Document:

RIGHTS AGREEMENT

                                     BETWEEN

                          FIRST SENTINEL BANCORP, INC.

                                       AND

                 REGISTRAR AND TRANSFER COMPANY, AS RIGHTS AGENT

                          Dated as of December 19, 2001

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                                TABLE OF CONTENTS

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SECTION 1.        CERTAIN DEFINITIONS............................................................................1

SECTION 2.        APPOINTMENT OF RIGHTS AGENT....................................................................5

SECTION 3.        ISSUE OF RIGHT CERTIFICATES....................................................................5

SECTION 4.        FORM OF RIGHT CERTIFICATES.....................................................................6

SECTION 5.        COUNTERSIGNATURE AND REGISTRATION..............................................................7

SECTION 6.        TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST
                  OR STOLEN RIGHT CERTIFICATES...................................................................7

SECTION 7.        EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE............................................8

SECTION 8.        CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.............................................9

SECTION 9.        RESERVATION AND AVAILABILITY OF CAPITAL STOCK..................................................9

SECTION 10.       PREFERRED SHARES RECORD DATE..................................................................10

SECTION 11.       ADJUSTMENT OF PURCHASE PRICE NUMBER AND KIND OF SHARES OR NUMBER OF RIGHTS....................10

SECTION 12.       CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES....................................16

SECTION 13.       CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER..........................16

SECTION 14.       FRACTIONAL RIGHTS AND FRACTIONAL SHARES.......................................................17

SECTION 15.       RIGHTS OF ACTION..............................................................................18

SECTION 16.       AGREEMENT OF RIGHT HOLDERS....................................................................18

SECTION 17.       RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.............................................19

SECTION 18.       CONCERNING THE RIGHTS AGENT...................................................................19

SECTION 19.       MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.....................................20

SECTION 20.       TERMS AND CONDITIONS OF RIGHTS AGENT'S APPOINTMENT............................................20

SECTION 21.       CHANGE OF RIGHTS AGENT........................................................................22

SECTION 22.       ISSUANCE OF NEW RIGHT CERTIFICATES............................................................23

SECTION 23.       REDEMPTION....................................................................................23

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SECTION 24.       EXCHANGE......................................................................................24

SECTION 25.       NOTICE OF CERTAIN EVENTS......................................................................25

SECTION 26.       NOTICES.......................................................................................26

SECTION 27.       SUPPLEMENTS AND AMENDMENTS....................................................................26

SECTION 28.       SUCCESSORS....................................................................................27

SECTION 29.       DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS..........................................27

SECTION 30.       BENEFITS OF THIS AGREEMENT....................................................................27

SECTION 31.       SEVERABILITY..................................................................................27

SECTION 32.       GOVERNING LAW.................................................................................27

SECTION 33.       COUNTERPARTS..................................................................................28

SECTION 34.       SECTION DESCRIPTIVE HEADINGS..................................................................28
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Exhibit A --      Form of Certificate of Designations, Preferences and
                  Rights of Series A Junior Participating Preferred Stock of
                  First Sentinel Bancorp, Inc.

Exhibit B --      Form of Right Certificate

Exhibit C --      Summary of Rights to Purchase Preferred Shares or Common Stock

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                                RIGHTS AGREEMENT
                                ----------------

                  This Rights Agreement ("Agreement"), is made as of the 19th
day of December, 2001, by and between First Sentinel Bancorp, Inc., a Delaware
corporation having an office at 1000 Woodbridge Center Drive, Woodbridge, New
Jersey 07095 ("Company"), and Registrar and Transfer Company, a corporation
organized under the laws of the State of New Jersey, with its principal office
at 10 Commerce Drive, Cranford, New Jersey 07016-3572 ("Rights Agent").

                              W I T N E S S E T H:
                              - - - - - - - - - -

                  WHEREAS, the Board of Directors of the Company desires to
provide all shareholders of the Company with the opportunity to benefit from the
long-term prospects and value of the Company and to ensure that all shareholders
of the Company receive fair and equal treatment in the event of any proposed
takeover of the Company; and

                  WHEREAS, on December 19, 2001, the Board of Directors of the
Company authorized and declared a dividend of one preferred share purchase right
("Right") for each share of common stock of the Company outstanding on January
1, 2002, each Right representing the right to purchase a one one-hundredth
(1/100) interest (subject to adjustment) in a Preferred Share (as defined
below), upon the terms and subject to the conditions set forth herein, and the
Company's Board has further authorized and directed the issuance of one Right
(subject to adjustment) with respect to each share of common stock of the
Company that shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are defined below);

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties hereby agree as follows:

Section 1.        CERTAIN DEFINITIONS.

                  For purposes of this Agreement, the following terms have the
meanings indicated:

                  (a) ACQUIRING PERSON. The term "Acquiring Person" shall mean
any Person who or which, together with all Affiliates and Associates of such
Person, is the Beneficial Owner of 12% or more of the Company's Common Shares
then outstanding, but shall not include the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company or any entity holding Common Shares of the Company for or pursuant to
the terms of any such plan. Notwithstanding the foregoing, no Person shall
become an Acquiring Person as the result of an acquisition of Common Shares by
the Company which, by reducing the number of Common Shares outstanding,
increases the proportionate number of Common Shares beneficially owned by such
Person to 12% or more of the Common Shares then outstanding; PROVIDED, HOWEVER,
that if a Person becomes the Beneficial Owner of 12% or more of the Common
Shares then outstanding by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares, then such Person shall be deemed to be an Acquiring
Person unless, upon the consummation of the acquisition of such additional
Common Shares, such Person does not own 12% or more of the Common Shares then
outstanding.

                  (b) AFFILIATE. The term "Affiliate" (whether referred to as an
"affiliate" of, or a Person "affiliated" with, a specified Person) shall mean a
Person that directly, or indirectly through

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one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.

                  (c) ASSOCIATE. The term "Associate," when used to indicate a
relationship with any Person, shall mean:

                  (i) any corporation or organization of which such Person is an
         officer or partner or is, directly or indirectly, either alone or
         together with one or more members of such Person's immediate family,
         the Beneficial Owner of 10% or more of any class of equity securities;

                  (ii) any trust or other estate in which such Person has a
         substantial beneficial interest or as to which such Person serves as a
         trustee or in a similar fiduciary capacity; and

                  (iii) any relative or spouse of such Person, or any relative
         of such spouse who has the same home as such Person or who is a
         director or officer of such Person or any of its Subsidiaries or
         Affiliates.

                  (d) BENEFICIAL OWNER. A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any securities:

                  (i) which such Person or any of such Person's Affiliates or
         Associates beneficially owns, directly or indirectly;

                  (ii) which such Person or any of such Person's Affiliates or
         Associates has (A) the right to acquire (whether such right is
         exercisable immediately or only after the passage of time) pursuant to
         any agreement, arrangement or understanding (other than customary
         agreements with and between underwriters and selling group members with
         respect to a bona fide public offering of securities), or upon the
         exercise of conversion rights, exchange rights, rights (other than the
         Rights issued hereunder), warrants or options, or otherwise; PROVIDED,
         HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or
         to beneficially own, securities tendered pursuant to a tender offer or
         exchange offer made by or on behalf of such Person or any of such
         Person's Affiliates or Associates until such tendered securities are
         accepted for purchase or exchange; or (B) the right to vote pursuant to
         any agreement, arrangement or understanding; PROVIDED, HOWEVER, that a
         Person shall not be deemed the Beneficial Owner of, or to beneficially
         own, any security if the agreement, arrangement or understanding to
         vote such security (1) arises solely from a revocable proxy or consent
         given to such Person in response to a public proxy or consent
         solicitation made pursuant to, and in accordance with, the applicable
         Rules and Regulations promulgated under the Exchange Act, and (2) is
         not also then reportable under the Exchange Act on Schedule 13D under
         the Rules and Regulations (or any comparable or successor reports); or

                  (iii) which are beneficially owned, directly or indirectly, by
         any other Person with which such Person or any of such Person's
         Affiliates or Associates has any agreement, arrangement or
         understanding (other than customary agreements with and between
         underwriters and selling group members with respect to a bona fide
         public offering of securities) for the purpose of acquiring, holding,
         voting (except to the extent contemplated by the proviso to Section
         1(d)(ii)(B) hereof) or disposing of such securities.

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                  Notwithstanding the foregoing, none of the Company's
directors, officers, employees or financial advisors shall be deemed to be the
Beneficial Owner of, or to beneficially own, any Common Shares owned by any
other director, officer, employee or financial advisor of the Company by virtue
of such persons acting in their capacities as such, including, without
limitation, in connection with any formulation and publication of the Board of
Directors' recommendation of a position, and any actions taken in furtherance
thereof, with respect to any acquisition proposal relating to the Company, any
tender offer or exchange offer for the Common Shares, or any solicitation of
proxies with respect to the Common Shares.

                  (e) BUSINESS DAY. The term "Business Day" shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.

                  (f) CLOSE OF BUSINESS. The term "Close of Business" on any
given date shall mean 5:00 P.M., New York City time, on such date; PROVIDED,
HOWEVER, that if such date is not a Business Day it shall mean 5:00 P.M., New
York City time, on the next succeeding Business Day.

                  (g) COMMON SHARES. The term "Common Shares" when used with
reference to the Company shall mean the shares of common stock, par value $0.01
per share, of the Company. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person or, if such other Person is
a Subsidiary of another Person, the Person or Persons that ultimately control
such first-mentioned Person.

                  (h) DISTRIBUTION DATE. The term "Distribution Date" shall have
the meaning set forth in Section 3(b) hereof.

                  (i) EXCHANGE ACT. The term "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.

                  (j) EXCHANGE RATIO. The tern "Exchange Ratio" shall have the
meaning set forth in Section 24(a) hereof.

                  (k) FINAL EXPIRATION DATE. The term "Final Expiration Date"
shall have the meaning set forth in Section 7(a) hereof.

                  (l) NASDAQ. The term "Nasdaq" shall mean The Nasdaq Stock
Market, Inc.

                  (m) PERSON. The term "Person" shall mean any individual, firm,
corporation, partnership, trust, association or other entity, and shall include
any successor (by merger or otherwise) of such entity.

                  (n) PREFERRED SHARES. The term "Preferred Shares" shall mean
shares of Series A Junior Participating Preferred Stock, par value $0.01 per
share, of the Company having the rights and preferences set forth in the form of
Exhibit A hereto.

                  (o) PURCHASE PRICE. The term "Purchase Price" shall have the
meaning set forth in Section 4 hereof.

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                  (p) REDEMPTION DATE. The term "Redemption Date" shall have the
meaning set forth in Section 7(a) hereof.

                  (q) REDEMPTION PRICE. The term "Redemption Price" shall have
the meaning set forth in Section 23(b) hereof.

                  (r) RECORD DATE. The term "Record Date" shall mean the Close
of Business on January 1, 2002.

                  (s) RIGHT CERTIFICATE. The term "Right Certificate" shall have
the meaning set forth in Section 3(a) hereof.

                  (t) RULES AND REGULATIONS. The term "Rules and Regulations"
shall mean the applicable rules and regulations promulgated by the Securities
and Exchange Commission, or any applicable federal or state regulatory agency or
authority that has jurisdiction over the Company at the relevant time.

                  (u) SECURITIES ACT. The term "Securities Act" shall mean the
Securities Act of 1933, as amended.

                  (v) SECURITY. The term "Security" shall have the meaning set
forth in Section 11(d)(i) hereof.

                  (w) SHARES ACQUISITION DATE. The term "Shares Acquisition
Date" shall mean the first date of public announcement (which, for purposes of
this definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.

                  (x) SUBSIDIARY. The term "Subsidiary" with respect to any
Person shall mean any corporation or other entity of which a majority of the
voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.

                  (y) SUMMARY OF RIGHTS. The term "Summary of Rights" shall have
the meaning set forth in Section 3(c) hereof.

                  (z) TRADING DAY. The term "Trading Day" with respect to a
Security shall mean a day on which the principal national securities exchange on
which the Security is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

                  (aa) VOTING STOCK. The term "Voting Stock" shall mean (i) the
Common Shares of the Company and (ii) any other shares of capital stock of the
Company entitled to vote generally in the election of directors or entitled to
vote together with the Common Shares in respect of any merger, consolidation,
sale of all or substantially all of the Company's assets, liquidation,
dissolution or winding up.

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        Section 2.        APPOINTMENT OF RIGHTS AGENT.

                  The Company hereby appoints the Rights Agent to act as agent
for the Company in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable upon 10
days' prior written notice to the Rights Agent. The Rights Agent shall have no
liability for or duty to supervise any such co-Rights Agent.

        Section 3.        ISSUE OF RIGHT CERTIFICATES.

                  (a) From the date hereof until, but not including, the
Distribution Date, (i) the Rights will be evidenced (subject to the provisions
of Section 3(c) hereof) by the certificates for Common Shares registered in the
names of the holders thereof and not by separate Right Certificates, and (ii)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will notify the Rights Agent of the occurrence of
the Distribution Date, and the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, at the Company's expense, send) by first-class,
insured, postage-paid mail, to each record holder of Common Shares as of the
Close of Business on the Distribution Date, at the address of such holder shown
in the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right (subject to
adjustment) for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.

                  (b) For purposes of the foregoing, the Distribution Date shall
be the earlier of (i) the Close of Business on the 20th Business Day after the
Shares Acquisition Date or (ii) the Close of Business on the 20th Business Day
(or such later date as may be determined by the Board of Directors of the
Company, in its sole discretion) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan) of, or of
the first public announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any Subsidiary of the Company or any entity holding Common Shares of the
Company for or pursuant to the terms of any such plan) to commence, a tender
offer or exchange offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares of the Company aggregating 12% or
more of the then outstanding Common Shares (including any such date that is
after the date of this Agreement and prior to the issuance of the Rights).

                  (c) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred Shares
or Common Shares, in substantially the form of Exhibit C hereto ("Summary of
Rights"), by first-class, postage-paid mail, to each record holder of Common
Shares as of the Close of Business on the Record Date, at the address of such
holder shown in the records of the Company. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares
outstanding

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on the Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.

                  (d) Certificates for Common Shares that become outstanding
(including, without limitation, reacquired Common Shares referred to in this
paragraph (d)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:

                 This certificate also evidences and entitles the holder hereof
                 to certain rights as set forth in a Rights Agreement, dated as
                 of December 19, 2001, by and between First Sentinel Bancorp,
                 Inc. and Registrar and Transfer Company, as Rights Agent (as
                 the same may be amended from time to time, the "Rights
                 Agreement"), the terms of which are hereby incorporated herein
                 by reference and a copy of which is on file at the principal
                 executive offices of First Sentinel Bancorp, Inc. Under certain
                 circumstances, as set forth in the Rights Agreement, such
                 Rights will be evidenced by separate certificates and will no
                 longer be evidenced by this certificate. First Sentinel
                 Bancorp, Inc. will mail to the holder of this certificate a
                 copy of the Rights Agreement without charge after receipt of a
                 written request therefor. As described in the Rights Agreement,
                 Rights owned by any Person who is or becomes an Acquiring
                 Person (as defined in the Rights Agreement) and certain
                 transferees thereof will become null and void.

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificates shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares that are no
longer outstanding. The Rights Agent shall deem any such Rights not outstanding
if it has actual knowledge that they are owned by the Company.

        Section 4.        FORM OF RIGHT CERTIFICATES.

                  The Right Certificates (and the form of election to purchase
Preferred Shares and the form of assignment printed on the reverse thereof)
shall be substantially in the form of Exhibit B hereto. The Right Certificates
shall be in machine printable format and in a form reasonably satisfactory to
the Rights Agent, and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any Rule or
Regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one one-hundredth
interests in a Preferred Share as shall be set forth therein at the price per
one one-hundredth interest in a Preferred Share set forth therein (the

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"Purchase Price"), but the number of such one one-hundredth interests in a
Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.

        Section 5.        COUNTERSIGNATURE AND REGISTRATION.

                  (a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof and shall be attested by the Secretary or
an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be countersigned and dated by an
authorized signatory of the Rights Agent either manually or by facsimile
signature and shall not be valid for any purpose unless countersigned. In case
any officer of the Company who shall have signed any of the Right Certificates
shall cease to be such an officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such an officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person who,
on the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although on the date of
the execution of this Rights Agreement any such person was not such an officer.

                  (b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its designated office, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates. In case any authorized signatory of the
Rights Agent who shall have countersigned any of the Right Certificates shall
cease to be such a signatory before delivery of the Right Certificates by the
Company, such Right Certificates, nevertheless, may be issued and delivered by
the Company with the same force and effect as though the person who
countersigned such Right Certificates had not ceased to be such a signatory; and
any Right Certificate may be countersigned on behalf of the Rights Agent by any
person who, on the actual date of the countersignature of such Right
Certificate, shall be a proper signatory of the Rights Agent to countersign such
Right Certificate, although on the date of the execution of this Agreement any
such person was not such a signatory.

        Section 6.        TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
                          CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN
                          RIGHT CERTIFICATES.

                  (a) Subject to the provisions of Section 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void pursuant to Section
11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-hundredth interests in a Preferred Share as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the
designated office of the Rights

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<PAGE>

Agent, along with a signature guarantee and such other and further documentation
as the Rights Agent may reasonably require. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested from the holders of such
Right Certificate. The Company may require payment from the holders of Rights of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

                  (b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
or the Rights Agent's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender of the Right
Certificate and a signature guarantee and such other and further documentation
as the Rights Agent may reasonably require to the Rights Agent and cancellation
of the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

        Section 7.        EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE.

                  (a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the designated office of the
Rights Agent, together with payment of the Purchase Price for each one
one-hundredth interest in a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Close of Business on January
1, 2012 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date") or (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof. The
Company shall provide the Rights Agent with a prompt written notice of the
occurrence of any of the events provided for in this Section 7(a).

                  (b) The Purchase Price for each one one-hundredth interest in
a Preferred Share pursuant to the exercise of a Right shall initially be $37.00,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.

                  (c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased, and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing interests in such number of one one-hundredth
interests in a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent), and the Company
hereby directs the depositary agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in

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<PAGE>

accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate. The provisions of this Section 7(c) shall apply whenever cash or
securities (such as Common Shares) may be received in lieu of the Preferred
Shares upon exercise of the Rights and surrender of the Right Certificates.

                  (d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.

                  (e) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with this Section 7.

        Section 8.        CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.

                  All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered to
the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Rights Agreement.
The Company shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

        Section 9.        RESERVATION AND AVAILABILITY OF CAPITAL STOCK.

                  (a) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares delivered
upon exercise of Rights (and, following the date on which a person becomes an
Acquiring Person, out of its authorized and unissued Common Shares and/or other
securities or out of its authorized and issued shares held in the treasury)
shall, at the time of delivery of the certificates for such Preferred Shares or
Common Shares (subject to payment of the Purchase Price), be duly authorized,
validly issued and fully paid and nonassessable shares.

                  (b) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preferred Shares or Common Shares upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for the Preferred Shares or Common Shares in a name other
than that of, the registered holder of the Right Certificates evidencing Rights
surrendered for transfer, delivery or exercise or to issue or to deliver any
certificates or depositary

                                      -9-
<PAGE>

receipts for Preferred Shares or Common Shares upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificates at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no such tax is due.

        Section 10.       PREFERRED SHARES RECORD DATE.

                  Each person in whose name any certificate for Preferred Shares
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Shares
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the Preferred Shares transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.

        Section 11.       ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
                          SHARES OR NUMBER OF RIGHTS.

                  The Purchase Price, the number of Preferred Shares or other
securities or interests therein covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this
Section 11.

                  (a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock or interests therein issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock or interests therein which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, such holder would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; PROVIDED, HOWEVER, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock or interests therein of the
Company issuable upon exercise of one Right.

                  (ii) Subject to Section 24 hereof, in the event any Person
         shall become an Acquiring Person, each holder of a Right shall have the
         right to receive, upon exercise thereof at a price equal to the then
         current Purchase Price multiplied by the number of one

                                      -10-
<PAGE>

         one-hundredth interests in a Preferred Share for which a Right is then
         exercisable (regardless of whether the Right is then exercisable), in
         accordance with the terms of this Agreement and in lieu of interests in
         Preferred Shares, such number of Common Shares of the Company as shall
         equal the result obtained by (A) multiplying the then current Purchase
         Price by the number of one one-hundredth interests in a Preferred Share
         for which a Right is then exercisable (regardless of whether the Right
         is then exercisable) and dividing that product by (B) 50% of the then
         current per share market price of the Company's Common Shares
         (determined pursuant to Section 11(d) hereof) on the date such Person
         became an Acquiring Person; provided, however, that the Purchase Price
         and the number of Common Shares so purchasable upon exercise of a Right
         shall, following the occurrence of such event, be subject to further
         adjustment as appropriate in accordance with Section 11(f) hereof. In
         the event that any Person shall become an Acquiring Person and the
         Rights shall then be outstanding, the Company shall not take any action
         (except as permitted under Sections 24 and 27 hereof) that would
         eliminate or diminish the benefits intended to be afforded by the
         Rights, except as provided in Section 23(b) hereof. Notwithstanding
         anything in this Agreement to the contrary, from and after the time any
         Person becomes an Acquiring Person, any Rights that are or were
         acquired or beneficially owned by such Acquiring Person (or any
         Associate or Affiliate of such Acquiring Person) shall be void, and any
         holder of such Rights shall thereafter have no right to exercise such
         Rights under any provision of this Agreement. No Right Certificate
         shall be issued pursuant to Section 3 hereof that represents Rights
         beneficially owned by an Acquiring Person or any Associate or Affiliate
         thereof whose Rights would be void pursuant to the preceding sentence;
         no Right Certificate shall be issued at any time upon the transfer of
         any Rights to an Acquiring Person or any Associate or Affiliate thereof
         or to any nominee of such Acquiring Person, Associate or Affiliate
         whose Rights would be void pursuant to the preceding sentence. Where a
         Right Certificate is delivered to the Rights Agent for transfer to an
         Acquiring Person or an Associate or Affiliate thereof, and the Rights
         Agent has actual knowledge or has received notice from the Company that
         the transferee is an Acquiring Person or an Associate or Affiliate
         thereof, that Right Certificate shall be canceled. The Rights Agent
         shall have no liability for canceling Right Certificates so delivered
         for transfer.

                  (iii) In the event that there shall not be sufficient Common
         Shares issued but not outstanding or authorized but unissued to permit
         the exercise in full of the Rights in accordance with the foregoing
         subparagraph (ii) of this paragraph (a), (A) the Company shall take all
         such action as may be necessary to authorize additional Common Shares
         for issuance upon exercise of the Rights or (B) the Company, at its
         option, notwithstanding any other provision of this Agreement, with
         respect to each Right, to the extent permitted by applicable law and
         any agreements or instruments in effect on the Distribution Date to
         which the Company is a party, upon exercise of the Rights, may pay cash
         and/or securities equal to the Purchase Price per Right, in lieu of
         issuing such additional Common Shares and requiring payment therefor.
         To the extent that any legal or contractual restrictions prevent the
         Company from paying the full amount of cash and/or securities payable
         in accordance with the foregoing sentence, the Company shall pay to
         holders of the Rights as to which such payments are being made all
         amounts which are not then restricted on a pro rata basis. The Company
         shall continue to make payments on a pro rata basis as funds become
         available until such payments have been paid in full. The Company shall
         provide the Rights Agent with written notice of any election made
         pursuant to this Section 11(a)(iii).

                                      -11-
<PAGE>

                  (iv) In the event that the Rights become exercisable or
         exchangeable under the provisions of this Agreement, the Company
         covenants and agrees to use its best efforts to (A) cause a
         registration statement under the Securities Act, or, if the Securities
         Act is not applicable, under the comparable federal or state securities
         laws applicable to the Common Shares and Preferred Shares, as in effect
         on the date in question, and under the applicable Rules and Regulations
         thereunder, on an appropriate form, with respect to the shares
         purchasable upon exercise of the Rights or exchangeable for such
         Rights, to remain effective (with a prospectus or offering circular at
         all times meeting the requirements of the Securities Act or any other
         applicable federal or state law) until the Final Expiration Date; (B)
         qualify or register the Common Shares or Preferred Shares purchasable
         upon exercise of the Rights under the blue sky laws of such
         jurisdictions as may be necessary or appropriate; and (C) list the
         shares purchasable upon exercise of the Rights on each national
         securities exchange on which shares of the same class or series were
         listed prior to exercisability of the Rights or, if such shares are not
         listed or admitted to the trading on any national securities exchange,
         on Nasdaq or such other system then in use. The Company covenants and
         agrees to bear the full cost of any registration, qualification or
         listing required under this Section 11(a)(iv).

                  (b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as defined in
Section 11(d) hereof) on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of Preferred Shares which the aggregate offering price of the
total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); PROVIDED,
HOWEVER, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
or interests therein of the Company issuable upon exercise of one Right. In case
such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
binding upon the Rights Agent and the holders of the Rights. Preferred Shares
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect if such record
date had not been fixed.

                  (c) In case the Company shall fix a record date for the making
of a distribution of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section

                                      -12-
<PAGE>

11(b) hereof) to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price of the
Preferred Shares on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and binding upon
the Rights Agent and the holders of the Rights) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one Preferred Share and the denominator of which shall be
such current per share market price of the Preferred Shares; PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock (or
interests therein) of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.

                  (d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days immediately prior to such date; PROVIDED, HOWEVER, that in the event that
the current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported on Nasdaq or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company.

                  (ii) For the purpose of any computation hereunder, the
         "current per share market price" of the Preferred Shares shall be
         determined in accordance with the method set forth in Section 11(d)(i)
         hereof. If the Preferred Shares are not publicly traded, the "current
         per share market price" of the Preferred Shares shall be conclusively
         deemed to be the current per share market price of the Common Shares as
         determined pursuant to Section 11(d)(i) hereof (appropriately adjusted
         to reflect any stock split, stock dividend or similar transaction
         occurring after the date hereof), multiplied by 100. If neither the
         Common Shares nor the Preferred Shares are publicly held or so listed
         or traded, "current per share market price"

                                      -13-
<PAGE>

         shall mean the fair value per share as determined in good faith by the
         Board of Directors of the Company, whose determination shall be
         described in a statement filed with the Rights Agent and binding upon
         the Rights Agent and the holders of the Preferred Shares.

                  (e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; PROVIDED, HOWEVER, that any adjustments that by reason of
this Section 1l(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-millionth
interest in a Preferred Share or one ten-thousandth interest in any other share
or security as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction that
requires such adjustment or (ii) the date of the expiration of the right to
exercise any Rights.

                  (f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares or interests therein, thereafter the Purchase Price and the number of
such other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in
Sections 11(a), (b), (c), (e), (h), (i) and (m) hereof, as applicable, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Shares shall apply on like terms to any such other shares. The Company shall
provide the Rights Agent with prompt written notice of any such election to
utilize other securities, the type of securities and the exchange ratio of Right
Certificates therefor.

                  (g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredth
interests in a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.

                  (h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredth interests in a Preferred Share (calculated to the nearest one
one-millionth interest in a Preferred Share) obtained by (i) multiplying (x) the
number of one one-hundredths interests covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

                  (i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredth interests in a Preferred
Share purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-hundredth interests in a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The

                                      -14-
<PAGE>

Company shall make a public announcement of its election to adjust the number of
Rights and shall simultaneously provide the Rights Agent with written notice of
such election to adjust, which announcement and notice shall indicate the record
date for the adjustment and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter but, if the Right Certificates have been issued,
shall be at least 10 days later than the date of the public announcement. If
Right Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights to which such holders shall be entitled as a result of
such adjustment or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably require, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. The Company shall provide the Rights
Agent with written notice of the occurrence of any distribution effected
pursuant to the foregoing. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein and shall
be registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.

                  (j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredth interests in a Preferred Share issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one one-hundredth interests in a Preferred Share that were expressed in the
initial Right Certificates issued hereunder but shall be deemed to represent the
Purchase Price and the number of one one-hundredth interests in a Preferred
Share as adjusted pursuant to the terms hereof.

                  (k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.

                  (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment. The Company
shall give the Rights Agent prompt written notice of its election to defer the
issuance of Preferred Shares.

                  (m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Preferred
Shares, issuance wholly for

                                      -15-
<PAGE>

cash of any Preferred Shares at less than the current market price, issuance
wholly for cash of Preferred Shares or securities that by their terms are
convertible into or exchangeable for Preferred Shares, dividends on Preferred
Shares payable in Preferred Shares or issuance of rights, options or warrants
referred to above in Section 11(b) hereof, hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such shareholders.

                  (n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one one-hundredth interests in a Preferred Share purchasable after
such event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredth interests in a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (ii) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights that each
Common Share outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.

        Section 12.       CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
                          SHARES.

                  Whenever an adjustment is made as provided in Sections 11 and
13 hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, including, but not limited to, the adjusted Purchase Price and
a brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares or the Preferred
Shares a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 25 hereof. The Rights
Agent may rely, and shall incur no liability for relying upon, the most recent
such certificate that it has received.

        Section 13.       CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
                          EARNING POWER.

                  In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (a) the Company shall consolidate with,
or merge with and into, any other Person, (b) any Person shall consolidate with
the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one one-hundredth
interests in a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement, and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-hundredth interests in a

                                      -16-
<PAGE>

Preferred Share for which a Right is then exercisable and (B) dividing that
product by 50% of the then current per share market price of the Common Shares
of such other Person (determined pursuant to Section 11(d) hereof) on the date
of consummation of such consolidation, merger, sale or transfer; (ii) the issuer
of such Common Shares shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof and the making
of payments in cash and/or securities equal to the Purchase Price in accordance
with Section 11(a)(iii) hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights. The Company shall not consummate
any such consolidation, merger, sale or transfer unless prior thereto the
Company and such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The prior written consent of the Rights
Agent must be obtained in connection with any such supplemental agreement that
alters the rights or duties of the Rights Agent. The Company shall not enter
into any transaction of the kind referred to in this Section 13 if at the time
of such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements that, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The provisions of this Section
13 shall similarly apply to successive mergers or consolidations or sales or
other transfers. The Rights Agent may rely, and shall be fully protected in
relying, on a certificate of the Company stating that the provisions of this
Section 13 have been fulfilled.

        Section 14.       FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

                  (a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates that evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported on Nasdaq
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.

                                      -17-
<PAGE>

                  (b) The Company shall not be required to issue fractional
interests in Preferred Shares (other than fractional interests that are integral
multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights
or to distribute certificates that evidence fractional interests in Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share). Fractional interests in Preferred Shares in integral
multiples of one one-hundredth of a Preferred Share may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided, that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts, and provided, further, that the Company shall notify the Rights Agent
of any such election pursuant to this Section 14(b). In lieu of fractional
interests in Preferred Shares that are not integral multiples of one
one-hundredth of a Preferred Share, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Preferred Share. For the purposes of this Section 14(b), the
current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.

                  (c) Upon accepting a Right, the holder of such Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).

        Section 15.       RIGHTS OF ACTION.

                  All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18 hereof, are
vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.

        Section 16.       AGREEMENT OF RIGHT HOLDERS.

                  Every holder of a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:

                  (a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;

                  (b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the designated office of the Rights Agent, duly

                                      -18-
<PAGE>

endorsed or accompanied by a proper instrument of transfer along with a
signature guarantee and such other and further documentation as the Rights Agent
may reasonably require; and

                  (c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.

        Section 17.       RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.

                  No holder, as such, of any Right Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
Preferred Shares or interests therein or any other securities of the Company
that may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.

        Section 18.       CONCERNING THE RIGHTS AGENT.

                  (a) The Company agrees to pay to the Rights Agent such
compensation as shall be agreed to in writing between the Company and the Rights
Agent for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and other
disbursements (including reasonable attorneys' disbursements) incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability or expense incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including reasonable attorneys'
fees and expenses and the costs and expenses of defending against any claim of
liability in the premises. In no case will the Rights Agent be liable for
special, indirect, incidental or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the possibility of such damages. Any liability of the Rights
Agent will be limited to the amount of fees paid by the Company hereunder. This
Section 18(a) shall survive the termination of this Agreement.

                  (b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, instructions or other paper or document believed by it
to be genuine and to be signed and executed by the proper

                                      -19-
<PAGE>

person or persons and, where necessary, verified or acknowledged, or otherwise
upon the advice of counsel as set forth in Section 20 hereof.

        Section 19.       MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
                          AGENT.

                  (a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement and any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

                  (b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.

        Section 20.       TERMS AND CONDITIONS OF RIGHTS AGENT'S APPOINTMENT.

                  The Rights Agent undertakes the duties and obligations imposed
by this Agreement upon the following terms and conditions, to all of which the
Company and the holders of Right Certificates, by their acceptance thereof,
shall be bound:

                  (a) The Rights Agent may consult with legal counsel of its
selection (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.

                  (b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

                                      -20-
<PAGE>

                  (c) The Rights Agent shall be liable only for its own
negligence, bad faith or willful misconduct.

                  (d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.

                  (e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.

                  (f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performance
by the Rights Agent of the provisions of this Agreement.

                  (g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with such
instructions of any such officer. An application by the Rights Agent for
instructions may set forth in writing any action proposed to be taken or omitted
by the Rights Agent with respect to its duties and obligations under this
Agreement and the date on and/or after which such actions shall be taken, and
the Rights Agent shall not be liable for any action taken or omitted in
accordance with a proposal included in any such application on or after the date
specified therein (which date shall not be less than one Business Day after the
Company receives such application) without the consent of the Company unless
prior to taking or omitting such action, the Rights Agent has received written
instructions in response to such application specifying the actions to be taken
or omitted.

                  (h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent

                                      -21-
<PAGE>

under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

                  (i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.

                  (j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if the Rights Agent shall have reasonable grounds for believing the
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.

                  (k) In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any action taken
or omitted by it in connection with its administration of this Agreement in
reliance upon (i) the proper execution of the certification concerning
beneficial ownership appended to the Form of Assignment and the Form of Election
to Purchase included as part of Exhibit B hereto (the "Certification"), unless
the Rights Agent shall have actual knowledge that, as executed, the
Certification is untrue or (ii) the non-execution or failure to complete the
Certification including, without limitation, any refusal to honor any otherwise
permissible assignment or election by reason of such nonexecution or failure.

                  (l) The Company agrees to give the Rights Agent prompt written
notice of any event or ownership that comes to the Company's attention that
would prohibit the exercise or transfer of the Rights Certificates.

        Section 21.       CHANGE OF RIGHTS AGENT.

                  The Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon 30 days' notice in
writing mailed to the Company and, at the Company's expense, to each transfer
agent of the Common Shares or Preferred Shares by registered or certified mail,
and to the holders of the Right Certificates by first class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the Company shall become the Rights Agent, and the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or any State of the United States,
in good standing, that is authorized under such laws to exercise the powers of
the Rights Agent contemplated by this

                                      -22-
<PAGE>

Agreement and is subject to supervision or examination by federal or state
authority. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares and mail a notice thereof in writing to
the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

        Section 22.       ISSUANCE OF NEW RIGHT CERTIFICATES.

                  Notwithstanding any of the provisions of this Agreement or of
the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement.

        Section 23.       REDEMPTION.

                  (a) The Rights may be redeemed by action of the Board of
Directors of the Company pursuant to paragraph (b) of this Section 23 and shall
not be redeemed in any other manner. The Rights Agent shall be given written
notice of any such redemption.

                  (b) The Board of Directors of the Company may, at its option,
at any time prior to the 20th Business Day after any Person becomes an Acquiring
Person, redeem all but not less than all of the then outstanding Rights at a
redemption price of $0.01 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price").

                  (c) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (b) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate, and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; PROVIDED, HOWEVER,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action of the Board of
Directors ordering the redemption of the Rights pursuant to Section 23(b)
hereof, the Company shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.

                                      -23-
<PAGE>

        Section 24.       EXCHANGE.

                  (a) The Board of Directors of the Company may, at its sole
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). The Rights Agent shall be
given written notice of any such exchange and the Exchange Ratio pursuant to
which such exchange is effected. Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.

                  (b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate, and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange, and the
Rights Agent shall be given written notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights that will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights that have become void pursuant
to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

                  (c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute interests in Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof) for Common
Shares exchangeable for Rights, at the initial rate of one one-hundredth
interest in a Preferred Share (or equivalent preferred share) for each Common
Share, as appropriately adjusted to reflect adjustments in the voting rights of
the Preferred Shares pursuant to Section 3(a) of Exhibit A hereto so that the
fraction of a Preferred Share delivered in lieu of each Common Share shall have
the same voting rights as one Common Share. The Rights Agent shall be given
written notice of any such substitution.

                  (d) In the event that there shall not be sufficient Common
Shares or Preferred Shares issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24, (i) the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of the
Rights or (ii) the Company, at is option, notwithstanding any other provision of
this Agreement, with respect to each Right, to the extent permitted by
applicable law and any agreements or instruments in effect on the Distribution
Date to which the Company is a party, upon exercise of

                                      -24-
<PAGE>

the Rights, may pay cash and/or securities equal to the Purchase Price per
Right, in lieu of issuing such additional Common Shares and requiring payment
therefor. To the extent that any legal or contractual restrictions prevent the
Company from paying the full amount of cash payable in accordance with the
foregoing sentence, the Company shall pay to holders of the Rights as to which
such payments are being made all amounts that are not then restricted on a pro
rata basis. The Company shall continue to make payments on a pro rata basis as
funds become available until such payments have been paid in full. The Company
shall provide the Rights Agent with written notice of any election made pursuant
to this Section 24(d).

                  (e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates that evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (e), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.

        Section 25.       NOTICE OF CERTAIN EVENTS.

                  (a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make
any other distribution to the holders of its Preferred Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preferred
Shares rights or warrants to subscribe for or to purchase any additional
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate and the Rights Agent, in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution or winding up is
to take place and the date of participation therein by the holders of the Common
Shares and/or Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be earlier.

                  (b) In case an event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate and to the Rights Agent, in accordance with
Section 26 hereof, a notice of the occurrence of such event, which notice shall
describe the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof.

                                      -25-
<PAGE>

        Section 26.       NOTICES.

                  Notices or demands authorized by this Agreement to be given or
made by the Rights Agent or by the holder of any Right Certificate to or on the
Company, shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:

                              First Sentinel Bancorp, Inc.
                              1000 Woodbridge Center Drive
                              Woodbridge, New Jersey 07095
                              Attn: President

Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:

                              Registrar and Transfer Company
                              10 Commerce Drive
                              Cranford, New Jersey 07016-3572
                              Attn: Vice President, Corporate Relations

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

        Section 27.       SUPPLEMENTS AND AMENDMENTS.

                  The Company may, at any time prior to the time a Person
becomes an Acquiring Person, by resolution of its Board of Directors, from time
to time supplement or amend this Agreement without the approval of any holders
of Right Certificates in any respect, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; PROVIDED,
HOWEVER, that from and after such time as any Person becomes an Acquiring
Person, this Agreement may be amended by the Board of Directors of the Company
in any manner which would not adversely affect the interests of any holders of
Right Certificates (other than an Acquiring Person or an Affiliate of Associate
thereof). Upon the delivery of a certificate from an executive officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section 27, the Rights Agent shall execute such
supplement or amendment, provided that the Rights Agent shall not be required to
consent to any amendment or supplement that is adverse to its interests. Without
limiting the foregoing, the Company may, at any time prior to such time as any
Person becomes an Acquiring Person, amend this Agreement to lower the thresholds
set forth in Sections 1(a) and 3(b) hereof to not less than the largest
percentage of the outstanding Common Shares then known by the Company to be
beneficially owned by any Person.

                                      -26-
<PAGE>

        Section 28.       SUCCESSORS.

                  All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.

        Section 29.       DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.

                  (a) The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to such Board of Directors or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the Company in
good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties and (y) not
subject the Board of Directors of the Company to any liability to the holders of
the Rights.

                  (b) In taking any action referred to in Section 29(a), the
Board of Directors shall be entitled to consider, without limitation, the
financial and managerial resources and future prospects of an Acquiring Person,
the possible effects of the action on the business of the Company and its
Subsidiaries and on the employees, customers, suppliers and creditors of the
Company and its Subsidiaries and the effects on the communities in which the
Company's and its Subsidiaries' facilities are located.

        Section 30.       BENEFITS OF THIS AGREEMENT.

                  Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).

        Section 31.       SEVERABILITY.

                  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

        Section 32.       GOVERNING LAW.

                  This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely
within such State.

                                      -27-
<PAGE>

        Section 33.       COUNTERPARTS.

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

        Section 34.       SECTION DESCRIPTIVE HEADINGS.

                  Descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

                                      -28-
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and year first
above written.

                                    FIRST SENTINEL BANCORP, INC.

                                    By:
                                       /s/ John P. Mulkerin
                                       -----------------------------------------
                                       John P. Mulkerin
                                       President and Chief Executive Officer
Attest:

By: /s/ Christopher Martin
   -----------------------------------------
   Christopher Martin
   Corporate Secretary

                                     REGISTRAR AND TRANSFER COMPANY,
                                     as Rights Agent

                                     By:   /s/ Diane Sayek
                                        ----------------------------------------
                                        Name:  Diane Sayek
                                        Title: Vice President
Attest:

By:   /s/ Florence P. Bogaenko
   -----------------------------------------
   Name:  Florence P. Bogaenko
   Title: Account Executive

                                      -29-
<PAGE>

                                                                       Exhibit A
                                                                       ---------

             CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF

                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

                                       OF

                          FIRST SENTINEL BANCORP, INC.

             PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
                            OF THE STATE OF DELAWARE

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

               We, John P. Mulkerin and Christopher Martin, being the President
and Chief Executive Officer and the Corporate Secretary, respectively, of First
Sentinel Bancorp, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware ("Corporation"), in accordance with the
provisions of Sections 103 and 151 thereof, DO HEREBY CERTIFY:

               That, pursuant to the authority conferred upon the Board of
Directors of the Corporation ("Board") by the Corporation's Certificate of
Incorporation ("Certificate of Incorporation"), at a meeting duly called and
held on December 19, 2001, at which a quorum was present and acting throughout,
the Board duly adopted the following resolution creating a series of 700,000
shares of preferred stock, par value $0.01 per share, designated "Series A
Junior Participating Preferred Stock":

                       RESOLVED, that, pursuant to the authority vested in the
               Board of Directors of the Corporation ("Board") by the
               Corporation's Certificate of Incorporation ("Certificate of
               Incorporation"), the Board does hereby provide for the issuance
               of a series of preferred stock, par value $0.01 per share, of the
               Corporation, to be designated "Series A Junior Participating
               Preferred Stock," initially consisting of seven hundred thousand
               (700,000) shares, and to the extent that the designations,
               powers, preferences and relative and other special rights and the
               qualifications, limitations and restrictions thereof are not
               stated and expressed in the Certificate of Incorporation, does
               hereby fix and herein state and express such designations,
               powers, preferences and relative and other special rights and the
               qualifications, limitations and restrictions thereof, as follows:

               Section 1.  DESIGNATION AND AMOUNT. The shares of such
series shall be designated as "Series A Junior Participating Preferred Stock,"
par value $0.01 per share ("Series A Preferred Stock"), and the number of shares
constituting such series shall be 700,000. Such number of shares may be
increased or decreased by resolution of the Board; PROVIDED, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for

<PAGE>

issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.

               Section 2.           DIVIDENDS AND DISTRIBUTIONS.

                       (a) Subject to the rights of the holders of any shares of
any series of preferred stock (or any similar stock) ranking prior and superior
to the Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of shares of common
stock of the Corporation, par value $0.01 per share ("Common Stock"), and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board out of funds legally available therefor, quarterly dividends payable
in cash on the first day of March, June, September and December in each year
(each such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of: (a)
$1.00 and (b) subject to the provision for adjustment set forth herein, 100
times the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

                       (b) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in paragraph (a) of
this section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
PROVIDED, that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1.00 per share on the Series A Preferred Stock shall nevertheless be payable
on such subsequent Quarterly Dividend Payment Date.

                       (c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend

                                      -2-
<PAGE>

Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the dated fixed for the payment
thereof.

               Section 3. VOTING RIGHTS. The holders of shares of Series A
Preferred Stock shall have the following voting rights:

                       (a) Subject to the provision for adjustment hereinafter
               set forth, each share of Series A Preferred Stock shall entitle
               the holder thereof to 100 votes on all matters submitted to a
               vote of the stockholders of the Corporation. In the event the
               Corporation shall at any time declare or pay any dividend on the
               Common Stock payable in shares of Common Stock or effect a
               subdivision or combination or consolidation of the outstanding
               shares of Common Stock (by reclassification or otherwise than by
               payment of a dividend in shares of Common Stock) into a greater
               or lesser number of shares of Common Stock, then in each such
               case the number of votes per share to which holders of shares of
               Series A Preferred Stock were entitled immediately prior to such
               event shall be adjusted by multiplying such number by a fraction,
               the numerator of which is the number of shares of Common Stock
               outstanding immediately after such event and the denominator of
               which is the number of shares of Common Stock that were
               outstanding immediately prior to such event.

                       (b) Except as otherwise provided herein, in any other
               resolution creating a series of preferred stock or any similar
               stock, in any amendment to the Certificate of Incorporation or by
               law, the holders of shares of Series A Preferred Stock and the
               holders of shares of Common Stock and any other capital stock of
               the Corporation having general voting rights shall vote together
               as one class on all matters submitted to a vote of stockholders
               of the Corporation.

                       (c) Except as set forth herein, or as otherwise provided
               by law, holders of Series A Preferred Stock shall have no special
               voting rights and their consent shall not be required (except to
               the extent they are entitled to vote with holders of Common Stock
               as set forth herein) for taking any corporate action.

                                      -3-
<PAGE>

                       Section 4.           CERTAIN RESTRICTIONS.

                       (a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:

                       (i) declare or pay dividends, or make any other
               distributions, on any shares of stock ranking junior (either as
               to dividends or upon liquidation, dissolution or winding up) to
               the Series A Preferred Stock;

                       (ii) declare or pay dividends, or make any other
               distributions, on any shares of stock ranking on a parity (either
               as to dividends or upon liquidation, dissolution or winding up)
               with the Series A Preferred Stock, except dividends paid ratably
               on the Series A Preferred Stock and all such parity stock on
               which dividends are payable or in arrears in proportion to the
               total amounts to which the holders of all such shares are then
               entitled;

                       (iii) redeem or purchase or otherwise acquire for
               consideration shares of any stock ranking junior (either as to
               dividends or upon liquidation, dissolution or winding up) to the
               Series A Preferred Stock, provided that the Corporation may at
               any time redeem, purchase or otherwise acquire shares of any such
               junior stock in exchange for shares of any stock of the
               Corporation ranking junior (either as to dividends or upon
               dissolution, liquidation or winding up) to the Series A Preferred
               Stock; or

                       (iv) redeem or purchase or otherwise acquire for
               consideration any shares of Series A Preferred Stock, or any
               shares of stock ranking on a parity with the Series A Preferred
               Stock, except in accordance with a purchase offer made in writing
               or by publication (as determined by the Board) to all holders of
               such shares upon such terms as the Board, after consideration of
               the respective annual dividend rates and other relative rights
               and preferences of the respective series and classes, shall
               determine in good faith will result in fair and equitable
               treatment among the respective series or classes.

                       (b) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.

               Section 5. REACQUIRED SHARES. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall, upon their

                                      -4-
<PAGE>

cancellation, become authorized but unissued shares of preferred stock and may
be reissued as part of a new series of preferred stock subject to the conditions
and restrictions on issuance set forth herein, in a resolution of the Board, in
the Certificate of Incorporation or in any other Certificate of Amendment
creating a series of preferred stock or any similar stock or as otherwise
required by law.

               Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of: (i) $100.00 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, and (ii) an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (b) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

               Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

                                      -5-
<PAGE>

               Section 8. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable, except as otherwise provided herein.

               Section 9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all other series of the Corporation's preferred stock.

               Section 10. AMENDMENT. At any time that any shares of Series A
Preferred Stock are outstanding, the Certificate of Incorporation shall not be
amended in any manner, nor shall the Board take any action, which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding shares of Series A
Preferred Stock, voting together as a single class.

               Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be
issued in fractions of a share, which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.

                                      -6-
<PAGE>

         IN WITNESS WHEREOF, First Sentinel Bancorp, Inc. has caused this
certificate to be executed by its President and Chief Executive Officer, and
attested by its Corporate Secretary, this 19th day of December, 2001.

                                        FIRST SENTINEL BANCORP, INC.

                                        By:
                                           ---------------------------------
                                           John P. Mulkerin
                                           President and Chief Executive Officer

Attest:
By:
   ---------------------------------
   Christopher Martin
   Corporate Secretary

                                      -7-
<PAGE>

                                                                       Exhibit B
                                                                       ---------

                            FORM OF RIGHT CERTIFICATE

Certificate No. R-                          __ RIGHTS

                  NOT EXERCISABLE AFTER JANUARY 1, 2012, OR, IF EARLIER,
                  IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
                  SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO
                  EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
                  AGREEMENT. ANY RIGHTS BENEFICIALLY OWNED BY OR
                  TRANSFERRED TO AN ACQUIRING PERSON OR AN AFFILIATE OR
                  ASSOCIATE THEREOF OR ANY SUBSEQUENT HOLDER OF SUCH
                  RIGHTS MAY BECOME VOID AND WILL NO LONGER BE
                  TRANSFERABLE.

                                RIGHT CERTIFICATE

                          FIRST SENTINEL BANCORP, INC.

                  This certifies that ______________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of December 19, 2001 (as the same
may be amended from time to time, "Rights Agreement"), by and between First
Sentinel Bancorp, Inc., a Delaware corporation ("Company"), and Registrar and
Transfer Company ("Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., New York City time, on January 1, 2012 at the designated
office of the Rights Agent, or at the office of its successor as Rights Agent, a
one one-hundredth interest in a fully-paid, non-assessable share of Series A
Junior Participating Preferred Stock, par value $0.01 per share ("Preferred
Shares"), of the Company, at a purchase price of $37.00 ("Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed, along with a signature guarantee and such other and
further documentation as the Rights Agent may reasonably require. The number of
Rights evidenced by this Right Certificate (and the number of one one-hundredth
interests in Preferred Shares that may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of ______________ ____, 20___, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-hundredth interests in Preferred Shares that may
be purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.

                  This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full

<PAGE>

description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and of the Rights Agent.

                  This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the Rights Agent, along
with a signature guarantee and such other and further documentation as the
Rights Agent may reasonably require, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of interests in
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Right Certificate or Right Certificates
for the number of whole Rights not exercised.

                  Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be, and under certain circumstances are
required to be, redeemed by the Company at a redemption price of $0.01 per Right
or (ii) may be exchanged in whole or in part for Preferred Shares or shares of
the Company's common stock, par value $0.01 per share.

                  No fractional interests in Preferred Shares will be issued
upon the exercise of any Right or Rights evidenced hereby (other than fractional
interests that are integral multiples of one one-hundredth of a Preferred Share,
which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.

                  No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.

                  This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.

                                      -2-
<PAGE>

                  WITNESS the facsimile signature of the proper officers of the
company and its corporate seal. Dated as of ____________ ___, 20__.

                                            FIRST SENTINEL BANCORP, INC.

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

Attest:
By:
   ---------------------------------
   Name:
   Title:

Countersigned:

REGISTRAR AND TRANSFER COMPANY,
   AS RIGHTS AGENT
By:
   ---------------------------------
      Authorized Signatory.

Dated: _________ ___, 20__

                                      -3-
<PAGE>

                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT
                               ------------------

             (To be executed by the registered holder if such holder
                   desires to transfer the Right Certificate.)

                  FOR VALUE RECEIVED _______________________________ hereby
sell(s), assign(s) and transfer(s) unto ________________________________________
                  (Please print name and address of transferee)

this Right Certificate, together with all right, title and interest therein, and
do(es) hereby irrevocably constitute(s) and appoint(s) _________________________
as Attorney, to transfer the within Right Certificate on the books of First
Sentinel Bancorp, Inc. with full power of substitution.

Dated: ______________________, 20__

                                              ------------------------------
                                              Signature

                                              ------------------------------
                                              Signature

Signature Guarantee:

                  Signatures must be guaranteed by an eligible financial
institution or broker who is a member/participant in a Medallion Program
approved by the Securities Transfer Association, Inc.
--------------------------------------------------------------------------------
                  The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

                                              ------------------------------
                                              Signature

                                              ------------------------------
                                              Signature

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

                                      -4-
<PAGE>

            [Form of Reverse Side of Right Certificate -- continued]

                          FORM OF ELECTION TO PURCHASE
                          ----------------------------

             (To be executed by the registered holder if such holder
                   desires to exercise the Right Certificate.)

To:      FIRST SENTINEL BANCORP, INC.

                  The undersigned hereby irrevocably elects to exercise
________________ Rights represented by this Right Certificate to purchase the
interests in Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such interests in Preferred Shares be issued in
the name of:

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

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

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

(Please insert social security or
other taxpayer identification number)

If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

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

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

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

(Please print name and address)

-------------------------------
(Please insert social security or
other taxpayer identification number)

Dated: ___________________, 20__

                                              ------------------------------
                                              Signature

                                              ------------------------------
                                              Signature

                                      -5-
<PAGE>

            [Form of Reverse Side of Right Certificate -- continued]

Signature Guarantee:

                  Signatures must be guaranteed by an eligible financial
institution or broker who is a member/participant in a Medallion Program
approved by the Securities Transfer Association, Inc.
--------------------------------------------------------------------------------
                  The undersigned hereby certifies that the Rights evidenced by
this Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

                                              ------------------------------
                                              Signature

                                              ------------------------------
                                              Signature

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

                                     NOTICE
                                     ------

                  The signature in the foregoing Forms of Assignment and
Election to Purchase must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.

                  In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement), and such
Assignment or Election to Purchase will not be honored.

                                      -6-
<PAGE>

                                                                       Exhibit C
                                                                       ---------

                     [Logo of First Sentinel Bancorp, INc.]

                          SUMMARY OF RIGHTS TO PURCHASE
                        PREFERRED SHARES OR COMMON SHARES

         1. IN GENERAL. On December 19, 2001, the Board of Directors of First
Sentinel Bancorp, Inc. ("First Sentinel" or the "Company") declared a dividend
of one preferred share purchase right ("Right") for each share of First
Sentinel's common stock. The dividend is payable on January 1, 2002 ("Record
Date") to the stockholders of record on that date. Each Right entitles the
registered holder to purchase, after the Distribution Date (as defined below), a
one one-hundredth (1/100) interest in a share of Series A Junior Participating
Preferred Stock ("Preferred Shares"), of First Sentinel, at a price of $37.00
("Purchase Price"), subject to adjustment.

         The terms of the Rights are set forth in a Rights Agreement, dated as
of December 19, 2001, by and between First Sentinel and Registrar and Transfer
Company, as rights agent. A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated December 20, 2001. You can obtain a copy of the Rights Agreement,
free of charge, by calling (732) 726-9700.

         Set forth below is a summary description of the Rights. This
description is only a summary, is not complete and is qualified in its entirety
by reference to the Rights Agreement.

         2. DISTRIBUTION DATE. Until the Distribution Date (as defined below),
the Rights will be attached to and traded with First Sentinel's common stock and
will be evidenced by the certificates for the common stock. The Rights "detach"
from the common stock on the Distribution Date. After the Distribution Date,
separate Right Certificates will be mailed to stockholders, and all Rights held
by an Acquiring Person (as defined below) will become null and void.

         "Distribution Date" means the earlier of (a) the close of business on
the 20th business day following a public announcement that a person or group of
persons has acquired beneficial ownership of 12% or more of First Sentinel's
outstanding common stock ("Acquiring Person") or (b) the 20th business day
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in a person or
group becoming an Acquiring Person.

         3. TRANSFER OF RIGHTS AND CERTIFICATES. Until the Distribution Date,
(a) the Rights will be transferred with and only with the common stock, (b)
common stock certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference, and (c) the surrender for
transfer of any common stock certificates, even without such notation, will also
constitute the transfer of the Rights associated with common stock represented
by such certificates. After the Distribution Date, the Right Certificates alone
will evidence the Rights.

         4. EXPIRATION. The Rights will expire on January 1, 2012, unless such
date is extended or the Rights are earlier redeemed by the Company.

         5. ANTI-DILUTION ADJUSTMENTS. The Purchase Price, the number of
interests in Preferred Shares issuable and the number of outstanding Rights may
be adjusted from time to time to prevent

<PAGE>

dilution from certain events, such as a stock dividend, a stock split or a
reclassification of the Preferred Shares or the common stock. Adjustments to the
Purchase Price will not be made until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price.

         6. PREFERRED SHARES. Interests in Preferred Shares purchasable upon
exercise of the Rights will not be redeemable. Each Preferred Share will be
entitled to a minimum preferential quarterly dividend payment in an amount per
share equal to the greater of (a) $1.00 and (b) 100 times the dividend declared
per share of common stock for such quarter. In the event of liquidation, the
holders of the interests in Preferred Shares will be entitled to a minimum
preferential liquidation payment in an amount per share equal to the greater of
(i) $100.00 and (ii) 100 times the payment made per share of common stock. Each
Preferred Share will have 100 votes, voting together with the common shares. In
the event of any merger, consolidation or other transaction in which common
shares are exchanged, each Preferred Share will be entitled to receive 100 times
the amount received per common share. These rights are protected by customary
anti-dilution provisions.

         Because of the nature of the dividend, liquidation and voting rights of
the Preferred Shares, the value of the 1/100 interest in a Preferred Share
purchasable upon exercise of a Right should approximate the value of one share
of common stock.

         7. EXERCISE OF RIGHTS FOR COMMON SHARES. If any person becomes an
Acquiring Person, proper provision will be made so that each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereafter be void), will have the right to receive, upon the exercise thereof
at the then-current Purchase Price, that number of common shares having a market
value of two times the Purchase Price. In the event that the Company is acquired
in a merger or other business combination transaction or 50% or more of its
consolidated assets or earning power is sold, proper provision will be made so
that each holder of a Right will have the right to receive, upon the exercise
thereof at the then-current Purchase Price, that number of shares of common
stock of the acquiring company that, at the time of such transaction, has a
market value of two times the Purchase Price.

         8. OPTIONAL EXCHANGE OF RIGHTS. After any person or group becomes an
Acquiring Person, but before an Acquiring Person acquires 50% or more of our
common stock, our Board may extinguish the Rights by exchanging one share of
common stock (or equivalent preferred stock) for each Right (other than Rights
owned by an Acquiring Person, which shall be void).

         9. REDEMPTION OF RIGHTS. At any time before the 20th business day after
any person or group becomes an Acquiring Person, the Company's Board of
Directors may redeem the Rights in whole, but not in part, at a price of $0.01
per Right. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate, and the only right of the holders of Rights will be
to receive the redemption price.

         10. AMENDMENTS. The terms of the Rights may be amended by the Company's
Board of Directors without the consent of the holders of the Rights; PROVIDED,
HOWEVER, that, after a person or group becomes an Acquiring Person, the Board
may not amend the terms of the Rights in any manner that adversely affects the
holders of the Rights.

         11. RIGHTS PRIOR TO EXERCISE. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.<PAGE>
                                                                    EXHIBIT 10.5

                           AMENDED AND RESTATED LEASE

     This Amended and Restated Lease (this "Restated Lease") is made as of the
1st day of January, 2001, (the "Restatement Effective Date") by and between
FIRST & UTAH STREET ASSOCIATES, L.P., a Washington limited partnership
("Landlord"), and STARBUCKS CORPORATION, d/b/a Starbucks Coffee Company, a
Washington corporation ("Tenant").

     In consideration of the mutual promises and agreements set forth in the
Lease, Landlord and Tenant agree as follows:

     WHEREAS, Tenant is currently and has since 1993 been a tenant of Landlord
pursuant to the terms of an Office Lease dated July 1, 1993 (the "Office Lease")
for certain premises of that certain building known as Starbucks Center. The
Office Lease was amended by that Amendment to Lease dated September 10, 1993,
that Second Amendment to Office Lease dated January 1, 1995, that Third
Amendment to Office Lease dated September 30, 1995, that Fourth Amendment to
Office Lease dated October 31, 1997, that Fifth Amendment to Office Lease dated
March 5, 1998, and that Sixth Amendment to Office Lease dated January 4, 1999
(collectively, the Office Lease and Amendments First through Sixth are referred
to herein as the "Initial Amended Lease", and this Restated Lease is also
referred to herein simply as the "Lease"); and

     WHEREAS, the parties desire to further amend the Initial Amended Lease to
add additional space in the Starbucks Center to the Premises (defined below) and
for other reasons and have determined the most appropriate method to accomplish
this is to Amend and Restate the Lease in its entirety.

                                       1
<PAGE>
     NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree to amend and restate the Initial Amended
Lease in its entirety to read as follows:

     1.   Description of Premises.

          a.   Premises

     Landlord does hereby lease to Tenant, on the terms and conditions
hereinafter set forth, those certain premises (the "Initial Premies") containing
approximately five hundred fifty thousand (550,000) square feet of rentable
space (the "Rentable Space")(calculated as provided below) primarily located on
the sixth through the ninth floors ("Floors") of the Starbucks Center at 2401
Utah Avenue South in Seattle, King County, Washington (the "Building"), which is
situated on the real property legally described on Exhibit A attached hereto
(the "Property"). The floors of the Building are referred to herein individually
as, a "Floor", and collectively as, the "Floors". In addition, Tenant has the
right hereunder, subject to the availability of additional parking as described
herein, to lease up to an additional four hundred fifty thousand (450,000)
square feet of Rentable Space on the second through fifth Floors of the Building
(the "Additional Premises"). As used herein, the Initial Premises and any
portion of Additional Premises, from and after the date Tenant elects or is
required to take possession of and/or pay Rent (defined below) on such portion
of the Additional Premises, are collectively referred to herein as the
"Premises", provided that space on which Tenant is required to pay a Holding Fee
(defined below) pursuant to Section 5.c. shall not be deemed Premises. The
Building, the Parking Garage (defined below), the North Parking Garage (defined
below and, collectively with the Parking Garage, the "Parking Garages"), and the
Property are collectively referred to in this Lease as the "Project," and the
Project is depicted on the site plan attached hereto as Exhibit A-1 (the "Site

                                       2
<PAGE>
Plan"). The larger development owned by Landlord, including Home Depot and
Sears Auto Center, is referred to herein as the "Larger Development." The total
area of the Building is 1,473,440 square feet of Rentable Space. The Initial
Premises shall be located as shown in the space plan for the Premises attached
to this Lease as Exhibit B (the "Space Plan").

          b. Common Areas.

     This Lease includes the right of Tenant, subject to the applicable Rules
and Regulations (defined below) and the express terms of this Lease, to use the
common areas and facilities of the Project in common with other tenants of the
Project. For purposes of this Lease, "common areas and facilities" means all of
the facilities in the Project designed and intended for use by the tenants of
the Project in common with Landlord and each other, including without
limitation common corridors, elevators, walkways, truck docks, restrooms,
service areas, lobbies, the cafeteria, risers and all other common and service
areas of the Building and parking areas and landscape areas in or on the
Project.

          c. Measurement.

     As used in this Lease, the "square footage of Rentable Space" shall mean
floor area measured in the manner described in Exhibit C ("Space Measurement")
attached hereto, provided that the parties stipulate that the square footage
of Rentable Space of the Initial Premises (as shown on Exhibit B) as of the
Restatement Effective Date shall be those amounts shown on Exhibit B.

     2.   Term.

          a. Term.

     The "Initial Term" of this Lease commenced on or about September 17, 1993
(the "Commencement Date of the Initial Amended Lease") and shall end on
September 30, 2025.

                                       3
<PAGE>
The "Term" of the Lease shall mean the Initial Term and any Extension Term
(defined below) for which an Extension Option (defined below) is exercised.

          b.   Acceptance of Premises.

     Landlord or Landlord's agents have made no representations or promises
with respect to the Building, the Premises or this Lease except as herein
expressly set forth. Landlord represents and warrants that all structural
parts, including but not limited to the foundation, roof, exterior walls,
plumbing and electrical systems, if any, of the Project, and any work
constructed or caused to be constructed by Landlord in the Initial Premises or
pursuant to Exhibit L of this Lease, meet and comply with all federal, state
and local laws, ordinances and regulations and are in good and sanitary order,
condition and repair at delivery of the Premises to Tenant. Tenant represents
and warrants to Landlord that (a) Tenant's sole intended use of the Premises is
for general office use, data center, training, storage, R&D Labs, test kitchen,
model store, pilot plant, roaster and other related purposes, (b) Tenant does
not intend to use the Premises for any other purpose, (c) prior to executing
this Lease Tenant has made such investigations as Tenant deemed appropriate
with respect to the suitability of the Premises for its intended use and has
determined that the Premises are suitable for such intended use, and (d)
subject to Landlord's warranties set forth above, Tenant's taking possession of
the Premises shall be conclusive evidence that Tenant accepts the same and that
the Premises were in good and satisfactory condition on such date.

     3.   Extension Options.

          a.   Grant of Option.

     If Tenant is not then in default under the terms of the Lease, Tenant
shall have the option to extend the Term of the Lease for three (3) additional
periods of five (5) years each (each an "Extension Option" for an "Extension
Term"), the first of which will commence at the end of the

                                       4

<PAGE>
Initial Term of the Lease, and the second and third of which will commence
immediately after the expiration of the immediately preceding Extension Term.
Each Extension Term shall be upon the same terms and conditions as contained in
the Lease, except that the total Rent (exclusive of Tenant's pro rata share of
Operating Expenses (defined below)) for each Extension Term shall be ninety five
percent (95%) of the then-prevailing "Effective Fair Market Rent" (defined
below) for the Premises. For purposes of this Section, "Effective Fair Market
Rent" is hereby defined to be that flat rental rate per square foot of Rentable
Space that will yield to Landlord over the applicable Extension Term in
question the same net number of dollars Landlord would earn if Landlord were to
put the space in question (in its then-existing condition) on the market for
lease to a new office tenant, after factoring in all typical concessions and
similar expense passthroughs. The Extension Options to extend the Lease for
three (3) Extension Terms shall be exercised by Tenant's giving written notice
thereof to Landlord at least two hundred seventy (270) days before the end of
the Initial Term or the then Extension Term, respectively; provided that in no
event shall any Extension Option be deemed to have expired unless Tenant fails
to exercise its option within fifteen (15) days following receipt of a written
reminder notice from Landlord of the deadline for exercising the Extension
Option. Such reminder notice to be given not earlier than fifteen (15) days
before the deadline for exercise of the applicable Extension Option. For
example, if Tenant has not exercised an Extension Option two hundred seventy
(270) days before the end of the then existing term, the time for exercise
shall be not later than fifteen (15) days after Tenant's receipt of Landlord's
reminder notice.

          b.   Calculation of Effective Fair Market Rent.

     If Landlord and Tenant are unable to agree on the Effective Fair Market
Rent within thirty (30) days following Tenant's exercise of an Extension Option
(the "Exercise Date"), both

                                       5
<PAGE>
Landlord and Tenant shall submit their final estimate of the Effective Fair
Market Rent to the other in writing within ten (10) days thereafter, and the
Effective Fair Market Rent shall be determined by arbitration as follows:

          (i)  The arbitration will be by three arbitrators, all of whom must
be (1) neutral parties and (2) either MAI appraisers or licensed real estate
brokers who have been active, over the five (5) years ending on the date of
appointment, in the brokering or appraisal of office space in the greater
Seattle Central Business District. Landlord and Tenant shall each select one of
the arbitrators, and such selection shall be accomplished within sixty (60)
days after the Exercise Date. The third arbitrator will be selected by the two
arbitrators so chosen by Landlord and Tenant. If the two arbitrators cannot
agree upon the third arbitrator within ninety (90) days following the Exercise
Date, the third arbitrator will be selected by application by either party to
the American Arbitration Association.

          (ii) Within one hundred twenty (120) days following the Exercise Date
(the "Decision Date"), the arbitrators shall decide on the Effective Fair
Market Rent for the Premises for a five (5) year term. (For purposes of
determining the Effective Fair Market Rent for the first or second Extension
Term, the existence of the second and/or third Extension Option shall also be
taken into consideration.) The decision of the majority of the arbitrators
shall control. If a majority of the arbitrators do not agree within the
stipulated time period, then each arbitrator shall render his or her separate
determination of the Effective Fair Market Rent on or before the Decision Date.
In such case, the three (3) determinations shall be averaged to determine the
Effective Fair Market Rent. However, if the lowest Effective Fair Market Rent
and/or the highest Effective Fair Market Rent is more than ten percent (10%)
lower or higher than the middle Effective Fair Market Rent, the low Effective
Fair Market Rent and/or high

                                       6
<PAGE>
Effective Fair Market Rent shall be disregarded. If only one (1) Effective Fair
Market Rent is disregarded, the remaining two (2) Effective Fair Market Rents
will be averaged in order to establish the Effective Fair Market Rent.

               (iii) Both parties may submit any information to the arbitrators
for their consideration with copies to the other party. In using comparable
lease rates to aid in determining Effective Fair Market Rent, the parties shall
employ lease rates for comparable space only within a two (2) mile radius of
the Building. A copy of the arbitrators' written decision will be given to
both parties when the Effective Fair Market Rent has been determined. The
determination of the Effective Fair Market Rent will be final and binding upon
Landlord and Tenant. The cost of the arbitration will be paid by Tenant if the
Effective Fair Market Rent is one hundred ten percent (110%) or more of the
proposed Effective Fair Market Rent specified in the notice given by Tenant to
Landlord, and shall be paid by Landlord if the Effective Fair Market Rent is
less than ninety percent (90%) of the proposed Effective Fair Market Rent
specified in the notice given by Landlord to Tenant, and otherwise shall be
paid equally by the Landlord and Tenant.

               (iv)  With respect to the Effective Fair Market Rent for the
second Extension Term, Landlord and Tenant shall attempt in good faith to agree
on Effective Fair Market Rent up to one (1) year prior to expiration of the
First Extension Term. If Landlord and Tenant are unable to agree, both Landlord
and Tenant shall submit their final estimates of Effective Fair Market Rent to
the other in writing by the tenth (10th) day of the last Lease Year (defined
below) of the first Extension Term, and the Effective Fair Market Rent shall be
determined in accordance with the procedures set forth in this Section 3.b.
Notwithstanding anything to the contrary contained in this Section 3.b.,
Tenant's second Extension Option shall

                                       7
<PAGE>
not expire until the later of (1) the date set forth in Section 3.a, or (2)
sixty (60) days following the determination of Effective Fair Market Rent.

     4.   Rent.

          a. Payment of Rent.

     Tenant shall pay Landlord Rent each month in advance on the first day of
each calendar month. Rent shall be payable only on the portion of the Premises
in Actual Use (defined below) by Tenant as provided herein. Rent shall be
payable in monthly installments throughout the Term of the Lease. Rent for any
fractional calendar month, at the beginning or end of the Term of the Lease,
shall be prorated based on the number of days in the month.

          b. Adjustment of Rent.

     Rent shall be adjusted from time to time based on changes in the size of
the Premises. Whenever there is a change in the square footage of Rentable
Space of the Premises, calculated pursuant to Exhibit C, in Actual Use by
Tenant under the Lease, Landlord and Tenant shall execute a certificate (an
"Expansion Certificate", which shall be in the form attached hereto as Exhibit
D) setting out the then square footage of Rentable Space of the Premises and
the Base Floor Rent (defined below) to be paid from the date of such change.

     As used herein, the term "Lease Year" shall mean the twelve (12) month
period during the Term from October 1 through the following September 30.

          c. Rent Definition.

     "Rent" as used in the Lease shall mean Base Floor Rent, Building Systems
Additional Rent, Building Amenities Additional Rent, Parking Garage Base Rent,
Operating Expense Additional Rent (all defined below) and any other items
referred to as "Additional Rent" provided for in the Lease.

                                       8
<PAGE>
          (i)  Base Floor Rent. "Base Floor Rent" means a full service rent
commencing October 1, 2000 (becoming applicable to the Expansion Premises
(defined below) as it is added to the Premises) and is as follows:

<Table>
<Caption>
         --------------------------------------------------------------------
          FLOOR(S)                           COST PER SQUARE FOOT PER YEAR
         --------------------------------------------------------------------
<S>                                          <C>
          2nd, 3rd, 4th and 5th
          (exclusive of Data Center)         $10.02
         --------------------------------------------------------------------
          5th Floor Data Center and
          6th through 9th                    $ 5.15
         --------------------------------------------------------------------
</Table>

As used herein, the term "Data Center" refers to the 10,275 square foot area on
the fifth Floor of the Building constructed as a data center for Tenant.

     On October 1, 2005, October 1, 2010, October 1, 2015 and October 1, 2020,
(the "Adjustment Dates"), Base Floor Rent shall be adjusted in accordance with
the cumulative increase in the Index (defined below), provided that with
respect to Floors 2 through 5 (exclusive of the Data Center), the initial
deemed Base Floor Rent shall be Eight Dollars ($8.00), which shall be the
number used for the initial adjustment, and there shall then be added to the
result (as increased on each Adjustment Date), the unadjusted amount of $2.02).
Adjusted Base Floor Rent shall be calculated by multiplying the Base Floor Rent
then in effect for each Floor by a fraction, the numerator of which shall be
the Consumer Price Index for all Urban Consumers--U.S. City Average--All Items,
as most recently published by the U.S. Department of Labor's Bureau of Labor
Statistics (the "Index") for the month immediately prior to the then current
Adjustment Date, and the denominator of which shall be the Index published for
the month immediately prior to the previous Adjustment Date (or, for purposes
of calculating the first increase effective on October 1, 2005, the Index as of
September 1, 2000); provided, however,

                                       9

<PAGE>
that the increase in Base Floor Rent for each of the Floors shall not exceed
the maximum total percentages set forth below for each five (5) year period
(e.g. "Years 6-10 references the 2005 adjustment).

<Table>
<Caption>
----------------------------------------------------------------------------------------------------
 BASE FLOOR RENT             APPLICABLE         YEARS         YEARS         YEARS        YEARS
PAYABLE FOR FLOORS             FLOORS            6-10         11-15         16-20        20-25

                                              OCTOBER 1,    OCTOBER 1,    OCTOBER 1,    OCTOBER 1,
    EFFECTIVE                                    2005          2010          2015          2020
----------------------------------------------------------------------------------------------------
<S>                         <C>               <C>           <C>           <C>           <C>
Maximum total                 6-9 and 5th      22.25%        17.34%        17.34%        15.93%
percentage increase for       Floor Data
prior 5-year period             Center
----------------------------------------------------------------------------------------------------
Maximum total                    2-5           15.00%        15.00%        15.00%        15.00%
percentage increase for     (exclusive of
prior 5-year period          Data Center)
----------------------------------------------------------------------------------------------------
</Table>

     For example, for the first Adjustment Date, the limit on adjusted Base
Floor Rent for the sixth through ninth Floors and the Data Center shall be
calculated as follows:

     $5.15 [the current rate/s.f.] x 1.2225 = $6.30

     For the second Adjustment Date, assuming the maximum change in the Index
in the previous five (5) years, the limit on adjusted Base Floor Rent for those
Floors will be calculated as follows:

     $6.30 x 1.1734 = $7.39.

     For the first Adjustment Date, the limit on Adjusted Base Floor Rent for
the second through fifth Floors (exclusive of the Data Center) shall be
calculated as follows:

     $8.00 [the deemed rate/s.f.] x 1.15 = $9.20 + $2.02 = $11.22

     For the second Adjustment Date the limit on adjusted Base Floor Rent for
those Floors will be calculated as follows:

     $9.20 x 1.15 = $10.58 + $2.02 = $12.60.

                                       10
<PAGE>
     Notwithstanding the foregoing, if any such decimal multiplier is less than
one, the Base Floor Rent shall remain unchanged. If the Index is discontinued,
Landlord shall substitute a similar index of consumer prices.

     Base Floor Rent for the Premises has been established on a full-service
basis and includes any charges or expenses for the Premises other than
telephone, janitorial and any special utility or other requirements of Tenant
as provided for in the Lease (which shall be paid directly by Tenant) and
includes, subject to Tenant's obligations to pay for increases in Operating
Expenses allocable to the Premises under Section 4.c.(v) below, Tenant's share
of any charges or expenses for the Building and the Project, including without
limitation, common area maintenance expenses, real property taxes and
assessments, insurance, security systems, electrical service, water service,
plumbing, sewer, garbage collection and common area janitorial service, but
excludes all expenses of operating and maintaining the Parking Garage and, if
applicable, the North Parking Garage, and also excludes all maintenance
expenses which are the responsibility of Tenant under the Lease.

               (ii) Building Systems Additional Rent. "Building Systems
Additional Rent" shall equal the amount necessary to fully amortize, in equal
monthly installments over a term of twenty (20) years at a fixed interest rate
equal to nine and one-half percent (9.5%) (the "Amortization Rate"), the sum of
the following items: (1) the total cost incurred by Landlord in the
construction of Building Systems (defined below) required by Tenant pursuant to
Section 12.a below, excluding any allocation of costs for land (except with
respect to the North Parking Garage as provided herein), overhead or
Landlord/developer profit, plus (2) interest at the Amortization Rate accrued
by Landlord during the Phase (defined below) of construction on funds loaned by
Tenant for Building Systems, together with interest paid by Landlord during the

                                       11

<PAGE>
Phase on any other funds utilized by Landlord for construction of Building
Systems at a rate not to exceed the prime interest rate established from time
to time by Bank of America or its successor bank (the "Prime Rate") plus one
percent (1%) (the "Construction Interest Rate") plus (3) a construction
supervision fee payable to Landlord equal to three and one-half percent (3.5%)
of the Hard Costs (defined below) of constructing the Building Systems;
provided, however, such construction supervision fee shall be four and one-half
percent (4.5%) of the Hard Costs for the construction of the North Parking
Garage. Building Systems Additional Rent with respect to each Phase of the
Building Systems (including Phases related to the Expansion Premises) shall be
calculated separately and shall be due monthly commencing on the first (1st)
day of October following completion of the particular Phase of Building
Systems, and payable monthly following written notice given by Landlord to
Tenant setting forth the total cost of such Phase of Building Systems and the
calculation (or recalculation) of monthly Building Systems Additional Rent
(with the initial payment adjusted to include Building Systems Additional Rent
accrued from and after October 1 of the year the Phase is completed), and
ending on the earlier to occur of (1) the expiration of the Lease, or (2) the
first day of the 240th month from the date of first payment (with respect to
that Phase). As used herein, "Hard Costs" shall mean direct costs incurred by
Landlord and payable to third-party contractors, subcontractors or suppliers
for labor, materials or equipment furnished to the Property in connection with
the construction of Building Systems (or, where appropriate, Building Amenities
(defined below) or the Parking Garages) including architects and engineering
fees and Building Plans (defined below), but (except for the North Parking
Garage) excluding any costs allocated to or incurred for land, overhead,
Landlord/developer fees or profit, consultant fees, general conditions or
supervision fees, financing fees, governmental or permitting fees, and taxes
other than sales taxes. As of

                                       12

<PAGE>
October 1, 2000, the Building Systems Additional Rent totaled $114,728.70 per
month. With respect to Building Systems Additional Rent on the Initial Premises
(including the remaining buildout of the sixth Floor), Tenant may make a
one-time change to the Amortization Rate or amortization schedule for such
amounts provided that no such change may increase the "unamortized" balance that
would otherwise exist at the end of the Initial Term of this Lease. With respect
to Building Systems Additional Rent on Required or Optional Expansion Premises
(defined below), Tenant may change the Amortization Rate or amortization period
used to calculate the Building Systems Additional Rent for each Phase at the
time the Building Systems Additional Rent for that Phase first becomes due by
giving written notice of the requested change to Landlord by not later than
September l of such Phase, provided that no such change may increase the
"unamortized" balance that would otherwise exist at the end of the Initial Term
of this Lease.

                        (iii) Building Amenities Additional Rent. "Building
Amenities Additional Rent" shall equal the amount necessary to fully amortize in
equal monthly installments over a term of ten (10) years at a fixed interest
rate equal to the Amortization Rate the sum of the following items: (1) the
total cost incurred by Landlord in the construction of Building Amenities
required by Tenant pursuant to Section 12.a. below, excluding any allocation of
costs for land, overhead or Landlord/developer profit, plus (2) interest at the
Amortization Rate accrued by Landlord during the Phase of construction on funds
loaned by Tenant for Building Amenities, together with interest paid by Landlord
during the Phase on any other funds utilized by Landlord for the construction of
the Building Amenities at the Construction Interest Rate, plus (3) a
construction supervision fee payable to Landlord equal to three and one-half
percent (3.5%) of the Hard Costs of constructing the Building Amenities.
Building Amenities

                                       13
<PAGE>

Additional Rent with respect to each Phase of the Building Amenities shall be
calculated separately and shall be due monthly, commencing on the first (1st)
day of October following completion of the particular Phase of Building
Amenities, and payable monthly following written notice given by Landlord to
Tenant setting forth the total cost of such Phase of Building Amenities and the
calculation (or recalculation) of monthly Building Amenities Additional Rent
(with the initial payment adjusted to include Building Amenities Additional Rent
accrued from and after October 1 of the year the Phase is completed), and ending
on the earlier to occur of (1) the expiration of the Lease, or (2) the first day
of the 120th month from the date of first payment (with respect to that Phase).
As of October 1, 2000, the Building Amenities Additional Rent totaled $53,498.72
per month. With respect to Building Amenities Additional Rent on the Initial
Premises (including the remaining build-out of the sixth Floor), Tenant may make
a one-time change to the Amortization Rate or amortization schedule for such
amounts provided that no such change may increase the "unamortized" balance that
would otherwise exist at the end of the Initial Term of this Lease. With respect
to Building Amenities Additional Rent on Required or Optional Expansion
Premises, Tenant may change the Amortization Rate or amortization period used to
calculate the Building Amenities Additional Rent for each Phase at the time the
Building Amenities Additional Rent for that Phase first becomes due, by giving
written notice of the requested change to Landlord by not later than September 1
of such Phase, provided that no such change may increase the "unamortized"
balance that would otherwise exist at the end of the initial term of this Lease.

                        (iv) Parking Garage Base Rent. "Parking Garage Base
Rent" for the Parking Garage shall equal (i) $99,275.71 per month. Parking
Garage Base Rent for the Parking Garage shall be due and payable monthly through
June 30, 2016. Rent for the North Parking

                                       14
<PAGE>

Garage shall be calculated in the same manner as, and included in the Building
System Additional Rent, except that the cost of the BN Parcel (defined below)
and the value (determined on the same per square foot basis as the cost of the
BN Parcel) of the Landlord's Garage Parcel (defined below) will be included.
After Parking Garage Base Rent for the Parking Garage and for the North Parking
Garage terminates as provided herein, rent for each of such Parking Garages
shall be the Effective Fair Market Rent thereof, determined as provided in
Section 3.b. above, provided that in calculating such Effective Fair Market
Rent, one of the factors that shall be considered is the amount that the
Landlord would pay to a professional garage operator (i.e. the Effective Fair
Market Rent is net of all additional expenses that Landlord would incur if
Landlord took over the Parking Garage or the North Parking Garage and contracted
to have it operated in the open market outside of this Lease).

                        (v) Adjustments for Increases in Operating Expenses.
Rent hereunder shall be adjusted as of January 1, 2001 and on January 1 of each
year thereafter to reflect annual increases in Operating Expenses for the
Project over the "Base Year" of 1995. As used herein, the tenor "Operating
Expenses" shall include real estate taxes and liability and property damage
insurance on the Project, excluding the Parking Garages (real estate taxes and
insurance relating to the Parking Garage and North Parking Garage are charged
separately, as Additional Rent, pursuant to Sections 14 and 15 below), utilities
(including local telephone service charge of Landlord's building management
office), common area janitorial services, security systems, facilities
personnel, the management fee actually charged to the Project (Tenant's share of
which pursuant to Section 4.c(v) (2) shall not to exceed four and one-half
percent (4.5%) of the gross annual Rent paid by Tenant to Landlord hereunder)
maintenance (including elevators, HVAC, the Building, parking areas, and
landscaping) and trash removal, window washing and roof

                                       15
<PAGE>

repairs. Landlord and Tenant agree that the Operating Expenses for the Base Year
(the "Operating Expense Base") are deemed to be $2.02 per square foot of
Rentable Space in the Premises for calculations of increases in Operating
Expenses for periods after January 1, 2001. For the purposes of calculating the
annual increases in Operating Expenses over the Operating Expense Base allocable
to the Premises, the following allocation methods shall be used:

                                (1) Any Operating Expenses separately allocable
to the Premises will be allocated solely to the Premises; provided that in the
case of any separate allocation, all tenant spaces (but not the common areas and
facilities) in the Project shall either be subject to the same special
allocation or the cost of providing such services to the other tenants' space
shall be excluded from the Operating Expenses on which Tenant's share is based;

                                (2) Building security, Building maintenance,
Building staff, Building management fee (not to exceed four and one-half percent
(4.5%) of the gross annual Rent paid by Tenant hereunder), real property taxes
and insurance on the Property (excluding the Parking Garages), and all other
Operating Expenses not specifically set forth in this Section shall be allocated
on a per square foot basis using the ratio of the blended average of the total
number of square feet of Rentable Space of the Premises in Actual Use during
applicable periods to the total number of square feet of Rentable Space in the
Building (excluding the Parking Garages).

                                (3) Elevator and HVAC maintenance will be
allocated as provided in Section 4.c.(v)(2) above except for any elevators
serving only the Premises, which maintenance will be allocated directly to
Tenant.

                                (4) Electricity and gas will be metered at the
Premises and will be allocated directly to Tenant.

                                       16
<PAGE>

                                (5) Janitorial work and supplies will be
allocated based on the actual costs paid by Landlord to third parties to clean
and supply the common areas and facilities of the Building. Tenant has elected
to provide its own janitorial services in the Premises. The calculations of Base
Floor Rent and Operating Expense Base set forth above reflect this fact, and the
cost of janitorial services to the Premises and to the premises of other tenants
shall not be an Operating Expense.

                                (6) Real property taxes for the Building
(excluding the Parking Garages) will be allocated based upon the methods
employed by the King County Assessor to determine the assessed value of the
improvements to the Property, calculated and expressed on a cost per square foot
basis. If the assessed value of the Building is established by capitalizing the
net operating income from the Building, then Tenant's allocation of real
property taxes will be based on a comparison of Landlord's net operating income
derived from the Premises (excluding the Parking Garages) under the Lease to the
total net operating income for the Building. If the assessed value of the
Building is based on value of the improvements made to the Building, including
the Building Improvements (defined below), Tenant's allocation of the real
property taxes shall be reasonably allocated based on the level of improvements
in the Premises compared to the level of improvements of the other premises in
the Building.

        If after Landlord's good faith application of the foregoing allocation
methods Landlord and Tenant do not agree on the exact share or amount of real
property taxes to be included in Operating Expenses, the dispute shall be
resolved in accordance with Section 44 below.

        Notwithstanding any other provision of this Lease, the following shall
be excluded (or, as applicable, deducted) from the calculation of Tenant's share
of Operating Expenses: (A) the cost of repairs or other work occasioned by fire,
windstorm or other casualty or loss in excess of the

                                       17
<PAGE>
insurance proceeds therefor (or, if greater, the proceeds that would have been
available had Landlord maintained the insurance required to be maintained by
Landlord pursuant to this Lease), or by the exercise of eminent domain; (B)
rental concessions or lease buy-outs; (C) the costs of renovating or otherwise
improving or decorating, painting or redecorating space (exclusive of the common
areas and facilities) for any tenants or other occupants of the Building,
including, without limitation, Tenant; (D) the cost of any work or service
performed for and electricity supplied to any tenant or occupant (other than
Tenant) to the extent the cost of such work or service is "excess use" by such
tenant, which shall mean the extent to which the cost exceeds the greater of (i)
the cost of the standard amount or level of such work, service or electricity
provided to tenants or occupants of the Building in general, or (ii) the cost of
the amount or level of work, service or electricity made available by Landlord
to Tenant without after hours or other special charge under this Lease; (E)
depreciation; (F) overhead or profit paid to Landlord, subsidiaries or
affiliates of Landlord, for services on or to the Building or common areas and
facilities if and to the extent the cost therefor exceeds competitive costs for
such services in comparable office buildings located within five (5) miles of
the Building were they not so rendered by Landlord, or by a subsidiary or
affiliate of Landlord; (G) payments of principal, interest or other payments of
any kind on any deeds to secure debt, mortgages, ground or underlying leases, or
other hypothecations for security of all or any part of the Building or common
areas and facilities by Landlord; (H) Landlord's general overhead and any other
expense not directly related to the Building or common areas and facilities,
except if included in Landlord's management fee; (I) all items, services and/or
goods for which Tenant or any other tenant, occupant, person or other party is
obligated to reimburse Landlord or to pay third parties including all Landlord
provided repair and maintenance services to any tenant space in excess of

                                       18
<PAGE>
those services provided to Tenant pursuant to Section 13.a; (J) advertising and
promotional expenses with respect to leasing space in or selling the Building;
(K) brokerage, legal and professional fees expended by Landlord in connection
with negotiating and entering into any leases and any related instruments
(including, without limitation, guaranties, surrender agreements, leasing
amendments and consents to assignment or subletting) with any tenant or other
occupant of any portion of the Building, and the enforcement of any such
instruments; or which are expended or incurred by Landlord in connection with
the negotiation and entering of sale, ground lease, financing, partnership or
similar transactions pertaining to the Building, or any portion thereof, and/or
of Landlord or an interest in Landlord, including without limitation, promissory
notes, security deeds, mortgages, ground or master leases, purchase and sale
agreements, options, and any and all similar and/or related documents,
instruments and agreement; (L) estate, inheritance, gift, franchise and income
taxes of Landlord (except for any such tax which is levied in lieu of or in
substitution for any current or future real property taxes); (M) wages, salaries
and other compensation paid to employees of the Landlord at the Building who are
above the level of Property Manager, except as included in Landlord's management
fee; (N) the costs and expenses of maintenance and operation of either of the
Parking Garages, which are separately provided for under this Lease; (O) all
items that would be capitalized under generally accepted accounting principles
as of the date hereof except to the extent amortization of such item is less
than the reduction in Operating Expenses achieved by such item; (P) the cost of
defending against claims in regard to the existence or release of Hazardous
Substances (defined below) at the Building or common areas and facilities and
costs of any clean-up of any such Hazardous Substances; (Q) costs and expenses
incurred in connection with compliance with or the contesting or settlement of
any claimed violation of law or requirements of law if such law

                                       19
<PAGE>

was in effect and applicable to (i) the common areas and facilities as of the
Commencement Date of the Initial Amended Lease or (ii) any portion of the
Premises at the time the Building Systems or Building Amenities were constructed
as to such portion; (R) interest, penalties or damages incurred by Landlord
under any agreement to which Landlord is a party by reason of the default of
Landlord; (S) expenses incurred in connection with relocating tenants in the
Building; (T) the cost of installing, operating and maintaining any specialty
service or special facility such as daycare, health club, cafeteria or dining
facility or luncheon club, other than those facilities generally made available
to tenants of the Building without costs; (U) the costs of acquiring, securing,
cleaning and maintaining works of art; (V) any item or service that Landlord is
specifically required by any provision of this Lease to provide at Landlord's
expense, and (W) all other items for which Tenant or any other tenant, occupant
or other party compensates Landlord, so that no duplication of payments by
Tenant or to Landlord shall occur.

        Commencing January 1, 2001, and continuing on the first day of each
calendar month thereafter, Tenant shall pay to Landlord as "Operating Expense
Additional Rent" hereunder, an amount equal to one-twelfth (1/12th) of the
amount by which actual Operating Expenses for the calendar year in question, as
estimated by Landlord and allocated to Tenant, exceed the Operating Expenses
Base, as calculated, estimated and reconciled as provided herein.

        Notwithstanding the foregoing, increases in Operating Expenses for the
Limited Operating Expenses (defined below) shall not exceed three percent (3%)
per annum, compounded but not cumulative, provided that if such Limited
Operating Expenses increase by more than eight percent (8%) per annum, the
increase over the eight percent (8%) will be paid by Tenant as a surcharge,
which surcharge shall be included in the base calculation for increases in
Limited Operating Expenses for the following year. As used herein, real property
taxes, property

                                       20
<PAGE>

and liability insurance premiums and all utilities, including but not limited to
electricity, water, sewer and gas are collectively referred to as "Unlimited
Operating Expenses" and all Operating Expenses other than Unlimited Operating
Expenses are referred to as "Limited Operating Expenses". As an example, in 1995
the Operating Expense Base (for all Operating Expenses) was $2.5840 (including
janitorial service of $.562), and the cost of the Limited Operating Expenses was
$1.801, so that the increased rate per square foot per annum for Operating
Expense Additional Rent hereunder allocable to increase in Operating Expenses
for 1996 through 1999 was as follows:

                               OPERATING EXPENSES

<TABLE>
<CAPTION>
                ACTUAL         ALLOWED         ACTUAL            ACTUAL        ALLOWED
               LIMITED         LIMITED       UNLIMITED           TOTAL       PASSTHROUGH
<S>            <C>             <C>           <C>                 <C>         <C>
1995            $1.801          $1.801         $0.784            $2.584        $2.584
1996            $1.905          $1.855         $0.929            $2.835        $2.784
1997            $2.171          $2.078         $1.096            $3.267        $3.175
1998            $2.195          $2.141         $1.067            $3.262        $3.208
1999            $2.240          $2.205         $1.016            $3.255        $3.221
</TABLE>

        The above table is for purposes only of illustrating the operation of
the cap, as it includes the Base Year cost of janitorial service to the Premises
(as per the Initial Amended Lease prior to this Restated Lease). Commencing
January 1, 2001, janitorial services to the Premises and any other tenant
premises is excluded from Operating Expenses.

        On or before April 30 of each year, Landlord shall determine actual
Operating Expenses for the immediately preceding year, and shall provide Tenant
with a written statement setting forth in detail the comparison of estimated and
actual Operating Expenses for such year. In the

                                       21
<PAGE>

event Tenant overpaid Operating Expenses for such year, Tenant shall have the
right to offset the overpayment against Operating Expense Additional Rent
falling due thereafter. In the event Tenant underpaid Operating Expenses for
such year, Tenant shall pay to Landlord the amount of the underpayment within
thirty (30) days following receipt of Landlord's statement.

        Each notice provided by Landlord to Tenant with respect to calculations
of Operating Expenses and Operating Expense Additional Rent due under this
Section 4 shall be accompanied by reasonable backup documentation supporting
such calculations, and Tenant shall have the right to review and audit all
pertinent information and documentation relating to these figures upon
reasonable advance notice to Landlord for one (1) full calendar year following
the conclusion of the calendar year in question. If Tenant's audit reveals that
Landlord miscalculated the actual Operating Expenses by more than a factor of
three percent (3%), Landlord shall reimburse Tenant for all third-party costs
incurred by Tenant in conducting such audit. Landlord shall keep all pertinent
backup information and documentation for at least three (3) years after the year
in question.

        5. Additional Premises.

                a. Required Expansion.

                        (i) Required Expansion Premises. Provided Landlord is
able to provide the required additional parking as described in Section 15,
Tenant shall lease an additional area of 200,000 square feet of Rentable Space
on the third, fourth and fifth Floors of the Building (the "Required Expansion
Premises") which Required Expansion Premises will be located as shown on Exhibit
E ("Space Plan Required Expansion Premises") attached hereto and incorporated
herein by reference. Tenant shall begin Actual Use of (or begin paying a Holding
Fee as provided below) for Required Expansion Premises not later than six (6)
months following

                                       22
<PAGE>

the dates shown in the agreed upon schedule for construction availability (the
"Required Expansion Schedule") attached hereto as Exhibit F and incorporated
herein by reference, which Required Expansion Schedule will provide for Tenant
to lease at least 50,000 square feet of new space in the Required Expansion
Premises each year commencing on October 1, 2001. The dates in the Required
Expansion Schedule are the dates on which Landlord must be prepared to make the
applicable Required Expansion Premises available for commencement of
construction of Building Systems, Building Amenities and Tenant Improvements
(defined below). As provided further below, such Required Expansion Premises
shall thereafter be added to the Premises on Actual Use by Tenant, provided that
if Actual Use has not occurred by six (6) months after the applicable Required
Expansion Premises are made available for construction, then the Holding Fee may
become applicable as provided in Section 5.c.

                        (ii) Timing and Construction. Tenant has given Landlord
notice of takedown of the 4th Floor space currently occupied by Olympic West
Sportswear, Inc. ("Olympic West") (as shown on Exhibit E as floor location 4th
NE), with an availability for commencement of construction date of December 1,
2000. Tenant has given Landlord notice of takedown of the northeast corner of
the 5th Floor (as shown on Exhibit E as floor location 5th NE) with an
availability for commencement of construction date of April 1, 2001. Tenant
shall give Landlord at least nine (9) months notice (an "Expansion Notice") in
the form attached as Exhibit G of Tenant's intent to takedown any other Required
Expansion Premises. The space described in any Expansion Notice shall be
referred to as the "Designated Expansion Premises". Each Expansion Notice will
set out the location, the proposed date of construction commencement (not
earlier than the date designated on the Required Expansion Schedule) and
proposed date of Tenant's Actual Use of the space, and will be for a minimum of
25,000 square

                                       23
<PAGE>

feet of Rentable Space in the Building. Upon receipt of Tenant's Expansion
Notice, Landlord shall confirm the availability of the Designated Expansion
Premises. Following the giving of an Expansion Notice, Tenant shall provide
Landlord, not later than sixty (60) days prior to the scheduled availability for
commencement of construction, permit ready plans and specifications approved by
Tenant, and Landlord shall promptly apply for all necessary building permits for
construction of improvements to the Designated Expansion Premises and shall work
diligently using its best efforts to promptly obtain such permits and to
construct such improvements as are required to be constructed by Landlord under
this Lease. Each time the Premises are expanded by the inclusion of Required
Expansion Space and upon the request of either, Landlord and Tenant shall
execute an Expansion Certificate.

               b.      Optional Expansion.

        Provided Landlord is able to provide the required additional parking as
described in Section 15, after Tenant is in Actual Use of all of the Required
Expansion Premises, as provided herein, Tenant shall have the option to lease an
additional 250,000 square feet of space in the Building (the "Optional Expansion
Premises" and collectively with the Required Expansion Premises, "the Expansion
Premises") which Optional Expansion Premises will be located as shown on Exhibit
H attached hereto and incorporated herein by reference (the "Space Plan Optional
Expansion Premises"). The timing for commencement of construction of the
Optional Expansion Premises is set forth in a schedule (the "Optional Expansion
Schedule" and collectively with the Required Expansion Schedule, an "Expansion
Schedule") attached hereto as Exhibit I and incorporated herein by reference.
Tenant shall give Landlord an Expansion Notice a minimum of nine (9) months
prior to Tenant's proposed date of availability for commencement of construction
of any of the Optional Expansion Premises. Each such Expansion Notice will

                                       24
<PAGE>

designate the location of the proposed Optional Expansion Space and the proposed
date of commencement of construction (not earlier than the date designated on
the Optional Expansion Schedule) and of proposed date of Actual Use, and will be
for a minimum of 25,000 square feet. Upon receipt of Tenant's Expansion Notice,
Landlord shall confirm the availability of the Designated Expansion Premises.
Following the giving of an Expansion Notice, Tenant shall provide Landlord, not
later than sixty (60) days prior to the scheduled date of availability for
commencement of construction, permit ready plans and specifications approved by
Tenant, and Landlord shall promptly apply for all necessary building permits for
construction of improvements to the Designated Expansion Premises and shall work
diligently using its best efforts to promptly obtain such permits and to
construct such improvements as are required to be constructed by Landlord under
this Lease. Each time the Premises are expanded by the inclusion of Optional
Expansion Space and upon the request of either, Landlord and Tenant shall
execute an Expansion Certificate. If Tenant is not in Actual Use of the
Designated Expansion Premises within six (6) months after the scheduled date of
availability for commencement of construction as set forth in Tenant's Expansion
Notice, a Holding Fee shall be paid if and to the extent provided in Section
5.c.

                c. Tenant's Failure to Occupy Premises.

        In the event Tenant has not commenced Actual Use of the amount of square
footage of Rentable Space as is required to satisfy (i) the requirements of the
Required Expansion Schedule in the case of Required Expansion Premises or (ii)
the Actual Use date of Optional Expansion Premises based on the Optional
Expansion Premises Expansion Notice (calculated in each case on the basis that
applicable Expansion Premises are scheduled to be in Actual Use by six (6)
months after the scheduled date it is to be available for the commencement of
construction),

                                       25
<PAGE>
then Tenant shall pay a Holding Fee on the amount by which Tenant's Actual Use
of such Expansion Premises is less than the Designated Expansion Premises;
provided that (i) this provision shall not apply to any such Expansion Premises
where all of the Building Systems and Building Amenities, if any, and Tenant
Improvements have been substantially completed (because after substantial
completion the Expansion Premises must be placed in Actual Use or be placed in a
Space Pocket), and (ii) no Holding Fee or other charge shall be due for any
period in which the lack of substantial completion or Actual Use is due to
Landlord-caused delay (and Tenant shall not receive any credit for any rent
received by Landlord for such space during such period). There are two levels of
Holding Fee. First, to the extent the delay in substantial completion is not due
to the fault of either Landlord or Tenant, the Holding Fee shall be at a rate
equal to the total storage rent per square foot of Rentable Space per annum
(including expense pass throughs) Landlord is then charging to third parties for
similar space (the "Total Storage Rent") payable monthly until the date Tenant
is in Actual Use of such space (with proration for any partial month). Second,
to the extent the delay in substantial completion is caused by the fault of
Tenant in not meeting required timelines or otherwise, the Holding Fee shall be
at a rate equal to $1.50 per square foot of Rentable Space per annum plus the
Total Storage Rent for such space, payable monthly until the date Tenant is in
Actual Use of such space (with proration for any partial month). In either
situation in which a Holding Fee is due, Tenant shall receive as a credit
against such Holding Fee any sums that Landlord receives as rent (including
expense pass throughs) for such space from any third party.

                                       26
<PAGE>

                d. Landlord's Obligation to Provide Space Prior to the Agreed
Upon Option Dates and to Accommodate Substitutions.

                        (i) Required Expansion Premises. If Tenant wishes to
take down Required Expansion Premises prior to date provided in the Required
Expansion Schedule, Landlord shall use its best efforts to accommodate such
accelerated take down unless to do so would cause Landlord to breach an existing
lease of such space. If Landlord may make such space available by refusing to
extend a lease, terminating a month-to-month tenancy, or exercising a
termination clause, Landlord shall do so, so long as Tenant pays any rent lost
as a result of Landlord's termination of such lease prior to the scheduled date
of availability for commencement of construction. Landlord shall notify Tenant
of the potential lost rent prior to terminating the applicable lease. In leasing
(or renewing leases of) Required Expansion Premises to third parties after
January 1, 2001, Landlord shall either limit the term of new or renewal leases
or include a termination clause such that any new or renewal lease of Required
Expansion Space may be terminated without charge on not more than nine (9)
months notice. If Tenant wishes to accelerate take down of Required Expansion
Space that is subject to a non-terminable lease, Landlord agrees to use its best
efforts to relocate the tenants in the desired Required Expansion Space to
another location in the Building. Landlord shall, prior to making such
relocation, notify Tenant of any unavoidable additional costs Landlord will
incur in implementing such relocation, and if there are such costs, the
relocation shall be subject to Tenant agreeing to pay such costs.

                        (ii) Optional Expansion Premises. Landlord is not
obligated to provide Optional Expansion Premises until the dates listed in the
Optional Expansion Schedule. Landlord agrees, however, to use its best efforts
to relocate and/or exercise termination clauses

                                       27
<PAGE>

of other tenants that are in the desired Optional Expansion Premises if Tenant's
needs for Optional Expansion Space accelerate. Landlord shall, prior to making
any such relocation or termination, notify Tenant of any unavoidable additional
costs Landlord will incur in implementing such action, and if there are such
costs, the relocation or termination shall be subject to Tenant agreeing to pay
such costs. If the third party tenant can't be or isn't moved and the lease is
not otherwise terminable, Landlord agrees not to extend such third party's lease
beyond its existing term.

                        (iii) Substitutions. Landlord agrees to use its
reasonable best efforts to accommodate Tenant's requests for modifications of
the Required Expansion Schedule and Optional Expansion Schedule in which one
designated space is substituted for another, so long as the total square footage
required to be taken by any given time within the applicable category (i.e.
Required or Optional) is not thereby reduced, and Landlord receives the same
total rentals as it would have received but for the substitution.

                        (iv) Revision of Applicable Schedules. If Tenant makes a
request for accelerated take down of Expansion Premises and/or modifications of
the Required Expansion Schedule or Optional Expansion Schedule in which one
designated space is substituted for another, Landlord shall use reasonable best
efforts to respond to such request within twenty-one (21) days after the
request, and the parties shall work in good faith to resolve any issues as
expeditiously as possible. Upon establishment of a modification to the Required
Expansion Schedule or Optional Expansion Schedule, the parties shall initial,
date and attach to this Lease such revised schedule, and such modified schedule
shall thereafter govern the rights of the parties hereunder.

                                       28
<PAGE>

                e. Right of First Refusal.

        Tenant shall have a right of first refusal to lease any space designated
as Required Expansion Premises and Optional Expansion Premises, provided Tenant
has first given Landlord written notice that Tenant needs to accelerate its
expansion in the Building, which notice will include the amount of additional
space needed by Tenant. In addition, Tenant shall have a right of first refusal
to lease the space currently occupied by Sears in the Building at the expiration
or earlier termination of the current Sears lease. These rights of first refusal
shall be exercised by Tenant giving Landlord written notice of its intent to so
lease such space within ten (10) days of written notice from Landlord as to the
availability of such space. The Rent for the Required and Optional Expansion
Premises will be as provided herein, and Rent for the space currently rented to
Sears will be (1) until the date the Sears lease would have expired according to
its terms, the greater of the scheduled rent under the Sears lease or the Base
Floor Rent then being paid by Tenant on the second through fifth Floors, and (2)
after the date the Sears lease would have expired according to its terms, the
fair market value for similar retail space in its then existing condition,
determined as provided for Effective Fair Market Rent in Section 3.b. above.

                f. Additional Premises.

        For the purposes of this Lease, any portion of the Required Expansion
Premises and Optional Expansion Premises in Actual Use by Tenant and the Sears
space, if leased by Tenant as provided herein, shall be considered to be
Additional Premises for all purposes hereof.

        6. Space Pockets.

                a. Definition.

        "Space Pockets" are office/workstations within the Required or Optional
Expansion Premises built out for Tenant's future use, on which rent is not paid
by Tenant until (i) such

                                       29
<PAGE>

office/workstations are placed in Actual Use, or (ii) a specific date as
specified below, whichever occurs first.

                b. Measurement.

        The square footage of Rentable Space of the Space Pockets shall be a
fixed amount based on the size of the Additional Premises on which the
improvements have been constructed, as the case may be, and the number of
offices/workstations, if any, in such space as measured in accordance with
Exhibit C. This fixed amount shall be the average size of each
office/workstation, if any, and its pro rata share of "Circulation Space"
(hallways, copy rooms, conference rooms and other non-office areas) in the
designated Additional Premises.

        For example, if the designated Additional Premises total 60,000 square
feet and contain 200 office/workstations per the applicable space plan for the
Additional Premises, then the average office/workstation and its pro rata share
of Circulation Space totals 300 square feet (60,000 square feet divided by 200
office/workstations = 300 square feet).

        Accordingly if Tenant designated 50 office/workstations as Space
Pockets, then the total square feet of Space Pockets would be 15,000 square feet
(50 offices x 300 square feet / office = 15,000 square feet of Space Pockets).
In this example, an office/workstation, regardless of its actual size, is deemed
to be a 300 square feet Space Pocket for purposes of measuring the designation
of or Actual Use of Space Pockets.

        The actual number of office/workstation as shown on the applicable space
plan and the square footage of Rentable Space of the designated Additional
Premises as measured in accordance with Exhibit C is conclusive and final.

                                       30
<PAGE>

                c. Actual Use.

        "Actual Use" of any of the Additional Premises and/or Space Pockets is
defined as when Tenant moves into and uses the offices/workstations, if any, in
such designated Additional Premises including those that Tenant had previously
designated as Space Pockets for any purpose other than inactive storage or when
Tenant moves into and uses any of such designated Additional Premises which does
not contain office/workstations. Once offices/workstations that were previously
Space Pockets are in Actual Use, then the square footage of Rentable Space added
to the Premises to calculate the Rent equals the deemed square feet of Rentable
Space of those Space Pockets offices/workstations in Actual Use.

        For example, using the same Space Pocket per office/workstation number
as set out in the example in Section 6.b. above, if Tenant placed 10 additional
offices/workstations in Actual Use, then Tenant would start paying Rent on 3,000
additional square feet of Rentable Space. The calculation is 10
offices/workstations times 300 square feet of Space Pocket per
office/workstation equals 3,000 square feet of Rentable Space of total Space
Pockets now in Actual Use.

        The use of Circulation Space around offices/workstations that are
designated as Space Pockets is not deemed to be Actual Use. The setup or storage
of furniture in offices/workstations is also not deemed to be Actual Use.

                d. Maximum Amount of Space Pockets.

        Tenant shall have the right to Space Pocket up to twenty five percent
(25%) of any Required or Optional Expansion Premises included in any Designated
Expansion Premises. All Space Pockets designated in Designated Expansion
Premises shall be deemed to be in Actual

                                       31
<PAGE>

Use six (6) months from the date of Tenant's first occupancy of any of the
Designated Expansion Premises in which such Space Pockets are located.

        The sizes, locations, and configurations of the Space Pockets shall be
determined by Tenant prior to Tenant's occupancy of any of the Designated
Expansion Premises in which such Space Pockets are located and Landlord shall be
given written notice, in the form attached hereto as Exhibit J ("Space Pocket
Designation") of the sizes, locations and configurations of the Space Pockets
prior to the date Tenant takes occupancy of any such Designated Expansion
Premises.

        Tenant shall give Landlord five (5) days prior written notice when
Tenant desires to place in Actual Use any portion of the Space Pockets, provided
such Actual Use shall occur only on the first or fifteenth of a month and the
minimum square footage of Space Pockets that Tenant can place in Actual Use at
any given time is 2,000 square feet. For example, using the example set forth in
Section 6.b., if Tenant only needed to occupy 6 offices totaling 1,800 square
feet of Space Pockets, Tenant would have to place into Actual Use one more
office/workstation such that the Space Pockets put in Actual Use would equal
2,100 square feet (7 offices x 300 square feet).

                e. Right to Relocate Space Pockets.

        Subject to the provisions of this Section 6, Tenant shall have the right
to "relocate" Space Pockets to accommodate growth, shrinkage or reshuffling of
various departments and/or support areas in the Designated Expansion Premises;
provided, following such relocation, the total area of the Space Pockets in a
specific Designated Expansion Premises may not be greater than the total area of
the Space Pockets in such Designated Expansion Premises prior to such
relocation. For example, Tenant's employees may vacate work stations and
relocate into Space Pockets totaling equal or more square footage than those
vacated, and the vacated work stations shall

                                       32
<PAGE>

become Space Pockets; provided that Tenant shall not reduce its Rent by
relocating Space Pockets. Tenant shall notify Landlord in writing when such
relocation is to occur, and any of Tenant's cost of relocating shall be paid by
Tenant.

        7. Use of Premises.

        Tenant will use the Premises for general office use, data center,
training, storage, R&D Labs, test kitchen, model store, pilot plant, roaster and
other related purposes and for no other purposes without Landlord's prior
written consent, which consent shall not be unreasonably withheld or delayed.
Tenant shall comply with all statutes, rules, ordinances, orders, codes and
regulations which are applicable to Tenant's use and manner of use of the
Premises, provided that Tenant shall not be responsible to make any structural
repairs, improvements, replacement or alterations to the Premises, the Building
and/or the Project in order to comply with requirements of this Section 7 unless
caused by a change in Tenant's use of the Premises. Tenant shall not use or
permit the Premises to be used in any manner which would increase the existing
rate of insurance on the Building or cause the cancellation of any insurance
policy covering the Building, nor shall Tenant permit to be kept, used or sold
anywhere in or about the Premises or the Building any equipment, machinery,
apparatus or device which may be prohibited by the provisions of the standard
form fire insurance policies in use in the State of Washington, unless Tenant,
at its sole expense, obtains an endorsement to the policy allowing such
activity. Tenant, shall not during the term of this Lease, (a) commit or allow
to be committed any waste upon the Premises, or any public or private nuisance
or other act or thing which materially disturbs the quiet enjoyment of any other
tenant in the Building, (b) allow any sale by auction upon the Premises, (c)
place any loads upon the floor, walls, or ceiling of the Premises which endanger
the Building, (d) use any machinery which will adversely affect the structure of
the Building or any

                                       33
<PAGE>

Building system, (e) place any harmful liquids in the drainage system or in the
soils surrounding the Building or (f) unreasonably interfere with other tenants
of the Building. Tenant shall not, without the prior written consent of
Landlord, use any apparatus, machinery, equipment or device in or about the
Premises which will cause any substantial noise or vibration. If any of Tenant's
office machines and equipment should disturb the quiet enjoyment of any other
tenant in the Building, then Tenant shall provide adequate insulation, or take
such other action as may be necessary to eliminate the disturbance, all at
Tenant's sole cost and expense. Tenant shall not cause or permit any waste
material or refuse to be dumped upon or remain upon any part of the Building or
the Property outside the Premises, except in designated receptacles, nor shall
Tenant cause or allow any materials, supplies, equipment, finished products or
semi-finished products or articles of any nature to be stored upon or remain
upon the Building or the Property outside the Premises.

        8. Food Service Operator.

        Landlord covenants and agrees to use its best efforts to provide,
whether through lease or operating arrangement, a food service operator for the
Building cafeteria reasonably acceptable to Tenant; provided, however, that in
no event shall Landlord be obligated to breach or terminate any lease agreement
with any existing tenant. Landlord shall consent to Tenant's operation, subject
to applicable statutes and regulations, of a private cafeteria within the
Premises, subject to obtaining appropriate governmental permits, which Landlord
agrees to use its best efforts in assisting Tenant to obtain. In the event of
the expiration or earlier termination of the existing lease between Landlord and
Pioneer Human Services ("Pioneer") on the third Floor of the Building (the
"Pioneer Lease"), Tenant shall have the right to lease the premises vacated by
Pioneer (the "Pioneer Space") on the same terms and conditions as set forth in
the Pioneer Lease,

                                       34
<PAGE>
except that the term shall be the Term of this Lease, and rent for the Pioneer
Space shall be the greater of (a) One Thousand Dollars ($1,000.00) per month; or
(b) the average rent paid by Pioneer under the Pioneer Lease for the last twelve
(12) full months prior to the expiration or earlier termination of the Pioneer
Lease which will be increased thereafter on an annual basis based on changes in
the Index. Tenant shall have the right and option to sublease the Pioneer Space
without Landlord's consent for the operation of a retail food service facility
of similar or better quality; provided, however, that in the event that net
rents received by Tenant from subleases of the Pioneer Space exceed the rent
paid by Tenant for the Pioneer Space, fifty percent (50%) of such excess shall
be paid to Landlord. Landlord shall have the right to audit the records
regarding any such subleases on the same basis as provided in Section 4.c.(v)
regarding Operating Expenses.

        9. Rules and Regulations.

        Tenant and its agents, employees, and servants will at all times
observe, perform and abide by all of the reasonable, nondiscriminatory rules and
regulations (the "Rules and Regulations") of Landlord relating to the Building.
Attached hereto as Exhibit K are the current Rules and Regulations of the
Building. Landlord may change or add the Rules and Regulations, from time to
time, provided that Landlord agrees that any additions or amendments to the
Rules and Regulations of the Building shall not be inconsistent with the terms
and conditions of this Lease or impose any additional financial burdens on
Tenant. Any additions or amendments to the Rules and Regulations which are
inconsistent with this Lease or increase the financial burdens on Tenant shall
be null and void with respect to Tenant.

                                       35
<PAGE>

        10. Care and Surrender of Premises.

        Tenant shall take good care of the Premises as provided in the Lease
except for repairs required herein to be made by Landlord. On the expiration or
sooner termination of this Lease, Tenant, without notice, will immediately and
peacefully quit and surrender the Premises in good order, condition and repair
(reasonable wear and tear, damage by fire or other casualty or matters which are
Landlord's obligations hereunder excepted) and will clean the surface of
interior walls of the Premises, floors, suspended ceilings and carpeting
therein. Nothing herein shall be deemed to impose any obligation on Tenant for
repair or maintenance of any elements of the Building structure or the plumbing,
mechanical or electrical systems of the Building, or for any restorations,
alterations, replacements or repairs required to be made by Landlord pursuant to
the provisions of this Lease unless caused by the negligence or intentional act
or omission of Tenant or its agents, employees or invitees.

        11. Tenant Improvements; Alterations.

                a. Tenant Improvements.

        Landlord will deliver the Premises, and will continue to deliver the
Additional Premises as provided herein, to Tenant in sound structural condition
with all Building systems which service the Premises in good order and repair,
and with the improvements ("Tenant Improvements") shown and/or described in
Exhibit L ("Landlord's Work") and Exhibit M ("Tenant's Work") in accordance with
the drawings approved by Landlord and Tenant. Landlord shall complete Landlord's
Work at Landlord's sole cost and expense. Landlord shall complete Tenant's Work
at the sole cost and expense of Tenant. Tenant shall have the right to
participate in the bid process and to review and approve all construction
contracts for Tenant's Work. Landlord and Tenant shall each appoint one (1)
person to review invoices for Tenant's Work.

                                       36
<PAGE>

Those invoices, if approved by the fifth of a month, shall be paid by Tenant by
the twentieth of the month. Landlord will notify Tenant when in Landlord's
opinion Landlord's Work and Tenant's Work are substantially complete. Within
three (3) business days after receiving such notice, Landlord and Tenant shall
inspect the Premises for any deficiencies in Landlord's Work or Tenant's Work,
and Tenant will provide Landlord with a "punchlist" describing any deficiencies
in Landlord's Work or Tenant's Work. Landlord will correct defective items
stated in the punchlist promptly, but in no event later than twenty (20)
business days after receiving Tenant's punchlist.

        All of Landlord's Work and Tenant's Work shall be completed in a
workman-like manner in conformance with all applicable building codes, laws,
rules and regulations. Tenant shall, subject to the provisions of Section 11.b.
below, also have the right to construct and install at its sole cost and expense
such additional improvements in the Premises as are in its judgment necessary or
convenient for its use of the Premises.

                b. Alterations.

        After completion of Tenant's Work, Tenant shall not make any alterations
or improvements in or additions to the Premises or make any changes to locks on
doors or add to, disturb or in any way change any of the wiring, HVAC or
plumbing in the Premises or the Building, without first obtaining the written
consent of Landlord which consent shall not be unreasonably withheld, delayed or
conditioned. All such alterations, additions and improvements shall be performed
by contractors or mechanics approved by Landlord which consent shall not be
unreasonably withheld or delayed. All work with respect to any such alterations,
additions or improvements shall be performed in a good and workmanlike manner,
shall be of a quality equal to or exceeding the then existing construction
standards for the

                                       37
<PAGE>

Building and must be of a type, and the floors and ceilings must be finished in
a manner, customary for general office use and other uses common to similar
office buildings in the vicinity. Such alterations shall be diligently
prosecuted to completion to the end that the Premises shall be at all times a
complete unit except during the period necessarily required for such work. All
such alterations, additions and improvements shall be made strictly in
accordance with all laws, regulations and ordinances relating thereto, and no
interior improvements installed by Landlord in the Premises (including Tenant's
Work) may be removed unless the same are promptly replaced with interior
improvements of the same or better quality. Landlord hereby reserves the right
to require any contractor or mechanic working the Premises to provide lien
waivers and liability insurance covering such alterations, additions or
improvements to the Premises. Except as provided below, Tenant shall pay, when
due, all claims for labor or materials furnished to or for Tenant at or for use
in the Premises, and Tenant shall not permit any mechanic's or materialmen's
liens to be recorded against the Premises or the Property for any labor or
material furnished to Tenant or Tenant's agents or contractors in connection
with work of any character performed on the Premises by or at the direction of
Tenant. Tenant shall not be required to pay or otherwise satisfy such claims or
discharge such liens so long as it shall, in good faith, at its own expense,
contest the same or the validity thereof by appropriate proceedings, provided
that Tenant shall, at its cost, post a bond to remove the lien from the Premises
or the Property within twenty (20) days if such dispute can not be resolved
within the said time period. Tenant shall give Landlord ten (10) days' prior
written notice of the commencement of any alterations, additions or improvements
and agrees to allow Landlord and Landlord's Lender (defined below) to enter the
Premises and post appropriate notices to avoid liability to contractors or
material suppliers for payment for such alterations, additions or

                                       38
<PAGE>

improvements. All alterations, additions or improvements, except special
equipment specific to Tenant's use, shall remain in and be surrendered with the
Premises as a part thereof at the expiration or earlier termination of this
Lease, without disturbance, molestation or injury, provided that Landlord may,
together with the written notice consenting to the construction of any such
alterations, additions or improvements, notify Tenant that such alterations,
additions or improvements be removed upon the expiration or earlier termination
of this Lease. In such event, all expenses to remove such alterations, additions
or improvement and to restore said space to normal building standards shall be
borne by Tenant. Notwithstanding the foregoing, upon the expiration or
termination of this Lease, Tenant shall remove from the Premises all identifying
insignia which are characteristic of Tenant's business, and Tenant shall repair
any damage to the Premises or the Building caused by the removal of the same.
Notwithstanding anything contained herein to the contrary, Tenant may, upon
prior written notice to Landlord, make any nonstructural interior alterations or
additions that do not adversely affect the value of the Premises, the structural
integrity of the Building or any Building system, without Landlord's consent.

        All articles of personal property and all business and trade fixtures,
machinery and equipment, furniture and movable partitions owned by Tenant or
installed by Tenant at its expense in the Premises shall be and remain the
property of Tenant and shall be removed by Tenant at any time during the Lease
Term when Tenant is not in default hereunder. If Tenant shall fail to remove all
of such property from the Premises at the expiration of the Term hereof or
within ten (10) business days after any earlier termination of this Lease for
any cause whatsoever, Landlord may, at its option, remove the same in any manner
that Landlord shall choose, and store such property without liability to Tenant
for loss thereof. In such event,

                                       39
<PAGE>

Tenant agrees to pay Landlord upon demand any and ail expenses incurred in such
removal, including court costs and attorneys' fees and storage charges on such
property for any length of time that the same shall be in Landlord's possession.
Landlord may, at its option, without notice, sell said property or any of the
same, at private sale and without legal process, for such price as Landlord may
obtain and apply the proceeds of such sale to any amounts due under this Lease
from Tenant to Landlord and to the expense incident to the removal and sale of
said property.

        12. Additional Building Improvements.

                a. Construction; Building Systems and Building Amenities.

        In addition to completing Landlord's Work and Tenant's Work, Landlord
agrees to construct certain capital improvements to the Building for the sixth
Floor and the Required and Optional Expansion Premises ("Building Improvements")
if and when requested by Tenant and approved by Landlord, which approval shall
not be unreasonably withheld, delayed or conditioned in accordance with plans
and specifications to be prepared by or on behalf of Landlord (the "Building
Plans"). The Building Plans shall be prepared at Landlord's expense (but
included in the cost of such Building Improvement as provided below) based upon
conceptual designs and other comments and information provided by Tenant or its
agents in a timely manner. The Building Improvements shall include those
improvements more particularly described on Exhibit N attached hereto and
incorporated herein by reference as "Building Systems" and "Building Amenities."
Landlord and Tenant shall agree in writing as to the allocation of the cost of
Building Improvements (and North Parking Garage costs, if appropriate), between
Building Systems and Building Amenities based upon the following criteria: For
purposes of determining whether additional Building Improvements not identified
in this Lease are Building Systems or Building Amenities, it is understood and
agreed that

                                       40
<PAGE>

Building Systems shall be improvements that (i) involve the structural,
mechanical and electrical elements of the Building and the Property, or (ii) are
necessary to cause the Building and the Property to be in compliance with
applicable building and land use laws and codes, or (iii) permit interior spaces
in the Building to be exposed to natural light (to include windows but not
skylights), or (iv) protect the Building or the Property from the effects of
weather, heat, pollution or other external influences, or (v) are made for the
purpose of creating standard office shell and core conditions in the Premises,
and converting the Premises or the Building to, and maintaining the Premises and
the Building for, office and retail use as contemplated by the Lease; including
but not limited to roof, floors, walls, foundations, windows, HVAC, utilities,
elevators, including architect's and engineering fees required to design and
oversee construction or implementation of such improvements. Building Amenities
shall be improvements that (i) involve aesthetic or design elements (including
skylights), or (ii) are made primarily for the purpose of enhancing interior or
exterior environments or appearances of the Building or the Property, all of
which are made in order to accommodate Tenant specifically in its occupancy of
the Premises. Upon completion of the Building Plans for cumulative Phases,
Landlord and Tenant shall agree on a contractor or Landlord shall entertain
competitive bids from the three (3) reputable general contractors unless
Landlord and Tenant agree to entertain bids for a specific project from fewer
than three (3) contractors. Tenant shall be furnished copies of all bids, and
the construction contract or contracts for the additional Building Improvements
shall be awarded to the low bidder, unless Landlord and Tenant reasonably
believe such bidder is incapable of timely performing the Building Improvements
for the amount of the bid.

                                       41
<PAGE>

                b. Phasing of Building Improvements.

        For purposes of calculating Additional Rent relating to Building
Improvements and Landlord's repayment obligations under the Notes (defined
below), Building Systems and Building Amenities shall be grouped in one-year
"Phases." Each "Phase" of Building Systems and Building Amenities shall be the
cost of improvements in that classification completed in the fifty-two (52) week
year ending on September 30; provided that for the purposes of this Section 12,
the costs actually paid by Landlord for any Building Improvements commenced but
not completed over two (2) Phases will be included in the appropriate Note for
the second Phase of the work (with any subsequent costs included in subsequent
Phases).

                c. Cost of Building Improvements; Building Improvement Loan.

        In order to fund Building Improvements as provided herein, Tenant shall,
at its sole discretion, agree either to fund directly (either through borrowed
funds, capital leases or the contribution of Tenant's equity funds in which case
the costs funded directly by Tenant shall not be deemed "costs incurred by
Landlord") or to lend Landlord additional funds in accordance with the terms of
the Building Improvement Loan as provided in Section 12.d. below. In no event
shall Landlord be obligated to fund the cost of Building Improvements, either
directly or through the Building Improvement Loan, after September 30, 2015.

                d. Building Improvement Loan.

        The Building Improvement Loan shall be governed by the terms of a
separate Loan Agreement between Tenant, as Lender, and Landlord, as Borrower,
and shall be evidenced by two (2) series of promissory notes (each a "Note"),
one series in the principal amount of the portion of the Building Improvement
Loan allocable to Building Systems (the "Systems Note"),

                                       42
<PAGE>

and the second series in the principal amount of the portion of the Building
Improvement Loan allocable to Building Amenities (the "Amenities Note").

        Following an event of default under the Building Improvement Loan, in
addition to any other remedies available to Tenant, Tenant shall have the right
to offset the amounts due under the Building Improvement Loan, in the following
order, Building Systems Additional Rent, and then Building Amenities Additional
Rent, due to Landlord under this Lease.

                e. Electrical Upgrade.

        Landlord has increased the amperage in the Building electrical system in
order to provide electrical service reasonably necessary to properly and
adequately supply and serve the Premises. If additional transformers or other
electrical upgrades are needed for any expansion of the Premises beyond the
sixth through ninth floors or for Tenant's use of the Premises, Landlord shall
install the additional transformers and upgrades. The entire cost of the
additional transformers and upgrades shall be paid by Landlord, at its election
either at its own expense or with loan proceeds from the Building Improvement
Loan, and shall be amortized as "Building Systems" and paid for as Building
Systems Additional Rent.

                f. HVAC System.

        Landlord installed a centralized HVAC system for the sixth, seventh and
ninth Floors, including all duct work and delivery systems to the "VAV" boxes
serving the Premises and the installation of HVAC operating units on the roof of
the Building, all of which were included as part of Building Systems. All
internal distribution systems from the VAV boxes are part of Tenant's Work.
Landlord agrees to repair and maintain all system elements necessary to keep the
hydronic HVAC system serving the eighth Floor, including the cooling tower
located on the roof of the Building, in good condition and repair. Any
additional changes to the HVAC system

                                       43
<PAGE>
required for the Additional Premises or for Tenant's use of the Premises will be
installed by Landlord and paid in the same manner as for electrical upgrades in
Section 12.e. above.

                g. Life Safety Systems.

        All costs and expenses incurred by Landlord prior to the Restatement
Effective Date for the installation, maintenance and upgrade of life safety
systems for the Building, including but not limited to the fire control center
and associated hardware for the Building fire alarm system, shall be deemed to
be Landlord's Work to be provided at Landlord's sole cost and expense. From and
after the Restatement Effective Date, any cost of installing new or upgrading
existing life safety systems serving Designated Expansion Premises as required
to bring such life safety systems from the condition required to serve the
existing Building to the condition required for office occupancy of the
Designated Expansion Premises shall be paid by Tenant as a Building Improvement
Loan and shall be amortized as "Building Systems" and paid for as Building
Systems Additional Rent; provided, however, that (i) any costs and expenses of
upgrading the panels in the fire control center shall be Landlord's Work and
paid for by Landlord, and (ii) any costs and expenses required for the
installation of fire alarm systems running from detection points in the Premises
to the fire control center, including alarm devices, speakers and associated
wiring, shall be deemed to be Tenant's Work and paid for by Tenant.

        13. Repairs and Maintenance.

                a. Landlord's Obligations.

        Except where repairs are required to be made by Tenant or when caused by
the negligence or intentional acts or omissions of Tenant or its agents,
employees or invitees, but subject to Section 23 of this Lease, Landlord shall
perform the following maintenance and repairs, restorations or replacements to
the Premises, and to the Building and the Project to the

                                       44
<PAGE>

extent required for Tenant's use of the Premises: Landlord shall maintain,
repair and replace, as necessary, and keep in good order, safe and clean
condition (i) the plumbing, sprinkler, HVAC, electrical and mechanical lines and
equipment associated therewith (except such portions thereof which were
specifically installed for Tenant other than Landlord's Work and Tenant's Work),
elevators and boilers, broken or damaged glass, and damage by vandals; (ii)
fluorescent lighting fixtures and bulbs, both within the Premises and in the
common areas and facilities, (iii) utility and trunk lines, tanks and
transformers and the interior and exterior structure of the Building, including
the roof, exterior walls, bearing walls, support beams, floor slabs, foundation,
support columns and window frames; (iv) any walls, ceilings and, subject to
ordinary wear and tear, floor coverings (including carpets and tiles) in the
common areas and facilities, and maintenance of walls, ceilings and floor
coverings within the Premises if and to the extent such maintenance is performed
by Landlord under Landlord's Building-wide maintenance and repair program for
tenant premises; (v) improvements to the Property, including landscaping and
fencing; and (vi) the common areas and facilities located within or outside the
Building, including the common entrances, corridors, interior and exterior doors
and windows, loading docks, elevators, stairways, laboratory facilities and
parking areas and access thereto. Tenant shall perform all other maintenance and
repairs in the Premises; provided Tenant may request that Landlord perform such
maintenance in which event Tenant shall pay Landlord directly for the cost
thereof but such cost shall not be deemed an Operating Expense.

                b. Common Area Maintenance.

        Landlord shall continue to be responsible for the maintenance and repair
of the Building lobby, front parking lot and exterior common areas and
facilities and landscaping for the Building, in good order and condition
consistent with standards commensurate with a well-

                                       45
<PAGE>

maintained office and/or mixed use buildings in the greater Seattle, Washington
area. Notwithstanding the foregoing, Tenant shall be directly responsible for
payment of costs incurred by Landlord in maintaining and repairing the wood
doors into the main Building lobby, including those near the coffee bar.

                c. Landlord's Failure to Make Repairs.

        If after notice by Tenant, Landlord fails or refuses to make any
repairs, restorations or replacements which it is required to make under this
Section 13 or elsewhere in this Lease, within ten (10) days after written notice
from Tenant, Tenant may make the repairs, restorations or replacement on
Landlord's behalf; provided if the repairs, restorations or replacements
reasonably will require more than ten (10) days to complete, such ten (10) day
period shall be extended for such additional period of time as may be necessary
for Landlord to make the repairs, provided Landlord commences the repairs,
replacements or restoration within the initial ten (10) day period and
thereafter diligently prosecutes the same to completion and in good faith. If
Tenant makes any repairs, restorations or replacements on behalf of Landlord
pursuant to this Section 13.c., Landlord shall reimburse Tenant within thirty
(30) days after Landlord receives Tenant's invoice, for the actual costs
incurred by Tenant in so doing, together with interest thereon at an interest
rate two percent (2%) above the Prime Rate as the same may be adjusted from
time to time. If by reason of any emergency, repairs, restorations or
replacements become necessary which by the provisions hereof are the
responsibility of Landlord, Tenant may make such repairs, restorations or
replacements which, in Tenant's reasonable opinion, are necessary for the
preservation of the Premises, or of the safety or health of the occupants in the
Building or Tenant's property or required by law; provided, Tenant shall first
make reasonable efforts to inform Landlord of the need for the repairs and give
Landlord a reasonable opportunity to make

                                       46
<PAGE>

the necessary repairs, restorations or replacements. Landlord will reimburse
Tenant as provided above for any costs incurred by Tenant in making any such
emergency repairs, restorations or replacements.

        14. Parking.

                a. Existing On Site Parking.

        Tenant's customers, guests and invitees shall have a right to park on an
unreserved basis in the main parking lot on the Property east of the Building
(the "East Lot"), subject to any restrictions generally applicable, from time to
time, to the use of the East Lot. Landlord will provide five (5) visitor stalls
marked for Tenant's exclusive use in the East Lot at a mutually agreed upon
location. All administration and management of these stalls will be the
responsibility of Tenant.

                b. Parking Garage.

                        (i) Construction of Parking Garage. Landlord has
constructed in that existing building located immediately adjacent to the
northerly wall of the Building, commonly known as the "Section 10 Warehouse," a
parking garage containing parking stalls for approximately six hundred (600)
cars (the "Parking Garage"), which was constructed in accordance with plans
prepared at Landlord's expense by a licensed architect chosen by Landlord and
Tenant based upon schematic designs prepared by Tenant's architect.

                        (ii) Leasing of Existing Parking Garage. Tenant agrees
to lease the Parking Garage as provided herein. Tenant shall at all times have
the right at its sole discretion to sublease parking stalls in the Parking
Garage. Tenant shall have the right to reserve all parking stalls for use by
Tenant's employees in a separate designated area of the Parking Garage having a
separate entrance to be used solely by Tenant and its employees, customers and

                                       47
<PAGE>

invitees. The Parking Garage shall be available for use by Tenant's employees
and visitors twenty-four (24) hours per day, seven (7) days per week, including
holidays. Tenant shall operate and maintain the nonstructural elements of the
Parking Garage at its sole cost and expense in a clean, safe and secure
condition. Landlord shall be responsible at its expense for the repair and
maintenance of the structural elements of the Parking Garage. Tenant shall
reimburse Landlord for the cost of any services furnished by Landlord and shared
jointly by the Parking Garage and the Building which shall be equitably
allocated to the Parking Garage. If Tenant, its employees or guests are not able
to use the Parking Garage and access ways because of unauthorized use thereof by
others, Tenant shall have the right to take whatever steps are necessary to end
such unauthorized use, including posting signs, distributing parking stickers
and towing away unauthorized vehicles.

                        (iii) Parking Garage Taxes and Insurance. Tenant shall
pay to Landlord within thirty (30) days following receipt of an invoice from
Landlord, as Additional Rent hereunder, all ad valorem real property taxes
allocable to the Parking Garage and the land on which the Parking Garage is
constructed, together with the cost of all insurance for the Building equitably
allocable to the Parking Garage. Unless Tenant requests to maintain its own
policies of insurance for the Parking Garage, Landlord's policies of insurance
with respect to the Building, which policies shall otherwise satisfy the
requirements of the Lease, shall calculate and designate a separate and discrete
portion of the premium to the Parking Garage.

                        (iv) Olympic West Parking. Until the earlier to occur of
(a) January 31, 2003, or (b) the earlier termination of Olympic West's lease,
Tenant shall agree to lease to Olympic West thirty (30) stalls on the south end
of the second floor of the Parking Garage for Forty Dollars ($40) per stall per
month plus increases in the operating expenses for

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<PAGE>

the Parking Garage from the first year of operation of the Parking Garage
apportioned pro rata on a per stall basis.

        15. Additional Parking.

                a. Requirement for Additional Parking.

        The amount of Additional Premises that may be added to the Premises may
be subject to additional parking being available for use by Tenant. The three
options available for such additional parking are the (i) acquisition of
adjacent land from the Burlington Northern Santa Fe Railroad (the "BN Parcel")
shown on Exhibit O hereto for surface parking for the Premises and/or, together
with the "Landlord's Garage Parcel" (as defined below), for the construction of
a new parking garage (the "North Parking Garage") or (ii) the dedication of
Tenant's current parking lot of 8th and Holgate ("Tenant's Lot") as parking for
the Premises; provided the City of Seattle approves the use of Tenant's Lot as
parking in conjunction with the expansion of the office use of the Building; or
(iii) the use of the BN Parcel for surface parking and the dedication of
Tenant's Lot as parking for the Premises. As used herein, "Landlord's Garage
Parcel" shall mean that portion of the property shown as "Landlord's Garage
Parcel" on Exhibit O that coincides with the footprint of the North Parking
Garage as designed and constructed.

                        (i) Landlord agrees to use its best efforts to acquire
the BN Parcel, including as much land as is available for sale in order to
maximize the use of the BN Parcel for surface parking or the construction of the
North Parking Garage. If the BN Parcel is so acquired, Landlord will use its
best efforts to obtain a Master Use Permit ("MUP") from the City of Seattle for
the construction of the North Parking Garage on the BN Parcel and Landlord's
Garage Parcel. Tenant agrees to cooperate with Landlord in obtaining the MUP.

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<PAGE>

                        (ii) In the event Landlord acquires the BN Parcel and
obtains the MUP, the additional parking required for Tenant's expansion in the
Building shall be met, at Tenant's option, through the construction of the North
Parking Garage or, if allowed by the City of Seattle, through the use of surface
parking on the BN Parcel together with the possible dedication of the Tenant's
Lot to parking for the Building (which surface parking dedication may be
superseded and replaced by Tenant's subsequent election to construct the North
Parking Garage as provided herein).

                        (iii) In the event Landlord acquires the BN Parcel but
is unable to obtain the MUP, then the required parking for Tenant's expansion in
the Building may be through surface parking on the BN Parcel and/or, if allowed
by the City of Seattle, the possible dedication of the Tenant's Lot for parking
for the Building and Landlord shall have no obligation to find other parking for
the Building.

                        (iv) In the event Tenant elects, in its discretion, to
use the Tenant Lot to provide required parking for Tenant's expansion in the
Building, and if the North Parking Garage has not been constructed as of the
expiration or earlier termination of the Lease, then at the expiration or
earlier termination of the Lease, Tenant agrees to sell Tenant's Lot, or land
holding the equivalent number of parking stalls located no further from the
Building than Tenant's Lot, to Landlord for a price equal to fifty percent (50%)
of the then fair market value of the property, in the event that Landlord
obtained the MUP, or ninety-five percent (95%) of the then fair market value for
such property in the event Landlord did not obtain the MUP. If the parties
cannot agree on the fair market value, the same procedure outlined in Section
3.b. above for the determination of Effective Fair Market Rent will be followed.

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<PAGE>

                b. Funding for Additional Parking.

        In the event additional parking is acquired for the Tenant's expansion
in the Building, Tenant agrees to pay for the costs involved in obtaining such
parking as follows:

                        (i) In the event Landlord acquires the BN Parcel,
obtains the MUP and Tenant elects to have the North Parking Garage constructed
on the BN Parcel and Landlord's Garage Parcel, Tenant agrees to fund the full
cost of the acquisition of BN Parcel, the value of the Landlord's Garage Parcel
as provided in Section 4.c.(iv), the cost of obtaining the MUP, and the cost of
construction of the North Parking Garage by way of a Building Improvement Loan
for Building Systems as provided herein.

                        (ii) In the event Landlord acquires the BN Parcel and
obtains the MUP, but Tenant elects not to have the North Parking Garage
constructed as provided herein, then Tenant shall fund the full acquisition cost
of the acquisition of the BN Parcel, the cost of obtaining the MUP and, if
Tenant uses the BN Parcel for parking, the cost of any improvements to the BN
Parcel to provide for surface parking, all by way of a Building Improvement Loan
for Building Systems as provided herein.

                        (iii) In the event Landlord acquires the BN Parcel but
is unable to obtain the MUP, then Tenant shall fund fifty percent (50%) of the
cost of attempting to obtain the MUP and, if Tenant uses the BN Parcel for
parking, the cost of any improvements to the BN Parcel to provide for surface
parking, all by way of a Building Improvement Loan for Building Systems as
provided herein.

                c. Lease of Additional Parking.

        In the event Landlord acquires the BN Parcel, Tenant agrees to lease
such BN Parcel for parking at a rate which will amortize the Building
Improvement Loan for Building Systems

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<PAGE>

described in Sections 15.b.(i), (ii) or (iii) above plus, in the situation
described in Section 15.b.(iii), an amount equal to the amortization of the cost
of the acquisition of the BN Parcel over the Initial Term of the Lease in equal
monthly payments at the Amortization Rate.

                d. Leasing of North Parking Garage.

        If the North Parking Garage is built, Tenant agrees to lease the North
Parking Garage as provided herein. Tenant shall at all times have the right at
its sole discretion to sublease parking stalls in the North Parking Garage.
Tenant shall have the right to reserve all parking stalls for use by Tenant's
employees in a separate designated area of the North Parking Garage. The North
Parking Garage shall be available for use by Tenant's employees and visitors
twenty-four (24) hours per day, seven (7) days per week, including holidays.
Tenant shall operate the North Parking Garage and shall maintain the
nonstructural elements of the North Parking Garage at its sole cost and expense
in a clean, safe and secure condition. Landlord shall be responsible at its
expense for the repair and maintenance of the structural elements of the North
Parking Garage. Tenant shall reimburse Landlord for the cost of any services
furnished by Landlord and shared jointly by the North Parking Garage and the
Building which shall be equitably allocated to the North Parking Garage. If
Tenant, its employees or guests are not able to use the North Parking Garage and
access ways because of unauthorized use thereof by others, Tenant shall have the
right to take whatever steps are necessary to end such unauthorized use,
including posting signs, distributing parking stickers and towing away
unauthorized vehicles.

                e. North Parking Garage Taxes and Insurance.

        Tenant shall pay to Landlord within thirty (30) days following receipt
of an invoice from Landlord, as Additional Rent hereunder, all real property
taxes allocable to the North Parking Garage and the land on which the North
Parking Garage is constructed, together with the cost of

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<PAGE>

all insurance for the Building equitably allocable to the North Parking Garage.
Unless Tenant requests to maintain its own policies of insurance for the North
Parking Garage, Landlord's policies of insurance with respect to the Building,
which policies shall otherwise satisfy the requirements of the Lease, shall
calculate and designate a separate and discrete portion of the premium to the
North Parking Garage.

        16. Representations Regarding Title and Use.

        Landlord represents and warrants to Tenant that Landlord possesses good
and marketable fee title to the Property, the Building and the Premises, subject
only to the title exceptions listed on Exhibit P ("Title Exceptions") attached;
Landlord is authorized to enter into this Lease without the consent of any third
party other than Landlord's Lender; the provisions of this Lease do not and will
not conflict with or violate the provisions of existing or future agreements
between Landlord and any third party (including any lender holding a security
interest in the Property, Building or Project ("Landlord's Lender"); the
certificate of occupancy for the Building allows, or, with respect to any
Required or Optional Expansion Premises not later than the addition of such
Required or Optional Expansion Premises to the Premises, will allow Tenant to
use and enjoy the Premises and the common areas and facilities of the Project
for the purposes set forth in this Lease; the Premises and the common areas and
facilities of the Project and the uses thereof for the purposes specified in
this Lease are in conformity with all applicable laws; and Landlord will deliver
the Premises to Tenant, free of all tenants and occupants and claims thereto.

        17. Tenant's Signs.

        On floors less than twenty-five percent (25%) leased by Tenant, Tenant
may place its signs on entrance doors to the Premises and, at Landlord's
expense, Landlord shall place signs in

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<PAGE>

the elevator lobbies and in the hallways leading to the Premises which give
directions to the Premises, based on Building standards. Tenant shall not erect
or install or otherwise utilize signs, lights, symbols, canopies, awnings,
window coverings or other advertising or decorative matter on the windows, walls
and exterior doors or otherwise visible from the exterior of the Premises,
including any signs on the tower of the Building, except those currently located
in the Building, without (i) first submitting its plans to Landlord and
obtaining Landlord's written approval thereof (such plans must be professionally
designed and call for first-class materials to be used in construction) and (ii)
obtaining any required approval of the City of Seattle and of any other
applicable governmental authority. Landlord shall have the right to promulgate
from time to time additional reasonable rules, regulations and policies relating
to the style and type of said advertising and decorative matters which may be
used by any occupant, including Tenant, in the Building, and may change or amend
such rules and regulations from time to time as in its reasonable discretion it
deems advisable, provided that such rules and regulations shall not impose any
financial burdens on Tenant to comply with any such new or amended rules and
regulations referred to in this section. Tenant agrees to abide by such rules,
regulations and policies. At the expiration or earlier termination of this
Lease, all such signs, lights, symbols, canopies, awnings or other advertising
or decorative matter attached to or painted by Tenant upon the Premises or the
Building, whether on the exterior or interior thereof, which are not included in
Building Amenities, shall be removed by Tenant at its own expense, and Tenant
shall repair any damage or injury to the Premises or the Building and correct
any unsightly condition, caused by the maintenance and removal of said signs,
lights, symbols, canopies, awnings window coverings or other advertising or
decorative matter.

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<PAGE>

        Landlord and Tenant agree that all of Tenant's identity signage
installed by Landlord as Building Amenities (the "Tenant Identity Signage") are
and shall remain the personal property of Landlord. Upon expiration or earlier
termination of the Lease, Tenant shall have the right, but not the obligation,
to purchase the Tenant Identity Signage from Landlord by paying to Landlord an
amount equal to the unamortized balance of the total costs and expenses incurred
by Landlord in the purchase and installation of the Tenant Identity Signage,
including the cost of removing Landlord's existing signage in connection
therewith, amortized on a straight-line basis over a term of ten (10) years at
the Amortization Rate.

        Tenant, at Tenant's sole cost and expense, shall be responsible for the
repair and maintenance of the tower icon (the "Starbucks" icon on the Main
Building tower) and the Tenant Identity Signage above the main entrance to the
Building lobby. Landlord shall be responsible for maintaining all other Building
identity signs as well as directional signage on the light poles in the Building
parking lot, the cost of which shall be included as Operating Expenses. Landlord
shall, however, be responsible for providing all necessary electricity for the
Tenant Identity Signage and shall insure the Tenant Identity Signage in
accordance with the insurance requirements under the Lease, such costs and
expenses to be included as part of Operating Expenses. Landlord shall maintain
the poles used for Tenant's banners in the sidewalk east of the Building and
Tenant shall be solely responsible for maintaining and replacing the banners as
appropriate.

        18. Access by Landlord.

        Landlord and its agents shall have the right to enter the Premises, to
examine the same and to show the Premises to prospective and current purchasers
or lenders and, within the last twelve (12) months of the Lease Term only, to
prospective tenants. Except in emergency

                                       55
<PAGE>

situations, or to provide normal services to be provided by Landlord hereunder,
Landlord will give Tenant at least twenty-four (24) hours' advance notice prior
to entering the Premises. Landlord at all times shall have and retain a key with
which to unlock all of the doors in, upon or about the Premises, excluding
Tenant's vaults and safes, and Landlord shall have the right to use any and all
means which Landlord may deem proper to open said doors in an emergency in order
to obtain entry to the Premises. Entry to the Premises shall be at Landlord's
risk and Landlord shall respect and protect the confidentiality of information
about Tenant and Tenant's business learned as a result of such entry. Tenant, at
its option, may designate certain portions of the Premises (such as the file
room and computer room) as being "off limits," and except in an emergency,
neither Landlord nor its employees, agents or contractors shall have any access
to such off limits areas of the Premises unless accompanied by an employee of
Tenant. If Tenant elects to designate areas of the Premises as "off limits"
Tenant may install separate locks on such areas provided Landlord is provided
keys to such locks as required by the fire code. Landlord shall conduct its
activities in or about the Premises at a time and in a manner so as to minimize
disruption of or interference with Tenant's business or access to the Premises.

        19. Services.

                a. Basic Services.

        Except as otherwise specifically provided herein, Landlord shall
maintain and repair the Premises, the exterior of the Building and the public
and common areas and facilities of the Project, in good order and condition
consistent with maintenance standards for well maintained office and/or other
mixed-used (i.e., office, warehouse and retail) buildings in the City of
Seattle.

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<PAGE>

                b. Access.

        Landlord shall provide security for the Building and the Premises which
restricts access to the Premises other than during "normal business hours"
(i.e., 7:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m.
on Saturday, excluding holidays). Tenant shall have access to the Premises and
the parking areas (for Tenant's customers, guests and invitees) serving the
Building twenty-four (24) hours per day, seven (7) days per week, holidays
included, without having to give prior notice to Landlord or Landlord's agent.
The elevators serving any Floor(s) on which the Premises are located shall be
locked off after normal business hours but at least one (1) elevator shall allow
access to the Premises when a valid cardkey or code is used. A guard will be
available in the lobby at all times after hours to let Tenant's employees into
the Premises if the elevators are locked off.

                c. Building Services.

        Landlord shall provide Tenant with standard building services normally
provided in well maintained buildings, and Landlord shall furnish the Premises
with electricity for lighting and operation of low power office machines
(including but not limited to PC's, printers, file servers, and copiers) heat,
air-conditioning (the HVAC System shall function so that Tenant may maintain a
temperature within 2 degrees of 72 degrees F at all times subject to needed
adjustment, during normal business hours, hot and cold water, and elevator
services, holidays included, at no cost to Tenant other than the Base Floor
Rent. After hours electrical service will be separately metered, with meters
installed as part of Tenant's Work, for the actual cost of such after hours
electricity which will be paid for by Tenant within thirty (30) days of receipt
of an invoice from Landlord. All electrical service to the Premises above
standard use will be metered and billed directly to and be paid by Tenant.

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<PAGE>

                d. Security and Safety System.

        Landlord shall supply an electronic security system in the Building
which shall be in operation twenty-four (24) hours per day, and which will
include at least twenty (20) exterior and interior video security cameras and an
after hours electronic entry/exit system to the Building. In addition, Building
security personnel shall be on duty within the Project twenty-four (24) hours
per day. Landlord shall also supply a life safety and detection system in the
Building to provide maximum protection against fires and other life safety risks
with public announcement capacity and in compliance with the standards of all
applicable laws.

                e. Elevator Services.

        Tenant shall have the right to use all elevators servicing the main
lobby of the Building. At least one lobby elevator shall, subject to all
applicable fire department or other governmental rules and regulations, be
dedicated exclusively to Tenant's Floors of the Building, for the Term of the
Lease (but will be built so as to be able to open on other Floors) and shall be
controlled after hours by a "card key" security system. At the request of
Tenant, Landlord shall use its best efforts to remove or relocate existing
tenants in the Building in order to provide space for the construction of up to
three (3) new elevators which shall serve the central portion of the Building,
including the Premises, and shall be accessible from the existing main lobby of
the Building. Any such additional elevators shall be constructed by Landlord and
included as Building Systems.

                f. Interruption of Services.

        Landlord shall not be liable to Tenant for any loss or damage caused by
or resulting from any variation, interruption or any failure of the services to
be provided by Landlord pursuant to this Lease due to force majeure as the same
is defined hereunder in Section 35. Except as

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<PAGE>

provided below, no temporary interruption or failure of such services incident
to the making of repairs, alterations or improvements, or due to accident or
strike or conditions or events not under Landlord's control, shall be deemed an
eviction of Tenant or relieve Tenant from any of Tenant's obligations hereunder.
Landlord shall exercise its best efforts to restore such services and utilities
as soon as is reasonably practicable and to the extent reasonably practicable,
to provide temporary replacement services and utilities if deemed necessary by
Tenant for the continued operations of its business on the Premises. If any
services to be provided by Landlord pursuant to this Lease are not provided for
periods in excess of forty-eight (48) hours after written notice to Landlord,
and the interruption renders all or a portion of the Premises untenantable for
Tenant's use, Rent shall thereafter be abated in the same ratio as to that
portion of the Premises which Tenant reasonably determines is not usable for
Tenant's business purposes, shall bear to the whole of the Premises for the
period in excess of forty-eight (48) hours until the interruption in services is
remedied and full service to the Premises is restored.

                g. After Hours.

        All references herein to "after hours" means hours other than normal
business hours specified above in Section 19.b.

        20. Assignment.

        Tenant shall not directly or indirectly, voluntarily or by operation of
law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or
any part of its interest in or rights with respect to the Premises or Tenant's
leasehold estate hereunder (collectively, an "Assignment"), or permit all or any
part of the Premises to be occupied by anyone other than Tenant or sublet all or
any portion of the Premises or transfer a portion of its interest in or rights

                                       59
<PAGE>

with respect to Tenant's leasehold estate hereunder (collectively, "Sublease")
except as noted under Sections 20.a. and 20.b. below.

        Any Assignment or Sublease in violation of this Section 20 shall be
void. The acceptance of Rent or additional charges by Landlord from a purported
assignee or sublessee shall not constitute the waiver by Landlord of the
provisions of this Section 20 with respect to such attempted Assignment or
Sublease. Tenant agrees to pay Landlord's reasonable legal and accounting costs
of reviewing any proposed Assignment or Sublease which shall, in no event,
exceed Fifteen Hundred and No/100 Dollars ($1,500.00) per request in 1995
dollars to be adjusted annually by changes in the Index.

                a. Right to Assign or Sublease.

        Without Landlord's consent, Tenant may (i) assign this Lease in its
entirety (including all extension rights, expansion rights and other rights
provided herein) or (ii) Sublease all or any portion of the Premises, provided
the assignee or sublessee (i) will use the space in question for general office
and related purposes consistent with Section 7 above, (ii) is an affiliate of
Tenant (including without limitation a parent corporation, subsidiary
corporation, "brother-sister" corporation or affiliated partnership), an entity
resulting from a merger or consolidation with Tenant or any affiliate of Tenant,
an entity succeeding to the business and assets of Tenant, or an entity
resulting from the reorganization of Tenant or its affiliates provided any such
entity has a net worth equal to or greater than that of Tenant as of the
Restatement Effective Date. In the event of such an Assignment or Sublease, and
provided that the assignee or sublessee assumes in writing all of the
obligations of Tenant under the Lease, Tenant shall be released of all
obligations under the Lease. If any such assignee or sublessee under this
Section has a net worth greater than Fifty Million Dollars ($50,000,000.00), but
less than the net worth of the Tenant as

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<PAGE>

of the execution date of this Lease, Tenant agrees to guarantee the performance
of such assignee or sublessee under the Lease for a period of one (1) year after
the effective date of the Assignment or Sublease as provided herein; provided
further that no such Assignment or Sublease effective prior to October 1, 2010,
shall release Tenant of its obligations under this Restated Lease.

                b. Other Assignments or Subleases.

        Any other Assignment of this Lease or Sublease of all or any part of the
Premises shall be made only as follows:

        If Tenant desires at any time to enter into an Assignment of this Lease
or a Sublease of the Premises or any portion thereof, it shall first give
written notice to Landlord (the "Assignment Notice") of its desire to do so,
which Assignment Notice shall contain, without limitation, (i) the name of the
proposed assignee, subtenant or occupant, (ii) the nature of the proposed
assignee's, subtenant's or occupant's business to be carried on in the Premises,
(iii) the annual rent, and any adjustments in rent to be paid by the proposed
assignee, subtenant or occupant, (iv) a list of the deductions proposed to be
taken from Tenant's proceeds from the Assignment or Sublease to be used to
calculate the fifty percent (50%) to be paid to Landlord as provided herein, (v)
the term of the proposed Assignment or Sublease, and (vi) the area of the
Premises subject to the proposed Assignment or Sublease. In addition, Tenant
shall also provide Landlord within five (5) business days of Landlord's request
therefore, such financial information as Landlord may reasonably request
concerning the proposed assignee, subtenant or occupant.

        At any time within five (5) business days after Landlord's receipt of
the Assignment Notice, and any financial information requested by Landlord,
Landlord shall, by written notice to

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<PAGE>

Tenant, elect in writing to (i) consent to the Sublease or Assignment, or (ii)
disapprove the Sublease or Assignment; provided, however, Landlord shall not
unreasonably withhold or condition its consent to the Assignment or Sublease.
Failure to respond shall be deemed consent. As a condition for granting its
consent to any Assignment or Sublease, however, Tenant agrees to pay to Landlord
fifty percent (50%) of all Tenant's proceeds in connection with such Assignment
or Sublease which exceed the Rent payable by Tenant to Landlord hereunder (or a
proportionate amount thereof representing the portion of the Premises subject to
a Sublease or Assignment, if less than the entire Premises is subject to a
Sublease or Assignment), less (i) Tenant's reasonable leasing commissions; (ii)
payment attributable to the amortization (over the sublease term) of the cost of
tenant improvements made to the Premises at Tenant's expense for the assignee or
sublessee, if any; (iii) payment attributable to the remaining amortization (if
any) of Tenant Work paid for by Tenant which are within the portion of the
Premises subject to the Assignment or Sublease and which will remain therein
during the term of the Assignment or Sublease, amortized from date of
installation on the same basis as if such work had been amortized as Building
Amenities; and (iv) any other reasonable direct out-of-pocket costs related to
Tenant's securing an assignee or sublessee, such as attorney's fees. If Landlord
consents to the Sublease or Assignment within the time periods set forth herein,
Tenant may within one hundred (120) days after Landlord's consent, but not later
than the expiration of said one hundred twenty (120) days, enter into such
Assignment of the Lease or Sublease of the Premises or portion thereof, but only
upon the terms and conditions set forth in the Assignment Notice. All property
management responsibilities regarding any assignees or sublessees of Tenant,
which increase the cost to Landlord over and above that which was provided to
Tenant, will be the responsibility of

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<PAGE>

Tenant and paid for by Tenant or its assignee or sublessee, unless otherwise
agreed, in writing, by Landlord.

        No consent by Landlord to any Assignment or Sublease by Tenant shall
relieve Tenant of any obligation to be performed by Tenant under this Lease,
whether arising before or after the Assignment or Sublease except as provided
under Section 20.a. hereof. The consent by Landlord to any Assignment or
Sublease shall not relieve Tenant from the obligation to obtain Landlord's
express written consent to any other or further Assignment or Sublease.

        Notwithstanding the foregoing, if Tenant seeks to Sublease, in the
aggregate, more than fifty percent (50%) of the Premises pursuant to this
Section 20.b (other than Subleases for less than one year), Landlord shall be
entitled to terminate this Lease as to such portion of the Premises under
Sublease (or proposed Sublease) as may be required to cause no more than fifty
percent (50%) of the Premises to be under Sublease. Such termination right
(referred to herein as "Recapture" and Landlord's "Right of Recapture") shall
operate as follows: (1) As used herein the "50% Maximum" shall mean a constant
number equal to fifty percent (50%) of the maximum amount of Premises under
lease to Tenant prior to any Recapture (i.e. if Tenant had under lease 800,000
Square Feet of Rentable Area, the 50% Maximum will be a constant 400,000 Square
Feet, even if Landlord Recaptured 200,000 Square Feet so that only 600,000
Square Feet remained under lease). (2) Tenant shall notify Landlord (the "Excess
Sublease Notice") of the date on which Tenant intends to begin marketing any
space that would exceed the 50% Maximum (the "Excess Sublease Marketing Date"),
and the projected date of Sublease of such space (the "Projected Sublease
Date"). (3) The Excess Sublease Notice shall include Tenant's designation of a
commercially reasonable portion of the Premises (which may include areas other
than the area proposed for sublease) which, if recaptured, would bring the total
proposed

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<PAGE>

Sublease under the 50% Maximum (such space being referred to as "Premises
Available for Recapture"). Landlord may, within five (5) business days of
receipt of Tenant's Excess Sublease Notice, inform Tenant whether Landlord
elects to Recapture that portion of the Premises Available for Recapture. If
Landlord elects to exercise its Right of Recapture, Tenant may nullify that
election by withdrawing its Excess Sublease Notice by notice given to Landlord
within ten (10) days after Landlord's exercise of its Right of Recapture. If
Landlord exercises its Right of Recapture and Tenant does not withdraw its
Excess Sublease Notice, then on the Projected Sublease Date, this Lease shall be
deemed terminated as to the portion of the Premises Available for Recapture.
Landlord and Tenant shall split equally the cost of any demising walls or
systems segregation necessary to make the Premises Available for Recapture
commercially leasable as a separate tenant premises.

        Except as to space as to which Landlord has exercised its Right of
Recapture as provided above, in the event that Tenant proposes to Sublease space
pursuant to this Section 20.b (the "Proposed 20.b Sublease Space") such that the
Proposed 20.b Sublease Space plus all space then under Sublease pursuant to this
Section 20.b exceeds the 50% Maximum (in which case the entire amount of such
Proposed 20.b Sublease Space, whether or not such entire amount is in excess of
the 50% Maximum, shall be referred to as "Excess 20.b Sublease Space"), then in
addition to the otherwise existing requirements of this Section 20.b, the
following procedures shall apply:

        a. For a period beginning on the Excess Sublease Marketing Date and
ending on the first annual anniversary of the Excess Sublease Marketing Date,
both Tenant and Landlord may market the Excess 20.b Sublease Space. During such
period, if Tenant proposes a sublessee,

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<PAGE>

Landlord may withhold its consent in its sole discretion, but if Landlord
proposes a sublessee, Tenant's consent shall not be unreasonably withheld.

        b. From and after the first annual anniversary of the Excess Sublease
Marketing Date, if a Sublease for the Excess 20.b Sublease Space has not
otherwise been executed, neither party shall unreasonably withhold consent to a
Sublease proposed by the other party.

        21. Hazardous Substances.

        Without Landlord's consent, Tenant shall not keep, use, release or
dispose of any substances designated as, or containing components now or
hereafter designated as, hazardous, dangerous, toxic or harmful and/or subject
to regulation under any federal, state or local law, regulation or ordinance
("Hazardous Substances") on or about the Premises, the Building or the Property;
provided, the foregoing, shall not preclude Tenant from keeping and using in or
about the Premises and the Building, office supplies, ordinary cleaning products
and the like which are normally found in business offices or in connection with
the operation of a roaster or food service operations, and which contain or may
contain Hazardous Substances, so long as Tenant uses, stores and disposes of any
such products and supplies in compliance with all applicable environmental laws.
Landlord hereby agrees to defend, indemnify and hold Tenant harmless from any
and all clean up costs and expenses (including, without limitation, attorneys
fees and costs) and any and all other charges, expenses, fees, fines, penalties
(both civil and criminal) and costs relating to any remedial action or clean up
suffered or incurred by Tenant arising out of or related to the presence of
asbestos or other Hazardous Substances in, on or under the Premises, the
Building or the Property, unless caused by Tenant, its employees, agents or
contractors. Tenant hereby, agrees to defend, indemnify and hold Landlord
harmless from any and all clean up costs and expenses and any and all other
charges, expenses, fees, fines, penalties (both civil

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and criminal) and costs relating to any remedial action or clean up suffered or
incurred by Landlord and caused by Tenant's use of the Premises. Landlord shall
not allow any tenant or occupant of the Building to use any premises in the
Building, for any business in which any toxic, infectious, Hazardous Substances
are produced, stored or disposed in, on or about the Project except in
accordance with all applicable laws.

        22. Insurance: Indemnification.

                a. Indemnities.

        Tenant shall indemnify, defend and hold Landlord, its officers, agents,
employees and contractors harmless from all losses, damages, fines, penalties,
liabilities and expenses (including reasonable attorneys' fees and costs)
resulting from any actual injury to any person or from any actual loss of or
damage to any property, attributable to Tenant's use of the Premises or caused
by or resulting from any negligent or intentional act or omission of Tenant or
any employee, agent, contractor or invitee. Landlord shall indemnify, defend and
hold Tenant, its officers, agents, employees and contractors harmless from all
losses, damages, fines, penalties, liabilities and expenses including reasonable
attorneys, fees and costs resulting from any actual injury to any person or from
any actual loss of or damage to any property attributable to Landlord's
operation of the Project or caused by or resulting from any negligent or
intentional act or omission of Landlord or any employee, agent, contractor of
Landlord; provided that in no event shall Landlord be liable for interference
with Tenant's light, air or view in or from the Premises. The foregoing
indemnities specifically cover actions brought by each party's own employees and
shall survive the expiration or earlier termination of this Lease. The foregoing
indemnities are specifically and expressly intended to constitute waivers with
respect to the other party of each party's immunity, if any, under Washington's
Industrial Insurance Act, RCW Title 51, to the

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extent necessary to provide the other party with a full and complete indemnity
from claims made by the waiving party and its employees, to the extent of their
negligence. LANDLORD AND TENANT ACKNOWLEDGE THE FOREGOING INDEMNIFICATION
PROVISIONS WERE SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.

                b. Concurrent Negligence.

        In the event of concurrent negligence of Tenant, its agents, employees,
sublessees, licensees, contractors or invitees on the one hand, and that of
Landlord, its agents, employees, licensees or contractors on the other hand,
which concurrent negligence results in injury or damage to persons or property
in relation to the construction, alteration, repair, addition to, subtraction
from, improvement to or maintenance or use of the Premises or the Building, each
party's obligation to indemnify the other party as set forth in this Lease shall
be limited to the extent of the negligence of the indemnifying party, and that
of its agents, employees, sublessees, licensees, invitees or contractors,
including its proportionate share of costs and attorneys, fees and expenses
incurred in connection with any claim, action or proceeding brought with respect
to such injury or damage.

                c. Tenant's Insurance.

                        (i) Tenant shall, during the entire term of this Lease
and any other period of occupancy, at its sole cost and expense, keep in full
force and effect the following insurance:

                                (1) Standard form policy of property insurance
insuring against the perils of fire, extended coverage, vandalism, malicious
mischief, special extended coverage ("Special Cause of Loss") and sprinkler
leakage. This insurance policy shall be upon all property owned by Tenant, for
which Tenant is legally liable and/or that was installed at Tenant's expense,

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and which is located in the Building including, without limitation, Tenant's
Work, furniture, fittings, installations, fixtures and any other personal
property, in an amount not less than one hundred percent (100%) of the full
replacement cost thereof. In the event that there shall be a dispute as to the
amount which comprises full replacement cost, such dispute shall be resolved
through consultation between Landlord and Tenant. This insurance policy shall
also insure the direct or indirect loss of Tenant's earnings attributable to
Tenant's inability to use fully or obtain access to the Premises or the Building
in the amount as will properly reimburse Tenant. Such policy shall name Landlord
and any Landlord's Lender as loss payee, as their interests may appear from time
to time with respect to the Four Dollars ($4.00) contribution made by Landlord
toward Tenant's Work in the Initial Premises which was required in the Initial
Amended Lease.

                                (2) Commercial General Liability Insurance
insuring Tenant against any liability arising out of the lease, use, occupancy,
or maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be in the minimum amount of Three Million Dollars ($3,000,000.00) per
occurrence with an umbrella coverage of not less than Ten Million Dollars
($10,000,000.00) Combined Single Limit for injury to or death of one or more
persons in an occurrence, and for damage to tangible property (including loss of
use) in an occurrence, with such liability amount to be adjusted from year to
year as reasonably required by Landlord. The policy shall insure the hazards of
premises and operations, independent contractors, contractual liability and
shall (A) name Landlord and any Landlord's Lender as an additional insured, and
(B) contain a cross-liability provision.

                                (3) Workers' Compensation and Employer's
Liability Insurance (as required by state law).

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<PAGE>

                                (4) Any other form or forms of insurance as
Tenant or Landlord or any Landlord's Lender may reasonably require from time to
time (not more than once per year) in form, amounts and for insurance risks
against which a prudent tenant would protect itself.

                        (ii) All policies referred to in Section 22.c.(i) above
shall be primary and noncontributory, shall be written in a form satisfactory to
Landlord and shall be taken out with insurance companies qualified to issue
insurance in the State of Washington and holding a General Policyholder's Rating
of "A" and a Financial Rating of "IX" or better, as set forth in the most
current issue of Best's Insurance Guide. Within ten (10) days after the
execution of this Restated Lease, Tenant shall deliver to Landlord certificates
evidencing the existence of the amounts and forms of coverage in accordance with
the provisions as provided in this subsection. No such policy shall be
cancelable or reducible in coverage except after thirty (30) days prior written
notice to Landlord. Tenant shall, within ten (10) days prior to the expiration
of such policies, furnish Landlord with renewals or "binders" thereof. If Tenant
fails to obtain such insurance policy, Landlord, after ten (10) days prior
written notice to Tenant, may obtain such insurance. If Landlord obtains any
insurance that is the responsibility of Tenant under this Section 22, Landlord
shall deliver to Tenant a written statement setting forth the cost of any such
insurance and showing in reasonable detail the manner in which it has been
computed, and Tenant will pay such cost within thirty (30) days after its
receipt of the statement.

                d. Landlord's Insurance.

        So long as Tenant is lessee of at least 500,000 Square Feet of Rentable
Area in the Building, Landlord shall consult with Tenant in placing the
Landlord's insurance required hereunder. Landlord shall maintain at all times
during the Lease Term a policy or policies of

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<PAGE>
property insurance with extended coverage endorsement covering the Building in
an amount equal to one hundred percent (100%) of the replacement cost of the
Building (including costs required to comply with codes and ordinances in effect
at the time of repair) as determined by the insurer based on the Marshall Swift
(or similar) valuation estimates. In addition, Landlord may maintain at all
times during the Lease Term a policy or policies of DIC (Difference in
Conditions) insurance to cover flood and earthquake damage in an amount at the
minimum equal to the Potential Maximum Loss ("PML") as determined by the
insurer(s) (with such endorsements as are necessary to prevent co-insurance),
provided such DIC insurance is then commonly carried by institutional owners of
similar multi-tenant buildings in the area. If such insurance is not commonly
carried, Landlord will notify Tenant in writing and Tenant may thereafter
require Landlord to obtain such coverage; provided in such event Tenant shall
pay the premium for the DIC insurance coverage. Further, Landlord shall maintain
at all times during the Lease Term a policy or policies of commercial general
liability, or a combination of commercial general liability and umbrella or
excess liability insurance naming Tenant as an additional insured thereunder,
with combined limits of not less than Ten Million Dollars ($10,000,000). The
liability insurance required hereunder shall cover all of Landlord's operations
and activities and all contingent liability of Landlord for all operations
performed at the Building on Landlord's behalf by Landlord's contractors or
subcontractors, and shall specifically include contractual liability coverage.
The liability coverage required hereunder shall provide that Landlord's
insurance applies separately to each named insured or additional insured against
whom a claim is made or suit is brought, except with respect to the limits of
the insurer's liability. Landlord's property insurance policy shall include
Tenant as a loss payee as respects its interest, as lender, in Building Systems
and Building Amenities, provided Landlord's

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<PAGE>

Lender shall also be named as a loss payee as respect Landlord's Lender's
interest in the Project. The deductibles for any insurance carried by Landlord
hereunder shall be at Landlord's discretion and will reflect then current market
conditions; provided that if the deductible is greater than $100,000 per
occurrence for property insurance (excluding DIC coverage), Landlord shall
consult with Tenant, and will obtain insurance with a lower deductible as
directed by Tenant provided Tenant agrees to pay the difference in premium
between the insurance with a deductible proposed by Landlord and the insurance
with the deductible elected by Tenant.

        23. Waiver of Subrogation.

        Landlord and Tenant each hereby waive any and every claim which arises
or may arise in its favor and against the other party during the term of this
Lease or any extension or renewal, for any and all losses resulting from the
peril of any casualty (or other causes which could be insured against under the
terms of a broad form property insurance policy with an extended coverage
endorsement) to any of its real and personal property located within or upon, or
constituting a part of, the Premises, the Building the Property or the Project.
Said mutual waivers shall be in addition to, and not in limitation or derogation
of, any other waiver or release contained in this Lease with respect to any loss
or damage to property of the parties hereto. Inasmuch as said waivers will
preclude the assignment of any aforesaid claim by way of subrogation (or
otherwise) to an insurance company (or any other person), each party agrees, if
not previously arranged with insurance company, immediately to give each
insurance company which has issued to it, policies of property insurance
covering the peril of any casualty (or other causes could be insured under the
terms of a broad form property insurance policy with an extended coverage
endorsement) written notice of the terms of said mutual waivers, or to have such

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insurance policies properly endorsed, if necessary, to prevent the invalidation
of said insurance coverage by reason of said waivers.

        24. Subordination.

        Landlord represents and warrants to Tenant that Landlord is the fee
owner of the Building and the Property, subject only to the Title Exceptions,
including that certain Deed of Trust dated and recorded in the records of King
County, Washington under Recording No. 980415-0720, in which Teachers Insurance
and Annuity Association is the beneficiary, Transamerica Title Insurance Company
is the trustee and Landlord is the grantor. Upon any permitted refinancing of
such loan, Landlord, Landlord's Lender and Tenant will execute a Subordination
and Nondisturbance Agreement (the "SND Agreement") substantially in the form
attached hereto as Exhibit Q for Landlord's Lender's benefit in which Tenant (i)
confirms that this Lease is subordinate to the Deed of Trust, (ii) agrees to
attorn to Landlord's Lender if such Lender becomes the owner of the Property or
the Building, (iii) agrees to give Landlord's Lender copies of whatever notices
of default Tenant may give Landlord hereunder, (iv) agrees to accept a cure by
Landlord's Lender of any of Landlord's defaults, provided such cure is completed
within the cure period set forth in the SND Agreement, and (v) agrees not to pay
Rent more than one (1) month in advance. Tenant agrees to subordinate its
interests in this Lease to any subsequent Landlord's Lender having an interest
in the Property if such Landlord's Lender executes for Tenant's benefit a
nondisturbance agreement which is substantially identical to the one described
above for such Landlord's Lender's execution, or otherwise reasonably acceptable
to Tenant, provided that Tenant's rights under the Lease shall not be abridged
nor its obligations under the Lease enlarged thereby.

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<PAGE>

        25. Casualty or Condemnation.

                a. Casualty.

        If the Premises or the Building are destroyed or damaged by fire,
earthquake or other casualty to the extent that they are untenantable in whole
or in part, then Landlord shall, to the extent of the available insurance
proceeds plus (except in the case of flood or earthquake) the deductible,
proceed with reasonable diligence to rebuild and restore the Premises and the
Building or such part thereof as may be damaged as aforesaid, provided that
within twenty (20) days after such destruction or damage Landlord will notify
Tenant of Landlord's intention to do so and the time period within which such
work will be accomplished. If Landlord is to rebuild and/or repair the Premises
and/or the Building as provided in the preceding sentence, Tenant agrees to
release such insurance proceeds received by Tenant from its insurance carrier
with respect to insurance carried by Tenant on the Tenant's Work pursuant to
Section 22.c. above. Landlord shall restore and/or repair the Premises and/or
the Building (with improvements substantially comparable in quality to the
improvements to the Premises existing prior to the casualty) as rapidly as
possible, subject to delays beyond Landlord's control. During the period of such
rebuilding and restoration the Rent shall be abated in the same ratio as that
portion of the Premises rendered untenantable by the damage bears to the whole
of the Premises. If Landlord shall fail to notify Tenant, as required by this
Section, this Lease shall, at Tenant's option, at the expiration of the time for
the giving of the notice required above, terminate. If Tenant is deprived of
elevator access to the Premises as a result of a casualty, Rent shall be abated
in the same ratio as that portion of the Premises which Tenant reasonably
determines is not usable for Tenant's business purposes shall bear to the whole
of the Premises during the duration of the period during which such access is
unavailable. If the casualty giving rise to the damage is

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<PAGE>

uninsured, or substantial completion of the restoration of any damage will take
longer than three hundred sixty (360) days from the date of the damage or
destruction, either party shall have the right to terminate this Lease by giving
the other party written notice thereof within sixty (60) days after the casualty
causing the damage. In the event that the Lease is terminated as provided in
this paragraph, Tenant and Landlord agree that each party will make every effort
to release the insurance proceeds to the party entitled thereto under the Lease
to the other party as its respective interest may appear from time to time.

                b. Condemnation.

        If the Premises or any portion thereof are taken under the power of
eminent domain, or sold by Landlord under the threat of the exercise of said
power (all of which is herein referred to as "condemnation"), which taking
materially interferes with Tenant's use of the Premises, this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
possession of the Premises or the portion thereof. Upon receipt of the
condemnor's notice of intention to take by either party, such party shall
immediately give written notice of such receipt to the other party. If more than
twenty-five percent (25%) of the Premises, the Building, or the Property is
taken by condemnation, and if the effect of such condemnation is to render the
Premises untenantable for Tenant's uses, then either Landlord or Tenant may
terminate this Lease, by written notice to the other party, at any time
following the date the condemnor gives notice of its intention to take, and such
termination shall be effective on the date the condemning authority shall have
taken title or possession. If this Lease is not terminated by either Landlord or
Tenant then it shall remain in full force and effect as to the portion of the
Premises remaining, provided the Rent shall be reduced in the same proportion
that the area taken bears to the total area of the Premises prior to taking. In
the event this Lease is not so terminated, then Landlord

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agrees, at Landlord's sole cost, as soon as reasonably possible to restore the
Premises to a complete unit of like quality, character and utility for Tenant's
purposes as existed prior to the condemnation. Nothing contained herein shall be
deemed or construed to prevent Landlord or Tenant from enforcing and prosecuting
a claim or claims for the value of its respective interest or rights in
connection with any condemnation proceedings, whether partial or complete.

        26. Insolvency.

        If Tenant becomes insolvent, or makes an assignment for the benefit of
creditors, or a receiver is appointed for the business or property of Tenant, or
a petition is filed in a court of competent jurisdiction to have Tenant adjudged
bankrupt, then Landlord at Landlord's option may terminate this Lease, provided
if the bankruptcy petition filed with respect to Tenant is involuntary, Tenant
shall have ninety (90) days in which to cause such petition to be discharged
before Landlord shall have such termination right. Said termination shall
reserve unto Landlord all of the rights and remedies available under Section 27
below, and Landlord may accept rents from such assignee or receiver without
waiving or forfeiting said right of termination.

        27. Default.

                a. By Tenant.

        If any Rent is in arrears for a period of ten (10) days after a written
notice from Landlord to Tenant, or if Tenant shall fail at any time to keep or
perform any of the covenants or conditions of this Lease other than a covenant
for the payment of the monthly Rent for a period of more than thirty (30) days
after written notice thereof from Landlord (unless the cure cannot reasonably be
completed within such thirty (30) day period, and Tenant commences to cure such
default within such thirty (30) day cure period and diligently pursues such cure
to completion), then, and in either or any of such events Landlord, may, at its
option, cancel this Lease upon

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<PAGE>

giving the notice required by law, and/or may re-enter said Premises, but
notwithstanding such re-entry by the Landlord, the liability of the Tenant for
the Rent provided for herein shall not be extinguished for the balance of the
Term of this Lease, and Tenant covenants and agrees to make good to the Landlord
any deficiency arising from a re-entry and/or a reletting of the Premises at a
lesser rental than herein agreed. The Tenant shall pay such deficiency each
month as the amount thereof is ascertained by the Landlord. Landlord shall have
an affirmative obligation to use its best efforts to relet the Premises or any
portion of such Premises, and Tenant shall pay the cost for reletting including
but not limited to the cost of tenant improvements, any of Landlord's reasonable
attorneys' fees and the real estate commission for such reletting. If Landlord
relets for a period of time longer than the current Lease Term, then any such
costs shall be allocated throughout the entire reletting term to not unduly
reduce the amount of consideration received by Landlord during the remaining
period of Tenant's Lease Tenn. No remedy or election by Landlord hereunder shall
be deemed exclusive, but shall, wherever possible, be cumulative with all other
remedies at law or in equity.

        If any payment due from Tenant to Landlord hereunder is more than ten
(10) days late, Tenant shall pay Landlord interest on such late payment at an
interest rate of two percent (2%) above the Prime Rate.

                b. By Landlord.

        If Landlord fails to perform any covenant or condition of this Lease,
requiring the payment of money on the part of Landlord and such failure is not
cured within ten (10) days after written notice from Tenant to Landlord, or if
Landlord shall fail to keep or perform any of the covenants or conditions of
this Lease other than a covenant or condition requiring payment of money by
Landlord and such failure is not cured within thirty (30) days after written
notice of

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<PAGE>

the failure from Tenant to Landlord, then, in addition to all other rights or
remedies available to Tenant under this Lease, at law or in equity, Tenant may
perform the covenant or condition which Landlord failed to perform and Landlord
shall, upon receipt of an invoice from Tenant, pay Tenant the actual costs
incurred by Tenant in so doing, together with interest thereon at an interest
rate two percent (2%) above the Prime Rate provided, however, if Landlord
commences curative efforts of a nonmonetary failure within the thirty (30) day
cure period and is diligently prosecuting the cure in good faith, then the
thirty (30) day period shall be extended so long as Landlord is diligently
prosecuting the cure to completion. In addition to the foregoing rights and
remedies of Tenant, if Tenant has also given notice of the failure to Landlord's
Lender as provided in the SND Agreement, and the default is not cured within the
applicable time periods, Tenant shall, in addition to all other rights and
remedies at law or in equity, also have the right to terminate the Lease on
written notice to Landlord and Landlord's Lender, provided that such termination
right shall only be applicable with respect to uncured defaults which have a
material adverse impact on Tenant's occupancy or use of the Premises or on
Tenant's current or future parking requirements.

        28. Storage Space.

        During the entire term of this Lease, Tenant may lease available storage
space in the Building at the then market rates charged to third parties. Tenant
shall have access to the storage space twenty-four (24) hours per day, seven (7)
days per week, including holidays. Landlord does not guarantee the availability,
location or amount of storage space which may be available at any time. Once
Tenant has notified Landlord that Tenant desires to lease storage space in the
Building and for so long as such notice is applicable, as storage space becomes
available for lease (including space previously declined by Tenant), Landlord
shall make such space available

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<PAGE>

on a first offer basis. If Tenant does not agree to lease such space within ten
(10) days of notice from Landlord that this space will be available, Landlord
may lease such space to third parties.

        29. Building Name.

        The name of the Building is the Starbucks Center, and Landlord agrees
not to change the name of the building during the Lease Term except as provided
below. So long as Tenant occupies at least 25% of the Building, Tenant may
direct Landlord to rename the Building to any new trade name that Tenant adopts
for at least 70% of its retail outlets (e.g. by way of merger), or may direct
Landlord to restore the SODO Center name of the Building; provided Tenant pays
all costs reasonably attributable to such name change.

        If Tenant directs the restoration of the SODO Center name, then Tenant
agrees not to use the name or designation of the Building except as may be
permitted in writing by Landlord which consent shall not be unreasonably
withheld or delayed. If any such use is permitted, Tenant shall promptly
discontinue the use of upon termination or expiration of this Lease. Tenant
shall have no property right or interest in any name or designation which may
become associated with Tenant's business to the extent that such name or
designation contains any reference to the name or designation of the Building.
If Tenant by operation of law or otherwise is deemed to have acquired any title
or other right to any such name or designation of the Building, Tenant shall
forthwith assign the same to Landlord or Landlord's designee without
consideration other than the consideration of this Lease.

        30. Building Directory.

        Sufficient space shall be provided under Tenant's name on the building
directory in the main lobby of the Building to list the departments of Tenant.
Such list shall be updated from

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<PAGE>

time to time (no more frequently than once per month), at Tenant's cost, when
requested by Tenant.

        31. Commission.

        A commission shall be paid by Landlord pursuant to the Commission
Agreement approved by Landlord and Craig Kinzer & Co. The parties agree that
Craig Kinzer & Co. represented Tenant in the negotiation of this Lease. Each
party represents that it has no agreement to pay a commission to any other third
party and will hold the other party harmless from any such claims for
commissions made by third parties.

        32. Binding Effect.

        Each of the provisions of this Lease shall extend to and shall, as the
case may require, bind and inure to the benefit of Landlord and Tenant, and
their respective heirs, legal representatives, successors and assigns, subject,
however, to the provisions of Section 20 above. No waiver by Landlord or Tenant
of a breach by the other of any covenant or condition of this Lease shall be
construed to be a waiver of any subsequent breach of the same or any other
covenant or condition.

        33. Holding Over.

        If Tenant holds possession of the Premises after the term of this Lease,
Tenant shall be deemed to be a month-to-month tenant upon the same terms and
conditions as contained herein, except Rent, which shall be the then current
fair market rent for the Premises or one hundred fifty percent (150%) of the
Base Floor Rent for the period immediately preceding the end of the Lease Term,
whichever is greater.

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<PAGE>

        34. Attorneys' Fees.

        If either party to this Lease commences a legal action in order to
enforce this Lease, the prevailing party in such action shall be entitled to
recover from the nonprevailing party the prevailing party's reasonable costs and
attorneys' fees, including any such costs and attorneys' fees as are incurred in
bankruptcy court or on appeal.

        35. Force Majeure.

        The occurrence of any of the following events shall excuse such
obligations of Landlord or Tenant as are thereby rendered impossible or
reasonably impracticable for so long as such event continues: strikes; lockouts;
third-party labor disputes; acts of God; governmental restrictions, regulations
or controls; judicial orders; results of hostile governmental action; civil
commotion, fire or other casualty; and other causes beyond the reasonable
control of the party obligated to perform. Notwithstanding the foregoing, the
occurrence of such events shall not excuse Tenant's obligations to pay Rent.

        36. Quiet Enjoyment.

        So long as Tenant pays the Rent and performs the covenants contained in
this Lease, Tenant shall hold and enjoy the Premises peaceably and quietly,
subject to the provisions of this Lease.

        37. Recordation.

        Tenant shall not record this Lease without the prior written consent of
Landlord; however, at Tenant's request, Landlord shall execute for recording a
memorandum of this Lease in the form attached hereto as Exhibit R ("Memorandum
of Lease").

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<PAGE>

        38. Governing Law.

        This Lease shall be governed by, construed and enforced in accordance
with the laws of the State of Washington.

        39. Entire Agreement, Amendments and Severability.

        This is the entire agreement between Landlord and Tenant with respect to
the leasing of the Premises. This Lease supersedes all prior discussions and
agreements with respect to the leasing of the Premises, and may not be waived or
modified except by a written instrument signed by both parties. If any provision
of this Lease is finally adjudicated to be invalid, illegal or unenforceable, in
whole or in part, it will be deemed deleted to that extent and all other
provisions of this Lease shall remain in full force and effect. This Lease is
the result of substantial negotiations between Landlord and Tenant.
Consequently, this Lease shall be construed in accordance with the fair intent
of the language contained herein in its entirety and not for or against either
party, regardless of which party was responsible for the preparation of this
Lease. The parties represent and warrant to each other that each has consulted
with its own legal counsel in connection with the preparation of this Lease.

        40. Notices.

        Any notice, consent, approval or other communication required or given
pursuant to this Lease shall be in writing and must be personally delivered,
delivered by facsimile with electronic confirmation of delivery or mailed by
United States certified mail, return receipt requested, postage prepaid. If
mailed, notices shall be deemed received on the second (2nd) day following the
date of mailing. Notices shall be sent to the receiving party at the address set
forth below or such other address as either party may designate in writing to
the other party:

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<PAGE>

by a chain-link fence and secured by a padlock. Tenant shall at all times have
access to the Premises from the loading dock and Shipping Area through the
freight corridor and freight elevator "C."

        44. Dispute Resolution.

                a. Mediation.

        In the event of any dispute between the parties arising under the Lease
with respect to (a) the payment of Rent (other than determination of Effective
Fair Market Rent under Section 3.b), (b) identification of subsequent Building
Improvements as Building Systems or Building Amenities, (c) Operating Expenses,
(d) Expansion Options, (e) rights of first refusal, or (f) any other dispute
that the parties agree to resolve pursuant to this Section 44, the party
desiring to resolve the dispute shall first request that the dispute be mediated
and mediate the dispute. The requested mediation shall take place in Seattle,
Washington within twenty (20) business days after written notification to the
other party. The mediator shall be selected by agreement of the parties or by
the American Arbitration Association (or any successor organization thereto) in
Seattle, Washington and shall have at least five (5) years of experience in
commercial office and industrial real estate management in the Seattle,
Washington area.

                b. Arbitration.

        In the event any dispute mediated pursuant to Section 44.a. above is not
resolved by mediation within ten (10) business days after commencement of the
mediation or, if earlier, at such time as the mediator determines in good faith
that a resolution cannot be achieved through mediation, the mediator shall
submit the dispute to binding arbitration. The arbitrator shall be selected by
agreement of the parties or by the American Arbitration Association (or any
successor organization thereto) in accordance with its rules then prevailing and
shall have five

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<PAGE>

(5) years of experience in commercial office and industrial real estate
management in the Seattle, Washington area. The arbitrator shall have the
authority to fashion such just, equitable and legal relief as the arbitrator
shall, in its sole discretion, determine; provided, however, that the arbitrator
shall be required to enforce the attorney fee provisions set forth in Section 34
above. Each party shall bear all of its own expenses of arbitration. All
arbitration proceedings shall be conducted in Seattle, Washington. The decision
of the arbitrator shall be binding upon the parties and may be enforced in the
application of either party by the order or judgment of a court of competent
jurisdiction. The duty to arbitrate shall survive the cancellation or
termination of this Lease.

        45. Right of Second Refusal on Sale of Building.

        Home Depot currently holds a right of first refusal on Landlord's sale
of the Larger Development. In the event Landlord places the Larger Development
or any portion thereof on the market, Landlord agrees to give Tenant a right of
second refusal to purchase the Project in the event Home Depot does not exercise
its right of first refusal. Tenant shall have thirty (30) days from its receipt
of written notice from Landlord that Home Depot has not exercised its right of
first refusal to exercise Tenant's right of second refusal, which exercise must
be in writing.

        46. Rooftop Area.

        Landlord acknowledges that Tenant may improve the rooftop of the Parking
Garage as Building Amenities, subject to all applicable laws and regulations.

        47. Rooftop Communications Equipment.

        Tenant may, at its option and expense have the right to put
communications receiving/sending equipment on the rooftop of the Building and/or
the Parking Garages for its

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<PAGE>

own use and not for lease to third parties, which equipment may be operated
throughout the Lease Term and any renewals or extensions thereof. Tenant shall
ensure that communications equipment installed on such roofs conforms to
guidelines set forth by the City of Seattle and is consistent and compatible
with the Building's design and other systems. Such equipment shall be maintained
at Tenant's cost and at Tenant's risk. Landlord shall have no obligations
regarding the maintenance or insurance of such equipment. Landlord recognizes
the importance of rooftop communications equipment to Tenant, will fully
cooperate with Tenant in developing reasonable screening requirements for such
equipment, to be effected by Tenant at Tenant's expense, and shall not
unreasonably withhold its approval of Tenant's proposed installation of any such
equipment.

        Landlord will make every effort not to allow any other tenant to install
any systems or device that would interfere with the operation of Tenant's
communication system and Tenant shall make every effort such that its
communication system will not interfere with those of existing tenants in the
Building.

        48. Daycare.

        Landlord agrees that, subject to Tenant's compliance with all applicable
laws and regulations, Tenant may install in the Premises a licensed day care
facility. Such day care facility shall have the right to use the park area in
the parking lot east of the Building.

        49. Generator.

        The Premises shall include space in the Project for the installation of
one (1) generator for use by Tenant in the location shown on Exhibit T attached
hereto ("Location of Generator"). Tenant shall be responsible for the
installation, maintenance and repair of this generator.

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<PAGE>

        50. East Lot.

        Landlord agrees not to construct any structures in the East Lot without
Tenant's prior written approval which approval will not be unreasonably
withheld, delayed or conditioned; provided that if Landlord desires to erect a
structure in the East Lot, Tenant shall have the right of first refusal to lease
such area for a Starbucks retail store. Tenant must exercise such right of first
refusal by written notice to Landlord within thirty (30) days of Tenant's
receipt of written notice of Landlord's desire to erect a structure in the East
Lot and the terms of the lease for such retail store shall be negotiated in good
faith by the parties.

        IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Lease the day and year first above written.

                                            LANDLORD:
                                            FIRST AND UTAH STREET ASSOCIATES,
                                            L.P., a Washington limited
                                            partnership
                                            By: SODO Center, Inc., its general
                                                partner

                                            By /s/ KEVIN DANIELS
                                               ---------------------------------
                                               Its Vice President
                                                  ------------------------------

                                            TENANT:

                                            STARBUCKS CORPORATION, a Washington
                                            corporation

                                            By /s/ MICHAEL CASEY
                                               ---------------------------------
                                               Its Exec. V.P.
                                                  ------------------------------

                                       86
<PAGE>

STATE OF WASHINGTON         )
                            )ss.
COUNTY OF KING              )

        I certify that I know or have satisfactory evidence that Kevin Daniels,
to me known to be the Vice President of SODO CENTER, INC., which is the General
Partner of FIRST AND UTAH STREET ASSOCIATES, L.P., a Washington limited
partnership, signed this instrument and acknowledged said instrument to be the
free and voluntary act and deed of said corporation on behalf of said
partnership, for the uses and purposes therein mentioned, and on oath stated
that he was authorized to execute said instrument.

        WITNESS my hand and official seal hereto affixed this 13th day of
February, 2001.

                                            /s/ LINDA PIERATT
                                            ------------------------------------
                                            (Signature of Notary)

                                            Linda Pieratt
                                            ------------------------------------
                                            (Print or stamp name of Notary)
                                            NOTARY PUBLIC in and for the State
                                            of Washington
                                            My Appointment Expires: 8-19-04.

STATE OF WASHINGTON         )
                            )ss.
COUNTY OF KING              )

        I certify that I know or have satisfactory evidence that Michael Casey
signed this instrument, on oath stated that he/she was authorized to execute the
instrument as the Exec. V.P. OF STARBUCKS CORPORATION and acknowledged it to be
the free and voluntary act and deed of said corporation, for the uses and
purposes mentioned in the instrument.

        WITNESS my hand and official seal hereto affixed this l4th day of
February, 2001.

                                            /s/ NANCY M. KENT
                                            ------------------------------------
                                            (Signature of Notary)

                                            Nancy M. Kent
                                            ------------------------------------
                                            (Print or stamp name of Notary)
                                            NOTARY PUBLIC in and for the State
                                            of Washington
                                            My Appointment Expires: 11/01/01.

                                       87

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