into, between any Regulatory Agency and
Borrower, any Subsidiary Bank, or any other Subsidiary of Borrower;

         8.10    Any Regulatory Agency shall notify Borrower, any Subsidiary
Bank, or any other Subsidiary of Borrower that its capital has been impaired;

                                  - 24 -

<PAGE>
<PAGE>

         8.11    Any Subsidiary Bank shall cease to be an "insured bank"
under or within the meaning of the Federal Deposit Insurance Act of 1959,
as amended, or a cease and desist order, memorandum of understanding or
other agreement shall be issued by any Regulatory Authority against or
affecting Borrower, any Subsidiary Bank, or any other Subsidiary of
Borrower which (in Required Lenders' good faith opinion) has or could have
a material adverse affect on the business, operation or condition,
financial or otherwise, of Borrower, any Subsidiary Bank, or any other
Subsidiary of Borrower;

         8.12    Any litigation or governmental or regulatory proceeding
is instituted against Borrower, any Subsidiary Bank, any other Subsidiary
of Borrower or any other Obligor which, in Required Lenders, good faith
opinion, will have a material adverse effect on the financial condition of
Borrower, any Subsidiary Bank, any other Subsidiary of Borrower or any
other Obligor or on the continued operation of Borrower, any Subsidiary
Bank, any other Subsidiary of Borrower or any other Obligor, after taking
into account insurance coverage and reserves therefor (if any);

         8.13    Any property of Borrower, any Subsidiary Bank, any other
Subsidiary of Borrower or any other Obligor shall be seized, attached or
levied upon;

         8.14    Borrower, any Subsidiary Bank, any other Subsidiary of
Borrower or any other Obligor shall have a judgment entered against it by a
court having jurisdiction in the premises, and such judgment shall not be
appealed in good faith or satisfied by Borrower, any Subsidiary Bank, such
other Subsidiary of Borrower or such other Obligor, as the case may be,
within thirty (30) days after the entry of such judgment;

         8.15    Any default or event of default shall occur under or within
the meaning of any agreement, document or instrument evidencing, securing or
otherwise relating to any outstanding Indebtedness of Borrower, any
Subsidiary Bank, any other Subsidiary of Borrower or any other Obligor for
borrowed money (other than the Borrower's Obligations);

         8.16    The institution by Borrower, any ERISA Affiliate, any
Subsidiary Bank, or any other Subsidiary of Borrower of steps to terminate
any Pension Plan if, in order to effectuate such termination, Borrower, any
ERISA Affiliate, any Subsidiary Bank, or any other Subsidiary of Borrower
would be required to make a contribution to such Pension Plan or would incur
a liability or obligation to such Pension Plan in excess of Ten Thousand
Dollars ($10,000.00); or the institution by the PBGC of steps to terminate
any Pension Plan;

         8.17    Borrower, any Subsidiary Bank, any other Subsidiary of
Borrower or any other Obligor shall be declared by Required Lenders to be in
default on, or pursuant to the terms of, (a) any other present or future
obligation to Agent or any Lender, including, without limitation, any other
loan, line of credit, revolving credit, guaranty or letter of credit
reimbursement obligation, or (b) any other present or future agreement
purporting to convey to Agent or Lender a Lien upon any of the Property or
assets of Borrower, any Subsidiary Bank, such other Subsidiary of Borrower
or such other Obligor;

         8.18    The shares of capital stock of each Subsidiary Bank then
pledged by Borrower to Agent or Lenders pursuant to the Pledge Agreement
shall at any time for any reason constitute less than 100% of the issued and
outstanding shares of each class of capital stock of any Subsidiary Bank; or

         THEN, and in each such event (other than an event described in
Sections 8.07, 8.08 or 8.09), Agent may, and if requested in writing by
Required Lenders Agent shall, declare the entire outstanding principal
balance of and all accrued and unpaid interest on the Notes and all of the
other Borrower's Obligations to be immediately due and payable, whereupon
all of such outstanding principal balance and accrued and unpaid interest
and all such other Borrower's Obligations shall become and be immediately
due and payable, without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived by

                                  - 25 -

<PAGE>
<PAGE>

Borrower, Agent and Lenders may exercise any and all other rights and
remedies which they may have under any of the other Transaction Documents
or under applicable law; provided, however, that upon the occurrence of
any event described in Sections 8.07, 8.08 or 8.09, the entire outstanding
principal balance of and all accrued and unpaid interest on the Notes and
all of the other Borrower's Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower, Agent and Lenders may exercise any and all other rights and
remedies which it may have under any of the other Transaction Documents or
under applicable law.

SECTION 9.  AGENT
-----------------

         9.01    Appointment. U.S. Bank National Association is hereby
                 -----------
appointed by Lenders as Agent under this Agreement, the Notes and the other
Transaction Documents. Agent agrees to act as such upon the express
conditions contained in this Agreement.

         9.02    Powers. Agent shall have and may exercise such powers
                 ------
hereunder as are specifically delegated to Agent by the terms of this
Agreement and the other Transaction Documents, together with such powers as
are reasonably incidental thereto. Agent shall neither have any implied
duties to Lenders, nor any obligation to the Lenders to take any action
under this Agreement or any of the other Transaction Documents, except any
action specifically provided by the this Agreement or any of the other
Transaction Documents to be taken by Agent. Without limiting the generality
of the foregoing, Agent shall not be required to take any action with
respect to any Default or Event of Default, except as expressly provided in
Section 8 or in Section 9.06.

         9.03    General Immunity. Neither Agent nor any of its directors,
                 ----------------
officers, employees, agents or advisors shall be liable to any of the
Lenders for any action taken or not taken by it in connection with this
Agreement or any of the other the Transaction Documents (a) with the consent
or at the request of the Required Lenders or (b) in the absence of its own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, nonappealable order.

         9.04    No Responsibility for Loans, Recitals, Etc. Neither
                 ------------------------------------------
Agent nor any of its directors, officers, employees, agents or advisors
shall (a) be responsible for or have any duty to ascertain, inquire into
or verify any recitals, reports, statements, representations or warranties
contained in this Agreement or any of the other Transaction Documents or
furnished pursuant hereto or thereto; (b) be responsible for the Loan
hereunder, (c) be bound to ascertain or inquire as to the performance or
observance of any of the terms of this Agreement or any of the other
Transaction Documents; (d) be responsible for the satisfaction of any
condition specified in Section 4, except receipt of items required to be
delivered to Agent; (e) be responsible for the validity, effectiveness,
genuineness or enforceability of this Agreement or any of the other
Transaction Documents; or (f) be responsible for the creation, attachment,
perfection or priority of any security interests or liens purported to be
granted to Agent or any Lender pursuant to this Agreement or any of the
other Transaction Documents.

         9.05    Right to Indemnity. Notwithstanding any other
                 ------------------
provision contained in this Agreement to the contrary, to the extent
Borrower fails to reimburse Agent pursuant to Sections 10.04, 10.05, or
10.06, or if any Default or Event of Default shall occur under this
Agreement, the Lenders shall ratably in accordance with their respective
pro rata shares of the aggregate outstanding principal amount of the Loan
indemnify Agent and hold it harmless from and against any and all
liabilities, losses (except losses occasioned solely by failure of
Borrower to make any payments or to perform any obligations required by
this Agreement (excepting those described in Sections 10.04, 10.05, or
10.06), the Notes or any of the other Transaction Documents), costs and/or
expenses, including, without limitation, any liabilities, losses, costs
and/or expenses arising from the failure of any Lender to perform its
obligations hereunder or in respect of this Agreement, and also including,
without limitation, reasonable attorneys' fees and expenses, which Agent
may incur, directly or indirectly, in connection with this Agreement, the
Notes or any of the other Transaction Documents, or any action or
transaction related

                                  - 26 -

<PAGE>
<PAGE>

hereto or thereto; provided only that Agent shall not be entitled to such
indemnification for any losses, liabilities, costs and/or expenses
directly and solely resulting from its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final,
nonappealable order. This indemnity shall be a continuing indemnity,
contemplates all liabilities, losses, costs and expenses related to the
execution, delivery and performance of this Agreement, the Notes and the
other Transaction Documents, and shall survive the satisfaction and
payment of the Borrower's Obligations and the termination of this
Agreement.

         9.06    Action Upon Instructions of Required Lenders. Agent
                 --------------------------------------------
agrees, upon the written request of the Required Lenders, to take any
action of the type specified in this Agreement or any of the other
Transaction Documents as being within Agent's rights, duties, powers or
discretion. Notwithstanding the foregoing, Agent shall be fully justified
in failing or refusing to take any action hereunder, unless it shall first
be indemnified to its satisfaction by the Lenders pro rata against any and
all liabilities, losses, costs and expenses (including, without
limitation, attorneys' fees and expenses) which may be incurred by it by
reason of taking or continuing to take any such action, other than any
liability which may arise out of Agent's gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final,
nonappealable order. Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with written
instructions signed by the Required Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding on all of
the Lenders and on all holders of the Notes. In the absence of a request
by the Required Lenders, Agent shall have authority, in its sole
discretion, to take or not to take any action, unless this Agreement or
any of the other Transaction Documents specifically requires the consent
of the Required Lenders or of all of the Lenders.

         9.07    Employment of Agents and Counsel. Agent may execute any of
                 --------------------------------
its duties as Agent hereunder by or through employees, agents and
attorneys-in-fact and shall not be answerable to Lenders, except as to
money or securities received by it or its authorized agents, for the
default or misconduct of any such agents or attorneys-in-fact selected by
it in good faith and with reasonable care. Agent shall be entitled to
advice and opinion of legal counsel concerning all matters pertaining to
the duties of the agency hereby created.

         9.08    Reliance on Documents, Counsel. Agent shall be entitled to
                 ------------------------------
rely upon any note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons,
and, in respect to legal matters, upon the opinion of legal counsel selected
by Agent.

         9.09    May Treat Payee as Owner. Agent may deem and treat the
                 ------------------------
payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have
been filed with Agent. Any request, authority or consent of any person,
firm or corporation who at the time of making such request or giving such
authority or consent is the holder of any such Note shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note
or of any Note issued in exchange therefor.

         9.10    Agent's Reimbursement. Each Lender agrees to reimburse
                 ---------------------
Agent pro rata in accordance with its pro rata share of the aggregate
outstanding principal amount of the Loan for (a) any out-of-pocket costs
and expenses not reimbursed by Borrower for which Agent is entitled to
reimbursement by Borrower under this Agreement or any of the other
Transaction Documents and (b) for any other out-of-pocket costs and
expenses incurred by Agent on behalf of the Lenders in connection with the
amendment, modification, extension, renewal and/or enforcement of this
Agreement and/or any of the other Transaction Documents.

         9.11    Rights as a Lender. With respect to the Loan made and
                 ------------------
the Notes issued to it, Agent shall have the same rights and powers
hereunder as any Lender and may exercise the same as though it were not
Agent, and the terms "Lender" and "Lenders" shall, unless the context
otherwise indicates, include Agent in its individual capacity. Agent may
accept deposits from, lend money to, issue letters of credit for the
account of and generally engage in any kind of banking or trust business
with Borrower as if it were not Agent.

                                  - 27 -

<PAGE>
<PAGE>

         9.12    Independent Credit Decision. Each Lender acknowledges that
                 ---------------------------
it has, independently and without reliance upon Agent or any other Lender
and based on the financial statements referred to herein and such other
documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other
Transaction Documents. Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under this Agreement and the other Transaction Documents.

         9.13    Resignation of Agent. Subject to the appointment of a
                 --------------------
successor Agent, Agent may resign as Agent for Lenders under this Agreement
and the other Transaction Documents at any time by thirty (30) days' notice
in writing to Lenders and Borrower. Such resignation shall take effect upon
appointment of such successor Agent. Required Lenders shall have the right
to appoint a successor Agent who shall be entitled to all of the rights of,
and vested with the same powers as, the original Agent under this Agreement
and the other Transaction Documents. In the event a successor Agent shall
not have been appointed within the thirty (30) day period following the
giving of notice by Agent, Agent may appoint its own successor. Resignation
by Agent shall not affect or impair the rights of Agent under Sections 9.05
and 9.10 hereof with respect to all matters preceding such resignation. Any
successor Agent must be a national banking association or a bank chartered
in any State of the United States having a combined capital and surplus of
at least $100,000,000.00.

         9.14    Delivery of Document. Agent agrees to promptly provide each
                 --------------------
Lender with copies of (a) this Agreement and the other Transaction Documents
(including any amendments thereto), (b) any default notices sent by Agent to
Borrower or any other Obligor with respect to this Agreement or any of the
other Transaction Documents, (c) any waivers or consents signed by Agent or
otherwise sent by Agent to any Borrower or any other Obligor with respect to
this Agreement or any of the other Transaction Documents, (d) any notices of
default sent by Borrower or any other Obligor to Agent with respect to this
Agreement or any of the other Transaction Documents and (e) any requests for
any amendments, waivers or consents sent to Agent by any Borrower or any
other Obligor with respect to this Agreement or any of the other Transaction
Documents. Agent agrees to provide each Lender, within seven (7) Business
Days after written request by such Lender and at such Lender's expense, a
copy of such other information, reports, certificates and/or other materials
prepared by Borrower or otherwise required by the Transaction Documents and
which are in the possession of Agent which are reasonably requested by such
Lender in writing.

         9.15    Duration of Agency. The agency established by Section 9.01
                 ------------------
hereof shall continue, and Sections 9.01 through and including this Section
9.15 shall remain in full force and effect, until all of Borrower's
Obligations shall have been paid in full and Lenders' commitments to make
the Loan and/or extend credit to or for the benefit of Borrower shall have
terminated or expired.

SECTION 10.  GENERAL.
--------------------

         10.01   Amendments and Waivers. Any provision of this Agreement,
                 ----------------------
the Notes or any of the other Transaction Documents to which Borrower is a
party may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by Borrower and the Required Lenders (and, if
the rights or duties of Agent in its capacity as Agent, by Agent);
provided that no such amendment or waiver shall, unless signed by all
Lenders (a) increase the Loan Commitment of any Bank, (b) reduce the
principal amount of or rate of interest on the Loan or any fees under this
Agreement, (c) postpone the date fixed for any payment of principal of or
interest on the Loan or any fees under this Agreement, (d) change the the
aggregate principal amount of the Loan which shall be required for Lenders
or any of them to take any action or obligations under this Section or any
other provision of this Agreement, (e) change the definition of "Required
Lenders", (f) voluntarily release any Collateral (except as contemplated
by the applicable Transaction Document(s)), (g) voluntarily release any
Obligor, (h) amend Section 3.07, or (i) amend this Section 10.01.

                                  - 28 -

<PAGE>
<PAGE>

         10.02   No Waiver. No failure or delay by Agent, any Lender, or any
                 ---------
holder of a Note in exercising any right, remedy, power or privilege
hereunder or under any other Transaction Document shall operate as a waiver
thereof; nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies provided herein and in the other
Transaction Documents are cumulative and not exclusive of any rights and/or
remedies provided by law. Nothing herein contained shall in any way affect
the rights of Agent and Lenders to exercise any statutory or common law
right of banker's lien or set-off.

         10.03   Right of Set-Off. Upon the occurrence and during the
                 ----------------
continuance of any Event of Default under this Agreement, Agent and Lenders
are hereby authorized at any time and from time to time to set-off and apply
any and all deposits (general or special, time or demand, provisional or
final) at any time held and any and all other indebtedness at any time owing
by Agent or any Lender to or for the credit or the account of Borrower
against any and all of Borrower's Obligations irrespective of whether or not
Agent or Lenders shall have made any demand hereunder or thereunder. Agent
agrees promptly to notify Borrower after any such set-off and application
made by any Lender, provided, however, that the failure to give such notice
shall not affect the validity of any such set-off and application. The
rights of Agent and Lenders under this Section 10.03 are in addition to any
other rights and remedies (including, without limitation, other rights of
set-off) which Agent and Lenders may have. Nothing contained in this
Agreement or any other Transaction Document shall impair the right of Agent
and Lenders to exercise any right of set-off or counterclaim it may have
against Borrower and to apply the amount subject to such exercise to the
payment of indebtedness of Borrower unrelated to this Agreement or the other
Transaction Documents.

         10.04   Cost and Expenses. Borrower agrees, whether or not the
                 -----------------
Loan is made under this Agreement, to pay Agent and each Lender upon
demand for (a) all out-of-pocket costs and expenses and all Attorneys'
Fees incurred by Agent in connection with the preparation, documentation,
negotiation, execution and/or administration of this Agreement and/or any
of the other Transaction Documents, (b) all recording, filing and search
fees and expenses incurred by Agent or any Lender in connection with this
Agreement and the other Transaction Documents, (c) all out-of-pocket costs
and expenses and all Attorneys' Fees incurred by Agent or any of the
Lenders in connection with the (i) the preparation, documentation,
negotiation and execution of any amendment, modification, extension or
renewal of this Agreement and/or any of the other Transaction Documents
that has been requested by Borrower, (ii) the preparation of any waiver or
consent under this Agreement or under any of the other Transaction
Documents or (iii) any Default or Event of Default or alleged Default or
Event of Default under this Agreement, (d) if an Event of Default occurs,
all out-of-pocket costs and expenses and all Attorneys' Fees incurred by
Agent or any Lender in connection with such Event of Default and
collection and other enforcement proceedings resulting therefrom and (e)
all other Attorneys' Fees incurred by Agent or any Lender relating to or
arising out of or in connection with this Agreement or any of the other
Transaction Documents. Borrower further agrees to pay or reimburse Agent
and each Lender upon demand for any stamp or other similar taxes which may
be payable with respect to the execution, delivery, recording and/or
filing of this Agreement and/or any of the other Transaction Documents.
All of the obligations of Borrower under this Section 10.04 shall survive
the satisfaction and payment of the Borrower's Obligations and the
termination of this Agreement.

         10.05   Environmental Indemnity. Borrower hereby agrees to
                 -----------------------
indemnify Agent and each Lender and hold Agent and each Lender harmless
from and against any and all losses, liabilities, damages, injuries,
costs, expenses and claims of any and every kind whatsoever (including,
without limitation, court costs and Attorneys' Fees) which at any time or
from time to time may be paid, incurred or suffered by, or asserted
against, Agent or any Lender for, with respect to or as a direct or
indirect result of the violation by Borrower, any Subsidiary Bank, or any
other Subsidiary of Borrower of any laws or regulations relating to solid
waste and/or hazardous waste treatment, storage, disposal, generation and
transportation, air, water and/or noise pollution, soil or ground or water
contamination, the handling, storage or release into the environment of
hazardous materials or hazardous substances, and the transportation of
hazardous materials ("Environmental Laws"); or with respect to,

                                  - 29 -

<PAGE>
<PAGE>

or as a direct or indirect result of the presence on or under, or the
escape, seepage, leakage, spillage, discharge, emission or release from,
properties utilized by Borrower, any Subsidiary Bank, and/or any other
Subsidiary of Borrower in the conduct of their respective businesses into
or upon any land, the atmosphere or any watercourse, body of water or
wetland, of any hazardous material or substances (including, without
limitation, any losses, liabilities, damages, injuries, costs, expenses or
claims asserted or arising under the Environmental Laws); and the
provisions of and undertakings and indemnification set out in this Section
10.05 shall survive the satisfaction and payment of Borrower's Obligations
and the termination of this Agreement.

         10.06   General Indemnity. In addition to the payment of
                 -----------------
expenses pursuant to Section 10.04, whether or not the transactions
contemplated hereby shall be consummated, Borrower hereby agrees to
indemnify, pay and hold Agent, Lenders and any holders of the Notes, and
the officers, directors, employees, agents and affiliates of Agent,
Lenders and such holders (collectively called the "Indemnitees") harmless
from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such
Indemnitees shall be designated a party thereto), that may be imposed on,
incurred by or asserted against the Indemnitees, in any manner relating to
or arising out of this Agreement or other agreements executed and
delivered by Borrower or any other Obligor in connection herewith, the
statements contained in any term sheets delivered by Agent or any Lender,
Lenders' agreement to make the Loan hereunder or the use or intended use
of the proceeds of the Loan hereunder (the "Indemnified Liabilities");
provided that Borrower shall have no obligation to an Indemnitee hereunder
--------
with respect to Indemnified Liabilities arising from the gross negligence
or willful misconduct of that Indemnitee as determined by a court of
competent jurisdiction in a final nonappealable order. To the extent that
the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law
or public policy, Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or
any of them. The provisions of the undertakings and indemnifications set
out in this Section 10.06 shall survive satisfaction and payment of
Borrower's Obligations and the termination of this Agreement.

         10.07   Authority to Act. Agent and Lenders shall be entitled
                 ----------------
to act on any notices and instructions (telephonic or written) believed by
Agent and Lenders to have been delivered by any Person authorized to act
on behalf of Borrower pursuant hereto, regardless of whether such notice
or instruction was in fact delivered by a Person authorized to act on
behalf of Borrower, and Borrower hereby agrees to indemnify Agent and
Lenders and hold Agent and Lender harmless from and against any and all
losses and expenses, if any, ensuing from any such action.

         10.08   Notices. Any notice, request, demand, consent,
                 -------
confirmation or other communication under this Agreement shall be in
writing and delivered in person or sent by telecopy, recognized overnight
courier or registered or certified mail, return receipt requested and
postage prepaid, to the applicable party at its address or telecopy number
set forth on the signature pages hereof, or at such other address or
telecopy number as any party hereto may designate as its address or
telecopy number for communications hereunder by notice so given. Such
notices shall be deemed effective on the day on which delivered or sent if
delivered in person or sent by telecopy (with answerback confirmation
received), on the Business Day following the date of mailing by express
courier service, fully prepaid, or on the third (3rd) Business Day after
the day on which mailed, if sent by registered or certified mail.

         10.09   CONSENT TO JURISDICTION. BORROWER IRREVOCABLY SUBMITS TO
                 -----------------------
THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT OR ANY UNITED
STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
DOCUMENT. BORROWER HEREBY

                                  - 30 -

<PAGE>
<PAGE>

IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR
PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS. BORROWER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND BORROWER
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
BORROWER HEREBY EXPRESSLY WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION
WHICH BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR
SUBSEQUENT DOMICILES. BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON
BORROWER BY CERTIFIED MAIL SENT TO BORROWER AT ITS ADDRESS SET FORTH IN
SECTION 10.08.

         10.10   Agent's and Lenders' Books and Records. Agent's and
                 --------------------------------------
Lenders' books and records showing the accounts between Borrower and
Lenders shall be admissible in evidence in any action or proceeding and
shall constitute prima facie proof thereof.

         10.11   Governing Law; Amendments. This Agreement, the Notes,
                 -------------------------
the Pledge Agreement and all of the other Transaction Documents shall be
governed by and construed in accordance with the substantive laws of the
State of Missouri (without reference to conflict of law principles), and
this Agreement and the other Transaction Documents may not be changed, nor
may any term, condition or Event of Default be waived, modified or
discharged orally but only by an agreement in writing, signed by the party
against whom enforcement of any waiver, change, modification or discharge
is sought.

         10.12   References; Headings for Convenience. Unless otherwise
                 ------------------------------------
specified herein, all references herein to Section numbers refer to Section
numbers of this Agreement, all references herein to Exhibit A and Exhibit B
                                                    ---------     ---------
refer to annexed Exhibit A and Exhbit B which are hereby incorporated herein
                 ---------     --------
by reference and all references herein to Schedules 5.05, 5.08, 5.10, 5.11
                                          ---------
and 5.14 refer to annexed Schedules 5.05, 5.08, 5.10, 5.11 and 5.14 which
                          ---------
are hereby incorporated herein by reference. The Section headings are
furnished for the convenience of the parties and are not to be considered in
the construction or interpretation of this Agreement.

         10.13   Severability. In the event any one or more of the
                 ------------
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected
or impaired thereby.

         10.14   Counterparts. This Agreement may be executed in any number
                 ------------
of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         10.15   Resurrection of Borrower's Obligations. To the extent that
                 --------------------------------------
Agent or any Lender receives any payment on account of any of Borrower's
Obligations, and any such payment(s) or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside,
subordinated and/or required to be repaid to a trustee, receiver or any
other Person under any bankruptcy act, state or Federal law, common law or
equitable cause, then, to the extent of such payment(s) received, Borrower's
Obligations or part thereof intended to be satisfied and any and all liens,
security interests, mortgages, deeds of trust and/or other encumbrances upon
or pertaining to any assets of Borrower and theretofore created and/or
existing in favor of Agent or any Lender as security for the payment of such
Borrower's Obligations shall be revived and continue in full force and
effect, as if such payment(s) had not been received by Lender and applied on
account of Borrower's Obligations.

         10.16   Successors and Assigns.
                 ----------------------

         (a)     Subject to paragraphs (b), (c) and (d) of this

                                  - 31 -

<PAGE>
<PAGE>

Section 10.16, the provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns. Notwithstanding the foregoing, Borrower may not assign or
otherwise transfer any of its rights or delegate any of its obligations or
duties under this Agreement without the prior written consent of the Agent
and each Lender.

         (b)     Any Lender may at any time grant to one or more Lenders or
other financial institutions (each a "Participant") participating interests
in its Loan Commitment. In the event of any such grant by a Lender of a
participating interest to a Participant, whether or not upon notice to
Borrower and Agent, such Lender shall remain responsible for the performance
of its obligations hereunder, and Borrower and Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement. Any agreement pursuant to which any
Lender may grant such a participating interest shall provide that such
Lender shall retain the sole right and responsibility to enforce the
obligations of Borrower hereunder including, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that the
           --------
applicable Lender will not agree to any amendment, modification or waiver of
this Agreement described in Sections 10.01(a) and 10.01(b) without the
consent of Participant. Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits
of Sections 3.08, 3.09, 3.10, 3.11, 3.12 and 3.13 of this Agreement with
respect to its participating interest, but Borrower's liability in respect
thereof shall not be greater than its liability thereunder to the Lender
granting the applicable participation.

         (c)     Any Lender may at any time assign to one or more Lenders
or other financial institutions (each an "Assignee") all, or a
proportionate part of all, of its rights and obligations under this
Agreement and its Notes, and such Assignee shall assume such rights and
obligations, pursuant to an Assignment and Assumption Agreement in a form
acceptable to Agent, executed by such Assignee and such transferor Lender,
with (and subject to) the subscribed consent of Borrower and Agent, which,
in each case, shall not be unreasonably withheld or delayed; provided,
however, that (i) if any Assignee is an affiliate of such transferor
Lender or, immediately prior to such assignment, a Lender, no consent
shall be required and (ii) if any Event of Default under this Agreement
has occurred and is continuing no consent of Borrower to such assignment
shall be required. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Lender of an amount equal to
the purchase price agreed between such transferor Lender and such
Assignee, such Assignee shall be a Lender party to this Agreement and
shall have all the rights and obligations of a Lender as set forth in such
instrument of assumption, and the transferor Lender shall be released from
its obligations hereunder to a corresponding extent, and no further
consent or action by any party shall be required. Upon the consummation of
any assignment pursuant to this subsection (c), the transferor Lender,
Agent and Borrower shall make appropriate arrangements so that, if
required, new Note(s) are issued to the transferor Lender and/or the
Assignee, as applicable. In connection with any such assignment, the
transferor Lender shall pay to the Agent an administrative fee for
processing such assignment in the amount of $3,500.00.

         (d)     Any Lender may at any time assign all or any portion of
its rights under this Agreement and its Note to secure its obligations to
a Federal Reserve Bank. No such assignment shall release the transferor
Lender from any of its obligations hereunder.

         (e)     To the extent that an assignment of all or any portion of
the Loan Commitment and related outstanding Borrower's Obligations
pursuant to this Section 10.16 would, at the time of such assignment,
result in increased costs under Sections 3.08, 3.09, 3.10, 3.11 and 3.12
of this Agreement from those being charged by the respective transferor
Lender prior to such assignment, then Borrower shall not be obligated to
pay such increased costs (although Borrower shall be obligated to pay any
other increased costs of the type described above resulting from changes
after the date of the respective assignment). The transferor Lender, the
Assignee and Borrower agree to execute such documents (including, without
limitation, amendments to this Agreement and the other Transaction
Documents) as shall be necessary to effect the foregoing.

                                  - 32 -

<PAGE>
<PAGE>

         (f)     Notwithstanding any other provisions of this Section 10.16,
no transfer or assignment of the interests or obligations of any Lender
hereunder or any grant of participation therein shall be permitted if such
transfer, assignment or grant would require Borrower to file a
registration statement with the SEC or to qualify the Loan under the "Blue
Sky" law of any state.

         (g)     Each Lender initially a party to this Agreement hereby
represents, and each Person that becomes a Lender pursuant to an assignment
permitted by this Section 10.16 will, upon its becoming a party to this
Agreement, represent that (i) it is a financial institution which makes
loans in the ordinary course of its business, and that (ii) it will make or
acquire the Loan for its own account in the ordinary course of such
business, provided that subject to the preceding clauses (i) and (ii), the
          --------
disposition of any promissory notes or other evidences or interests in
indebtedness held by such Lender shall at all times be within its exclusive
control.

         (h)     Except to the extent of any assignment pursuant to
subsection (c) above, no Lender shall be relieved of any of its
obligations under the Transaction Documents as a result of any assignment
of or granting of participations in, all or any part of its rights and
obligations under the Transaction Documents.

         10.17   Notice Required by Section 4332.045 R.S. Mo.; Entire
                 ----------------------------------------------------
Agreement. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
---------
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWER, AGENT AND LENDERS
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY BORROWER,
AGENT AND LENDERS COVERING SUCH MATTERS ARE CONTAINED IN THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS, WHICH AGREEMENT AND OTHER TRANSACTION
DOCUMENTS ARE A COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN
BORROWER, AGENT AND LENDERS, EXCEPT AS BORROWER, AGENT AND LENDERS MAY LATER
AGREE IN WRITING TO MODIFY THEM. This Agreement embodies the entire
agreement and understanding between the parties hereto and supersedes all
prior agreements and understandings (oral or written) relating to the
subject matter hereof."

         10.18   Waiver of Jury Trial. BY ITS SIGNATURE BELOW WRITTEN EACH
                 --------------------
PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER TRANSACTION DOCUMENTS HEREIN DESCRIBED OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

         10.19   Confidentiality. Agent and Lenders agree to use reasonable
                 ---------------
precautions to keep confidential, in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, any nonpublic information
supplied to Agent and Lenders by Borrower or any Subsidiary pursuant to this
Agreement or any other Transaction Document which is identified by Borrower
as being confidential at the time the same is delivered to such Bank;
provided, however, that nothing contained in this Section 10.19 shall
prohibit or limit the disclosure by Agent or any Lender of any such
information (a) to the extent required by any statute, rule, regulation,
subpoena or judicial process, (b) to any governmental or regulatory agency
having jurisdiction over Agent or any Lender, (c) to any professional
advisors, including counsel and accountants, for Agent or any Lender, (d) to
any bank examiners or auditors, (e) in connection with any litigation to
which Agent or any Lender is a party, (f) in connection with the enforcement
of Agent's and Lenders' rights and remedies under this Agreement, any of the
Notes or any of the other Transaction Documents or (g) to any Assignee or
Participant (or prospective Assignee or Participant); and provided further,
that in no event shall Agent or any Lender be obligated or required to
return any materials furnished to Agent or any Lender by Borrower or any
Subsidiary under this Agreement or any other Transaction Document.
Notwithstanding the foregoing, neither Agent nor any Lender shall have any
liability to Borrower, any Subsidiary or any shareholder, partner, joint
venturer, director, officer, employee, member, manager or agent

                                  - 33 -

<PAGE>
<PAGE>

of Borrower or any Subsidiary by reason of, or in any way claimed to be
related to, any disclosure by Agent or any Lender of any information with
respect to Borrower or any Subsidiary except as the same results from the
gross negligence or willful misconduct of Agent or any Lender as
determined by a court of competent jurisdiction in a final, nonappealable
order. For purposes of this Section, the term "nonpublic information"
shall mean all financial statements, certificates, reports, agreements and
information (including all analyses, compilations and studies prepared by
Agent or any Lender based on any of the foregoing) that are received from
Borrower or any of its Subsidiaries, affiliates or representatives and
related to Borrower or any of its Affiliates, any shareholder of Borrower
or any employee, customer or supplier of Borrower or any of its
affiliates, other than any of the foregoing that were available to Agent
or any Lender on a nonconfidential basis prior to its disclosure thereto
by the Borrower. The provisions of this Section 10.19 shall remain
operative and in full force and effect regardless of the expiration and
term of this Agreement.

         IN WITNESS WHEREOF, Borrower, Agent and Lenders have executed this
Agreement as of day and year first above written.

                      (SIGNATURES ON FOLLOWING PAGES)

                                  - 34 -

<PAGE>
<PAGE>

                                  Borrower:

                                  ALLEGIANT BANCORP, INC.

                                  By:
                                     ---------------------------------------

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                  Address:     7801 Forsyth Boulevard
                                               Clayton, Missouri 63105
                                               Attention: Shaun R. Hayes,
                                                 President & C.E.O.
                                  Telecopier:  (314) 727-3494

                                  Agent:

                                  U.S. BANK NATIONAL ASSOCIATION,
                                  formerly known as Firstar Bank, N.A., Agent

                                  By:
                                     ---------------------------------------

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                  Address:     One Firstar Plaza
                                               7th & Washington Streets
                                               St. Louis, Missouri 63101
                                               Attention: Correspondent
                                                 Banking
                                  Telecopier:  (314) 418-8394

                                  - 35 -

<PAGE>
<PAGE>

                                  Lenders:

Loan Commitment: $15,000,000.00   U.S. BANK NATIONAL ASSOCIATION
                                  formerly known as Firstar Bank, N.A.

                                  By:
                                     ---------------------------------------

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                  Address:     One Firstar Plaza
                                               7th & Washington Streets
                                               St. Louis, Missouri 63101
                                               Attention: Correspondent
                                                 Banking
                                  Telecopier:  (314) 418-8394

Loan Commitment: $11,500,000.00   THE NORTHERN TRUST COMPANY

                                  By:
                                     ---------------------------------------

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                  Address:     50 South LaSalle Street
                                               Chicago, Illinois 60675
                                               Attention: Thomas E. Bernhardt,
                                                 Vice President
                                  Telecopier:  (312) 557-8337

Loan Commitment: $11,500,000.00   FIRST TENNESSEE BANK NATIONAL ASSOCIATION

                                  By:
                                     ---------------------------------------

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                  Address:     845 Crossover Lane
                                               Memphis, Tennessee 38117
                                               Attention: David S. Work,
                                                 Executive Vice President
                                  Telecopier:  (901) 435-7983

                                  - 36 -

<PAGE>
<PAGE>

                                  SCHEDULE 5.05
                                  -------------

                                   Litigation
                                   ----------

                                  - 37 -

<PAGE>
<PAGE>

                                  SCHEDULE 5.08
                                  -------------

                                  Subsidiaries
                                  ------------

                               See attached chart

                                     - 38 -

<PAGE>
<PAGE>

                                  SCHEDULE 5.10
                                  -------------

                           Other Loans and Guarantees
                           --------------------------

                                     - 39 -

<PAGE>
<PAGE>

                                  SCHEDULE 5.11
                                  -------------

                                 Permitted Liens
                                 ---------------

                                     - 40 -

<PAGE>
<PAGE>

                                  SCHEDULE 5.14
                                  -------------

                           Shares of Subsidiary Banks
                           --------------------------

         1.      The authorized capital of Allegiant Bank consists solely
of 57 shares of common stock, $12,875.00 par value, evidenced by Stock
Certificate No(s). 2366 issued in the name of Allegiant Bancorp, Inc.

         2.      The authorized capital of The Bank of St. Charles County
consists solely of 30,000 shares of common stock, $___________ par value,
evidenced by Stock Certificate No(s). ____________________ issued in the
name of Allegiant Bancorp, Inc.

         3.      The authorized capital of Bank of Ste. Genevieve consists
solely of 24,000 shares of common stock, $_________ par value, evidenced by
Stock Certificate No(s). ____________________ issued in the name of
Allegiant Bancorp, Inc.

         4.      The authorized capital of South Side National Bank of
St. Louis consists solely of 11531 shares of common stock, $_________ par
value, evidenced by Stock Certificate No(s). ____________________ issued in
the name of Allegiant Bancorp, Inc.

         5.      The authorized capital of State Bank of Jefferson County
consists solely of 40,000 shares of common stock, $_________ par value,
evidenced by Stock Certificate No(s). ____________________ issued in the
name of Allegiant Bancorp, Inc.

                                   - 41 -

<PAGE>
<PAGE>

                                    EXHIBIT A
                                    ---------

                        Form of Term Loan Promissory Note

                            TERM LOAN PROMISSORY NOTE
                            -------------------------

$_______________                                          St. Louis, Missouri
                                                           September 28, 2001

         FOR VALUE RECEIVED, the undersigned, ALLEGIANT BANCORP, INC., a
Missouri corporation ("Borrower"), hereby promises to pay to the order of
________________________________________ a ______________________
("Lender"), the principal sum of ___________________________________ Dollars
($_____________). The principal amount of this Term Loan Promissory Note
(this "Note") shall be paid in quarterly installments of
______________________________________ Dollars ($_____________) each, due
and payable on January 2, 2002, April 1, 2002, and July 1, 2002, with a
final installment due and payable on September 27, 2002, in the amount
necessary to repay in full, the principal balance then outstanding under
this Note, plus all billed/due and unpaid interest thereon.

         Borrower further promises to pay to the order of Lender interest on
the unpaid principal balance from time to time outstanding under this Note
prior to maturity at the rate(s) described in Section 3.02 of the Loan
Agreement (defined below). Interest shall be payable on the same dates that
principal is due (or on the last day of each Interest Period for all
portions of this Note subject to the LIBOR Rate), and at the maturity of
this Note, whether by reason of acceleration or otherwise. All payments
under this Note shall be applied first to the payment of all accrued and
unpaid interest, with the balance, if any, to be applied to the payment of
principal.

         Lender may record the date and amount of all advances and all
payments of principal and interest under this Note in the records it
maintains with respect thereto. Lender's books and records showing the
account between Lender and Borrower shall be admissible in evidence in any
action or proceeding and shall constitute prima facie proof of the items
therein set forth.

         The amount of interest accruing under this Note shall be computed
on an actual day, 360-day year basis. All payments of principal and interest
under this Note shall be made in lawful currency of the United States in
Federal or other immediately available funds at the office of Agent situated
at One Firstar Plaza, 7th & Washington Streets, St. Louis, Missouri 63101.
The acceptance by the holder of this Note of any installment of principal or
interest due under this Note after the date it is due as described above
shall not be held to establish a custom or waive any rights of the holder to
enforce prompt payment of any further installments or otherwise.

         This Note is one of the Notes referred to in that certain Loan
Agreement dated as of September 28, 2001, by and among Borrower, the Lenders
from time to time party thereto and U.S. Bank National Association., as
agent for the Banks ("Agent"), as the same may from time to time be amended,
modified, extended, renewed or restated (the "Loan Agreement"; all
capitalized terms used and not otherwise defined in this Note shall have the
respective meanings ascribed to them in the Loan Agreement). The Loan
Agreement, among other things, contains provisions for acceleration of the
maturity of this Note upon the occurrence of certain stated events and also
for prepayments on account of principal of this Note and interest on this
Note prior to the maturity of this Note upon the terms and conditions
specified therein.

         This Note is secured by, among other things, the Pledge Agreement,
to which Pledge Agreement a reference is hereby made for a description of
the security and a statement of the terms and conditions upon which this
Note is secured.

         If Borrower shall fail to make any payment of any principal or
interest due under this Note as and

                                   - 42 -

<PAGE>
<PAGE>

when the same shall become due and payable, or if any "Event of Default" (as
defined therein) shall occur under or within the meaning of the Loan
Agreement or the Pledge Agreement, then Lender may, at its option, declare
the entire outstanding principal balance of this Note and all accrued and
unpaid interest thereon to be immediately due and payable.

         In the event that any payment of any principal or interest due
under this Note shall not be paid when due, whether by reason of maturity,
acceleration or otherwise, and this Note is placed in the hands of an
attorney or attorneys for collection or for foreclosure of the Pledge
Agreement securing payment hereof, or if this Note is placed in the hands of
an attorney or attorneys for representation of Lender in connection with
bankruptcy or insolvency proceedings relating hereto, Borrower promises to
pay, in addition to all other amounts otherwise due on or under this Note,
the costs and expenses of such collection, foreclosure and representation,
including, without limitation, reasonable attorneys' fees and expenses
(whether or not litigation shall be commenced in aid thereof). All parties
hereto severally waive presentment, demand for payment, notice of dishonor,
protest and notice of protest.

         This Note shall be governed by and construed in accordance with the
substantive laws of the State of Missouri (without reference to conflict of
law principles).

         IN WITNESS WHEREOF, Borrower has executed this Note as of the day
and year first above written.

                                  Borrower:

                                  ALLEGIANT BANCORP, INC.

                                  By:
                                     ---------------------------------------

                                  Print Name:
                                             -------------------------------

                                  Title:
                                        ------------------------------------

                                     - 43 -

<PAGE>
<PAGE>

                                    EXHIBIT B
                                    ---------

                             ________________, 200__

U.S. Bank National Association
One Firstar Plaza
7th & Washington Streets
St. Louis, Missouri  63101
Attention: Correspondent Banking Department

Ladies and Gentlemen:

         Reference is hereby made to that certain Term Loan Agreement dated
as of September 28, 2001, by and between you and the undersigned (as the
same may from time to time be amended, modified, extended or renewed, the
"Loan Agreement"). All capitalized terms used and not otherwise defined
herein shall have the respective meanings ascribed to them in the Loan
Agreement.

         The undersigned hereby certifies to you that as of the date hereof:

         (a)     all of the representations and warranties of the
undersigned set forth in the Loan Agreement are true and correct;

         (b)     no violation or breach of any of the affirmative covenants
of the undersigned set forth in the Loan Agreement has occurred and is
continuing;

         (c)     no violation or breach of any of the negative covenants
of the undersigned set forth in the Loan Agreement has occurred and is
continuing;

         (d)     no Default or Event of Default under the Loan Agreement has
occurred and is continuing; and

         (e)     the financial statements of the undersigned, Subsidiary
Banks, the and the other Subsidiaries of the undersigned delivered to you
with this letter are true, correct and complete and have been prepared in
accordance with generally accepted accounting principles consistently
applied.

                                  Very truly yours,

                                  ALLEGIANT BANCORP, INC.

                                  By:
                                     ---------------------------------------

                                  Title:
                                        ------------------------------------

                                  By:
                                     ---------------------------------------

                                  Title:
                                        ------------------------------------

                                     - 44 -

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