Document:

GROUND LEASE

Date:              February 12, 1999

Lessor:            RICHARD WHITT and BARBARA WHITT,                 ("Lessor")
                   husband and wife, and KEITH FLICKER

Lessee:            SOUTH UMPQUA BANK                                ("Lessee")
                   a ____________________________

       Lessor  leases to  Lessee,  and Lessee  leases  from  Lessor,  the real
property (the "Premises")  described on Exhibit A attached and incorporated in
this Lease by this reference  consisting of approximately  21,669 gross square
feet.  The  foregoing  demise  is  subject,   however,   to  the  encumbrances
described  on  Exhibit  B  attached  and  incorporated  in this  Lease by this
reference.

       The  Premises  are leased for a term (the  "Term") of twenty (20) years
(subject  to two  options  to extend  for ten (10)  years each as set forth in
Section 23), commencing on the date of this Lease.

       Lessor and Lessee agree as follows:

Section 1.         Project Conditions
       1.1  Lessee  intends to  construct  a  building  (the  "Building")  and
related  improvements on, under,  and over the Premises.  The Building and all
the related  improvements  are referred to in this Lease as the "Project." The
Project and any future alterations,  additions, replacements, or modifications
to the Project  during the Term of this Lease are referred to in this Lease as
the  "Improvements."  The preliminary plans and specifications for the Project
are attached as Exhibit C and  incorporated  in this Lease by this  reference.
This Lease  shall be  conditioned  on Lessee and Lessor  determining  that the
Project is feasible  after  completing a  due-diligence  investigation  of the
condition of the Property and obtaining all necessary governmental  approvals,
consultants reports,  financing  commitments,  final plans and specifications,
design and construction  contracts,  and any other  approvals,  loan and lease
commitments,  or contracts reasonably determined to be necessary by the Lessor
and the Lessee. Due diligence  investigations  shall be completed by not later
than March 1, 1999.  If Lessee  determines  that the Project is not  feasible,
Lessee shall notify  Lessor in writing  received by Lessor not later than 5:00
PM on March 2, 1999.

       1.2  The foregoing  condition  shall be for the benefit of both parties
and must be  satisfied or waived by both the parties on or before 5:00 p.m. on
March 1, 1999,  or this Lease shall  terminate  and be of no further force and
effect.  In such event  neither party shall have any further  liability  under

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this  Lease  except for  liability  accrued  before  the date of  termination.
Nevertheless,  Lessee shall have the right to  terminate  this lease if Lessee
does not obtain  consent from state and federal  banking  regulatory  agencies
for this lease by March 15, 1999.  Lessee shall use best efforts to obtain the
necessary  consents.  Lessee shall notify Lessor in writing  immediately if it
elects to  terminate  because of the  condition  in this Section 1.2 and shall
provide to Lessor  evidence  that it did not, or in its  reasonable  judgment,
could not obtain consent.

       1.3  Lessor shall  cooperate  with Lessee in all respects in connection
with  satisfying the  condition.  Lessor shall execute such  applications  and
other instruments  reasonably necessary to satisfying the condition,  provided
that Lessor  shall not be required  to pay any  application  fees or incur any
other costs or liability in connection  with  satisfying the condition  beyond
Lessor's fees for any professional advice Lessor desires.  Lessor shall appear
as a  witness  in any  legal  or  administrative  proceedings  to  the  extent
reasonably necessary to satisfy the condition.

       1.4  Prior  to  or  at  the  same  time  as  Lessee   engages   in  its
construction,  Lessor shall  construct the driveway on Lessor's  adjacent land
to provide access from  Commercial  Street SE to the Premises.  Lessor may, at
Lessor's  election,  undertake  construction of all perimeter  sidewalks,  and
parking areas. In such event,  Lessor shall notify Lessee and shall coordinate
all construction  activities.  All parking areas and sidewalks  constructed by
Lessor  using  a  competent  contractor  and at  reasonable  cost.  All  costs
incurred by Lessor in the  construction  on the Premises  shall be paid for by
Lessee  within thirty (30) days after  billing  therefore.  The payment of the
construction costs shall be additional rent under this Lease.

Section 2. Construction of the Project
       Lessee  shall  construct  the  Project  (including  all  parking  lots,
sidewalks,  landscape areas, and buildings) in accordance with the final plans
and   specifications   approved  by  Lessor,   which  approval  shall  not  be
unreasonably  withheld or delayed.  The work shall be performed in  accordance
with all Legal  Requirements  and in a good and professional  manner.  For the
purposes of this Lease, the term Legal  Requirements  includes all present and
future laws, ordinances,  orders, rules, regulations,  and requirements of all
federal, state, and municipal governments,  departments,  commissions, boards,
and  officers,  foreseen or  unforeseen,  ordinary  as well as  extraordinary.
Lessor  shall  have the  right to  inspect  the work at  reasonable  intervals

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subject to the  supervision  of Lessee and in a manner that will  minimize any
interference with the work.

       Lessee  shall use its best  efforts to submit  plans for permits by not
later than April 1, 1999 and Lessee  shall  diligently  pursue  permits  until
issuance.  Lessee shall diligently  pursue completion of construction from the
date of issuance of the permits and use best efforts to complete  construction
not later than six (6) months following issuance of the permits.

       Lessor  agrees that it shall  deliver the  Premises  with all  existing
buildings  demolished  and debris  removed.  Lessor  shall  fill the  existing
basement to native  ground  level or such other  lower  level as Lessee  shall
direct  and shall  compact  all fill in the  basement  area to a load  bearing
capacity of 2,500 pounds per square foot.  Lessor shall  cooperate with Lessee
in the  placement of the fill to allow  construction  contemplated  by Lessee.
Lessor's  financial  obligation  to meet the load bearing  capacity  shall not
exceed  standard  placement.  Lessee  shall pay any cost in excess of standard
placement to meet its particular needs.

Section 3.         Minimum Rent
       3.1  Lessee  covenants and agrees to pay to Lessor,  promptly when due,
without  notice or  demand  and  without  deduction  or  setoff of any  amount
whatsoever,  $6,250 per month as Minimum Rent for the Premises from six months
following  the date of this Lease.  All Rent shall be paid in advance,  on the
first day of each month  during the Term.  If the Minimum Rent is scheduled to
begin on a date  other  than the  first  day of a month,  the  first  and last
month's rent shall be  pro-rated.  If the Minimum Rent payment is not received
by Lessor by the tenth day of any month,  Lessee shall pay a late fee equal to
5% of the unpaid Minimum Rent.  Lessor's  imposition of the late fee shall not
affect Lessor's other remedies.

       3.2  All amounts  payable under Section 3.1 above, as well as all other
amounts  payable by Lessee to Lessor  under the terms of this Lease,  shall be
paid at the office of Lessor set forth in Section  32, or at such other  place
within the  continental  limits of the United States as Lessor shall from time
to time  designate by notice to Lessee,  in lawful money of the United  States
which  shall be legal  tender in  payment  of all debts and dues,  public  and
private, at the time of payment.

       3.3  It is intended  that the Minimum Rent provided for in this section
shall be an absolutely net return to Lessor  throughout the Term,  free of any
expense,  charge,  or  other  deduction  whatsoever,   including  all  claims,
demands, or setoffs of any nature whatsoever.

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       3.4  Lessee  shall also pay without  notice,  except as may be provided
in this Lease,  and without  abatement,  deduction,  or setoff,  as additional
rent, all sums, impositions,  costs, and other payments which Lessee in any of
the  provisions  of this Lease  assumes or agrees to pay,  and in the event of
any  nonpayment,  Lessor  shall  have (in  addition  to all other  rights  and
remedies) all the rights and remedies  provided for in this Lease or by law in
the case of nonpayment of the Minimum Rent.

       3.5  Lessee  shall  pay,  as  Additional  Rent,  its pro rata  share of
Common  Area  Maintenance   Charges  imposed  under  any  Reciprocal  Easement
Agreement affecting the Premises.

       3.6  The base  rent  provided  in  Section  3.1 shall be  increased  or
decreased in the month of January  each year by a percentage  equal to 100% of
the  percentage  change in the  Consumer  Price Index  published by the United
States Bureau of Labor  Statistics  of the United States  Department of Labor,
not to exceed 5% per year.  Comparisons shall be made using the index entitled
U.S. City  Average--All  Items and Major Group Figures for All Urban Consumers
(1982-84  = 100),  or the  nearest  comparable  data on changes in the cost of
living if such index is no longer  published.  The change shall be  determined
by  comparison of the figure for January,  2000,  with that of January of each
succeeding year. In no event,  however,  shall base rent be reduced below that
payable  during the first year of this lease.  The minimum rent shall be fixed
until January 1, 2001,  when the first rent  adjustment  under this  paragraph
shall occur.

Section 4.         Use
       4.1  Lessee shall use and occupy the premises  continuously  during the
Term for the operation of a first-class  building and for such uses as are not
otherwise  prohibited by the terms of this Lease or any Covenants,  Conditions
or  Restrictions  now existing or hereafter  made  applicable to the Premises.
The  Premises  may not be used  for any  other  purpose  without  the  written
consent of Lessor,  which consent shall not be unreasonably  withheld.  Lessee
shall  maintain  and  operate  the  business  during the entire  Term with due
diligence  and in a  first-class  manner.  Neither  Lessee nor the  employees,
agents,  concessionaires,  licensees,  or  sublessees  of Lessee shall solicit
business in the parking  area or other common  areas of the  development,  nor
shall  Lessee  distribute  any  handbills  or  other  advertising   matter  on
automobiles  parked in the parking area or in the other common  areas.  Lessor
shall have the right to  approve  any signs or  displays  Lessee may desire to
erect on or about the  Premises  that are  visible  from the  exterior  of the
Building.  in  order to  ensure  that  Lessor  may  control  the  quality  and
character  of the  presentation  displayed  by Lessee.  Such  approval  may be

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withheld  or revoked if Lessor  reasonably  and in good  faith  believes  such
display or plan is unsatisfactory or inappropriate for the development.

       4.2  Lessee  shall not use or  occupy,  or permit or suffer  all or any
part of the  Premises or the  Improvements  to be used or occupied (1) for any
unlawful  or illegal  business,  use,  or  purpose,  (2) in any such manner to
constitute  a nuisance  of any kind,  or (3) for any  purpose or in any way in
violation  of the  certificate  of  occupancy,  or of any Legal  Requirements,
including  but  not  limited  to  Legal  Requirements   respecting   Hazardous
Substances, (4) for any business, use, or purpose deemed disreputable,  or (5)
for any purpose  that would  violate  any lease  entered  into,  now or in the
future,  between  Landlord and a third party which allows for exclusive rights
to use property  adjacent to or contiguous  with the Premises for a particular
use,  provided  however  that Tenant may always use the Premises for a bank or
general office use. The term Hazardous  Substance means any hazardous,  toxic,
or  dangerous   substance,   waste,   or  material  that  is  the  subject  of
environmental protection Legal Requirements,  including but not limited to the
items  listed in the United  States  Department  of  Transportation  Hazardous
Materials  Table (49 CFR s172.101) or  designated  as hazardous  substances by
the United  States  Environmental  Protection  Agency (40 CFR pt 302) . Lessee
acknowledges that the term Legal  Requirements  includes but is not limited to
all  environmental  protection  laws such as the  Comprehensive  Environmental
Response,  Compensation  and Liability Act (42 USC s6901 et seq.), the Federal
Water  Pollution  Control  Act (33 USC  s6901  et  seq.),  the  Federal  Water
Pollution  Control  Act (33 USC s1257 et seq.),  and the Clean Air Act (42 USC
s2001 et seq.) . Any  dispute  between  Lessor  and Lessee  arising  under the
provisions  of clause (4) of the  preceding  sentence  shall be  submitted  to
arbitration as provided in Section 33 below.

       4.3  Lessee  shall   observe  and  comply  with  all   conditions   and
requirements  necessary to preserve  and extend any and all rights,  licenses,
permits  (including but not limited to zoning variances,  special  exceptions,
and  nonconforming  uses),  privileges,  franchises,  and concessions that now
apply to the  Premises  or that  have been  granted  to or  contracted  for by
Lessor or Lessee in  connection  with any existing or  presently  contemplated
use of the Premises or the Improvements.

       4.4  Lessee   shall  not   suffer  or  permit  the   Premises   or  the
Improvements  or any  portion  to be  used by the  public,  as  such,  without
restriction  or in such  manner as might  reasonably  tend to impair  Lessor's
title to the Premises or  Improvements  or any  portion,  or in such manner as
might  reasonably  make possible a claim or claims of adverse  usage,  adverse
possession,  or prescription by the public, as such, or of implied dedication,
of the Premises or  Improvements  or any  portion.  Lessee  acknowledges  that
Lessor does not consent, expressly or by implication,  to the unrestricted use

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or possession of the whole or any portion of the Premises or  Improvements  by
the public, as such.

       4.5  Lessor and Lessee agree that if and when any  governmental  or any
other public  authority  requires the execution and delivery of any instrument
to evidence or consummate the dedication of any street  adjoining the Premises
and/or if and when any  governmental  or any  other  public  authority  or any
public  utility  company  requires the execution and delivery of any rights of
way,  easements,  and grants in, over, and along any such streets or in, over,
under,   or  through  the  Premises   (except  any  that  may  run  under  the
Improvements)  for the purpose of providing  water,  gas, steam,  electricity,
telephone,  storm and  sanitary  sewer,  or any other  necessary  or desirable
service or facility for the benefit of the Premises or the Improvements,  then
both parties,  without cost to either party,  will execute,  acknowledge,  and
deliver any such instrument or document as may be required.

Section 5.         Liens
       5.1   Lessee  shall have no power to do any act or to make any contract
that  may  create  or be the  foundation  for any  lien,  mortgage,  or  other
encumbrance  on the  reversion or other estate of Lessor or on any interest of
Lessor in the Premises.

       5.2   Lessee  shall not  suffer  or  permit  any liens to attach to the
interest  of  Lessee  in all or any part the  Premises  by reason of any work,
labor,  services,  or  materials  done for, or supplied to, or claimed to have
been done for or  supplied  to,  Lessee  or anyone  occupying  or  holding  an
interest in all or any part of the  Improvements  on the  Premises  through or
under  Lessee.  If any  such  lien  shall at any  time be  filed  against  the
Premises,  Lessee shall cause the same to be discharged  within the earlier of
the time  allowed by any of  Lessor's  mortgages,  or within 60 days after the
date of filing the same, by either payment, deposit, or bond.

     5.3 Nothing in this Lease shall be deemed to be, or be  construed  in any
way as constituting,  the consent or request of Lessor, express or implied, by
inference  or  otherwise,   to  any  person,  firm,  or  corporation  for  the
performance  of  any  labor  or  the  furnishing  of  any  materials  for  any
construction,  rebuilding,  alteration,  or repair of or to the Premises or to
the  Improvements,  or as giving  Lessee any right,  power,  or  authority  to
contract for or permit the rendering of any services or the  furnishing of any
materials  that  might  in any way  give  rise to the  right  to file any lien
against  Lessor's  interest in the Premises or against Lessor's  interest,  if
any, in the Improvements.  Lessee is not intended to be an agent of Lessor for
the construction of Improvements on the Premises.  Lessor shall have the right
to post and keep posted at all  reasonable  times on the  Premises  and on the
Improvements any notices that Lessor shall be required to post for the

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protection of Lessor and of the Premises and of the Improvements from any such
lien.  The foregoing  shall not be construed to diminish or vitiate any rights
of Lessee in this Lease to construct, alter, or add to the Improvements.

Section 6.         Taxes and Other Charges
       6.1   Lessee  shall  pay  and  discharge,  or  cause  to  be  paid  and
discharged,  before  any  fine,  penalty,  interest,  or cost may be added for
nonpayment,  all real estate taxes, personal property taxes,  privilege taxes,
excise taxes, business and occupation taxes, gross sales charges,  assessments
(including,  but not  limited  to,  assessments  for  public  improvements  or
benefits) , and all other  governmental  impositions and charges of every kind
and  nature   whatsoever,   whether  or  not  now   customary  or  within  the
contemplation  of the  parties  and  regardless  of whether  the same shall be
extraordinary or ordinary,  general,  or special,  unforeseen or foreseen,  or
similar or dissimilar to any of the  foregoing  which,  at any time during the
Term, shall be or become due and payable and which:

       6.1.1   Shall be levied,  assessed,  or imposed against the Premises or
the Improvements or any interest of Lessor or Lessee under this Lease; or

       6.1.2   Shall  be  or  become   liens   against  the  Premises  or  the
Improvements or any interest of Lessor or Lessee under this Lease; or

       6.1.3   Shall be levied,  assessed,  or imposed on or against Lessor by
reason of any actual or asserted  engagement by Lessor or Lessee,  directly or
indirectly, in any business,  occupation, or other activity in connection with
the Premises or the Improvements; or

       6.1.4   Shall be levied,  assessed, or imposed on or in connection with
the  ownership,   leasing,   operation,   management,   maintenance,   repair,
rebuilding, use, or occupancy of the Premises or the Improvements;

under or by virtue of any present or future  Legal  Requirement,  it being the
intention  of the  parties  that,  insofar as the same may  lawfully  be done,
Lessor shall be free from all such  expenses  and all such real estate  taxes,
personal  property  taxes,   privilege  taxes,  excise  taxes,   business  and
occupation  taxes,  gross  sales  taxes,  occupational  license  taxes,  water
charges, sewer charges,  assessments,  and all other governmental  impositions
and  charges of every kind and nature  whatsoever  (all of such  taxes,  water
charges, sewer charges,  assessments,  and other governmental  impositions and
charges  that Lessee is obligated  to pay being  collectively  called "Tax" or
"Taxes")

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      6.2   Nothing  contained  in  this  Lease  requires  Lessee  to pay  any
franchise, estate, inheritance,  succession,  capital levy, or transfer tax of
Lessor,  or any  income,  excess  profits,  or revenue  tax, or any other tax,
assessment,  charge,  or levy on the Rent  payable by Lessee under this Lease;
provided,  however,  that if at any  time  during  the  Term  the  methods  of
taxation  prevailing  at the  commencement  of the Term are altered so that in
lieu of any Tax under this section there is levied,  assessed,  or imposed (1)
a tax,  assessment,  levy,  imposition,  or charge,  wholly or  partially as a
capital  license fee  measured by the Rent payable by Lessee under this Lease,
then all such taxes, assessments,  levies, impositions, or charges or the part
so measured or based,  shall be deemed to be included  within the term Tax for
the  purposes of this  Lease,  to the extent that such Tax would be payable if
the Premises were the only property of Lessor  subject to such Tax, and Lessee
shall pay and  discharge  the same as  provided  in respect to the  payment of
Taxes.

       6.3   If by law  any  Tax is  payable,  or  may  at the  option  of the
taxpayer be paid, in  installments,  Lessee may, whether or not interest shall
accrue on the unpaid  balance,  pay the same, and any accrued  interest on any
unpaid balance,  in installments as each installment  becomes due and payable,
but in any event before any fine, penalty,  interest, or cost may be added for
nonpayment of any installment or interest.

       6.4   Any Tax relating to a fiscal  period of the taxing  authority,  a
part of which is  within  the Term and a part of which is  before or after the
Term, whether or not such Tax shall be assessed,  levied, imposed, or become a
lien on the Premises or the Improvements,  or shall become payable, during the
Term,  shall be  apportioned  and adjusted  between  Lessor and Lessee so that
Lessee shall pay only the portions  that  correspond  with the portion of such
fiscal periods  included  within the Term.  With respect to any Tax for public
improvements  or  benefits  that by law is  payable,  or at the  option of the
taxpayer may be paid, in installments,  Lessor shall pay the installments that
become due and payable after the Term  expires,  and Lessee shall pay all such
installments which become due and payable at any time during the Term.

       6.5   Lessee  covenants to furnish to Lessor,  within 30 days after the
last date when any Tax must be paid by Lessee  as  provided  in this  section,
official  receipts,  if such  receipts are then  available  to Lessee,  of the
appropriate   taxing  authority,   or  other  proof  satisfactory  to  Lessor,
evidencing payment.

       6.6  Lessee  shall  have the right at  Lessee's  expense  to contest or
review  the  amount  or  validity  of any  Tax or to seek a  reduction  in the
assessed   valuation  on  which  any  Tax  is  based,  by  appropriate   legal
proceedings.  Lessee may defer  payment of such  contested  Tax on  condition,
however,  that if such contested Tax is not paid  beforehand and if such legal

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proceedings  shall not operate to prevent the enforcement of the collection of
the Tax so  contested  and shall not prevent  the sale of the  Premises or the
Improvements   to  satisfy  the  same,   then  before   instituting  any  such
proceedings  Lessee  shall  furnish to Lessor and to any  Permitted  Leasehold
Mortgagee (as defined below),  if so required by the terms of its mortgage,  a
surety company bond, cash deposit, or other security  reasonably  satisfactory
to Lessor and any such  Permitted  Leasehold  Mortgagee,  as security  for the
payment of such Tax, in an amount  sufficient  to pay such Tax,  together with
all interest and  penalties in  connection  with such Tax and all charges that
might be  assessed  against  the  Premises  or the  Improvements  in the legal
proceedings.  Upon  termination of such legal  proceedings or at any time when
Lessor or any such Permitted  Leasehold Mortgagee shall determine the security
to be  insufficient  for the  purpose,  Lessee  shall  forthwith,  on  demand,
deliver to Lessor or such Permitted  Leasehold  Mortgagee  additional security
as is sufficient  and  necessary for the purpose,  and on failure of Lessee so
to do, the  security  originally  deposited  shall be applied to the  payment,
removal,  and  discharge  of  the  Tax  and  the  interest  and  penalties  in
connection  with the Tax and the  charges  and costs  accruing  in such  legal
proceedings  and the balance,  if any,  shall be paid to Lessee  provided that
there is then no  uncured  default  under this  Lease.  In the event that such
security shall be  insufficient  for this purpose,  Lessee shall forthwith pay
over  to  Lessor  or to any  such  Permitted  Leasehold  Mortgagee  an  amount
sufficient,  together with the security originally deposited, to pay the same.
Lessee  shall not be entitled to interest on any money  deposited  pursuant to
this section.

       6.7  Any  contest as to the  validity or amount of any Tax, or assessed
valuation  on which such Tax was  computed or based,  whether  before or after
payment,  may be made by Lessee in the name of Lessor or of  Lessee,  or both,
as Lessee  shall  determine,  and  Lessor  agrees  that it will,  at  Lessee's
expense,  cooperate  with Lessee in any such  contest to such extent as Lessee
may reasonably  request, it being understood,  however,  that Lessor shall not
be subject  to any  liability  for the  payment  of any costs or  expenses  in
connection  with any  proceeding  brought by Lessee,  and Lessee  covenants to
indemnify  and save Lessor  harmless  from any such costs or expenses.  Lessee
shall be  entitled  to any refund of any such Tax and  penalties  or  interest
that have been paid by Lessee or by Lessor and reimbursed to Lessor by Lessee.

       6.8  The  parties  shall  use  reasonable   efforts  to  see  that  all
communications  from the  governmental  authorities  respecting Taxes are sent
directly  by such  authorities  to Lessor.  Lessor  shall  forward any and all
communications   to  Lessee   within  48  hours  of  Lessor's   receipt.   The
certificate,  advice,  receipt, or bill of the appropriate official designated
by law to  make  or  issue  the  same  or to  receive  payment  of any  Tax or
nonpayment of such Tax shall be prima facie  evidence that such Tax is due and

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unpaid  or has  been  paid  at the  time of the  making  or  issuance  of such
certificate, advice, receipt, or bill.

Section 7.  Insurance
       7.1   Lessee,  at Lessee's sole cost and expense,  shall maintain,  for
the mutual benefit of Lessee,  Lessor, and any Permitted Leasehold  Mortgagee,
casualty  insurance covering loss or damage by fire, and other risks as may be
embraced  within  all-risk   insurance  insuring  the  full  replacement  cost
(excluding  foundation and excavation cost) of the  Improvements.  If all-risk
insurance becomes unavailable,  then Lessee shall insure the Improvements with
such  coverage as is customary  from time to time for  comparable  first-class
buildings  in  the  Salem,  Oregon  metropolitan  area.  The  amount  of  such
insurance  policy shall be increased from time to time as the full replacement
cost of the Improvements  increases.  Any dispute regarding  insurance matters
shall be arbitrated by the parties.

       In the event of any  casualty  damage to the  Improvements,  Lessor may
make  proof of loss if Lessee  fails to do so  within 15 days of the  casualty
and after 10 days'  written  notice from Lessor of its intent to do so. Unless
the casualty  occurs within five years of the  Expiration  Date of this Lease,
Lessee   shall   promptly   repair  or  replace  the  damaged  and   destroyed
Improvements  in  substantially  the form on the date of the  casualty or in a
manner reasonably  satisfactory to Lessor.  Lessee may use the Proceeds to pay
for the cost of repair,  restoration or replacement of the  Improvements.  Any
proceeds  not  used  for  the  repair,  restoration,  or  replacement  of  the
Improvements  shall  be  distributed  on the same  basis  as any  condemnation
proceeds  pursuant to the  provisions  of Section  16.2  below.  If the damage
occurs  within five (5) years of the  Expiration  Date of this Lease,  and the
cost of  repairing  such damage is more than 50% of the  assessed  real market
value of the  Improvements,  then Lessee shall have the option of  terminating
this Lease.  If the damage occurs within one (1) year of the  Expiration  Date
of this Lease,  and the cost of repairing  such damage is more than 25% of the
assessed real market value of the  Improvements,  then either party shall have
the option of terminating  this Lease. In the event the Lease is so terminated
within  five (5) years of the  Expiration  Date,  Lessee  shall  then,  at the
election of Lessor,  promptly  remove all debris and  restore the  Premises to
the  condition  in  existence  at the time of the initial  letting,  including
compaction  necessary  to meet  the  criteria  specified  in this  Lease.  All
Proceeds in excess of the amount  required to pay the  remaining  balance,  if
any,  on the  Permitted  Leasehold  Mortgages  and to remove all debris may be
retained by the Lessor.  Any dispute  regarding the  distribution  of Proceeds
shall be arbitrated.

       7.2  Lessee,  at its  expense,  shall  maintain at all times during the
Term of this Lease public  liability  insurance in respect of the Premises and

                                   Page 10
<PAGE>

the conduct or operation of its business,  with Lessor as additional  insured,
with $2,000,000  minimum combined  single-limit  coverage,  or its equivalent.
All  casualty   insurance  policies  shall  include   contractual   liability,
severability  of  interest,  and  cross-liability  endorsements.  When  Lessee
conducts  demolition  or  excavation  work,  the  exclusions  now  customarily
referred  to as the X, C, and U  exclusions  shall be  deleted  from  Lessee's
liability  insurance.  Lessee shall deliver to Lessor and any additional named
insured such fully paid-for  policies or certificates of insurance,  in a form
satisfactory  to Lessor,  issued by the  insurance  company or its  authorized
agent,  at least 10 days before the  Commencement  Date.  Lessee shall procure
and  pay for  renewals  of  such  insurance  from  time  to  time  before  the
expiration,  and  Lessee  shall  deliver to Lessor  and any  additional  named
insured  such  renewal  policy  or  certificate  at least 30 days  before  the
expiration  of any existing  policy.  All  insurance  policies  shall  contain
provisions  whereby (1) losses shall be payable  despite the negligence of any
person  having an  insurable  interest in the  Improvements;  (2) the Proceeds
will be paid in accordance with the terms of this Lease;  and (3) the policies
cannot be canceled  unless Lessor and any  additional  named insured are given
at least 20 days' prior written notice of such cancellation or modification.

       7.3  All insurance  policies  shall be written as primary  policies and
shall not be  contributing  with or be in excess of the  coverage  that either
Lessor or Lessee may carry.  All such  insurance  policies  shall be issued in
the name of Lessee,  with Lessor and any Permitted  Leasehold  Mortgagee being
included in the insurance policy  definition of who is an additional  insured,
shall  contain  a  standard  mortgagee's  clause in form  satisfactory  to the
Permitted  Leasehold  Mortgagees,  and  shall  be  primary  to  any  insurance
available to Lessor.

       7.4  All  policies of  insurance  shall be issued by good,  responsible
companies,  reasonably  acceptable  to  Lessor  and  any  Permitted  Leasehold
Mortgagee  and that are  qualified  to do  business  in the  State of  Oregon.
Executed  copies of such  policies  of  insurance  shall be  delivered  to any
Permitted  Leasehold  Mortgagee and certificates  shall be delivered to Lessor
within 30 days after the Building is completed and  thereafter  within 30 days
before the  expiration  of the term of each such policy.  As often as any such
policy shall expire or  terminate,  renewal or  additional  policies  shall be
procured  and  maintained  by Lessee in like  manner and to like  extent.  All
policies of insurance  must contain a provision  that the company  writing the
policy  will  give  Lessor  and any  Permitted  Leasehold  Mortgagee  30 days'
written  notice  in  advance  of  any  cancellation,   substantial  change  of
coverage, or the effective date of any reduction in amount of insurance.

                                   Page 11
<PAGE>

       7.5  The obligations of Lessee to carry the insurance  provided for may
be brought  within the coverage of a so-called  blanket  policy or policies of
insurance; provided, however:

     7.5.1 That the coverage  afforded  will not be reduced or  diminished  by
reason of the use of such blanket policy of insurance;

     7.5.2 That the requirements set forth are otherwise satisfied; and

     7.5.3  That,  as to all  insurance,  Lessor and any  Permitted  Leasehold
Mortgagee shall be named as additional insured.

       7.6  Lessor may from time to time,  but not more  frequently  than once
every three years,  require that the amount of public  liability  insurance to
be  maintained  by Lessee  under  Section 7.2 be  increased so that the amount
adequately  protects  Lessor's  interest based on amounts of coverage required
of comparable tenants in comparable buildings.

Section 8.         Lessor's Right to Perform Lessee's Covenants
       8.1  If Lessee at any time fails to pay any Tax in accordance  with the
provisions  of this Lease or fails to make any other  payment  or perform  any
other act on its part to be made or  performed,  then  Lessor,  after 10 days'
notice to Lessee  (or  without  notice in case of an  emergency)  and  without
waiving or releasing  Lessee from any  obligation of Lessee  contained in this
Lease or from any  default by Lessee and  without  waiving  Lessor's  right to
take such  action as may be  permissible  under this Lease as a result of such
default, may (but shall be under no obligation to)

     8.1.1 Pay any Tax payable by Lessee  pursuant to the  provisions  of this
Lease; or

     8.1.2 Make any other payment or perform any other act on Lessee's part to
be made or performed as provided in this Lease, and may enter the Premises and
the  Improvements  for any such purpose,  and take all such action,  as may be
necessary.

       8.2  All sums so paid by Lessor and all costs and expenses  incurred by
Lessor,   including   reasonable   attorney  fees,  in  connection   with  the
performance  of any such act,  together  with, if Lessee does not pay the same
within the 30-day  period after notice from Lessor,  interest from the date of
such payment or  incurrence  by Lessor of such cost and expense until paid, at
the annual rate of 12%,  shall  constitute  Additional  Rent payable by Lessee
under this Lease and shall be paid by Lessee to Lessor on demand.

                                   Page 12
<PAGE>

Section 9.  Compliance with Legal Requirements
       9.1   Throughout the Term,  Lessee shall promptly comply with all Legal
Requirements  that may apply to the  Premises  or to the use or manner of uses
of  the  Premises  or  the   Improvements  or  the  owners  or  users  of  the
Improvements,  whether or not the Legal  Requirements  affect the  interior or
exterior of the Improvements,  necessitate structural changes or improvements,
or interfere  with the use and enjoyment of the Premises or the  Improvements,
and  whether or not  compliance  with the Legal  Requirements  is  required by
reason of any condition,  event, or circumstance  existing before or after the
Term  commences.   Lessee  shall  pay  all  costs  of  compliance  with  Legal
Requirements,  but Lessee shall have the right to cease  occupation or use of,
or to demolish or remove,  all or any part of the Premises or the Improvements
in  lieu  of  compliance   with  any  Legal   Requirement   that  may  require
expenditures  on behalf of  Lessee  for  continued  use or  occupation  of the
Premises.

       9.2   Lessee  shall  have the  right,  after  prior  written  notice to
Lessor, to contest by appropriate legal proceedings,  diligently  conducted in
good faith,  in the name of Lessee or Lessor or both,  without cost or expense
to Lessor,  the validity or  application of any Legal  Requirement  subject to
the following:

     9.2.1 If, by the terms of any Legal  Requirement,  compliance may legally
be  delayed  pending  the  prosecution  of any  such  proceeding  without  the
incurrence  of any lien,  charge,  or liability of any kind against all or any
part of the  Premises or the  Improvements  and without  subjecting  Lessee or
Lessor to any liability,  civil or criminal, for failure to comply, Lessee may
delay compliance until the final determination of such proceeding; or

     9.2.2 If any lien, charge, or civil liability would be incurred by reason
of any such  delay,  Lessee  nevertheless  may  contest  the  matter and delay
compliance,  provided  that such delay  would not  subject  Lessor to criminal
liability or fine, and Lessee

       9.2.2.1  Furnishes  to  Lessor  security,  reasonably  satisfactory  to
Lessor, against any loss or injury by reason of such contest or delay, and

       9.2.2.2 Prosecutes the contest with due diligence.

       9.3   Lessor shall execute and deliver any appropriate  papers that may
be  necessary  or  proper  to  permit   Lessee  to  contest  the  validity  or
application of any Legal  Requirement,  provided all the  requirements of this
section have been satisfied by Lessee and Lessor will incur no cost.

                                   Page 13
<PAGE>

       9.4   Notwithstanding  any other provision in this Lease,  Lessee shall
have no  obligation  to  remediate  or  otherwise  cause  the  removal  of any
Hazardous  Substance  existing on the  Premises on the date of this Lease.  If
such Hazardous  Substance is found, Lessee shall immediately notify Lessor who
shall, at Lessor's election,  either pay all costs associated with remediation
or removal of the  Hazardous  Substance,  or,  alternatively,  terminate  this
Lease and pay to Lessee the value of its  improvements  as determined  through
appraisal.  If the cost of remediation  is less than or equal to  $100,000.00,
and if Lessor  elects to  terminate  this Lease,  Lessee may elect to continue
the lease in effect and shall  then be  entitled  to pay all costs  associated
with the  remediation  or removal of the  Hazardous  Substance,  not to exceed
$100,000,  and may offset the costs so incurred against the rent,  except that
in no case may more  than 40% of the  minimum  monthly  rent be  offset in any
calendar month.

Section 10.        Repairs and Maintenance
       Lessee  shall  maintain,  repair,  and  replace  the  Premises  and the
Improvements  as necessary to keep them in good order,  condition,  and repair
throughout  the  entire  Term.  Lessee's  obligations  shall  extend  to  both
structural  and  nonstructural  items  and to  all  maintenance,  repair,  and
replacement  work,  including but not limited to unforseen  and  extraordinary
items.  Lessor  shall  maintain the common  areas of the  development  in good
order,  condition,  and repair  throughout  the entire  Term.  All  aspects of
maintaining  the  parking  area,  including  but not  limited to  landscaping,
cleaning,  and lighting shall be governed by a Reciprocal  Easement  Agreement
recorded  in the deed  records of Marion  County,  Oregon  and  related to the
Premises.

Section 11.        Alterations, Additions, and New Improvements
       The term Modifications means any demolition,  improvement,  alteration,
change,  or  addition,  of, in, or to all or any part of the  Premises  or the
Improvements.  The term  Minor  Modifications  shall  mean  any  Modifications
costing less than  $75,000,  and the term Major  Modifications  shall mean any
and all Modifications other than Minor Modifications.  Multiple  Modifications
occurring  within a period of 365 days  shall be deemed a single  Modification
for the purposes of applying the provisions  contained in this section. At any
time during the Term and at Lessee's own cost and expense,  Lessee may make or
permit to be made any Minor  Modifications,  provided there is no existing and
unremedied  default on the part of Lessee, of which Lessee has received notice
of default, under any of the terms,  covenants,  and conditions of this Lease.
Major  Modifications  shall  require  the prior  consent  of the  Lessor.  All
salvage material in connection with any Modification  that Lessee is permitted
to make shall belong to Lessee.  Not  withstanding any other provision of this
Section,  no  modification  of the  improvements  on the Premises  shall occur

                                   Page 14
<PAGE>

without  Lessor's prior written  consent which would (i) alter the exterior of
the  building,  or (ii) alter the  footprint  of the building on the ground or
(iii) require the  elimination  of any parking area.  Landlord's  consent to a
Major Modification shall not be unreasonably withheld, delayed or conditioned.

Section 12. Title to Improvements
       Title  to  Improvements  shall  be  and  remain  in  Lessee  until  the
expiration of the Term,  unless this Lease is  terminated  sooner as provided.
Upon such expiration or sooner  termination,  title to the Improvements  shall
automatically  pass to, vest in, arid belong to Lessor without  further action
on the part of either party and without  cost or charge to Lessor.  During the
Term,  Lessee  shall be  entitled  for all  taxation  purposes  to claim  cost
recovery deductions and the like on the Improvements.

Section 13.       No Waste
       Lessee  shall not do or suffer any waste or damage,  disfigurement,  or
injury to the Premises or the  Improvements.  Demolition of all or any part of
the Improvements  done in accordance with the requirements of Section 11 above
shall not be considered prohibited by the terms of this section.

Section 14.        Inspection and Access
       14.1  Lessee shall permit Lessor,  any Permitted  Leasehold  Mortgagee,
or the  authorized  representative  of any of them to enter the Premises  arid
the Improvements at all reasonable times, and after reasonable notice,  during
usual  business  hours for the purposes of inspecting  the same and making any
repairs or  performing  any work that Lessee has  neglected or refused to make
in  accordance  with the  terms,  covenants,  and  conditions  of this  Lease.
Nothing  in this  Lease  shall  imply  any duty or  obligation  on the part of
Lessor to do any such work or to make any  Improvements of any kind whatsoever
to the Premises (including,  but not limited to, repairs and other restoration
work made necessary due to any fire, other casualty,  or partial condemnation,
irrespective  of  the  sufficiency  or  availability  of  any  fire  or  other
insurance  proceeds,  or any award in condemnation,  which may be payable) The
performance  of any work by Lessor  shall not  constitute a waiver of Lessee's
default in failing to perform the same.

       14.2  During  the   progress  of  any  work  on  the  Premises  or  the
Improvements  performed by Lessor  pursuant to the provisions in this section,
Lessor may keep and store on the  Premises  all  necessary  materials,  tools,
supplies,  and  equipment.  Lessor  shall  not be  liable  for  inconvenience,
annoyance,  disturbance,  loss of  business,  or other damage of Lessee or any
user by reason of making  such  repairs or  performing  any such  work,  or on
account  of  bringing  materials,  tools,  supplies,  and  equipment  onto the
Premises  or into  the  Improvements  during  the  course  of the work and the
obligations of Lessee under this Lease shall not be affected by the work.

                                   Page 15
<PAGE>

       14.3  Lessor  shall  have the  right to enter on the  Premises  and the
Improvements  at all  reasonable  times  during usual  business  hours for the
purpose of showing the same to  prospective  purchasers  of Lessor's  interest
and, at any time within two years before the Term expires,  for the purpose of
showing the same to prospective Lessees.

       14.4  Except  in the  event  of  emergency  repairs,  all  entry to the
Premises by Lessor shall require at least 24 hours'  advance notice to Lessee.
In the event of any emergency repairs,  Lessor shall use reasonable efforts to
give Lessee the earliest possible notice of the same.

       14.5  If  Lessor   constructs   or  causes   to  be   constructed   any
Improvements  adjacent to the  Premises  for  Lessor's  benefit,  Lessee shall
afford to the person or persons  constructing  the  Improvements  the right to
enter on the  Premises  for the  purpose of doing such work as such  person or
persons  shall  consider  to be  necessary  to  preserve  any of the  walls or
structures  of the  Improvements  on the Premises from injury or damage and to
support the same by proper foundations.

       Lessee  shall not, by reason of any such work,  have any claim  against
Lessor for damages or indemnity or for suspension,  diminution,  abatement, or
reduction of Rent under this Lease.

Section 15. Lessor's Exculpation and Indemnity
       15.1  Lessee is and shall be in  exclusive  control of the Premises and
of the  Improvements,  and Lessor shall not in any event  whatsoever be liable
for any injury or damage to any  property or to any person  happening  on, in,
or about  the  Premises  or the  Improvements  or any  injury or damage to the
Premises or the Improvements or to any property,  whether  belonging to Lessee
or to any other person, caused by any fire, breakage,  leakage, defect, or bad
condition  in any part or portion of the Premises or of the  Improvements,  or
from steam, gas, electricity,  water, rain, or snow that may leak into, issue,
or flow from any part of the  Premises  or the  Improvements  from the drains,
pipes,  or plumbing work of the same, or from the street,  subsurface,  or any
place or  quarter,  or due to the use,  misuse,  or abuse of all or any of the
Improvements  or from any kind of injury  that may arise from any other  cause
whatsoever on the Premises or in or on the Improvements,  including defects in
construction of the Improvements, latent or otherwise.

       15.2  Lessee shall indemnify and hold Lessor harmless  against and from
all liabilities,  obligations, damages, penalties, claims, costs, charges, and
expenses,  including  reasonable  architect  and  attorney  fees,  that may be
imposed on or incurred by or asserted  against  Lessor by reason of any of the
following occurrences during the Term:

                                   Page 16
<PAGE>

       15.2.1     Any work or thing  done in,  on, or about all or any part of
the Premises or the Improvements by Lessee or any party other than Lessor;

       15.2.2      Any  use,  nonuse,   possession,   occupation,   condition,
operation,  maintenance,  or  management of all or any part of the Premises or
the Improvements or any adjacent alley, sidewalk, curb, vault, passageway,  or
space;

       15.2.3      Any  negligence on the part of Lessee or any of its agents,
contractors, servants, employees, sublessees, licensees, or invitees;

       15.2.4      Any accident,  injury,  or damage to any person or property
occurring in, on, or about the Premises or the Improvements; or

       15.2.5      Any  failure  on the part of  Lessee to  perform  or comply
with any of the  covenants,  agreements,  terms,  provisions,  conditions,  or
limitations  contained  in this Lease on its part to be  performed or complied
with.

       15.3  In case any action or  proceeding  is brought  against  Lessor by
reason of any such claim,  Lessee upon written  notice from Lessor  shall,  at
Lessee's  expense,  resist or defend  such  action or  proceeding  by  counsel
approved  by Lessor  in  writing,  which  approval  shall not be  unreasonably
withheld.  Lessor shall not make any claim against  Lessee with respect to any
of such risks as to which Lessee has furnished Lessor with insurance  policies
or  certificates  of  insurance  evidencing  coverage of such risks unless and
until the insurer  fails or refuses to defend  and/or pay all or any part of a
third-party claim.

Section 16.        Condemnation
       16.1  If all the Premises and the  Improvements are taken or condemned,
by right of eminent domain or by purchase in lieu of condemnation,  or if such
portion of the  Premises or the  Improvements  shall be so taken or  condemned
that the portion  remaining is not sufficient  and suitable,  in Lessee's sole
judgment  (subject,   however,  to  any  rights  of  any  Permitted  Leasehold
Mortgagee) , to permit the  restoration  of the  Improvements  following  such
taking or  condemnation,  then this Lease and the Term,  at  Lessee's  option,
shall cease and  terminate  as of the date on which the  condemning  authority
takes  possession  (any taking or  condemnation  of the land described in this
section being called a "Total  Taking"),  and the Minimum Rent and  Additional
Rent shall be apportioned and paid to the date of such total taking.

                                   Page 17
<PAGE>

       16.2  If this  Lease  expires  and  terminates  as a result  of a Total
Taking,  the  rights and  interests  of the  parties  shall be  determined  as
follows:

       16.2.1      The total  award or awards  for the Total  Taking  shall be
apportioned and paid in the following order of priority:

       16.2.1.1    Lessor  shall  have the right to and shall be  entitled  to
receive  directly  from the  condemning  authority,  in its  entirety  and not
subject  to any  trust,  that  portion  of the  award,  which is  defined  and
referred  to as the  "Land  Award,"  and  neither  Lessee  nor  any  Permitted
Leasehold  Mortgagee  shall be entitled to receive any part of the Land Award.
The term Land Award shall mean that  portion of the award in  condemnation  or
change of grade  proceedings  that  represents  the fair  market  value of the
Premises,  considered as vacant,  unimproved but encumbered by this Lease, the
consequential  damage to any part of the Premises  that may not be taken,  the
diminution of the  assemblage  or plottage  value of the Premises not so taken
and all other  elements  and  factors  of damage to the  Premises;  but in all
events  such  damage  or  valuation  shall  take into  consideration  that the
Premises is encumbered by this Lease;

       16.2.1.2    Lessee  shall  have the right to and shall be  entitled  to
receive  directly from the  condemning  authority,  subject,  however,  to the
rights  of the  Permitted  Leasehold  Mortgagees,  that  portion  of the award
referred  to as the  "Leasehold  Award." The term  Leasehold  Award shall mean
that portion of the award in  condemnation  proceedings  that  represents  the
fair  market  value of  Lessee's  interest  in the  Improvements  and the fair
market  value of  Lessee's  leasehold  estate as so taken and,  provided  this
Lease is not  terminated  as a result  of such  condemnation  or  taking,  the
consequential damages to any part of the Improvements.

       16.2.1.3    It is the  intent of the  parties  that the Land  Award and
Leasehold  Award will equal the total amount of the awards  respecting a total
taking.

       16.2.2      If the  court  or such  other  lawful  authority  as may be
authorized  to fix and  determine  the  awards  fails  to fix  and  determine,
separately  and apart,  the Land Award and the  Leasehold  Award,  such awards
shall be determined and fixed by written  agreement  mutually  entered into by
and among Lessor,  Lessee,  and First Leasehold  Mortgagee,  if any, and if an
agreement  is not  reached  within  20 days  after the  judgment  or decree is
entered in the  proceedings,  the  controversy  shall be  resolved in the same
court as the  condemnation  action is brought,  in such  proceedings as may be
appropriate for adjudicating the controversy; and

                                   Page 18
<PAGE>

       16.2.3  If the  condemning  authority  refuses  or  otherwise  fails to
deduct  from the  Leasehold  Award any Rent or other  money due from Lessee to
Lessor  and to pay  same  directly  to  Lessor,  then  Lessee  and  the  First
Leasehold  Mortgagee,  if any,  shall  execute and deliver to Lessor a written
and  acknowledged  assignment  of such amount  payable  out of such  Leasehold
Award,  and if,  nevertheless,  the full amount of the Leasehold Award is paid
to Lessee or the First Leasehold  Mortgagee,  if any, the recipient shall hold
in trust for Lessor  and pay over to Lessor  forthwith  on the  receipt of the
award the amount or amounts so due.

       16.3  If,  during the Term,  there is a taking or  condemnation  of the
Premises or the  Improvements  that is not a total  taking and not a temporary
taking  of the kind  described  below,  or in the  event of the  change in the
grade of the streets or avenues on which the  Premises  abuts,  this Lease and
the Term  shall not cease or  terminate  but  shall  remain in full  force and
effect with  respect to the portion of the  Premises  and of the  Improvements
not taken or condemned (any taking or  condemnation  or change of grade of the
kind described in this Section being referred to as a "Partial  Taking") , and
in such event:

       16.3.1      The  total  award  or  awards  for  the  taking   shall  be
apportioned and paid in the following order of priority:

       16.3.1.1    Lessor  shall  have the right to and shall be  entitled  to
receive  directly  from the  condemning  authority,  in its  entirety  and not
subject to any trust,  that  portion of the award that  equals the Land Award,
and neither Lessee nor any Permitted  Leasehold Mortgagee shall be entitled to
receive any part of the award; and

       16.3.1.2    If at the time of such  taking  there is a First  Leasehold
Mortgage held by a Lending Institution,  then such Lending Institution, or, if
there is no such First Leasehold Mortgage,  then Lessee,  shall have the right
to and shall be entitled to receive  directly  from the  condemning  authority
the  balance of the award,  to be  applied by the  recipient  as it shall deem
appropriate.

       16.4  In the event of a taking of all or a part of the  Premises or the
Improvements for temporary use, this Lease shall continue  without change,  as
between  Lessor and Lessee,  and Lessee  shall be entitled to the entire award
made for  such  use;  provided  that  Lessee  shall  be  entitled  to file and
prosecute  any claim  against  the  condemner  for  damages and to recover the
same,  for  any  negligent  use,  waste,  or  injury  to the  Premises  or the
Improvements  throughout the balance of the  then-current  Term. The amount of
damages so recovered shall belong to Lessee.

       16.5  In the  event of any  dispute  between  Lessee  and  Lessor  with
respect  to any  issue  of fact  arising  out of a  taking  mentioned  in this

                                   Page 19
<PAGE>

section,  such  dispute  shall  be  resolved  by the same  court in which  the
condemnation  action is brought, in such proceedings as may be appropriate for
the adjudicating the dispute.

Section 17. Assignment and Subletting
       17.1  Until the Project is  substantially  completed,  Lessee shall not
sell,  assign,  or in any other manner  transfer this Lease or any interest in
this Lease or the estate of Lessee under this Lease  without the prior consent
of Lessor, which consent shall not be unreasonably withheld or delayed.  After
the Project is completed,  there shall be no  restriction on Lessee's right to
sell,  assign,  or in any manner  transfer  this Lease or any interest in this
Lease or the  estate of Lessee or rent,  sublet,  sublease,  or  underlet  the
Premises or the Improvements, except as set forth below.

       17.2  Lessee   shall  have  the  right  to  sublet   portions   of  the
Improvements  at any time and from time to time,  but only for a term or terms
that shall expire before the  expiration  of the Term,  and provided that each
such sublease shall be in writing and shall be subject and  subordinate to the
rights of Lessor under this Lease.  The use of the subtenant  shall be subject
to the approval of Landlord as required in Section 4.

       17.3  When  this  Lease  terminates,  Lessor  shall  recognize  and not
disturb the quiet  enjoyment of any sublessee if (1) the sublease is then free
from  default;  (2) the  sublease is in all  material  respects in the form of
sublease  approved by Lessor;  and (3) the sublessee  executes the  attornment
agreement  described  below  in  this  section.  As a  condition  of  Lessor's
nondisturbance  of the  sublessee,  it shall  deliver to Lessor an  attornment
agreement  confirming  that the sublessee  will attorn to Lessor and recognize
it as the  sublessee's  Lessor  under  the  terms of the  sublease.  Upon such
attornment  and  satisfaction  of the other  nondisturbance  requirements  set
forth above,  the sublease shall continue in full force and effect as a direct
lease  between  the  sublessee  and Lessor on all the terms,  conditions,  and
covenants  as are set forth in the  sublease  except that Lessor shall not (1)
be liable for any  previous act or omission of the  sublessor;  (2) be subject
to  any  offset,  deficiency,  or  defense  that  shall  have  accrued  to the
sublessee  against the sublessor;  (3) be bound by any previous  prepayment of
more than one month's rent unless such  modification or prepayment  shall have
been expressly  approved in writing by Lessor; or (4) be liable for commencing
or completing any  construction  or any  contribution  toward  construction or
installation of any improvements on the Premises  required under the sublease,
or any expansion or rehabilitation  of existing  improvements on the Premises,
or for  restoring  improvements  following  any  casualty  not  required to be

                                   Page 20
<PAGE>

insured  under this Lease,  or for the costs of any  restoration  in excess of
the proceeds  recovered under any insurance  required to be carried under this
Lease. On request,  Lessor shall confirm in a separate written  agreement with
any qualified  sublessee the nondisturbance  obligation of Lessor as set forth
in this section.

Section 18. Representations of Lessor
       Lessor represents to Lessee as follows:

       18.1  Lessor  has no  notice of any liens to be  assessed  against  the
Premises.

       18.2  To the best  knowledge  of Lessor,  there is no  violation of any
Legal  Requirements  related to the Premises that will be existing on the date
Lessee's construction begins.

       18.3  The execution,  delivery, and performance of this Lease by Lessor
will not result in any breach of, or constitute any default  under,  or result
in the  imposition  of,  any lien or  encumbrance  on the  Premises  under any
agreement  or other  instrument  to which Lessor is a party or by which Lessor
is bound.

       18.4  To the best of  Lessors  knowledge,  there are no legal  actions,
suits or  other  legal  or  administrative  proceedings  (except  a  currently
pending  lot line  adjustment  previously  disclosed  to  Lessee) ,  including
condemnation cases, pending or threatened against the Premises,  and Lessor is
not aware of any fact that might  result in any such  action,  suit,  or other
proceeding.

       18.5  Lessor has no  information or knowledge of any action by adjacent
landowners,  or natural or  artificial  condition on the  Premises  that would
limit, or impede the Lessee's project.

Section 19. Default; Remedies
       19.1  The  occurrence  of any one or more of the  following  events  of
default constitutes a breach of this Lease by Lessee:

       19.1.1      If Lessee  defaults  in the payment of Rent due and payable
by Lessee,  and such  default  continues  for 10 days  after  Lessor has given
Lessee a notice specifying the same; or

       19.1.2      If Lessee,  whether by action or inaction, is in default of
any of its  obligations  under this Lease (other than a default in the payment
of Rent by Lessee) and such default  continues  and is not remedied  within 60
days after Lessor has given Lessee a notice  specifying  the same,  or, in the
case of a  default  that can be cured but not  within a period of 60 days,  if
Lessee has not (1) commenced  curing such default  within such 60-day  period;
(2)  notified  Lessor  of  Lessee's  intention  to cure  the  default;  or (3)
continuously and diligently completed the cure of the default.

                                   Page 21
<PAGE>

       19.2  During any 12-month period,  Lessee shall be entitled to only two
notices pursuant to Section 19.1.1. Thereafter,  nonpayment of rent within ten
(10) days  after the due date  shall be an event of  default  without  further
notice to Lessee.

       19.3  Upon the  occurrence of an event of default,  Lessor may exercise
any one or more of the  remedies set forth in this section or any other remedy
available under applicable law or contained in this Lease:

       19.3.1      Lessor or Lessor's  agents and employees may immediately or
at any time  thereafter  reenter  the  Premises  either  by  summary  eviction
proceedings  or by any suitable  action or  proceeding  at law, or by force or
otherwise,  without being liable to indictment,  prosecution,  or damages, and
may  repossess the same,  and may remove any person from the Premises,  to the
end that Lessor may have, hold, and enjoy the Premises.

       19.3.2      Lessor  may  relet  the  whole or any part of the  Premises
from  time to  time,  either  in the  name of  Lessor  or  otherwise,  to such
Lessees,  for such terms ending before,  on, or after the  expiration  date of
the Lease  Term,  at such  rentals  and on such  other  conditions  (including
concessions and free rent) as Lessor may determine to be  appropriate.  To the
extent allowed under Oregon law,  Lessor shall have no obligation to relet all
or any part of the  Premises  and shall not be liable for refusal to relet the
Premises,  or, in the event of such  reletting,  for  refusal  or  failure  to
collect  any rent due on such  reletting;  and any action of Lessor  shall not
operate  to relieve  Lessee of any  liability  under  this Lease or  otherwise
affect such liability.  Lessor at its option may make such physical changes to
the  Premises  as Lessor,  in its sole  discretion,  considers  advisable  and
necessary  in  connection  with  any such  reletting  or  proposed  reletting,
without  relieving  Lessee of any  liability  under  this  Lease or  otherwise
affecting Lessee's liability.

       19.3.3      Whether  or not  Lessor  retakes  possession  or relets the
Premises,  Lessor  has the right to recover  its  damages,  including  without
limitation all lost rentals, all legal expenses,  all costs incurred by Lessor
in restoring the Premises or otherwise  preparing the Premises for  reletting,
and all costs incurred by Lessor in reletting the Premises.

       19.3.4      To the extent  permitted  under Oregon law,  Lessor may sue
periodically  for damages as they accrue  without  barring a later  action for
further  damages.  Lessor  may in one  action  recover  accrued  damages  plus
damages  attributable  to the  remaining  Lease Term  equal to the  difference
between  the Rent  reserved  in this  Lease for the  balance of the Lease Term
after the time of award,  and the fair rental  value of the  Premises  for the
same  period,  discounted  at the time of award  at a  reasonable  rate not to
exceed 10% per annum.  If Lessor has relet the  Premises  for the period  that
otherwise would have  constituted all or part of the unexpired  portion of the
Term,  the amount of rent reserved on such  reletting  shall be deemed,  prima
facie,  to be the fair and  reasonable  rental value for the part or the whole
of the Premises so relet during the term of the reletting.

       19.4  No failure by Lessor to insist on the strict  performance  of any
agreement,  term,  covenant,  or  condition  of this Lease or to exercise  any
right  or  remedy  consequent  upon a  breach,  and no  acceptance  of full or
partial Rent during the  continuance of any such breach,  constitutes a waiver
of any such breach or of such  agreement,  term,  covenant,  or condition.  No
agreement,  term,  covenant,  or condition to be performed or complied with by

                                   Page 22
<PAGE>

Lessee, and no breach by Lessee, shall be waived,  altered, or modified except
by a written  instrument  executed  by Lessor.  No waiver of any breach  shall
affect or alter this Lease, but each and every agreement,  term, covenant, and
condition  of this Lease shall  continue in full force and effect with respect
to any other then-existing or subsequent breach.

       19.5  Each  right  and  remedy  provided  for in this  Lease  shall  be
cumulative  and shall be in addition  to every other right or remedy  provided
for in this  Lease or now or  hereafter  existing  at law or in  equity  or by
statute or otherwise,  and the exercise or beginning of the exercise by Lessor
or Lessee of any one or more of the rights or  remedies  provided  for in this
Lease or now or  hereafter  existing  at law or in  equity  or by  statute  or
otherwise  shall not preclude the  simultaneous or later exercise by the party
in question of any or all other rights or remedies  provided for in this Lease
or now or hereafter existing at law or in equity or by statute or otherwise.

Section 20.        No Abatement of Rent
       20.1  Except as  otherwise  specifically  provided  in this  Lease,  no
abatement,  refund,  diminution,  or reduction  of Rent or other  compensation
shall be claimed by or allowed  to Lessee,  or any person  claiming  under it,
under any circumstances,  whether for inconvenience,  discomfort, interruption
of business,  or otherwise,  arising from work on  Improvements,  by virtue or
because of Legal  Requirements,  or the occurrence of any matters  referred to
in Sections 7 (casualty  damage) and 16  (condemnation)  of this Lease, or for
any other reason, cause, or occurrence.

       20.2  Unless caused by Lessor,  if any adjoining  Building or structure
encroaches on the Premises,  no claim,  demand, or objection of any kind shall
be made by Lessee  against  Lessor by reason of such  encroachments;  no claim
for  abatement  of Rent due under this  Lease  shall be made by reason of such
encroachments   or  acts  of,  or  in   connection   with,   removal   of  the

                                   Page 23
<PAGE>

encroachments.  The rights, liabilities,  and obligations of the parties shall
be  the  same  as if  there  were  no  encroachments.  In  any  related  legal
proceedings,  the Premises  may  properly  and without  prejudice be described
according to the  description  previously  used without  reference to any such
encroachments.  Lessor  agrees to  cooperate  with  Lessee in any  proceedings
sought by Lessee to remove such encroachments,  provided such cooperation does
not cause Lessor to incur any expense.

Section 21. Transfer of Interest by Lessor
       Lessor  may  sell,  exchange,  assign,  transfer,  convey,  contribute,
distribute,  or otherwise  dispose of all or any part of its interest  (called
"Lessor's  Interest") in the Premises or this Lease (including but not limited
to Lessor's  reversion) . Upon any transfer of the Lessor's interest,  the new
owner of the  Lessor's  interest  shall be deemed for all  purposes the Lessor
and the existing  Lessor shall be released from all liability under this Lease
except  liability  for  any  default  of the  Lease  existing  on the  date of
assignment.

Section 22.       Tenant's Abandonment of the Premises
       If Lessee  shall  abandon  the  Premises  for a period in excess of 180
days,  Lessor shall have the Option to purchase  Lessee's  Improvements on the
Premises.  The  Improvements  shall  be  purchased  at a price  determined  by
appraisal as set forth  herein.  Lessor shall notify Lessee of its election to
purchase  the  Premises  in  writing  at any time after the 180 day period and
before  Lessee is subject to a binding  contract to sell the  improvements  to
others.  If the  parties  are  unable to agree on a price and go  through  the
appraisal  process,  Lessor may decline to close the sale,  in which event the
Lessor  shall pay the  entire  costs of the  appraisal.  Closing  shall  occur
within 60 days after  Lessor's  notice of  exercise  of its  option.  Lessee's
obligations under this Lease shall terminate at closing.  Lessee shall provide
to Lessor a  preliminary  title  report to show the  condition of the title to
the  Improvements at least thirty (30) days prior to the date set for closing.
At  closing,  Lessee  shall  provide to Lessor a special  warranty  deed which
shall  warrant  the real  property  and  Improvements  free of all  claims  or
encumbrances  except  those  existing  on the  date of this  Lease  and  those
claimed by, through or under the Lessor.

Section 23. Option to Extend Lease
       The Term may be extended,  at the option of Lessee,  for two additional
periods of ten (10) years  each.  Each  option  shall be  exercised  by Lessee
giving  written  notice  to Lessor  not more  than 24 months  nor less than 12
months  before the initial Term  expires.  Such  extended Term shall be on the
same  terms,  covenants,  and  conditions  as  provided  in this Lease for the
initial  Term,  except the Minimum  Rent.  Minimum Rent for the renewal  terms

                                   Page 24
<PAGE>

shall be  determined  by appraisal  of the real  property  (less  improvements
constructed  by Lessee  under this  Lease).  The Minimum  Rent shall equal the
appraised  value of the real  property with an annual  capitalization  rate of
11.5%,  provided however,  the monthly Minimum Rent shall not be less than the
monthly  Minimum  Rent for the Premises  for the month  immediately  prior the
commencement  of the renewal term.  Minimum Rent during the renewal term shall
be  adjusted  as provided in Section  3.5,  above.  Payment of all  additional
charges  required  to be made by  Lessee  as  provided  in this  Lease for the
initial Term shall continue to be made during the extended Term.

Section 24. Lessor's Right to Encumber
       Lessor, during the Term, may encumber,  mortgage,  pledge, or otherwise
hypothecate its fee simple interest in the Premises.

Section 25. Nonmerger
       There  shall be no merger of this  Lease,  or of the  leasehold  estate
created by this  Lease,  with the fee estate in the  Premises by reason of the
fact that this Lease,  the  leasehold  estate  created by this  Lease,  or any
interest in this Lease or in any such leasehold estate, may be held,  directly
or  indirectly,  by or for the  account  of any  person  who shall own the fee
estate in the Premises or any interest in such fee estate,  and no such merger
shall  occur  unless and until all  persons at the time  having an interest in
the fee  estate in the  Premises  and all  persons  (including  all  Permitted
Leasehold  Mortgagees)  having an interest in this Lease,  or in the leasehold
estate  created by this Lease,  shall join in a written  instrument  effecting
such merger and shall duly record the same.

Section 26. Quiet Enjoyment
       Lessee,  on paying the Rent and  observing  and keeping all  covenants,
agreements,  and  conditions  of this  Lease  on its  part to be  kept,  shall
quietly  have and enjoy the  Premises  during the Term  without  hindrance  or
molestation by anyone claiming by, through,  or under Lessor as such, subject,
however, to the exceptions, reservations, and conditions of this Lease.

Section 27. Surrender
       27.1  Except  as  otherwise  provided,  Lessee,  on the last day of the
Term,  shall surrender and deliver up the Premises and all Improvements to the
possession  and use of Lessor  without  fraud or delay,  free and clear of all
lettings and  occupancies  other than subleases then  terminable at the option
of Lessor or subleases to which Lessor shall have specifically consented,  and
free and  clear of all  liens  and  encumbrances  other  than  those,  if any,
presently  existing or created or  suffered by Lessor,  without any payment or
allowance whatever by Lessor on account of any Improvements on the Premises.

                                   Page 25
<PAGE>

       27.2  When  furnished by or at the expense of Lessee or any  sublessee,
furniture,  fixtures, and equipment may be removed by Lessee at or before this
Lease  terminates,  provided,  however,  that the removal  will not injure the
Premises  or the  Improvements  or  necessitate  changes  in or repairs to the
same.  Lessee  shall pay or cause to be paid to Lessor  the cost of  repairing
any damage arising from such removal and  restoration  of the Premises  and/or
the Improvements to their condition before such removal.

       27.3  Any  personal  property  of Lessee or any  sublessee  that  shall
remain on the Premises after the  termination of this Lease and the removal of
Lessee or such  sublessee  from the Premises may, at the option of Lessor,  be
deemed to have been  abandoned by Lessee or such  sublessee  and may either be
retained by Lessor as its property or be disposed of, without  accountability,
in such manner as Lessor may see fit,  or if Lessor  gives  written  notice to
Lessee to such effect,  such  property  shall be removed by Lessee at Lessee's
sole cost and  expense.  If this Lease  terminates  early for any reason other
than the default of Lessee  then,  anything to the  contrary  notwithstanding,
Lessee or any sublessee  shall have a reasonable time thereafter to remove its
personal property.

       27.4  Lessor shall not be responsible for any loss or damage  occurring
to any property owned by Lessee or any sublessee.

       27.5  The  provisions of this section shall survive any  termination of
this Lease.

Section 28. Invalidity of Particular Provisions
       If any term or provision of this Lease or the  application of the Lease
to any person or circumstances  is, to any extent,  invalid or  unenforceable,
the remainder of this Lease,  or the  application of such term or provision to
persons or  circumstances  other than those as to which it is held  invalid or
unenforceable,  shall not be  affected,  and each term and  provision  of this
Lease shall be valid and be enforced to the fullest extent permitted by law.

Section 29. No Representations
       Lessee  acknowledges  that it has  examined  the  Premises  and that no
representations  as to the  condition of the Premises have been made by Lessor
or any agent or person  acting for Lessor  (except as  expressly  provided  in
this Lease) . Before any construction commences on the Premises,  Lessee shall
conduct  tests  of  the  subsurface  and  soil  conditions  to  ascertain  the
suitability  of the Premises for the  contemplated  Project and shall  furnish
such  fill  and  take  such  other  steps  as  may  be  required   before  the
commencement of  construction.  Lessor shall have no liability  because of, or
as a result of, the existence of any subsurface or soil  condition,  either on
the Premises or on adjacent land, that might affect Lessee's construction.

                                   Page 26
<PAGE>

Section 30. Estoppel Certificate
       Either party,  within 10 days after a request from time to time made by
the other party and without charge,  shall give a certification  in writing to
any person, firm, or corporation  reasonably specified by the requesting party
stating  (1) that this Lease is then in full force and effect and  unmodified,
or if modified,  stating the modifications;  (2) that Lessee is not in default
in the payment of Rent to Lessor, or if in default,  stating such default; (3)
that  as far as the  maker  of the  certificate  knows,  neither  party  is in
default in the  performance  or observance of any other  covenant or condition
to be  performed  or  observed  under  this  Lease,  or if either  party is in
default,  stating  such  default;  (4) that as far as the maker (if Lessor) of
the  certificate  knows,  no event has occurred that  authorized,  or with the
lapse of time will  authorize,  Lessee to  terminate  this  Lease,  or if such
event has  occurred,  stating such event;  (5) that as far as the maker of the
certificate knows, neither party has any offsets,  counterclaims, or defenses,
or, if so,  stating them;  (6) the dates to which Rent have been paid; and (7)
any other matters that may be reasonably requested by the requesting party.

Section 31.        Force Majeure
       If the  performance  by  either  of the  parties  of  their  respective
obligations  under this Lease (excluding  monetary  obligations) is delayed or
prevented in whole or in part by any Legal  Requirement  (and not attributable
to an act or  omission  of the  party),  or by any acts of God,  fire or other
casualty,  floods,  storms,  explosions,   accidents,  epidemics,  war,  civil
disorders, strikes or other labor difficulties,  shortage or failure of supply
of materials,  labor, fuel, power, equipment,  supplies or transportation,  or
by any other cause not reasonably  within the party's control,  whether or not
specifically mentioned, the party shall be excused,  discharged,  and released
of  performance to the extent such  performance  or obligation  (excluding any
monetary  obligation)  is so limited or prevented by such  occurrence  without
liability of any kind.

Section 32. Notices
       32.1  Any  notice  required  or  permitted  by the terms of this  Lease
shall be deemed  given if delivered  personally  to an officer of the party to
be notified or sent by United  States  registered or certified  mail,  postage
prepaid, return-receipt requested, and addressed as follows:

       If to Lessor:                 with copy to:
       Dan Berrey, P.C.              Gordon Hanna, P.C.
       % Certified Property          Attn: Gordon Hanna
            Management               340 Vista St. SE, Suite 310
       P.O. Box 269                  P.O. Box 4591
       Salem, OR 97308               Salem, OR 97302

                                   Page 27
<PAGE>

       If to Lessee:                 with copy to:
       South Umpqua Bank             John Arnold
       Attn: President               Arnold, Gallagher, Saydack, et al
       445 S.E. Main Street          800 Willamette St., Suite 800
       P.O. Box 1820                 P.O. Box 1758
       Roseburg, OR 97470            Eugene, OR 97440

or such  other  addresses  as may be  designated  by either  party by  written
notice to the  other.  Except  as  otherwise  provided  in this  Lease,  every
notice,  demand,  request, or other communication shall be deemed to have been
given or served on actual receipt.

       32.2  A  copy  of  each  notice   from   Lessor  to  Lessee   shall  be
contemporaneously  delivered to each Permitted Leasehold Mortgagee which shall
have previously  delivered to Lessor,  by registered or certified mail, return
receipt requested,  addressed as provided above in this section,  its name and
the  mailing  address to which  communications  under this  section  are to be
delivered.  Notice to Lessee shall not be effective  until a duplicate  notice
is received by each Permitted Leasehold Mortgagee that is entitled to notice.

       32.3  Lessee  shall   immediately   send  to  Lessor,   in  the  manner
prescribed  above for giving notice,  copies of all notices given by it to any
Permitted  Leasehold Mortgagee or received by it from such Permitted Leasehold
Mortgagee,  and copies of all  notices  that it receives  with  respect to the
Premises or  Improvements  from any government  authorities,  fire  regulatory
agencies,  and similarly  constituted  bodies,  and copies of its responses to
such notices.

       32.4  Notwithstanding  anything in this  section to the  contrary,  any
notice mailed to the last  designated  address of any person or party to which
a notice may be or is required to be delivered  pursuant to this Lease or this
section shall not be deemed  ineffective if actual delivery cannot be made due
to a change of address of the person or party to which the notice is  directed
or the  failure or refusal of such  person or party to accept  delivery of the
notice.

Section 33. Arbitration and Appraisal
       33.1  In any case in which it is  provided  by the terms of this  Lease
that  any  matter  shall be  determined  by  arbitration  or  appraisal,  such
arbitration  or appraisal  shall be conducted in the manner  specified in this
section.

       33.2  The party  desiring  such  arbitration  or  appraisal  shall give
written  notice to that  effect to the  other  party and shall in such  notice
appoint a disinterested person of recognized  competence in the field involved
as  arbitrator  or appraiser  on its behalf.  Within 15 days  thereafter,  the
other  party may by  written  notice to the  original  party  appoint a second

                                   Page 28
<PAGE>

disinterested  person of recognized  competence in such field as arbitrator or
appraiser on its behalf.  The arbitrators thus appointed shall appoint a third
disinterested  person of recognized  competence  in such field,  and the three
arbitrators shall, as promptly as possible,  determine such matter,  provided,
however, that

       33.2.1      If the second  arbitrator  or  appraiser  is not  appointed
pursuant to the above procedure,  then the first arbitrator or appraiser shall
proceed to determine such matter; and

       33.2.2      If the  two  arbitrators  or  appraisers  appointed  by the
parties  are unable to agree,  within 15 days after the second  arbitrator  or
appraiser  is  appointed,   on  the  appointment  of  a  third  arbitrator  or
appraiser,  they shall  give  written  notice of such  failure to agree to the
parties  and,  if the  parties  fail to agree on the  selection  of the  third
arbitrator  or appraiser  within 15 days after the  arbitrators  or appraisers
appointed by the parties give notice,  then within 10 days  thereafter  either
of the  parties  on  written  notice  to the  other  party  may  request  such
appointment  by the presiding  judge of the Circuit Court of the County of the
State of Oregon in which  the  Premises  are  located,  or to any other  court
having  jurisdiction and exercising  functions  similar to those now exercised
by the court.

       33.3  Lessor and Lessee shall each be entitled to present  evidence and
argument  to  the  arbitrators.  The  determination  of  the  majority  of the
arbitrators  or  appraisers,  or of the sole  arbitrator or appraiser,  as the
case may be, shall be conclusive on the parties,  and judgment on the same may
be entered in any court having jurisdiction over the parties.  The arbitrators
or appraisers or the sole  arbitrator or appraiser,  as the case may be, shall
give written notice to the parties stating the arbitration determination,  and
shall furnish to each party a signed copy of such  determination.  Arbitration
proceedings shall be conducted  pursuant to ORS 33.210-33.340 and the rules of
the American  Arbitration  Association,  except as provided otherwise.  If any
such dispute  involves a determination  of value or of a fixed amount of money
and if a  majority  of the  arbitrators  do not agree,  then,  instead of such
arbitration,  either party shall be entitled to seek a judicial  determination
of the matter in issue in a court of competent jurisdiction.

       33.4  Each party shall pay the fees and expenses of the  arbitrator  or
appraiser  appointed  by such party and  one-half of the fees and  expenses of
the third arbitrator or appraiser, if any.

       33.5  Anything    contained    in   this   Lease   to   the    contrary
notwithstanding,  whenever  Lessee  is  required  to make  any  payment  or to
perform any act or thing at a specified  time or within a specified time limit
under the  provisions of this Lease,  and any such payment or  performance  is

                                   Page 29
<PAGE>

subject to  arbitration  under this section,  such time or time limit,  as the
case may be,  shall be  extended by the period  consumed  by the  institution,
conduct,  and prosecution to final  conclusion of any arbitration or appraisal
concerning or relating to such payment or performance.

Section 34. Costs and Attorney Fees
       If either party brings an action to recover any sum due or for any
breach and obtains a judgment or decree in its favor, the court may award to
such prevailing party its reasonable costs and reasonable attorney fees,
specifically including reasonable attorney fees incurred in connection with
any appeals (whether or not taxable as such by law).

Section 35. Entire Agreement
       This Lease contains the entire agreement between the parties and,
except as otherwise provided, can be changed, modified, amended, or
terminated only by an instrument in writing executed by the parties. It is
mutually acknowledged and agreed by Lessee and Lessor that there are no
verbal agreements, representations, warranties, or other understandings
affecting this Lease.

Section 36. Applicable Law
       This Lease shall be governed by, and construed in accordance with, the
laws of the state of Oregon.

Section 37. Interest on Rent Arrearages
       All arrearages in the payment of Rent that Lessee fails to pay within
the 30-day period after notice from Lessor shall bear interest from the date
due until paid, at the rate defined in Section 8.2 above.

Section 38. Brokerage
       Lessor and Lessee represent to each other that they have not employed
any brokers in negotiating and consummating the transaction set forth in this
Lease, but have negotiated directly with each other.

Section 39. Covenants to Bind and Benefit Parties
       The covenants and agreements contained in this Lease shall bind and
inure to the benefit of Lessor, its successors and assigns, and Lessee, its
successors and assigns.

Section 40.       Captions and Table of Contents
       40.1 The captions of this Lease are for convenience and reference
only, and in no way define, limit, or describe the scope or intent of this
Lease or in any way affect this Lease.

                                   Page 30
<PAGE>

       40.2  The table of  contents  preceding  this  Lease but under the same
cover is for the purpose of convenience  and reference  only, and is not to be
deemed or construed in any way as part of this Lease,  nor as  supplemental or
amendatory.

Section 41. Definition of Lessor
       The term  Lessor  as used in this  Lease  means  only the owner for the
time  being  of the  Premises,  so that  in the  event  of a  sale,  transfer,
conveyance,  or other termination of Lessor's interest in the Premises, Lessor
shall be and is  entirely  freed  and  relieved  of all  liability  of  Lessor
thereafter  accruing,  and in such event  Lessor shall remit any funds held by
Lessor,  in  which  Lessee  has an  interest,  to the  successor  owner of the
Premises.  Lessor shall remain  liable for any such money not so remitted.  It
shall be deemed and construed  without further  agreement  between the parties
or their  successors  in interest,  or between the parties and such  successor
owner of the  Premises,  that such  successor  owner has assumed and agreed to
carry  out  any and all  agreements,  covenants,  and  obligations  of  Lessor
thereafter accruing.

Section 42.        Recordation of Lease
       Lessee may elect that a copy of this  Lease or a  memorandum,  executed
and acknowledged by both parties,  be recorded in the public records of Marion
County, Oregon. Lessee shall pay the recording costs.

Section 43. Covenants, Conditions and Restrictions
       Lessee  takes  leases  the  property  subject  to  certain   Covenants,
Conditions and Restrictions which provide,  among other things, for the common
use of certain driveways,  sidewalks,  landscape area and parking facility. As
of the date of this  lease,  the parties are still  negotiating  over  certain
minor points in the Covenants,  Conditions and Restrictions.  In the event the
Covenants,  Conditions and  Restrictions are not recorded prior to the date of
this Ground Lease,  Lessee agrees on demand to subordinate its interest in the
property  to  the  provisions  of  the  recorded  Covenants,   Conditions  and
Restrictions.

Section 44. Statutory Warning
       "THIS  INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY  DESCRIBED IN THIS
INSTRUMENT IN VIOLATION OF APPLICABLE  LAND USE LAWS AND  REGULATIONS.  BEFORE
SIGNING OR ACCEPTING THIS  INSTRUMENT,  THE PERSON  ACQUIRING FEE TITLE TO THE

                                   Page 31
<PAGE>

PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING  DEPARTMENT
TO VERIFY APPROVED USES."

       IN WITNESS WHEREOF, Lessee and Lessor have caused this Lease to be
executed by their duly authorized officers.

Lessor:                                 Lessee:

                                        SOUTH UMPQUA BANK

/s/ Richard Whitt by POA                By:  /s/ Steve May, its Vice
----------------------------------           ---------------------------------
                                             President/Retail Banking
/s/ Barbara Whitt by POA
----------------------------------

/s/ Keith Flicker
----------------------------------

                                   Page 32
<PAGE>

                        FIRST ADDENDUM TO GROUND LEASE

BETWEEN:           Richard Whitt and Barbara Whitt,
                   husband and wife, and Keith Flicker                ("Lessor")

AND:               South Umpqua Bank                                  ("Lessee")
                   an Oregon banking corporation
                   445 SE Main Street
                   Roseburg, OR 97470

EFFECTIVE
DATE:              February 12, 1999.

1.    Section 1.2 is hereby deleted in its entirety and the following language
      substituted in its place:

      "The  foregoing  condition  shall be for the benefit of both parties and
      must be  satisfied  or waived by both the parties on or before 5:00 p.m.
      on March 1, 1999,  or this Lease  shall  terminate  and be of no further
      force and  effect.  In such event  neither  party shall have any further
      liability under this Lease except for liability  accrued before the date
      of termination.

            In addition,  it is a condition  of this Lease that Lessee  secure
      approval from state and federal banking regulatory  agencies to locate a
      branch on the Premises.  Lessee  represents  that it has already applied
      for such  approval  and  covenants  that it will use its best efforts to
      obtain the same.  Lessee shall keep Lessor  informed as to the status of
      its  applications for approval and will promptly notify Lessor when such
      approval is obtained. If approval has not been secured by April 1, 1999,
      either party may terminate this Lease unless it reasonably  appears that
      approval  will be obtained by April 30, 1999, in which event the parties
      shall extend the date for  satisfaction of this condition to the earlier
      of: (i) the date on which Lessee  receives  notice of such approval,  or
      (ii) April 30, 1999. If Lessee elects to terminate this Lease because of
      the  failure to satisfy  the  condition  in this  Section  1.2, it shall
      provide to Lessor evidence that it did not, or, its reasonable judgment,
      could not obtain the necessary regulatory approval."

2.    The last  paragraph  of Section 2 is hereby  deleted in its entirety and
      the following language substituted in its place:

      "Lessor  shall   deliver  the  Premises  with  all  existing   buildings
      demolished  and debris  removed.  Lessor shall prepare the site and fill
      the existing  basement to native  ground level or such other lower level
      as Lessee shall direct in accordance  with the  specifications  attached
      hereto as Exhibit A and by this reference incorporated herein. Lessee

                                    Page 1
<PAGE>

      shall reimburse  Lessor for the cost of such basement fill to the extent
      it is greater than would be the cost of standard  placement of fill with
      a  load-bearing  capacity of 2,500 pounds per square  foot.  The parties
      estimate that Lessee's  reimbursement  obligation will be  approximately
      $1,000.00."

3.     Except as provided in Sections 1 and 2 above, the Lease is unchanged.

LESSOR:                                   LESSEE:

Richard Whitt and Barbara Whitt,          South Umpqua Bank
husband and wife, and Keith Flicker
                                          By:  Steve May, Sr. VP/Retail
Banking                                        -------------------------------
                                               Sr. VP / Retail Banking
s/s Richard Whitt by POA
----------------------------------

s/s Barbara Whitt by POA
----------------------------------

s/s Keith Flicker by POA
----------------------------------

                                    Page 2
<PAGE>

                         EXHIBIT A TO FIRST ADDENDUM

FOUNDATIONS

1.    Preparation - Prior to filling basement, the Contractor shall remove all
      decomposable  materials.  Exposed soils, if any, shall be scarified to a
      depth of at least 6 inches and then be  brought  to the proper  moisture
      content and compacted to 95% Standard Proctor density.

2.    Filling - The Contractor shall clean, free draining fill material within
      the basement, as more fully described  subsequently.  Prior to backfill,
      the basement structure shall be penetrated to provide for escape of free
      water. The structural fill shall be as further described below, properly
      moisture conditioned and compacted:

      a.    Structural fill shall be non-expansive  material,  free of organic
            material and with a maximum aggregate size smaller than 2 1/2" and
            at  least  75%  smaller  than  3/4".  On  site  materials  are not
            suitable, except as described in paragraph 3.

      b.    Structural  fill shall be compacted  to 95%  relative  density per
            ASTM D- 1557 at optimum moisture content.

      c.    Basement fill shall be topped with a minimum thickness of 4 inches
            of 3/4"  minus  road base,  moisture  conditioned  to within 2% of
            optimum moisture content and compacted to at least 95% of Standard
            Proctor density.

3.    Alternate  Fill - Clean  soil  fill  may be  used,  subject  to  weather
      conditions  being suitable for placement and compaction and  conformance
      with the following:

      a.    Prior  to   placement,   representative   soil  samples  shall  be
            appropriately  prepared  and tested for density  per ASTM  D-1557.
            After   compaction  to  95%  relative  density  per  ASTM  D-1557,
            consolidation tests shall be performed on a representative sample.
            The  material  shall be deemed  suitable if maximum  consolidation
            under  2,500 psf load does not exceed  1/4" total for the depth of
            fill.

      b.    Structural fill shall be non-expansive  material,  free of organic
            material and with a maximum aggregate size smaller than 2 1/2" and
            at least 75% smaller than 3/4".  Maximum  portion passing the #200
            sieve shall be 25%.

      c.    Basement fill shall be topped with a minimum thickness of 4 inches
            of 3/4"  minus  road base,  moisture  conditioned  to within 2% of
            optimum moisture content and compacted to at least 95% of Standard
            Proctor density.

SITE PREPARATION

1.    Prior  to  placing  site  fills,   the   Contractor   shall  remove  all
      construction  rubble,  trash, debris,  decomposable  materials and other
      non-soil  components and shall scarify  exposed surface to a depth of at
      least 6 inches. After scarification,  surface shall be brought to within
      1% of optimum  moisture  content and compacted to the density  specified
      below.  Asphaltic,   concrete  and  other  surfaces  and  any  ancillary
      structures   shall  be   constructed   in  accordance   with  civil  and
      architectural plans.

2.    Fill material  shall be free of trash and rock over 6" in diameter.  All
      structural  fill shall be moisture  conditioned  to within 1% of optimum
      moisture content and compacted to at least 95% Standard Proctor density.

3.    Fills within  basement  area outside of building  footprint,  but within
      parking or other  surfaced  area,  shall be  constructed as described in
      Foundations section.

                                    Page 3Real Estate Lease

       THIS LEASE is made and  entered  into this 25th day of  February,  1999
between NE Broadway Partners ("Landlord"), and South Umpqua Bank ("Tenant").

1.   Basic Lease Provisions and Identification of Exhibits.

     1.1  Basic Lease Provisions.

Leased Premises:    Approximately  3,419  square feet of rentable  floor space
                    located  at  1448  NE  Weidler,  Portland,  Oregon  and as
                    depicted in Exhibit A

Applicable
Percentage:         54.792%

Lease Term:                    Five (5) years

Commencement Date:  May 1, 1999, or the opening of business,  whichever occurs
                    first.

Monthly Base Rent:  Tenant   shall  pay  a  monthly  base  rent  as
                    follows:

                               Year 1 - 2   $5,408.00
                               Year 3       $5,692.91
                               Year 4       $5,977.83
                               Year 5       $6,262.75

Permitted Uses:     Bank and Financial Service

Tenant's Broker:    Norris & Stevens

Landlord's Broker:  HSM Pacific

Exhibits:           Leased Premises,  Tenant's Improvements,  Option to Renew,
                    and Rules and Regulations

     1.2  Identification of Exhibits.

          The  Exhibits   identified   in  and  attached  to  this  Lease  are
     incorporated in this Lease by reference.

2. Leased Premises.

     Landlord  hereby  leases  to  Tenant,  and  Tenant  hereby  accepts  from
Landlord,  subject to and with the benefit of the terms and provisions of this
Lease,  the Leased Premises as described in Section 1.1. The real property and

                                      1
<PAGE>

improvements in which the Leased Premises are located are hereinafter referred
to as the "Building."

3.   Term.

     This Lease shall be in effect for the period of time specified in Section
1.1 known as "Lease Term" and hereinafter referred to as the "Term."

4.   Monthly Base Rent, Other Charges, Late Charge, Utilities, and Deposit

     4.1  Monthly Base Rent.

          Commencing on the Commencement  Date,  Tenant shall pay to Landlord,
     without  notice or demand  and  without  any  deduction  whatsoever,  the
     monthly sums set forth in Section 1.1, above,  (the "Monthly Base Rent'),
     which  Tenant  shall pay in  advance  on or before  the first day of each
     calendar month of the Term.

     4.2  Other Charges.

          In addition to the Monthly  Base Rent,  Tenant shall pay to Landlord
     in the  manner  provided  in  Section  4.2  (c),  Tenant's  share  of the
     following items (hereinafter called "Other Charges"):

          (a)  Tenant  shall pay to  Landlord  Tenant's  prorata  share of the
               operating  costs of the  Building.  Tenant's  share shall be an
               amount equal to the total  operating costs during each calendar
               year of the Term,  multiplied by the  "Applicable  Percentage".
               The  "Applicable  Percentage"  is 54.792%,  and  represents the
               percentage that Tenant's  useable space is of the total useable
               space in the  Building.  For the  purposes of this  Section 4.2
               (a), the term "operating costs of the Building" means the total
               costs and expenses that are actual,  reasonable  and necessary,
               and directly attributable to operating, maintaining,  repairing
               and cleaning the Land, and Building, including, but not limited
               to, standard  all-risk  insurance  coverage,  fire and extended
               coverage,  including earthquake  insurance,  the cost of public
               liability  and property  damage  insurance,  rental  insurance,
               personal property taxes and assessments payable on the land and
               improvements  comprising the Building, all repairs not required
               by Landlord referred to in Section 10 hereof,  asphalt patching
               and resurfacing,  lighting,  sanitary control, removal of snow,
               trash and other refuse,  rental maintenance Lease and repair of
               machinery and equipment used in such  maintenance,  the cost of
               personnel  to  implement  such  services,  utility  charges for

                                      2
<PAGE>

               common  areas,  and a  reasonable  allowance  to  Landlord  for
               Landlord's supervision of the operation,  maintenance,  repair,
               etc. of the common  area,  however,  such  allowance  shall not
               exceed ten percent 10% of operating costs. In addition,  Tenant
               shall pay its prorata  share of all real and personal  property
               taxes.  The term  "Property  Taxes" shall  include all real and
               personal property taxes,  assessments,  and other  governmental
               charges, general and special,  ordinary, and extraordinary,  of
               any kind  and  nature  whatsoever  levied  by any  governmental
               authority  against  the land and  improvements  comprising  the
               Building  and any  personal  property  used  in its  operation,
               maintenance and repair,  and all costs and expenses incurred by
               Landlord  in  attempts  to obtain  reductions  in such taxes or
               assessments.   Property  Taxes  include,   without  limitation,
               assessments for roads or other public  improvements or benefits
               which are levied,  assessed or imposed  during the Term of this
               Lease,  and which  become a lien upon the  Building or any part
               thereof,  together with any taxes upon rental payable by Tenant
               hereunder if such taxes are substituted in whole or in part for
               presently  existing ad valorem real property  taxes but only to
               the extent to which such taxes upon rentals are substituted for
               said real property taxes.  However,  "Property Taxes" shall not
               include  any  franchise,  excise,  gift,  estate,  inheritance,
               succession,  capital  levy  or  transfer  tax  of  Landlord  in
               connection  with this Lease or Landlord's  rights in the Leased
               Premises,  or any income,  excess profits or revenue tax charge
               or levy against Landlord upon the business, sales or operations
               of Landlord. Nothing herein shall prevent or prohibit Tenant at
               its own expense from  contesting or instituting all proceedings
               reasonably  necessary  to contest the validity or amount of any
               real or personal  property taxes and assessments  applicable to
               the Leased Premises.

          (b)  Notwithstanding  anything contained herein to the contrary, the
               following shall not be included in the Other Charges:

               (1)  The cost of any capital  addition  to the  Building or the
                    land on which the Building is located,  including the cost
                    to prepare space for occupancy by a new tenant;

                                      3
<PAGE>

               (2)  Expenses for which  Landlord is or will be  reimbursed  by
                    another source;

               (3)  Expenses for the defense of Landlord's title to the Leased
                    Premises or the Building;

               (4)  Structural  repairs and replacements which are required of
                    Landlord under Section 10.1;

               (5)  Depreciation and  amortization of the Building,  financing
                    costs,  including  interest and principal  amortization of
                    debts;

               (6)  Charitable or political contributions;

               (7)  Cost of  improving,  renovating,  or cleaning  space for a
                    tenant or space  vacated by a tenant or items and services
                    selectively supplied to any other tenant;

               (8)  Any amounts expended by Landlord as environmental response
                    costs for  removal,  enclosure,  encapsulation,  clean-up,
                    remediation  or  other  activities   regarding  Landlord's
                    compliance  with  federal,   state,   municipal  or  local
                    hazardous  waste and  environmental  laws,  regulations or
                    ordinances   unless  the  need  for  such  expenditure  by
                    Landlord  is caused in whole or part by  Tenant's  use and
                    occupancy of the Leased Premises;

               (9)  Costs  to  correct   original   defects  in  the   design,
                    construction  or latent defects in the Leased  Premises or
                    the Building;

               (10) Expenses  payable  directly  by  tenant(s)  for any reason
                    (such as excessive utility use);

               (11) Any  repair,  rebuilding  or other  work  necessitated  by
                    condemnation, fire, windstorm or other insured casualty or
                    hazard;

               (12) Any amounts  due as a result of  Landlord's  violation  or
                    failure to comply with any  governmental  regulations  and
                    rules or any court order, decree or judgment;

               (13) Leasing commissions,  advertising expenses and other costs
                    incurred in leasing or procuring new tenants;

                                      4
<PAGE>

               (14) The  salaries  and  benefits  of  executive   officers  of
                    Landlord, if any;

               (15) Attorney's fees, accounting fees and expenditures incurred
                    in connection  with  negotiations,  disputes and claims of
                    other  tenants or  occupants  of the  Building  with other
                    third parties  except as specially  provided in the Lease;
                    as well as cost to  prepare  financial  statements  or tax
                    returns; or

               (16) Cost of the  initial  stock of  tools  and  equipment  for
                    operations, repair and maintenance of the Building.

          (c)  Prior to the  expiration  of each calendar year during the Term
               (or as soon thereafter as such information  becomes  available)
               Landlord will notify  Tenant in writing of Landlord's  estimate
               of  Tenant's  share  of the  Other  Charges  due for  the  next
               calendar  year.  Landlord's  estimate  shall be  based,  to the
               extent  possible,  upon the actual  amount of the Other Charges
               for the immediately  preceding  calendar year. Tenant shall pay
               their estimated  amount in advance in twelve (12) equal monthly
               installments  on the first day of each  month of such  calendar
               year.  Within  thirty (30) days after the end of each  calendar
               year.  Landlord will compute  Tenant's  share for such calendar
               year based upon the actual  amount of the Other Charges for the
               calendar  year,  and if the total amount of Tenant's  share for
               calendar year is less than the actual amount of Tenant's  share
               for  such  calendar   year,   Tenant  shall  pay  Landlord  any
               deficiency.  If the  total  amount  paid  by  Tenant  for  such
               calendar  year  exceeds the actual  amount of  Tenant's  share,
               Landlord shall credit such excess to the next monthly  payments
               which thereafter  become due. If this Lease commences at a time
               other than the beginning of a calendar  year,  Tenant shall pay
               the estimate of Tenant's share for the portion remaining of the
               calendar  year  based  upon the  number of days the Lease is in
               force.  If  this  Lease  expires  at  a  time  other  than  the
               expiration  date of a calendar year,  Tenant shall be obligated
               to pay immediately any deficiencies  which shall be computed at
               the expiration of that calendar  year. If the estimated  amount
               Tenant  has paid for that  calendar  year  exceeds  the  actual
               amount of Tenant's share, and if Tenant has otherwise  complied
               with all the terms and provisions of this Lease, Landlord shall

                                      5
<PAGE>

               refund such excess to Tenant  Tenant's  obligations  under this
               Section shall survive the  expiration  or  termination  of this
               Lease.

          (d)  Landlord shall keep records showing all  expenditures  incurred
               as Other  Charges  and/or  Additional  Rent for each year for a
               period of three years  following  each year,  and such  records
               shall be made  available  for  inspection  by Tenant and/or its
               agents during such period.

          (e)  Any dispute with respect to  Landlord's  calculations  of Other
               Charges under this Lease shall be submitted to an  independent,
               certified  public  accountant  selected  by both  Landlord  and
               Tenant,  whose  decision  shall be binding on the  parties.  If
               Landlord and Tenant are unable to agree on such an  accountant,
               either party may apply to the  Presiding  Judge of the judicial
               district where the Leased  Premises are located for appointment
               of an independent certified public accountant. Where there is a
               variance of two percent (2%) or more between said  decision and
               Landlord's  determination of Tenant's share of Building Charge,
               Common Area Charge and/or  Additional Rent,  Landlord shall pay
               the costs of said audit and shall credit any overpayment toward
               the next Monthly Base Rent payment due. If there is no variance
               or a variance of less than two percent  (2%),  Tenant shall pay
               such costs  including the cost of audit to Landlord  within ten
               (10) days after demand by Landlord.

     4.3  Late Charge.

          If any Monthly  Base Rent  installment  is not  received by Landlord
     from  Tenant  by the  tenth  (10th)  day  of the  month  for  which  such
     installment  is due,  Tenant  shall  immediately  pay to  Landlord a late
     charge equal to five percent (5%) of such installment.

     4.4  Utilities.

          Tenant shall pay before  delinquency,  at its sole cost and expense,
     all charges for water,  gas,  heat,  electricity,  refrigeration,  power,
     telephone  service,  sewer  service  charges,  and all other  services or
     utilities  used in,  upon or about the Leased  Premises  during the Term;
     provided, however, that if any such services or utilities shall be billed
     to Landlord and are not separately  metered to the Leased  Premises,  the
     amount  thereof  shall be  prorated  by  Landlord  among all users of the
     Building based on use of such services or utilities, and Tenant shall pay
     to  Landlord  upon demand  Tenant's  pro rata share of such  charges.  In

                                      6
<PAGE>

     determining this proration of such charges among tenants of the Building,
     Landlord  shall  consider  the  customary  and  historical  uses  of such
     services by similar tenants in similar locations and by Tenant in similar
     locations. If Tenant disagrees with Landlord's determination, the dispute
     shall be subject to arbitration pursuant to ORS 33.210 et seq. with costs
     to be paid by the losing party as designated by the arbitrator.  Landlord
     or Tenant,  as the case may be. shall pay the amount owed to the other as
     set forth in the arbitrator's award. In no event shall Landlord be liable
     for an interruption or failure in the supply of any such utilities to the
     Leased Premises.

5.   Personal Property Taxes.

     Tenant shall pay, or cause to be paid,  before  delinquency,  any and all
taxes  levied  or  assessed  during  the  Term  upon  all  Tenants   leasehold
improvements,  equipment, furniture, fixtures, and any other personal property
located in the Leased Premises.

6.   Licenses and Taxes.

     Tenant  shall be  liable  for,  and shall pay  throughout  the Term,  all
license  and excise  fees and  business  and  occupation  taxes  covering  the
business  conducted by Tenant on the Leased  Premises but excluding any fee or
charge on the net income or revenue of Landlord.

7.   Use.

     7.1  Permitted Uses.

          Tenant  shall  not use or  permit  or  allow  the use of the  Leased
     Premises for any business or purpose  other than set forth in Section 1.1
     above  without  Landlord's  prior  written  consent  which  shall  not be
     unreasonably withheld,  conditioned,  or delayed.  Tenant shall not do or
     permit  anything to be done in or about the Leased Premises other than as
     specified in Section 1.1 or bring or keep anything  therein which will in
     any way  increase  the  existing  rate or  premiums or affect any fire or
     other  insurance  upon the Leased  Premises or the  Building,  or cause a
     cancellation of any insurance  policy covering the Leased Premises or the
     Building or any part thereof or any of its contents.  Tenant shall not do
     or permit or allow  anything  to be done in or about the Leased  Premises

                                      7
<PAGE>

     which  will in any way  obstruct  or  interfere  with the rights of other
     tenants or occupants of the Building.  To the extent compliance is within
     Tenant's  control,  Tenant  shall  conform  to all  applicable  laws  and
     regulations of any public authority affecting the Leased Premises and the
     condition and use thereto, and correct at Tenants own expense any failure
     of compliance  created  through  Tenant's  fault or by reason of Tenant's
     use.

     7.2  Hazardous Substances.

          (a)  Tenant  shall use its best  efforts  to ensure  that  Hazardous
               Substances are not spilled,  leaked,  disposed of, or otherwise
               released  on or under the  Leased  Premises.  Tenant may use or
               otherwise  handle on the Leased  Premises only those  Hazardous
               Substances  typically  used  or sold in the  prudent  and  safe
               operation  of  Tenant's   business   conducted  on  the  Leased
               Premises.  Tenant  may bring upon the  property,  use and store
               materials of a type and quantity  consistent with the operation
               of its permitted  business use,  provided that said storage and
               use are consistent with all current State of Oregon and federal
               law,  statute,  rule  or  regulation  regarding  the  handling,
               storage and use of said materials.

          (b)  Upon twenty (20) days prior written notice to Tenant (except in
               the case of an  emergency)  Landlord  may, but is not obligated
               to,  enter upon the Leased  Premises  and take such actions and
               incur such costs and expenses to effect such  compliance  as it
               deems advisable to protect its interest in the Leased Premises.
               Tenant  shall  reimburse  Landlord  for the full  amount of all
               costs and expenses incurred by Landlord in connection with such
               compliance activities,  and such obligation shall continue even
               after  the  termination  of this  Lease.  Tenant  shall  notify
               Landlord  immediately of any release of any Hazardous Substance
               on the Leased Premises.

          (c)  Tenant agrees to indemnify and hold Landlord  harmless  against
               any and all losses,  liabilities,  suits,  obligations,  fines,
               damages, judgments,  penalties, claims, charges, cleanup costs,
               remedial  actions,  costs  and  expenses  (including,   without
               limitations,  attorneys' fees and  disbursements)  which may be
               imposed on, incurred or paid by, or asserted  against  Landlord
               or the Leased  Premises by reason of, or in connection with (1)
               any  misrepresentation,  breach of warranty or other default by
               Tenant  under  this  Lease,  or (2) the  acts or  omissions  of
               Tenant,  or any subtenant or other person for whom Tenant would

                                      8
<PAGE>

               otherwise be liable,  resulting in the release of any Hazardous
               Substance.

          (d)  In the event of a violation  and/or  emergency  with  immediate
               threat to life, property or environment,  Landlord reserves the
               right to begin  immediate  action  to  correct  said  violation
               and/or  emergency.  Any  measures  taken by  Landlord  will not
               relieve  Tenant of  responsibility  for said  violation  and/or
               emergency.

     7.3  Use and Maintenance of Common Area.

          (a)  The use and  occupation by Tenant of the Leased  Premises shall
               include a right to use the Common Area and other  facilities as
               may be  designated  from  time to time  by  Landlord,  subject,
               however,  to the terms and conditions of this Lease. The Common
               Area and  facilities,  which Tenant may be permitted to use and
               occupy  pursuant to this  paragraph are to be used and occupied
               under a revocable  license,  and if the amount of such areas is
               diminished,  Landlord shall not be subject to any liability nor
               shall  Tenant be entitled to any  compensation,  diminution  or
               abatement of rent,  nor shall such  diminution of such areas be
               deemed constructive or actual eviction.

          (b)  Landlord  shall at all times during the Term of this Lease have
               the following rights with respect to the Common Area.

               (1)  Landlord  shall  have the right  from time to time to make
                    changes in the Common  Area,  including  the  location and
                    relocation of driveways, entrances, exits, parking spaces,
                    the direction and flow of traffic,  landscaped  areas, and
                    all other facilities thereof.

               (2)  Landlord shall have the right to establish, change, alter,
                    amend and to enforce against Tenant and other users of the
                    Common Area, such reasonable  rules and regulations as may
                    be  deemed  necessary  or  advisable  for the  proper  and
                    efficient  operation and  maintenance  of the Common Area.
                    The rules and  regulations  herein  provided  may include,
                    without limitation, the hours during which the Common Area
                    shall be open for use but in no event  shall  the  parking
                    lot be closed  until a  reasonable  period  of time  after
                    Tenant  closes  its  Leased  Premises.  Tenant  agrees  to
                    conform to and abide by all rules and  regulations  in its

                                      9
<PAGE>

                    use and the use by its customers and patrons of the Common
                    Area,   provided,   however,   that  all  such  rules  and
                    regulations  and such types of operation and other matters
                    affecting  the customers and patrons of Tenant shall apply
                    equally and without discrimination to all persons entitled
                    to the use of the Common Area.

               (3)  Landlord shall have the sole and exclusive  control of the
                    Common  Area,  and may at any time  and from  time to time
                    exclude  and  restrain  any person  from use or  occupancy
                    thereof, excepting,  however, bona fide customers, patrons
                    and suppliers of Tenant, and other tenants of Landlord who
                    make use of the Common Area in  accordance  with the rules
                    and regulations  established by Landlord from time to time
                    with  respect  thereto.  Nothing  herein  shall  limit the
                    rights of Landlord at any time to remove any  unauthorized
                    persons.  The rights of Tenant in and to the  Common  Area
                    shall at all times be subject  to the  rights of  Landlord
                    and of other  tenants in the  Building  to use the same in
                    common with Tenant,  and it shall be the duty of Tenant to
                    keep  all  of  the  Common  Area  free  and  clear  of any
                    obstructions  created or  permitted by Tenant or resulting
                    from  Tenant's  operation  and to  permit  the  use of the
                    Common Area only for the purpose hereinabove set forth.

               (4)  Landlord shall have the right to designate  specific areas
                    for the parking of vehicles of the agents and employees of
                    Tenant.  Tenant  shall cause its agents and  employees  to
                    park its vehicles only within such designated areas.

8.   Alterations.

     Tenant shall not make any alterations, additions or improvements in or to
the Leased  Premises  without the prior  written  consent of  Landlord,  which
consent shall not be unreasonably withheld, conditioned or delayed.

9.   Removal of Tenant's Property.

     All trade  fixtures  and  equipment  placed  upon the Leased  Premises or
installed by Tenant during the Term of this Lease shall remain the property of
Tenant.  Upon  expiration  and/or  termination of this Lease,  however caused,

                                      10
<PAGE>

Tenant may,  at  Tenant's  own  expense  remove any or all such  fixtures  and
equipment  Tenant shall repair any physical damage resulting from the removal.
If Tenant fails to remove such property,  Landlord may give Tenant twenty (20)
days written notice  requiring  Tenant to remove the property.  Following such
twenty  (20) day  written  notice,  in the event  Tenant has not  removed  its
property, Landlord may treat the property as abandoned and retain the property
or  Landlord  may  effect a  removal  of the  property  and place it in public
storage on Tenant's account.  In the event of a removal,  Tenant may be liable
to  Landlord  for the cost of  removal,  restoration  of the Leased  Premises,
transportation to storage, and storage.

10.  Maintenance and Repairs.

     10.1 Landlord's Obligations.

          The following shall be the  responsibility of Landlord at Landlord's
     expense:

          (a)  Repair and maintenance of the roof, gutters, exterior walls and
               foundation of the Leased Premises.

          (b)  Repair  and  maintenance  of  exterior  water,  sewer,  gas and
               electrical  services  up to the  point of  entry to the  Leased
               Premises.

     Except as otherwise  specifically  provided herein and unless Landlord is
     grossly  negligent in performing  repairs,  alterations or  improvements,
     there shall be no  abatement  of Monthly  Base Rent and no  liability  of
     Landlord  by  reason  of any  injury  to or  interference  with  Tenant's
     business  arising  from  the  making  of  any  repairs,   alterations  or
     improvements  in or to any portion of the Leased  Premises or Building of
     which the Leased  Premises is a part or in or to fixtures,  appurtenances
     and equipment therein;  provided,  however, if Landlord fails to commence
     repairs of the Building as required in this  Section  10.1 within  twenty
     (20) days after  written  notice from  Tenant,  Tenant may  perform  such
     repairs and deduct the costs  thereof  from the  installments  of Monthly
     Base Rent next falling due; and provided  further,  if such disrepair has
     the effect that Tenant cannot reasonably operate the business for the use
     set forth in  Section  1.1,  then the  Monthly  Base Rent shall be abated
     until  the  Leased  Premises  can be  reasonably  operated  for such use.
     Notwithstanding anything contained herein to the contrary, Landlord shall
     use best  efforts  to  avoid  materially  or  unreasonably  affecting  or
     interrupting Tenant's use, business or operations on or decreasing access
     or visibility of the Leased Premises.

                                      11
<PAGE>

     10.2 Tenant's Obligations

          The  following  shall be the  responsibility  of Tenant at  Tenant's
     expense:

          (a)  Repair of interior walls, ceilings, doors, windows, and related
               hardware,  floors (including floor  coverings),  all electrical
               equipment.  light fixtures,  switches,  and wiring and plumbing
               from the point of entry to the  Leased  Premises  and all other
               appliances  and  equipment  within or  attached  to the  Leased
               Premises.  In  addition,  Tenant  shall  at its  sole  cost and
               expense install or construct any  improvements,  equipment,  or
               fixtures required by any governmental  authority or agency as a
               consequence  of  Tenant's  use  and  occupancy  of  the  Leased
               Premises.  Tenant  shall  replace,  any  damaged  glass  within
               forty-eight (48) hours of the occurrence of such damage.

          (b)  Any  repairs  necessitated  by the  negligence  of Tenant,  its
               agents,  employees, and invitees, except as provided in Section
               13.3 dealing with waiver of subrogation,  but including repairs
               that would  otherwise be the  responsibility  of Landlord under
               Section 10.1.

          (c)  Repair and  maintenance  of the  heating  and air  conditioning
               system.

               (1)  Landlord will employ and pay a contractor  satisfactory to
                    Landlord,  engaged in the business of maintaining systems,
                    to perform regularly scheduled inspections of the Heating,
                    Ventilation  and Air  Conditioning  (HVAC) systems serving
                    the Leased  Premises  and to perform any  necessary  work,
                    maintenance  or repair  thereon,  provided  said rates are
                    competitive.  Tenant shall reimburse Landlord for all sums
                    paid by Landlord in connection therewith.

     10.3 Failure to Maintain.

          If Tenant  fails to keep and  preserve  the Leased  Premises  as set
     forth in Section 10.2, above,  Landlord may, at its option,  put or cause
     the same to be put in the condition and state of repair agreed upon,  and
     in such case, upon receipt of written  statements  from Landlord,  Tenant
     shall  promptly  pay the entire  cost  thereof.  Landlord  shall have the
     right, without liability, to enter the Leased Premises for the purpose of

                                      12
<PAGE>

     making such repairs upon the failure of Tenant to do so with fifteen (15)
     days' notice to Tenant,  unless  Landlord deems entry  necessary  without
     notice due to an emergency.

     10.4 Common Area Maintenance and Repair.

          All repairs to the Leased Premises which Landlord is not required to
     make under  Section 10.1 and Tenant is not required to make under Section
     10.2  shall be deemed  Common  Area  Maintenance  and  Repair and will be
     maintained by Tenant as per Section 24.11.

     10.5 Landlord's Duties.

          Landlord  shall not be in default under this Lease or liable for any
     damages  resulting  from or  incidental  to, nor shall it be an actual or
     constructive  eviction  of  Tenant,  nor shall the  Monthly  Base Rent be
     abated by reason of:

          (a)  The  interruption  of any of the  services  described  in  this
               Section 10;

          (b)  Failure  to furnish or delay in  furnishing  any such  services
               when  such  failure  or  delay is  caused  by  accident  or any
               condition beyond the reasonable control of Landlord,  including
               the making of necessary  repairs or  improvements to the Leased
               Premises or to the Building;

          (c)  Any limitation,  curtailment,  rationing or restrictions on the
               use of  electricity,  water,  gas or any  other  form of energy
               serving the Leased Premises or the Building; or

          (d)  Failure  to make any  repair  or to  perform  any  maintenance,
               unless such  failure  shall  persist for an  unreasonable  time
               after written notice of the need for such repair or maintenance
               is given to Landlord by Tenant.  Landlord  shall use reasonable
               efforts to remedy any  interruption  in the  furnishing of such
               services.

11.  Liens and Encumbrances.

     (a)  Tenant shall keep the Leased Premises and the Building free from any
          liens or encumbrances  arising out of any work performed,  materials
          furnished or obligations incurred by Tenant, and shall indemnify and
          hold Landlord harmless from any and all costs, liability or expenses
          (including attorneys' fees) arising therefrom.

                                      13
<PAGE>

     (b)  Tenant  may  withhold  payment  of any  claim in  connection  with a
          good-faith dispute over the obligation to pay, as long as Landlord's
          property  interests  are not  jeopardized.  If a lien is  filed as a
          result of  nonpayment,  Tenant  shall,  within  ten (10) days  after
          knowledge of the filing,  secure the discharge of the lien or post a
          cash deposit or satisfactory  surety bond in an amount sufficient to
          discharge the lien plus any costs,  attorney fees, and other charges
          that  could  accrue as a result of a  foreclosure  or sale under the
          lien.

12.  Assignment and Subletting.

     No part of the Leased Premises may be assigned,  mortgaged, or subleased,
nor may a right of use of any  portion of the  property  be  conferred  on any
third person by any other means, without the prior written consent of Landlord
which will be subject to the factors  discussed  below.  This provision  shall
apply to all  transfers  by operation  of law. If Tenant is a  corporation  or
partnership,  this provision  shall apply to any transfer of a majority voting
interest  in stock or  partnership  interest  of  Tenant.  No  consent  in one
instance shall prevent the provision from applying to subsequent instances. In
determining  whether  to consent  to  assignment  Landlord  may  consider  the
following  factors:  financial  ability of assignee;  business  experience  of
assignee;  compatibility of use with other tenants in the Building;  zoning or
other use restrictions; and other factors which Landlord may deem prudent.

13.  Insurance and Indemnity.

     13.1 Insurance.

          (a)  During the entire Term Tenant shall,  at its expense,  maintain
               adequate  liability  insurance  with an  insurance  company  or
               companies  acceptable to Landlord with a combined  single limit
               of $1,000,000  for personal  injuries and property  damage,  to
               indemnify  both  Landlord  and Tenant  against any such claims,
               demands,  losses, damages,  liabilities and expenses.  Landlord
               shall be named as an additional  insured and shall be furnished
               with  a  certificate   of   insurance,   which  shall  bear  an
               endorsement that the same shall not be canceled except upon not
               less than thirty (30) days' prior  written  notice to Landlord.
               Tenant shall also at its own expense maintain, during the Term,
               all-risk insurance covering its furniture,  fixtures, equipment
               and  inventory  in an  amount  equal  to the  replacement  cost
               thereof, and insurance covering all plate glass and other glass
               on the Leased  Premises.  Tenant shall  provide  Landlord  with

                                      14
<PAGE>

               copies of the policies of insurance  or  certificates  thereof.
               Landlord shall carry all-risk fire insurance on the Building.

          (b)  Landlord  will  not  carry  insurance  of  any  kind  on any of
               Tenant's  improvements or on Tenant's  furniture or furnishings
               or on any fixtures, equipment, improvements or appurtenances of
               Tenant under this Lease, and Landlord shall not be obligated to
               repair any  damage  thereto  or  replace  the same,  except for
               damages or loss caused by Landlord or  Landlord's  agents or by
               the gross negligence of Landlord or Landlord's agents.

     13.2 Indemnification.

          (a)  Landlord  shall not be liable for injury to any person,  or for
               the loss of or damage to any  property  (including  property of
               Tenant)  occurring  in or about the  Leased  Premises  from any
               cause  whatsoever,  except for Landlord's  gross  negligence or
               misconduct.   Tenant  hereby  indemnifies  and  holds  Landlord
               harmless from and agrees to defend Landlord against any and all
               claims, charges, liabilities,  obligations, penalties, damages,
               costs  and  expenses   (including   attorneys'  fees)  arising,
               claimed,  charged or incurred  against or by Landlord  from any
               matter  or  thing  arising  from  Tenant's  use of  the  Leased
               Premises,  the conduct of its  business  or from any  activity,
               work or other  things done or  permitted  by Tenant in or about
               the Leased  Premises.  Tenant shall further  indemnify and hold
               Landlord  harmless from and against any and all claims  arising
               from any breach or default in the performance of any obligation
               on  Tenant's  part or to be  performed  under the terms of this
               Lease, or arising from any act or negligence of Tenant,  or any
               officer, agent, employee, guest, or invitee of Tenant, and from
               all costs,  attorneys'  fees, and  liabilities  incurred in the
               defense of any such claim or any action or  proceeding  brought
               thereon and in case any action or proceeding be brought against
               Landlord  by reason of such  claim.  Tenant,  upon  notice from
               Landlord,  shall defend the same at Tenant's expense by counsel
               reasonably   satisfactory  to  Landlord.   The  indemnification
               provided  for in  this  Section  with  respect  to any  acts or
               omission  during  the  Term of this  Lease  shall  survive  any
               termination or expiration of this Lease.  Except for conditions
               under  Landlords  control.  Landlord  shall not be  liable  for
               interference with light or air or view or for any latent defect
               in the Leased  Premises.  Tenant shall promptly notify Landlord

                                      15
<PAGE>

               of  casualties  or  accidents  occurring in or about the Leased
               Premises.

          (b)  Landlord  shall  indemnify  and defend  Tenant  from any claim,
               loss, liability, cost or expense, including Tenant's reasonable
               attorney  fees and  costs,  arising  out of or  related  to any
               activity of Landlord, its employees,  agents or contractors, on
               the Leased  Premises or any  condition  of the Leased  Premises
               caused or contributed to by Landlord, its agents, employees, or
               contractors,  or any  breach  of any  duty,  representation  or
               warranty of Landlord under this Lease; provided,  however, that
               Landlord  shall have no  liability  for  damages due to natural
               causes or  causes  outside  Landlord's  reasonable  control  or
               supervision.

     13.3 Waiver of Subrogation.

          Landlord  and  Tenant  hereby  mutually   release  each  other  from
     liability  and waive all right of  recovery  against  each  other,  their
     agents,  employees,  customers  and invitees for any loss in or about the
     Leased Premises,  from perils insured against under their respective fire
     and  all-risk  insurance  contracts,   including  any  extended  coverage
     endorsements  thereof,  whether  due to  negligence  or any other  cause;
     provided  that this Section  shall be  inapplicable  if it would have the
     effect,  but only to the extent it would have the effect, of invalidating
     any insurance coverage of Landlord or Tenant.

14.  Eminent Domain.

     14.1 Partial Taking.

          If a portion of the Leased  Premises is  condemned  and Section 14.2
     does not apply, the Lease shall continue on the following terms:

          (a)  Landlord  shall be  entitled to the  proceeds  of  condemnation
               attributable to the real property and improvements  (except for
               Tenant's  leasehold  improvements and trade  fixtures).  Tenant
               shall  have  no  claim  against  Landlord  as a  result  of the
               condemnation  except that  Tenant  shall be entitled to receive
               any proceeds for  interruption of Tenant's  business and to any
               award  attributable to Tenant's leasehold  improvements,  trade
               fixtures and equipment.

                                      16
<PAGE>

          (b)  Landlord  shall proceed as soon as reasonably  possible to make
               such  repairs  and  alterations  to the Leased  Premises as are
               necessary  to  restore  the  remaining  Leased  Premises  to  a
               condition as  reasonably  practicable  to that  existing at the
               time of the  condemnation.  Base  Rent  shall be  abated to the
               extent that the Leased  Premises  is unusable by Tenant  during
               the period of alteration and repair.

          (c)  After the date on which title vests in the condemning authority
               or  an  earlier  date  on  which  alterations  or  repairs  are
               commenced  by  Landlord  to restore  the  balance of the Leased
               Premises in anticipation of taking, the Monthly Base Rent shall
               be  reduced  in  proportion  to the  reduction  in value of the
               Leased  Premises as an economic  unit on account of the partial
               taking. If the parties are unable to agree on the amount of the
               reduction of Monthly Base Rent,  the amount shall be determined
               by arbitration.

     14.2 Total Taking.

          If a  condemning  authority  takes all of the Leased  Premises  or a
     portion  sufficient to render the remaining  Leased  Premises  reasonably
     unsuitable  for the  use  that  Tenant  was  then  making  of the  Leased
     Premises, the Lease shall terminate as of the date the title vests in the
     condemning authorities.  Such termination shall have the same effect as a
     termination  under  Section  14.1.  Landlord  shall  be  entitled  to the
     proceeds  of   condemnation   attributable   to  the  real  property  and
     improvements  (except for Tenants  leasehold  improvements  and  Tenant's
     trade fixtures).  Tenant shall have no claim against Landlord as a result
     of the  condemnation,  provided  Tenant  shall be entitled to receive any
     proceeds for  interruption  of Tenant's  business or relocation  expenses
     made available by the  condemning  authority and Tenant shall be entitled
     to any award attributable to Tenant's leasehold improvements and Tenant's
     trade fixtures and equipment.

     14.3 Sale in Lieu of Condemnation.

          Sale of all or part of the Leased  Premises to a purchaser  with the
     power of  eminent  domain in the face of a threat or  probability  of the
     exercise of the power shall be treated for the  purposes of this  Section
     14.3 as a taking by condemnation.

                                      17
<PAGE>

     15.1 Default.

          Any of the following shall constitute a default by Tenant under this
     Lease:

          (a)  Tenant's  failure to pay rent or any monetary  obligation under
               this Lease  within 10 days after it is due  provided,  however,
               Landlord  will not be required  to notify  Tenant more than one
               time  during  any twelve  (12)  month  period of failure to pay
               rent.

          (b)  Tenant's  insolvency,  business  failure or assignment  for the
               benefit of its creditors.  Tenant's commencement of proceedings
               under any  provision of any  bankruptcy  or  insolvency  law or
               failure to obtain  dismissal of any petition  filed  against it
               under such laws  within  the time  required  to answer;  or the
               appointment of a receiver for Tenant's properties.

          (c)  Assignment or subletting by Tenant in violation of Section 12.

          (d)  Vacation  or  abandonment  of the Leased  Premises  without the
               written  consent  of  Landlord  or failure to occupy the Leased
               Premises  within  twenty  (20) days after  notice of  tendering
               possession.

          (e)  Tenant's  failure to comply  with any other  term or  condition
               within twenty (20) days following  written notice from Landlord
               specifying the noncompliance.  If such noncompliance  cannot be
               cured within the twenty (20) day period,  this provision  shall
               be satisfied if Tenant commences  correction within such period
               and  thereafter  proceeds  in good  faith  and with  reasonable
               diligence to effect compliance as soon as possible.

     15.2 Legal Expenses.

          In case of default as described in Section 15.1, Landlord shall have
     the right to the following  remedies  which are intended to be cumulative
     and in addition to any other remedies provided under applicable law:

     (a)  Landlord may at its option  terminate the Lease by notice to Tenant.
          With or without  termination,  Landlord may retake possession of the

                                      18
<PAGE>

          Leased  Premises  and may use or relet the Leased  Premises  without
          accepting surrender or waiving the right to damages.  Following such
          retaking  of  possession,  efforts by  Landlord  to relet the Leased
          Premises  shall be sufficient if Landlord uses  reasonable  and good
          faith  efforts for  finding  tenants for the space at rates not less
          than the current rates for other  comparable  space in the Building.
          If Landlord  has other  vacant  space in the  Building,  prospective
          tenants  may be placed in such  other  space  without  prejudice  to
          Landlord's claim to damages or loss of rentals from Tenant.

     (b)  Landlord may recover all damages  caused by Tenant's  default  which
          shall  include  an  amount  equal to  rentals  lost  because  of the
          default,  lease commissions paid for this Lease, and the unamortized
          cost  of any  tenant  improvements  installed  by  Landlord  to meet
          Tenant's  special  requirements.  Landlord may sue  periodically  to
          recover damages as they occur throughout the Term, and no action for
          accrued  damages  shall bar a later action for damages  subsequently
          accruing.  Landlord  may elect in any one action to recover  accrued
          damages  plus  damages  attributable  to the  remaining  Term of the
          Lease. Such damages shall be measured by the difference  between the
          Monthly Base Rent under this Lease and the  reasonable  rental value
          of the Leased  Premises for the remainder of the Term  discounted to
          the time of judgment at the prevailing interest rate on judgments.

     (c)  Landlord may make any payment or perform any obligation which Tenant
          has failed to perform,  in which case Landlord  shall be entitled to
          recover  from  Tenant  upon  demand all  amounts so  expended,  plus
          interest  from  the date of the  expenditure  at the rate of one and
          one-half  percent (1.5%) per month.  Any such payment or performance
          by Landlord shall not waive Tenant's default.

16.  Default by Landlord.

     Landlord  shall  not be in  default  unless  Landlord  fails  to  perform
obligations  required of Landlord within twenty (20) days after written notice
by Tenant to Landlord which describes the default; provided,  however, that if
the nature of  Landlord's  obligation  is such that more than twenty (20) days
are  required  for  performance,  then  Landlord  shall not be in  default  if
Landlord  commences  performance  within  such  twenty  (20)  day  period  and
thereafter diligently prosecutes the same to completion.

                                      19
<PAGE>

17.  Damage or Destruction.

     No  damages,  compensation  or claim  shall be  payable by  Landlord  for
inconvenience,  loss of  business  or  annoyance  arising  from any  repair or
restoration of any portion of the Leased Premises or the Building.

     17.1 Destruction.

          If the Leased  Premises or the Building in which the Leased Premises
     are located are destroyed or damaged such that the cost of repair exceeds
     fifty  percent  (50%) of the value of the  structure  before the  damage,
     either  party  may  elect to  terminate  the  Lease a~ of the date of the
     damage or  destruction  by notice given to the "other in writing not more
     than  sixty (60) days  following  the date of  damage.  If neither  party
     elects to terminate,  Landlord  shall  diligently  proceed to restore the
     Leased Premises to substantially  the same or better form as prior to the
     damage  or  destruction  so  as  to  provide  Tenant  with  usable  space
     equivalent  in quantity and character and in the same location as existed
     prior to the damage or  destruction.  Tenant shall be responsible for the
     cost to rebuild  any  fixtures  or  improvements  not  insured  under the
     insurance  policy  referred  to in Section  13.1  unless  such  damage or
     destruction was caused or by the gross negligence of Landlord, its agents
     or employees,  or persons under the control or  supervision  of Landlord.
     Work shall commence as soon as reasonably  possible and thereafter  shall
     proceed  without  interruption  except for work  stoppages  on account of
     labor disputes and matters beyond Landlord's reasonable control.

     17.2 Rent Abatement.

          Rent  shall be abated  during the repair of any damage to the extent
     the Leased Premises are untenantable,  except that there shall be no rent
     abatement  where the damage  occurred as the result of the  negligence of
     Tenant, its employees, agents or contractors.

     17.3 Damage Late in Term.

          If damage or  destruction  to which  Section 17.1 would apply occurs
     within one year before the end of the then-current Term, Tenant may elect
     to terminate the Lease by written  notice to Landlord given within thirty
     (30) days after the date of the damage.

                                      20
<PAGE>

     17.4 Express Agreement.

          The  provisions  of this  Section  shall be  considered  an  express
     agreement  governing any case of damage or destruction of the Building or
     Leased Premises by fire or other casualty.

18.  Subordination and Attornment

     18.1 Subordination.

          This Lease shall be subordinate to any existing or future  mortgages
     or deeds of trust on the Building or on the  leasehold  interest  held by
     Landlord,  and to any extensions,  renewals,  or replacements thereof. At
     the request of Landlord,  Tenant shall  promptly  execute and deliver all
     instruments  which may be appropriate to further secure and document such
     subordination.

     18.2 Attornment.

          If the interest of Landlord is  transferred  to any person or entity
     by reason of  foreclosure  or other  proceedings  for  enforcement of any
     mortgage,  deed of trust or  security or by delivery of a deed in lieu of
     foreclosure or other proceedings, Tenant shall upon delivery to Tenant by
     said   transferee  of  a   nondisturbance   agreement,   immediately  and
     automatically  attorn  to such  person  or  entity.  In the event of such
     transfer,  this  Lease  and  Tenant's  rights  hereunder  shall  continue
     undisturbed so long as Tenant is not in default.

     18.3 Tenant's Certificate.

          Tenant and or Landlord  shall at any time and from time to time upon
     not less than three  days' prior  written  notice  from  Landlord  and or
     Tenant  execute,  acknowledge  and  deliver to  Landlord  and or Tenant a
     statement in writing (a) certifying  that this Lease is unmodified and in
     full  force and  effect  (or,  if  modified,  stating  the nature of such
     modification  and  certifying  that this Lease as so  modified is in full
     force and  effect),  and the date to which the rents are paid in advance,
     if any,  and (b)  acknowledging  that there are not, to  Tenant's  and or
     Landlord's knowledge, any uncured defaults on the part of Landlord and or
     Tenant hereunder, or specifying such defaults if any are claimed, and (c)
     setting forth the date of  commencement  of Monthly Base Rents.  Any such
     statement may be relied upon by any prospective purchaser or encumbrancer
     of all or any portion of the Building.

                                      21
<PAGE>

     18.4 Transfer or Sale of Property.

          Should Landlord sell or transfer, in any way, its ownership interest
     or a portion  thereof  of the  Leased  Premises,  the new owner  shall be
     required  to honor this  Lease  including  extensions  thereof so long as
     Tenant is not in default.

19.  Access by Landlord.

     Landlord or Landlord's employees,  agents, and contractors shall have the
right to enter the Leased Premises with reasonable  notice to examine the same
or to make such repairs,  alterations,  improvements  or additions as Landlord
may deem necessary or desirable. If Tenant is not personally present to permit
entry and an entry is  necessary,  Landlord may in case of emergency  forcibly
enter the same, without rendering Landlord liable therefor.  Nothing contained
herein shall be  construed  to impose upon  Landlord any duty of repair of the
Leased Premises or the Building except as otherwise  specifically provided for
herein.

20.  Abandonment of Leased Premises.

     Should Tenant vacate or abandon the Leased Premises or be dispossessed by
process of law or  otherwise  for more than twenty (20)  business  days,  such
abandonment, vacation or dispossession shall be deemed a breach of this Lease,
and, in addition to any other  rights which  Landlord  may have,  Landlord may
remove any personal  property  belonging to Tenant which remains on the Leased
Premises  and store the  same,  the cost of such  removal  and  storage  to be
charged to the account of Tenant.

21.  Attorney's Fees and Court Costs.

     The prevailing party shall recover from the losing party, attorney's fees
and costs if an  attorney  is hired to collect  the rental due  herewith or to
enforce  compliance  with any of the terms,  covenants or  conditions  of this
Lease.  The losing  party  promises and agrees to pay the  prevailing  party's
reasonable  attorney's  fees and costs even  though no suit or action is filed
hereon.  However,  if a suit or action is filed, the amount of such reasonable
attorney's  fees  shall be fixed by the  court or  courts in which the suit or
action,  including any appeal therein,  is tried,  heard or decided.  Such sum
shall  include an amount  estimated by the court as the  reasonable  costs and
fees to be  incurred  by the  prevailing  party  in  collecting  any  monetary
judgment  or award or  otherwise  enforcing  each  order,  judgment  or decree
entered in such suit, action or other  proceedings.  Attorney's fees and costs

                                      22
<PAGE>

include those  attorney's fees and costs incurred  seeking relief from stay in
bankruptcy courts.

22.  Quiet Enjoyment

     Tenant,  upon fully  complying  with and promptly  performing  all of the
terms, covenants and conditions of this Lease on its part to be performed, and
upon the prompt and timely payment of all sums due  hereunder,  shall have and
quietly enjoy the Leased Premises for the Term set forth herein as against any
adverse  claim of Landlord or any third party  claiming  by,  through or under
Landlord.

23.  Signs.

     Tenant  shall not place or suffer to be placed on the  exterior  walls of
the Leased  Premises or upon the roof or any  exterior  door or wall or on the
exterior or interior of any window thereof any sign, awning, canopy,  marquee,
advertising matter, decoration, letter or other thing of any kind, without the
prior written consent of Landlord. Tenant, at Tenant's expense, shall have the
right to install signage consistent with Landlord's size and design guidelines
upon Landlord's written approval, which shall not be unreasonably withheld.

24.  Holdover.

     If  Tenant  shall  continue  to  occupy  the  Leased  Premises  after the
expiration  or  sooner  termination  of  this  Lease,  Tenant  shall  pay,  as
liquidated  damages,  for each month of continued occupancy an amount equal to
one and  one-half  (1.5) times the  monthly  rent being paid for the month the
Lease  expires or is  terminated.  No receipt of money by Landlord from Tenant
after  expiration or termination of this Lease shall  reinstate or extend this
Lease or affect any prior notice given by Landlord to Tenant.

25.  Miscellaneous.

     25.1 Tenant Defined.

          The word  "Tenant" as used herein shall mean each and every  person,
     partnership  or  corporation  who is mentioned as a Tenant  herein or who
     executes this Lease as Tenant.

     25.2 Joint Obligation.

          If there be more than one Tenant, the obligations  hereunder imposed
     shall be joint and several.

                                      23
<PAGE>

     25.3 Broker's Commission.

          Landlord and Tenant represent and warrant that they have incurred no
     liabilities  or claims for  brokerage  commissions  or  finder's  fees in
     connection  with the execution of this Lease and that they have not dealt
     with  or  have  any  knowledge  of  any  real  estate  broker,  agent  or
     salesperson  in  connection  with this Lease  other than the  individuals
     named in Section 1.1.

     25.4 Recording.

          Tenant shall not record this Lease without the prior written consent
     of Landlord.

     25.5 Notices.

          Any notice required in accordance with any of the provisions  herein
     if to Landlord shall be delivered or mailed by first class US mail to the
     address of Landlord as set forth by the  signature of the Parties,  or at
     such other place as Landlord  may in writing  from time to time direct to
     Tenant, and if to Tenant,  shall be delivered or mailed by first class US
     mail to Tenant at the Leased Premises.  If there is more than one Tenant,
     any notice required or permitted  hereunder may be given by or to any one
     thereof,  and shall  have the same  force and effect as if given by or to
     all thereof.  Notices shall be deemed received on the date hand delivered
     or on the date that is three days after  proper  mailing if sent by first
     class US mail.

     25.6 Time.

          Time  is of the  essence  of  this  Lease  and  each  and all of its
     provisions in which performance is a factor.

     25.7 Prior Agreements.

          This Lease contains all of the agreements of the parties hereto with
     respect to any matter  covered or mentioned  in this Lease,  and no prior
     agreements  or  understanding  pertaining  to any such  matters  shall be
     effective for any purpose.  No provisions of this Lease may be amended or
     added to except by an agreement in writing  signed by the parties  hereto
     or their  respective  successors  in  interest.  This Lease  shall not be
     effective  or binding on any party until fully  executed by both  parties
     hereto.

                                      24
<PAGE>

     25.8 Choice of Law.

          This Lease  shall be  governed by the laws of the state in which the
     Leased Premises are located.

     25.9 Confidentiality.

          Tenant  agrees  to keep  all  terms  and  conditions  of this  Lease
     strictly  confidential  and  not  directly  or  indirectly  divulge  such
     information to any third party without  Landlord's  prior written consent
     except  that the Tenant may report any  information  required  by laws or
     regulations applicable to tenant.

     25.10 Portion of Rent.

          In the event of  commencement or termination of this Lease at a time
     other than the beginning or end of one of the specified  rental  periods,
     then  the  Monthly  Base  Rent  shall  be  prorated  as of  the  date  of
     commencement  or termination  and in the event of termination for reasons
     other than default,  all prepaid rent shall be refunded to Tenant or paid
     on its account.

     25.11 Net Lease.

          Landlord  and Tenant  acknowledge  that this Lease is a "net  lease"
     with  respect  to  taxes,   insurance,   utility  service,   repairs  and
     maintenance  of the Leased  Premises  and Common  Areas.  Landlord  shall
     receive all Monthly Base Rents and all payments  hereunder that Tenant is
     required  to  make  to  Landlord  free  from  any  charges,  assessments,
     impositions, expenses, deductions and offsets.

     IN WITNESS WHEREOF,  the parties hereto have executed this instrument the
day and year first above set forth.

LANDLORD                                        TENANT
NE Broadway Partners                            South Umpqua Bank
P0 Box 529                                      1448 NE Weidler
Eugene, OR 97440                                Portland, OR  97232

                                      25
<PAGE>

                                  EXHIBIT A

           Floor Plan showing Useable Space and Shared Common Area

                                      26
<PAGE>

                                  EXHIBIT B

NE Broadway Partners
Real Property Lease

Tenant lmprovement Provisions.

1.   Building Standard Components Provided By Landlord.

     Landlord  agrees to deliver the Leased  Premises  with all  utilities and
     mechanical  systems  in good  working  order  and all  existing  portable
     fixtures removed from the Leased Premises.

2.   Tenant lmprovement Allowance Provided By Landlord.

     In addition to the items  specified in paragraph 1 above,  Landlord  will
     provide an allowance of $30,000. Such allowance will be used by Tenant in
     the Leased Premises to provide: lighting, partitions, carpet, paint, etc.
     and shall be paid to Tenant upon  receipt of a  Certificate  of Occupancy
     and the release of all liens.

3.   lmprovements Constructed By Tenant.

     3.1  All  work  that  is  to  be  performed  in  connection  with  Tenant
          Improvements on the Leased Premises by Tenant or Tenant's contractor
          is hereafter  referred to as tenant's work ("Tenant's Work"), and is
          subject to the following conditions:

     3.2  Such  Tenant's  Work  shall not  proceed  until  Landlord's  written
          approval  which  shall not be  unreasonably  withheld of each of the
          following items: (1) Tenant's  contractor;  (2) public liability and
          property damage insurance  carried by Tenant or its contractor;  and
          (3) schematic  plans and  specifications  which shall be prepared by
          Tenant's Planner at Tenant's  expense.  All such Tenant's Work shall
          be  done  in   strict   conformity   with  such   final   plans  and
          specifications.

     3.3  Tenant  shall  obtain at  Tenant's  expense  any  required  building
          permits.  All  Tenant's  Work shall be  performed  at Tenant's  sole
          expense in accordance  with the building  permits and all applicable
          governmental regulations. Notwithstanding any failure by Landlord to
          object  to  any  such  Tenant's   Work,   Landlord   shall  have  no
          responsibility   for  Tenant's   failure  to  meet  all   applicable
          regulations.  Tenant shall hold  Landlord  harmless from any and all
          liability,  costs, damages, expenses (including attorneys' fees) and
          from any liens resulting from Tenant's Work.

                                      27
<PAGE>

     3.4  If, in  conjunction  with the  application  for or  issuance  of any
          permits,  or  certificates  to either Landlord or Tenant or to their
          respective   designees  with  respect  to  the  commencement  and/or
          completion  of  either   Landlord's   work  or  Tenant's  work,  any
          governmental or  quasi-governmental  authority  having  jurisdiction
          requires the  performance of any work to correct or modify  Building
          structure or Building access  (including front or back entry/door to
          Tenant's space) in order to receive permit or certificate, then this
          work shall be performed by Landlord at Landlord's sole expense.

     3.5  Tenant shall  provide  Landlord  with work  commencement  notice and
          Tenant's  contractors  construction  schedule for all Tenant's work.
          Landlord shall be informed in advance of any Tenant's work requiring
          access to the adjoining  tenant's  leased space or disruption of any
          utility service to the Building.

     3.6  If any work  performed  by  Tenant  or  Tenant's  contractor  is not
          performed  properly  or if the  Leased  Premises  are  not  properly
          cleaned,  Landlord shall notify Tenant and Tenant shall correct such
          work and clean the Leased Premises.

                                      28
<PAGE>

                                  EXHIBIT C

NE Broadway Partners
Real Property Lease

Option to Renew.

At the  end of the  original  Lease  Term,  providing  Tenant  is not  then in
default,  Tenant  shall  have the right and  option to renew this Lease for an
additional  five (5) year term.  In the event Tenant  exercises  the option to
renew,  Tenant shall give Landlord  written notice of intent to renew not less
than  one-hundred  eighty (180) days and not more than  two-hundred  ten (210)
days  prior to the end of the  original  Term.  In the event  Tenant is not in
default  and gives the notice to  Landlord  within  the time set forth  above,
this  Lease  shall be  renewed  for a period of five (5)  years  upon the same
terms and  conditions as set forth herein  except for rent.  The parties shall
meet  within  thirty  (30) days of the date Tenant  gives  Landlord  notice of
intent to renew the Lease and agree upon the rent which will be  determined by
market rates then in effect.

At the end of the first option period  described  above,  providing  Tenant is
not then in  default,  Tenant  shall  have the right and  option to renew this
Lease for an additional five (5) year term. In the event Tenant  exercises the
option to renew,  Tenant shall give Landlord written notice of intent to renew
not less than one-hundred  eighty (180) days and not more than two-hundred ten
(210) days prior to the end of the original  Term.  In the event Tenant is not
in default and gives the notice to Landlord  within the time set forth  above,
this  Lease  shall be  renewed  for a period of five (5)  years  upon the same
terms and  conditions as set forth herein  except for rent.  The parties shall
meet  within  thirty  (30) days of the date Tenant  gives  Landlord  notice of
intent to renew the Lease and agree upon the rent which will be  determined by
market rates then in effect.

Arbitration.

If a dispute  arises  between the parties  concerning the rental rates for the
option  periods,  either  party may  request  arbitration  and  appoint  as an
arbitrator  an  independent  real  estate  professional  having  knowledge  of
valuation of rental  properties  comparable to the Leased Premises.  The other
party shall also choose an arbitrator  with such  qualifications,  and the two
arbitrators  shall  choose a  third.  If the  choice  of the  second  or third
arbitrator  is not made  within  ten (10)  days of the  choosing  of the prior
arbitrator,  then  either  party  may  apply  to the  presiding  judge  of the
judicial  district  where the Leased  Premises are located for  appointment of
the required arbitrator.

The  arbitration  shall  proceed  according to the Oregon  statutes  governing
arbitration,  and the  award of  arbitrators  shall  have the  effect  therein
provided.  The  arbitration  shall take  place in the county  where the Leased
Premises are located.  Costs of the arbitration shall be shared equally by the
parties,  but  each  party  shall  pay  its  own  attorney  fees  incurred  in
connection  with  the  arbitration.  The  purpose  of  the  arbitrators  is to
establish a fair market rental value.

                                      29
<PAGE>
                                  EXHIBIT D

NE Broadway Partners
Real Property Lease

Rules and Regulations.

1.   No sign, placard, picture, advertisement,  name or notice shall be posted
     or affixed on or to any part of the outside of the Building or the Leased
     Premises  except a suite  number  and  Tenant  name  outside  the  Leased
     Premises  entry door without the prior consent of Landlord,  and Landlord
     shall have the right to remove any sign, placard, picture, advertisement,
     name or notice posted in violation of this rule, without notice to and at
     the expense of Tenant.

2.   The sidewalks,  exits or entrances  shall not be obstructed by any Tenant
     or used for any purpose other than for ingress and egress from the Leased
     Premises.  The  exits,  entrances,  and  roof  are not for the use of the
     general  public  and  Landlord  shall in all  cases  retain  the right to
     control and prevent  access  thereto by all persons whose presence in the
     judgment  of Landlord  shall be  prejudicial  to the  safety,  character,
     reputation and interests of the Building and its tenants.

3.   Tenant shall not alter any lock or install any new or additional locks or
     any bolts on any door of the Leased Premises or the Building  without the
     prior written consent of Landlord.

4.   The restrooms and the fixtures and equipment  contained therein shall not
     be used for any purpose other than that for which they were  constructed.
     Restroom  fixtures  shall  not  be  used  for  the  disposal  of  foreign
     substances  (e.g.  coffee  grounds)  and  the  expense  of any  breakage,
     stoppage or damage  resulting  from violation of this rule shall be borne
     by the responsible Tenant.

5.   Tenant  shall not permit the Leased  Premises to be occupied or used in a
     manner offensive or objectionable to the other occupants of the Building,
     persons  having  business  therein,   or  the  occupants  of  neighboring
     buildings.  Specifically, Tenant shall not use, keep or permit to be used
     or kept any  noxious  gas or odorous  substance  in the Leased  Premises.
     Tenant shall not allow any animals of any kind to be brought into or kept
     in or about the Leased Premises or the Building. Tenant shall not make or
     permit to be made any loud or disturbing  noises,  whether by any musical
     instrument, audio equipment, appliance, or in any other way. Tenant shall
     not install any radio or television antenna, loudspeaker, or other device
     on the roof or exterior walls or windows of the Building.

                                      30
<PAGE>

6.   Tenant  shall not install  vinyl,  tile,  carpet or other  similar  floor
     covering  so that the same  shall be  affixed  to any floor of the Leased
     Premises in any manner  except as approved  by  Landlord.  The expense of
     repairing  any  damage  resulting  from a  violation  of this  rule or of
     removing any floor  coverings  affixed in violation of this rule shall be
     borne by Tenant.

7.   Before leaving the Building,  Tenant and Tenant's employees shall (1) see
     that the doors of the Leased Premises are closed and securely locked; (2)
     shut off all water faucets and water-using  appliances;  and (3) shut off
     all lights  except  security  night lights and  appliances  which consume
     electricity,  so as to prevent  waste or damage.  Tenant shall  indemnify
     Landlord and other tenants for any injuries sustained by any of them as a
     result of any violation of this rule.

8.   Landlord  reserves  the right to exclude or expel from the  Building  any
     person who, in the  judgment of  Landlord,  is  intoxicated  or under the
     influence  of liquor or drugs,  or who shall in any  manner do any act in
     violation of any of the Rules and Regulations of the Building.

9.   The  requirements of Tenant will be attended to only upon  application at
     the Building  management office.  Employees of Landlord shall not perform
     any work or do anything  outside of their  regular  duties  unless  under
     special instructions from Landlord, and no employee will admit any person
     (tenant or otherwise) to any office  without  specific  instruction  from
     Landlord.

10.  Without the prior written  consent of Landlord,  Tenant shall not use the
     name of the  Building  to promote or  advertise  the  business  of Tenant
     except as Tenant's address.

11.  Tenant agrees that it shall comply with all fire and security regulations
     that may be  issued  from time to time by  Landlord.  Tenant  shall  also
     provide  Landlord with the name of a designated  responsible  employee to
     represent   Tenant  in  all  matters   pertaining  to  fire  or  security
     regulations.

12.  Landlord reserves the right to rescind, alter or waive, by written notice
     to Tenant,  any rule or regulation  prescribed  for the Building when, in
     Landlord's  judgment,  it is necessary,  desirable or proper to take such
     action in the best  interest of the Building and its tenants.  The waiver
     of a rule or regulation for the benefit of a particular tenant or tenants
     shall not be construed as a waiver of such rule or regulation in favor of
     any other tenant or tenants,  nor shall any such waiver prevent  Landlord
     from thereafter enforcing the rules or regulation in question against any
     or all tenants of the Building.

13.  These Rules and  Regulations  supplement  and shall not be  construed  to
     modify or amend the provisions of the Lease  Agreement or other agreement
     between  Landlord and Tenant.  In the event of any conflict between these
     Rules and Regulations and the Lease Agreement and any agreement  executed
     by Landlord and Tenant, the Lease Agreement shall prevail.

                                      31
<PAGE>

14.  Landlord may require  Tenant to provide  Landlord  the license  number at
     automobiles  to be parked  in the  parking  lot  pursuant  to the  rights
     granted  hereunder.  Landlord may provide  parking  stickers to Tenant to
     identify  automobiles  parked in such  parking  lot. In such  event,  any
     automobiles  parked in areas  allocated for Tenants of the Building which
     are not  properly  identified  as  automobiles  belonging  to Tenant,  or
     employees or agents thereof, may be removed by Landlord without notice to
     Tenant.  The cost of any such  removal  shall be borne by Tenant.  In the
     event of any repeated violations of the rules and regulations promulgated
     by Landlord  with  respect to the parking  lot,  Landlord  shall have the
     right to revoke Tenant's parking  privileges  granted  hereunder  without
     terminating  this  Lease.  Any  such  revocation  shall be  evidenced  by
     delivery of written notice to Tenant.

                                      32
<PAGE>

                                   ADDENDUM

Signage.   Landlord   understands   that  Tenant  will  pursue   approval  for
increased signage beyond the current  thirty-two (32) square feet maximum with
the City of  Portland.  If  approval  is  granted,  Tenant  intends to install
individualized   dimensional  lettering,   which  is  the  mutually  preferred
solution  for the  building.  If Tenant is unable to  receive  increase  their
allowed square footage for signage,  Landlord will approve appropriately sized
and designed acceptable alternate signage.

Final  approval will be  contingent  upon  Landlord's  review of complete shop
drawings  showing  placement,  construction  and  connections  prior  to  work
commencing.

                                      33

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]