LEASE AGREEMENT

LEASE SUMMARY

591 and 599 Lighthouse Avenue
Monterey, California 93940

Lease Date: December 30, 2004

Lessor: JULIET B. HOOKER, KATHERINE B. CONGDON and WILLIAM C. BURKETT,
Co-Trustees of the William Andrew Burkett Trust dated March 13, 1985, as to an
undivided one-half interest, and JULIET. B. HOOKER, KATHERINE B. CONGDON and
WILLIAM C. BURKETT, Co-Trustees of the Juliet J. Burkett Testamentary Trust
dated March 13, 1981, as to an undivided one-half interest (collectively doing
business as Burkett Land Company).

Address of Lessor: Burkett Land Company, 101 Laurel Street, San Francisco,
California 94118

Lessee: CENTRAL COAST BANCORP, a California corporation

Address of Lessee: Community Bank of Central California, 301 Main Street
Salinas, California 93901

Premises: 591 and 599 Lighthouse Avenue, Monterey, California

Floor Area of the Premises: Approximately 3,296 square feet

Property: Refer to Exhibit B-1 and Exhibit B-2

Initial Term: Sixty (60) months

Initial Term Commencement Date: January 1, 2005

Option Terms: Two (2) sixty (60) month options to extend (see Paragraph 3[a])

Fixed Minimum Rent During Initial Term: $5,438.40 per month for the period
January 1, 2005 through December 31, 2005. Fixed Minimum Rent will be adjusted
by the increase in CPI annually pursuant to Paragraph 4(b) of the Lease.

Fixed Minimum Rent During Option Terms: At the commencement of each Option Term,
the Fixed Minimum Rent shall be increased by the increase in the CPI or
increased to the Fair Market Rent, whichever is greater, pursuant to Paragraph
4(c) of the Lease, and thereafter will be adjusted by the increase in CPI
annually.

Estimated Additional Rent: $1,121.00 per month, which amount is subject to
adjustment pursuant to Paragraph 4(d).

Security Deposit: $5,438.40.

Permitted Use: Commercial or retail bank, financial services and operations
incidental to such uses.

The foregoing Lease Summary is incorporated into and made a part of this Lease.
Each reference in this Lease to the Lease Summary shall mean the respective
information set out above and shall be construed to incorporate ail of the terms
contained in the particular Lease paragraph pertaining to such information. In
the event of any conflict between the provisions of the Lease Summary and the
provisions of the Lease, the latter shall control.

TABLE OF CONTENTS

Lease Summary   i   Table of Contents  1. Definitions  1   2. Demise of
Premises  2   3. Term  2   4. Rent  3   5. Security Deposit  8   6. Use of the
Premises  8   7. Insurance  10   8. Taxes  13   9. Common Areas  13   10.
Condition of the Premises and Property  16   11. Repairs and Maintenance  16  
12. Alterations and Compliance with Governmental Requirements  17   13.
Utilities  19   14. Advertising and Signs  20   15. Assignment and Subletting 
20   16. Access to the Premises  22   17. Eminent Domain  23   18. Damage or
Destruction  24   19. Hold Harmless  25   20. Default and Remedies  26   21.
Bankruptcy  28   22. Waivers  29   23. No Accord and Satisfaction  29   24.
Subordination and Attornment  29   25. Estoppel Certificates  30   26. Surrender
and Holding Over  30   27. Sale of the Premises by Lessor  31   28. Notices  31
  29. Brokers  31   30. Limitation of Lessor's Liability  32   31. Lessor Right
to Perform  32   32. General Provisions  32  

Attachments

Lease Summary

Exhibit A     Diagram of Premises.

Exhibit B-1   Diagram of the Property

Exhibit B-2   Legal Description of the Property

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”), dated for reference purposes only as of
December 30, 2004, is made and entered into by and between JULIET B. HOOKER,
KATHERINE B. CONGDON and WILLIAM C. BURKETT, Co-Trustees of the William Andrew
Burkett Trust dated March 13, 1985, as to an undivided one-half interest, and
JULIET B. HOOKER, KATHERINE B. CONGDON and WILLIAM C. BURKETT, Co-Trustees of
Juliet J. Burkett Testamentary Trust dated March 13, 1981, as to an undivided
one-half interest (collectively doing business as Burkett Land Company)
(collectively, “Lessor”) and CENTRAL COAST BANCORP, a California corporation
(“Lessee”).

In consideration of the mutual covenants and agreements contained in this Lease,
and other valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Lessor and Lessee agree as follows:

1. DEFINITIONS. As used in this Lease:

(a)  Building The term “Building” refers to the “building improvements” located
on the Property of which the Premises are a portion and commonly known as 585,
591 and 599 Lighthouse Avenue, Monterey, California. The Building is shown on
Exhibit B-1. The Building contains approximately 4,856 gross square feet of
floor area.

(b)  Common Area. The term “Common Area” refers to that portion of the Property
designated from time to time by Lessor for the ingress and egress of pedestrians
and motor vehicles to and from the public streets adjoining the Property and the
parking of motor vehicles, including areas devoted to sidewalks, landscaping and
service delivery facilities. Without limiting the generality of the foregoing,
such term shall include traffic lanes, the vehicle parking spaces, and areas
between such parking spaces (including landscaped areas), walkways, and except
as specifically set forth in this Lease, any other areas of the Property
provided for the common use of the tenants and occupants of the Property and
their customers.

(c)  Floor Area of the Premises. The term “Floor Area of the Premises” refers to
the number of gross square feet shown in the Lease Summary. Lessor and Lessee
agree that for purposes of this Lease, the Floor Area of the Premises shall be
the number of gross square feet shown in the Lease Summary notwithstanding that
the Premises may contain a greater or lesser number of square feet of floor
area.

(d) Initial Term Commencement Date. The term "Initial Term Commencement Date"
refers to the date of commencement of the Term of this Lease as set forth in the
Lease Summary.

(e) Initial Term Expiration Date. The term "Initial Term Expiration Date" refers
to the date of expiration of the Term of this Lease as set forth in the Lease
Summary.

(f) Lessee's Proportionate Share. The term "Lessee's Proportionate Share" refers
to the Floor Area of the Premises divided by the gross floor area of the
Building. Lessee's Proportionate Share is 67.87%.

(g) Premises. The term “Premises” refers to that commercial space located
substantially as outlined in green on Exhibit A attached to this Lease, together
with those appurtenances specifically granted to Lessee in this Lease; reserving
and excepting to Lessor the exclusive use of the exterior walls (other than
storefront), the roof, and the areas beneath and above the Premises, together
with the right to install, maintain, use, and replace utility ducts, wires,
conduits, and pipes leading through the Premises in locations which will not
materially interfere with Lessee’s use of the Premises.

(h) Property. The term “Property” refers to the real property owned by Lessor
located at (i) 585 Lighthouse Avenue, Monterey, California (referred to as
Assessor’s Parcel 001-065-016-000), (ii) 591 and 599 Lighthouse Avenue,
Monterey, California (referred to as Assessor’s Parcel 001-065-016-000), and
(iii) 584 Hawthorne Street, Monterey, California (referred to as Assessor’s
Parcel 00.1 -065-017-000); The Property is; outlined in orange on Exhibit B-1
and described in Exhibit B-2.

2.  DEMISE OF PREMISES. Lessor hereby leases the Premises to Lessee, and Lessee
hires and leases the Premises from Lessor, for the term, at the rental, and upon
the covenants and conditions contained in this Lease. This Lease and the rights
of Lessee under this Lease are subject and subordinate to ail easements,
rights-of-way, covenants, conditions, restrictions, deeds of trust, mortgages,
and other matters shown in the public records affecting the Property.

3. TERM. ----

(a) Initial Term. The initial term of this Lease shall be for the period
commencing on the Initial Term Commencement Date and expiring, unless sooner
terminated as provided in this Lease or extended pursuant to Paragraph 3(b)
below, at midnight on the Initial Term Expiration Date.

(b) Option Terms. Lessor grants to Lessee the option to extend the Initial Term
of this Lease for two (2) successive periods of sixty (60) months each (each an
“Option Term” and together the “Option Terms”). Lessee shall exercise the first
Option Term, if at all, by giving Lessor written notice exercising the first
Option Term not earlier than January 1, 2008 or later than January 1, 2009. If
Lessee has validly exercised the first Option Term, then Lessee shall exercise
the second Option Term, if at all, by giving Lessor written notice exercising
the second Option Term not earlier than January 1, 2013 or later than January 1,
2014. In no event shall any purported exercise of either of the Option Terms by
Lessee be effective if any default by Lessee (after the giving of any required
notice and the lapse of any period of cure provided in Paragraph 20(a) below)
shall exist under this Lease at the time of giving of such notice or on the date
of commencement of the applicable Option Term, and in any such case Lessee’s
exercise of the applicable Option Term shall be null and void and the Term of
this Lease shall end and expire at the end of the Initial Term without regard to
the Option Terms, or if the first Option Term has been validly exercised by
Lessee, the Term of this Lease shall end and expire at the end of the first
Option Term without regard to the second Option Term. Each of the Option Terms
shall be upon all of the provisions and conditions of this Lease, except that
the Fixed Minimum Rent for each of the Option Terms shall be as set forth in
Paragraph 4(c). below. As used in this Lease, the term “Term” shall mean the
Initial Term and, if validly exercised by Lessee pursuant to the provisions of
this Paragraph 3(b), each of the Option Terms.

4. RENT.

(a)  Fixed Minimum Rent During Initial Term. Commencing on the Commencement Date
and, subject to adjustment as provided in Paragraph 4(b), continuing throughout
the Initial Term, Lessee shall pay to Lessor Fixed Minimum Rent in the amount
set forth in the Lease Summary. If the Commencement Date should occur on a date
other than the first day of a month, or if the Expiration Date should occur on a
day other than the last day of a month, then Fixed Minimum Rent for such
fractional month shali be prorated on a daily basis based upon a thirty (30) day
month. Lessee shall pay the first month’s Fixed Minimum Rent (as set forth in
the Lease Summary) to Lessor upon execution of this Lease by Lessee.

(b)  Annual Adjustment of Fixed Minimum Rent. The Fixed Minimum Rent shall be
adjusted annually on each anniversary of the Commencement Date during the Term
(each, an “Adjustment Date”) in the manner provided in this Paragraph 4(b),.
except that the adjustment of Fixed Minimum Rent occurring on any Adjustment
Date that is also the date of commencement of an Option Term shall be determined
in the manner provided in Paragraph 4(c) below.

(i) Calculation of Adjustment. On the first Adjustment Date (i.e., January 1,
2006) and on each Adjustment Date thereafter the Fixed Minimum Rent shall be
increased to an amount determined by multiplying the Fixed Minimum Rent payable
under this Lease for the month immediately preceding the applicable Adjustment
Date by a fraction the denominator of which is the Index (as defined below) for
the month which is thirteen (13) months prior to the month during which the
applicable Adjustment Date occurs and the numerator of which is the Index for
the month immediately preceding the month during which the applicable Adjustment
Date occurs. The Fixed Minimum Rent so determined shall be the Fixed Minimum
Rent payable under this Lease for the twelve (12) month period commencing on the
applicable Adjustment Date. By way of illustration only, on the first Adjustment
Date (i.e., January 1, 2006) the Fixed Minimum Rent payable for December 2005
will be multiplied by a fraction the denominator of which is the Index for
December 2004 and the numerator of which is the Index for December 2005; if the
Fixed Minimum Rent for December 2005 is $5,438.40, the Index for December 2004
is 206 and the Index for December 2005 is 214, the adjusted Fixed Minimum Rent
starting January 1, 2006 would be $5,649.60 (i.e., $5,438.40 x 214/206 =
$5,649.60). Notwithstanding the foregoing to the contrary, in no event shall the
Fixed Minimum Rent as so adjusted be less than the Fixed Minimum Rent payable
for the month immediately preceding the applicable Adjustment Date.

(ii) Index. The Index for computing the adjustment in the Fixed Minimum Rent
shall be the Consumer Price Index (All Items) for all Urban Consumers for the
San Francisco/Oakland/San Jose area published by the United States Department of
Labor, Bureau of Labor Statistics, 1982-84 = 100 (the “Index”). If the Index is
changed so that a base period other than 1982-84 shall equal 100, then the Index
shall be converted in accordance with the conversion factor published by the
United States Bureau of Labor Statistics. If the Index is discontinued or
revised, the index designated as the successor or substitute to the Index by the
government of the United States shall be substituted. If no successor or
substitute index is so designated, Lessor shall designate an index prepared by
an appropriate government entity, corporation or other entity which reasonably
approximates the Index to be used in the replacement of the Index.

(iii) Notice of Adjustment. Lessor shall compute each adjustment in the Fixed
Minimum Rent as soon as practicable following each Adjustment Date and shall
deliver to Lessee a written statement showing the adjusted Fixed Minimum Rent
and the method used to compute the adjusted Fixed Minimum Rent. Lessee shall
continue to pay the same amount of Fixed Minimum Rent as is payable immediately
prior to the Adjustment Date until receipt of Lessor’s statement. Within ten
(10) days following receipt of such statement, Lessee shall pay to Lessor any
difference between the Fixed Minimum Rent paid by Lessee and the adjusted Fixed
Minimum Rent for the period from the applicable Adjustment Date to the date of
Lessor’s statement, and thereafter shall pay the adjusted Fixed Minimum Rent
shown in Lessor’s statement. Any delay in the delivery of any statement showing
the adjusted Fixed Minimum Rent shall not affect the obligation or liability of
Lessee to pay the adjusted Fixed Minimum Rent as provided in this Paragraph
4(b).

(c) Fixed Minimum Rent During Option Terms. At the commencement of the each of
the Option Terms, the Fixed Minimum Rent shall be increased to an amount equal
to the greater of (i) the amount determined pursuant to Paragraph 4(b), or
(c)*** the Fair Market Rent (as defined below) for the Premises, which greater
amount shall be the Fixed Minimum Rent payable under this Lease for the first
twelve (12) month period of the applicable Option Term. Thereafter, the Fixed
Minimum Rent so determined shall be adjusted annually on each Adjustment Date
during each of the Option Terms in the manner provided in Paragraph 4(b) above.
As used in this Paragraph 4(c), the term “Fair Market Rent” shall mean the
monthly amount, projected for the date of commencement of the applicable Option
Term, that a willing tenant would pay, and a willing landlord would accept (what
Lessor is accepting in then current transactions for the Building shall be
considered), for space comparable to the Premises in a comparable quality
commercial or office building located in the vicinity of the Building, taking
into account the age, quality and layout of the existing improvements in the
Premises, for a term of sixty (60) months and otherwise on the terms set forth
in this Lease. In no event shall the Fair Market Rent be less than the monthly
Fixed Minimum Rent for the Premises payable for the month immediately preceding
the date of commencement of the Option Term.

Lessor and Lessee shall have sixty (60) days following the date of receipt by
Lessor of Lessee’s notice of exercise of the applicable Option Term to agree
upon the Fixed Minimum Rent payable for the first twelve (12) month period of
the applicable Option Term. If Lessor and Lessee are unable to agree upon the
Fixed Minimum Rent during such sixty (60) day period, then either Lessor or
Lessee may elect to obtain a determination of the Fair Market Rent by appraisal
in the manner provided below in this Paragraph 4(c) by written notice given to
the other party within thirty (30) days following expiration of the aforesaid
sixty (60) day period.

If either Lessor or Lessee elects to obtain a determination of the Fair Market
Rent by the requisite notice, then, Lessor and Lessee each shall, within fifteen
(15) days following receipt of such notice of election, appoint a real estate
appraiser who shall be a member of the American Institute of Real Estate
Appraisers (“AIREA”) and shall have at least five (5) years experience in
appraising the rent for commercial and office properties in the Monterey,
California area and who shall not be directly affiliated with Lessor or Lessee,
and such appraisers shall each determine the Fair Market Rent based upon
prevailing comparable rentals in the Monterey, California area.. Such appraisers
shall, within forty-five (45) days after their appointment, complete their
appraisals and submit their written appraisal reports to Lessor and Lessee. If
the appraisers were unable to agree upon the amount of the Fair Market Rent and
if the higher appraised Fair Market Rent is not more than one hundred five
percent (105%) of the lower appraised Fair Market Rent, then the two (2)
appraised Fair Market Rent amounts shall be added together and divided by two
(2), and the result shall be used in determining the Fixed Minimum Rent for the
first twelve (12) months of the applicable Option Term pursuant to this
Paragraph 4(c).

If the higher appraised Fair Market Rent is more than one hundred five percent
(105%) of the lower appraised Fair Market Rent, then the appraisers, within
fifteen (15) days after submission of the last appraisal report, shall appoint a
third appraiser who shall be a member of the AIREA meeting the qualifications
set forth in this Paragraph 4(c). Such third appraiser shall, within forty-five
(45) days after his or her appointment, determine by appraisal the Fair Market
Rent and submit his or her written appraisal report to Lessor and Lessee. If a
third appraiser is appointed to determine the Fair Market Rent, then the Fair
Market Rent determined by the third appraiser shall be controlling, unless (i)
the Fair Market Rent determined by the third appraiser is less than that the
lower appraised Fair Market Rent set forth in the appraisal reports previously
obtained, in which case the lower appraised Fair Market Rent set forth in the
appraisal reports previously obtained shall be controlling, or (ii) the Fair
Market Rent determined by the third appraiser is greater than the higher
appraised Fair Market Rent set forth in the appraisal reports previously
obtained, in which case the higher appraised Fair Market Rent set forth in the
appraisal reports previously obtained shall be controlling.

If either Lessor or Lessee fails to appoint an appraiser, or if an appraiser
appointed by either of them fails, after his or her appointment, to submit his
or her appraisal report within the period required in this Paragraph 4(c), the
appraisal report submitted by the appraiser properly appointed and timely
submitting his or her appraisal report shall be controlling. If the two
appraisers appointed by Lessor and Lessee are unable to agree upon the
appointment of a third appraiser within the required period in accordance with
this Paragraph 4(c), then within fifteen (15) days thereafter either Lessor or
Lessee may make application to the office of the AIREA in or nearest to
Monterey, California, which shall appoint a member of said institute meeting the
qualifications set forth in this Paragraph 4(c) willing to serve as an
appraiser. Each party shall pay the fees and costs of the appraiser appointed by
such party and the parties shall each pay fifty percent (50%) of the fees and
costs of the third appraiser.

Upon the determination of the Fixed Minimum Rent for the first twelve (12) month
period of the applicable Option Term, Lessor shall prepare and Lessor and Lessee
shall execute and deliver an amendment to this Lease extending the term of this
Lease for the applicable Option Term and setting forth the Fixed Minimum Rent
payable during the first twelve (12) months of the applicable Option Term.

(d) Additional Rent. Beginning on the Commencement Date and thereafter
throughout the Term, Lessee shall pay to Lessor as additional rent (“Additional
Rent”) equal monthly installments on account of (i) all of “Lessor’s Insurance
Premiums” (as defined in Paragraph 7[b]) for insurance on the Premises and the
591-599 Lighthouse Avenue property, (ii) Lessee’s Proportionate Share of the
“Lessor’s Insurance Premises” for the 584 Hawthorne Street property, (iii) all
of the “Real Property Taxes” (as defined in Paragraph 8[a]) assessed against the
Premises and the 591-599 Lighthouse Avenue property, and (iv) Lessee’s
Proportionate Share of the “Real Property Taxes” assessed against the 584
Hawthorne Street property, together with an administrative fee equal to ten
percent (10%) of the total of such items. The amount of the Additional Rent
shall be reasonably estimated by Lessor annually in a written statement given to
Lessee by Lessor, and may be revised by Lessor from time to time by written
notice given to Lessee. Additional Rent shall be payable monthly in advance at
the time and at the place where Fixed Minimum Rent is payable. Lessee shall pay
the first month’s estimated Additional Rent (in the amount set forth in the
Lease Summary) to Lessor upon execution of this Lease by Lessee. Notwithstanding
the foregoing to the contrary, any amount paid by Lessor (i) to cover the
deductibles on the insurance to be maintained by Lessor pursuant to Paragraph
7(b), and (ii) because the insurance to be maintained by Lessor pursuant to
Paragraph 7(b) does not cover one hundred percent (100%) of the loss, shall, for
the purposes of this Paragraph 4(d), be amortized, together with interest at the
Interest Rate (as defined in Paragraph 4[g] below), over the useful life of the
items paid for from such amounts, and only that portion of such amortization
that is allocable to each year of the Term of this Lease shall be included in
Additional Rent for that year.

Within ninety (90) days after the end of each calendar year during the Term, or
as soon thereafter as practicable, Lessor shall provide Lessee with a written
reconciliation of the amount of Additional Rent paid by Lessee and the
Additional Rent actually incurred by Lessor during the preceding calendar year.
Within ten (10) days after receipt of such statement, Lessee shall pay to Lessor
any deficiency in the amount of Additional Rent paid by Lessee as shown in such
statement. If such statement shows that Lessee paid more in Additional Rent than
the Additional Rent actually incurred by Lessor, then Lessor shall apply the
surplus payment to the next installment of Additional Rent payable by Lessee.

(e) Additional Charges. Lessee shall pay all charges, fees and expenses and
other amounts as provided in or due under the provisions of this Lease
(“Additional Charges”). Lessor shall have the same remedies for Lessee’s failure
to pay any item of Additional Rent or Additional Charges when due as for failure
to pay any installment of Fixed Minimum Rent when due. As used in this Lease,
the term “Rent” shall mean all Fixed Minimum Rent, Additional Rent, Additional
Charges and all other amounts, payable to Lessor by Lessee under the provisions
of this Lease.

(f) Late Payment Charge. Lessee acknowledges that late payment by Lessee of any
Rent under this Lease will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which is extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by the terms of any ground lease,
mortgage or deed of trust covering the Property. Accordingly, if any Rent is not
received by Lessor within five days after the due date, Lessee shall pay to
Lessor as a late charge an additional sum equal to five percent (5%) of the
amount overdue. Lessor and Lessee agree that such late charge represents a fair
and reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of a late charge by Lessor shall in no event constitute a
waiver of the failure of Lessee to pay the overdue amount.

(g) Interest on Past-Due Rent. Any Rent which is not received by Lessor when due
shall bear interest at the rate of twelve percent (12%) per annum, but not
exceeding the maximum rate permitted by law (the “Interest Rate”), from the date
due until payment in full is received by Lessor.

(h) Manner of Payment. All payments of Rent shall be made without prior notice
or demand and without abatement, offset, deduction or counterclaim, to Burkett
Land Company at the address of Lessor set forth in the Lease Summary, or at such
other place as Lessor shall designate in writing from time to time, in lawful
money of the United States of America. All payments of Fixed Minimum Rent and
Additional Rent are payable in advance and are due on the first day of each
month. If Lessee has not paid two (2) or more installments of Fixed Minimum Rent
or Additional Rent when due during any twelve (12) month period of the Term,
Lessor may, in its sole and absolute discretion, require Lessee to prepay Rent
quarterly in advance by cashier’s or certified check.

(i) Net Lease. This Lease shall be an absolute net Lease and Fixed Minimum Rent
shall be paid to Lessor absolutely net of all costs and expenses of the
Premises, Building and Property. The provisions for payment of Additional Rent
are intended to pass onto Lessee and reimburse Lessor for all costs and expenses
incurred in connection with the ownership, maintenance and operation of the
Premises, Building and Property by Lessor and such additional facility as may be
determined by Lessor to be necessary to the Premises, Building and/or the
Property.

5. SECURITY DEPOSIT. Lessee shall pay to Lessor the amount set out in the Lease
Summary as the amount of the Security Deposit as security for the timely, full
and faithful performance by Lessee of each and every term, provision, covenant
and condition of this Lease (the “Security Deposit”). Lessee shall pay the
Security Deposit to Lessor in cash upon execution of this Lease by Lessee. In
the event Lessee fails to timely and fully perform any of the terms, provisions,
covenants or conditions of this Lease, including but not limited to the payment
of Rent, Lessor may use, apply or retain the whole or any part of the Security
Deposit for the payment of any Rent not so paid; for the repair of damage to the
Premises, the Building or the Common Area for which Lessee is responsible; for
the performance of the obligations of Lessee; for the cleaning and repair of the
Premises upon the expiration or termination of the Term; or for any other
purpose required or necessitated in Lessor’s discretion by reason of Lessee’s
failure to timely and fully perform the obligations of Lessee under this Lease,
but such Security Deposit shall in no event be construed as liquidated damages.
Should Lessee faithfully and fully perform and comply with all the terms,
provisions, covenants and conditions of this Lease, the Security Deposit or any
balance thereof, shall be returned to Lessee or, at the option of Lessor, to the
last assignee of Lessee’s interest in this Lease within thirty (30) days
following the expiration of the Term. Lessor shall not be required to segregate
the Security Deposit from Lessor’s general accounts and Lessee shall not be
entitled to any interest on the Security Deposit.

In the event that the Security Deposit, or any portion thereof, is appropriated
and applied by Lessor for the payment of overdue Rent or otherwise used or
applied by Lessor as provided in this Paragraph 5, Lessee shall, within five (5)
days after written demand by Lessor, remit to Lessor a sufficient cash amount to
restore the Security Deposit to its full original amount.

In the event that Lessor conveys or transfers the Property, and as a part of
such conveyance or transfer, Lessor assigns its interest in this Lease, the
Security Deposit (or so much of the Security Deposit that has not been applied
as provided in this Paragraph 5) shall be transferred to Lessor’s grantee,
transferee, assignee, or successor, and upon such transfer Lessor shall be
released and discharged from any further liability to Lessee with respect to the
Security Deposit.

6. USE OF THE PREMISES.

(a) Permitted Use. Lessee shall use the Premises solely for the purpose set out
in the Lease Summary. Lessee shall not use or permit the Premises to be used for
any other purpose or purposes whatsoever without the prior written consent of
Lessor, which consent Lessor may grant or withhold in Lessor’s reasonable
discretion.

Lessee shall obtain and keep in force and effect during the Term all permits,
licenses and approvals required for the lawful operation of Lessee’s business in
the Premises. Upon written request by Lessor, Lessee shall provide Lessor with
copies of all such required permits, licenses and approvals.

(b) Impermissible Uses.

(i) No Nuisance. Lessee shall not allow, suffer or permit the Premises or any
use thereof to constitute a nuisance or to interfere with the safety, comfort or
enjoyment of the Property by Lessor, other lessees of the Property or other
persons lawfully entitled to the use or enjoyment of the Property or any portion
of the Property, or the safety, comfort or enjoyment of lessees, occupants, or
owners of property adjoining the Property. Lessee shall confine to the Premises
music and other sounds and/or visual effects (e.g., unusually bright or flashing
lights, spot lights or similar devices) generated in, on or about the Premises
so as not to permit such sounds and/or visual effects to be seen or heard
outside of the Premises. Lessee shall not commit or allow the commission of any
waste upon the Premises or the Property.

(ii) Insurance Requirements. Lessee shall not do or permit anything to be done
in or about the Premises or bring or keep anything therein, which will in any
way increase the rate of fire or other insurance upon the Premises, the Building
or the Property. Lessee shall, at its sole cost and expense, comply with any and
all requirements pertaining to the Premises or the operations of Lessee on the
Property of any insurance company or rating bureau necessary or appropriate for
the maintenance of Lessor’s insurance covering the Building and the Property and
its appurtenances.

(iii) No Auction, Fire or Bankruptcy Sales. No auction, fire, bankruptcy or
"going out of business" sale may be conducted on or about the Premises. Lessee
shall not use or permit the use of any portion of the Premises as sleeping
apartments, lodging rooms or for any unlawful or immoral use or purpose.

(iv) Disposal of Rubbish. Lessee shall keep the Premises, walkways adjacent to
the Premises, any loading platform and service areas allocated for the use of
Lessee, and the Property clean and free from rubbish and dirt at all times, and
shall store all trash and garbage within the Premises and arrange for the
regular pick-up and proper disposal of such trash and garbage at Lessee’s
expense. Lessee shall not burn any trash or garbage of any kind in or about the
Property.

(c) Hazardous Materials. Lessee shall not store or use in, on or about the
Premises any hazardous, toxic, flammable, carcinogenic, reactive or dangerous
material, substance or waste (collectively, “Hazardous Materials”), except in
compliance with all manufacturer and supplier guidelines and all governmental
requirements including, but not limited to, the obtaining of any required
permits or approvals and/or the posting of any required notices or warnings.
Lessee shall maintain all required governmental permits and approvals for the
transportation, generation, storage or use of Hazardous Materials in or about
the Premises. Lessee shall, upon demand, provide Lessor with current a list of
all such substances stored or kept upon the Premises including the name and
quantity of each such substance. Lessee shall not cause or permit the disposal
or release of any Hazardous Materials in, on or about the Premises, the Building
or the Property. Lessee shall not place any Hazardous Materials in the plumbing
or drains of the Premises, Building or the Property.

(d). • Plumbing. The plumbing facilities, fixtures and apparatus located on the
Premises or the Property shall not be used for any purpose other than that for
which they are constructed, and no foreign, bulky or non-rapidly degradable
substance of any kind (including, but not limited to, grease, hair, caustic or
reactive materials and unaerated foods) shall be put into the drains, and the
expense of any breakage, stoppage or damage resulting from a violation of this
provision, whether on or off the Premises, by Lessee or Lessee’s employees,
agents, invitees, licensees or contractors shall be borne by Lessee. Without
limiting the foregoing, Lessee shall, at its own expense, if reasonably required
by Lessor, install devices in the plumbing to prevent damage thereto from
foreign substances.

(e)  Defacement of Surfaces. Lessee, its employees or agents, shall not mark,
hail, paint, drill into, or in any way deface any part of the Premises or the
Building, except to affix standard pictures or other wall hangings on the
interior walls of the Premises so long as they are not visible from the exterior
of the Building. Lessee shall not lay linoleum, tile, carpet or other similar
floor covering so that the same shall be affixed to the floor of the Premises in
any manner, except as approved by Lessor in writing. The. expense of repairing
any damage resulting from a violation of this provision or removal of any floor
covering shall be borne by Lessee.

(f)  No Representation by Lessor. Lessee acknowledges and agrees that Lessor has
made no representation or warranty (and no such representation or warranty shall
be implied from anything contained in this Lease) concerning the nature, quality
or suitability of the Premises, the Building or the Property for the conduct of
Lessee’s business.

7. INSURANCE.

(a) Lessee’s Insurance. Lessee shall, at all times during the Term, maintain in
full force and effect at Lessee’s sole cost and expense: (i) Workers’
Compensation insurance with limits of liability and coverage as required by
California law; (ii) Employer’s Liability insurance with a limit of liability of
not less than Two Million Dollars ($2,000,000.00) per occurrence; (iii)
Commercial Public Liability insurance, including property damage coverage,
covering the Premises and the operations of Lessee, with a combined single limit
of liability of not less than Two Million Dollars ($2,000,000.00) per
occurrence; (iv) Automobile Liability Insurance, including non-owned automobile
liability coverage, with a limit of liability of not less than Two Million
Dollars ($2,000,000.00); (v) plate glass insurance coverage on all exterior
plate glass in the Premises; and (vi) so called “All-Risk” hazard insurance
(including vandalism, malicious mischief and sprinkler leakage coverage)
covering all of Lessee’s leasehold improvements, furniture, fixtures, equipment
and personal property located in, on or about the Premises, the Building or the
Property in an amount equal to the full amount of the replacement cost of such
leasehold improvements, furniture, fixtures, equipment and personal property.

All such insurance shall be written by one or more insurance companies rated
A+/X or better in “Best’s Insurance Guide,” or such other rating as may be
required by any lender holding a lien on the Property, and licensed to do
business and to issue insurance in California. Lessee’s Commercial Public
Liability insurance shall name Lessor, and such other persons, firms, or
corporations as may be designated from time to time by Lessor, as additional
insureds, shall be written as primary insurance and not contributing with any
insurance that Lessor may carry and shall include a contractual liability
endorsement covering the indemnity obligations of Lessee set forth in this
Lease. The insurance required by this Paragraph 7(a) may be covered by general
or blanket policies covering all of Lessee’s locations, provided that the
coverage afforded the Premises or Lessor is not diminished thereby. All
insurance to be maintained by Lessee shall be endorsed to require the insurance
company issuing each policy of insurance to give Lessor at least thirty(30)
days’ prior written notice of any change, cancellation or lapse of coverage or
the effective date of any reduction in the amount of coverage under such policy.
Any deductibles on the insurance to be maintained by Lessee pursuant to this
Paragraph 7(a) shall be subject to the approval of Lessor.

The limits of liability on any of the insurance policies required to be
maintained by Lessee are not intended to, and shall not, limit Lessee’s
liability under this Lease. If, in the opinion of Lessor’s insurance advisor,
the amount of any such coverage is deemed inadequate at any time during the
Term, Lessee agrees to increase said coverage to such amounts as Lessor’s
insurance advisor shall deem appropriate.

Upon the Commencement Date and thereafter not less than thirty (30) days prior
to the expiration of any policy of such insurance, Lessee shall provide Lessor,
and all persons designated by Lessor, with certificates of insurance or copies
of insurance policies (as requested by Lessor) evidencing the effectiveness of
the insurance required to be maintained by Lessee, together with evidence that
the premiums for such insurance have been paid in advance for a period of not
less than twelve (12) months. Lessee shall not borrow against any of such
prepaid insurance premiums.

If Lessee fails to maintain any such insurance or to provide evidence of the
effectiveness of such insurance as required in this Paragraph 7(a), Lessor shall
have the right, but not the obligation, to obtain any such insurance and to pay
the premiums therefor, and in such event the entire amount of such premiums paid
by Lessor, together with an administrative fee of ten percent(10%) and interest
on such premiums and administrative fee at the Interest Rate, shall be
immediately due and payable by Lessee to Lessor as Additional Charges.

Any proceeds from Lessee’s “All-Risk” hazard insurance shall be used by Lessee
solely for the repair or replacement of the leasehold improvements, furniture,
fixtures, equipment, and personal property so insured so long as this Lease is
in effect. It is understood that Lessor shall have no interest in the proceeds
of the “All-Risk” hazard insurance upon Lessee’s leasehold improvements,
furniture, fixtures, equipment, and personal property, provided that such
proceeds are applied in accordance with the requirements of this Paragraph 7(a).

(b) Lessor’s Insurance. Lessor shall, at all times during the Term, maintain in
effect a policy or policies of insurance covering the Building providing
protection against any peril included within the classification “fire and
extended coverage”, together with insurance against sprinkler damage, vandalism,
and malicious mischief, in an amount equal to not less than ninety percent (90%)
of the full replacement cost of the Building and public liability insurance
coverage for the Property, both with such deductibles as Lessor shall determine.
Lessor may, but shall not be required to, obtain and maintain such other
insurance (including, but not limited to, earthquake insurance and rental loss
insurance) covering the Building and the Property as Lessor may deem necessary
or appropriate, or as may be required by any lender holding a lien on the
Property. The premiums for all such insurance maintained by Lessor, together
with the amount of any deductibles on such insurance paid by Lessor and any
amount paid by .Lessor because such insurance does not cover one hundred percent
(100%) of the loss are defined and referred to in this Lease as “Lessor’s
Insurance Premiums” and Lessee shall pay the same as Additional Rent as provided
in Paragraph 4(d).

Lessor may, but shall not be required to, obtain and maintain such other
insurance (including, but not limited to, earthquake insurance and flood
insurance) covering the Premises, the Building and/or the Property as Lessor may
desire, and shall maintain such other insurance as any mortgagee of Lessor may
require. The premiums for such other insurance shall be added to and shall
become a part of “Lessor’s Insurance Premiums” and Lessee shall pay the same as
Additional Rent as provided in Paragraph 4(d).

If Lessee’s activities in or about the Premises result in any increase in the
Lessor’s Insurance Premiums, such increased premium shall be immediately payable
by Lessee to Lessor, together with interest at the Interest Rate, upon demand as
Additional Charges.

(c) Waiver of Subrogation. With respect to all insurance required to be
maintained by Lessor and Lessee pursuant to this Paragraph 7, and with respect
to all insurance which either party may obtain with respect to the Premises, the
Building or the Property independent of its obligations under this Paragraph 7,
Lessor and Lessee each hereby waives any right of recovery against the other for
any loss to person or property to the extent such loss is covered by insurance
proceeds received. Lessor and Lessee shall each obtain for the benefit of the
other party a waiver of any right of subrogation that the insurer of such party
may acquire against the other party by virtue of the payment of any loss covered
by such insurance.

8. TAXES.

(a) Real Property Taxes. As used in this Lease, the term “Real Property Taxes”
is defined as: (i) all real estate taxes and assessments, general, special,
ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levies, taxes, assessments or charges (other than
inheritance, personal income or estate taxes) imposed, levied or assessed upon
the Premises, the Building, the Property and/or any improvements thereon, and/or
upon any legal or equitable interest of Lessor or Lessee in or to the Premises,
the Building and/or the Property, and/or the right of Lessor to rent or other
income from the Premises, the Building and/or the Property, and/or the business
of Lessor of owning and/or leasing the Premises, Building and/or the Property,
by any authority having the direct or indirect power to tax, including, but not
limited to, any city, state or federal government, or any school, agricultural,
sanitary, fire, street, drainage or other improvement or betterment district;
(ii) any tax, fee, levy, assessment or charge, or any increase therein, imposed
by reason of events occurring, or changes in applicable law taking effect, prior
to or during the Term, including, but not limited to, a change in the ownership
of the Premises, the Building and/or the Property or the improvements thereon,
the execution of this Lease, or modification or amendment of, or the transfer of
any interest in, this Lease, whether or not contemplated by the parties; (iii)
any tax, fee, levy, assessment or charge which may be levied in substitution or
in lieu (whether in whole or in part) of any other item which is included in the
definition of Real Property Taxes; and (iv) any tax, fee, levy, assessment or
charge relating to environmental protection, hazardous materials, substances or
wastes, groundwater or air quality protection, traffic congestion or control,
the use or parking of motor vehicles or any other matter relating to the
environment.

With respect to any future assessments which may be levied against or upon the
Premises, the Building or the Property and which may be paid pursuant to
applicable law in a lump sum or in installments, only the amount of such
installments (with appropriate proration for any partial year) and statutory
interest shall be included with the computation of Real Property Taxes for the
purposes of Paragraph 4(d).

Lessee shall pay as Additional Rent Lessee’s Proportionate Share of all Real
Property Taxes that are imposed or become payable during the Term as provided in
Paragraph 4(d).

(b) Personal Property Taxes. In addition to all other amounts which Lessee is
required to pay under this Lease, Lessee shall pay before delinquency any and
all taxes, assessments, license fees and public charges levied, assessed,
imposed or payable during the Term upon (i) the leasehold improvements located
in, on or about the Premises; (ii) any furniture, fixtures, equipment, inventory
and other items of personal property, from time to time located in, on or about
the Premises; and (iii) the operations of Lessee in the Premises or in, on or
about the Building and/or the Property. Lessee and Lessor shall cooperate in
attempting to have the taxing authorities assess and bill personal property
taxes separately from the Real Property Taxes. Within ten (10) days after
payment of such personal property taxes, Lessee shall delivery to Lessor copies
of the tax bills and evidence of Lessee’s payment of the same. If any such
personal property taxes are billed with the Real Property Taxes, Lessee shall
pay the same to Lessor within twenty (20) days after receipt of written notice
from Lessor, which notice shall be accompanied by the tax bill and other
documentation showing that such personal property taxes have been included in
the billing of Real Property Taxes.

(c) Real Property Taxes Prorated. The Real Property Taxes to be paid by Lessee
pursuant to Paragraph 4(e) shall be prorated at the beginning and end of the
Term so that Lessee shall pay only that portion of such taxes as the number of
days within the tax year at the beginning, and the tax year at the end, of the
Term which are within the Term each bears to the total number of days within
such tax year.

9. COMMON AREA.

(a) Lessee’s Rights. Lessor hereby grants to Lessee, for the benefit of Lessee
and the employees, customers and invitees of Lessee, during the Term, (i) the
nonexclusive right to use the Common Area, as it exists from time to time, in
common with Lessor and the other tenants of the Building and the Property and
their respective employees, customers and invitees for the ingress and egress of
automobiles and pedestrians, (ii) exclusive right to use the twelve (12) parking
spaced located in the Common Area and denominated on Exhibit B-1 as numbers 1,
2, 3, 4, 5, 6, 13, 14, 15, 24, 25 and 26, and (iii) the non-exclusive right to
use sixty percent (60%) of the total number of legal and complying parking
spaces located in the Common Area remaining after deduction of the twelve (12)
parking spaces allocated for Lessee’s exclusive use and the four (4) parking
spaced allocated for the use of the tenant of 585 Lighthouse Avenue, such rights
being subject to any rights, powers and privileges reserved to Lessor under the
terms of this Lease or under the terms of any rules and regulations or
restrictions governing the use of the Common Area as promulgated and amended by
Lessor from time to time. Lessee and its employees, customers and invitees shall
have the right to use the Common Area only during the normal business hours on
the days that Lessee conducts its business in the Premises.

The Common Area shall be used only for the ingress and egress of pedestrians and
automobiles to and from the Property and the public streets adjoining the
Property and for the parking of motor vehicles. Under no circumstances shall the
right herein granted to use the Common Area be deemed to include the right to
store any property, temporarily or permanently, in the Common Area. In the event
that any unauthorized storage shall occur, then Lessor shall have the right,
without notice, in addition to such other rights and remedies that Lessor may
have, to remove the property and charge the cost of such removal to Lessee,
which cost shall be immediately payable by Lessee to Lessor, together with
interest at the Interest Rate, upon demand as an Additional Charge. If Lessor or
any other permitted user of the Common Area believes that Lessee is not
conforming to the limitations on Lessee’s use of the parking spaces located in
the Common Area set forth in this Paragraph 9(a), then Lessor may retain parking
control personnel and restrict Lessee’s use of the parking spaces located in the
Common Area as provided in this Paragraph 9(a), and the cost of such parking
control personnel shall be allocated among the permitted users of the Common
Area as Lessor deems appropriate, and Lessee shall pay Lessee’s share of such
cost as Additional Charges upon demand.

(b) Maintenance. Lessee shall maintain or cause to be maintained the Common Area
in a neat, clean and safe condition during the Term of this Lease as if the
Common Area comprised a part of the Premises and all of the provisions of this
Lease shall apply to the Common Area including, but not limited to, Paragraphs
7(a) (insurance), 12(b) (compliance with governmental requirements), 13(b)
(utilities), 19(a) (hold harmless), and 19(b) assumption of risk). The such
maintenance and operation shall include, but shall not be limited to, the cost
of sweeping the Common Area; repairing and replacing the paving covering the
paved areas of the Common Area; striping the automobile parking stalls;
maintenance and replacement of landscaping; utilities supplied to the Common
Area; and compliance with all governmental requirements relating to the Common
Area. Lessee shall have the right to collect from the lessee’ of the 585
Lighthouse Avenue premises such lessee’s proportionate share of the cost of
maintaining the Common Area, which lessee’s proportionate share is 32.13% as
provided in the lease of such lessee. .Lesser shall not be liable to Lessee for
the refusal or failure of the Lessee of the 585 Lighthouse Avenue premises to
pay such lessee’s proportionate share Lessee shall maintain on the Premise
complete books and records of the costs incurred by Lessee in the maintenance
and operation of the Common Area. Such books and records shall be available to
Lessor for review and copying at the Premises upon not less than twenty-four
(24) hours’ prior written notice.

Notwithstanding any provision of this Paragraph 9 to the contrary, Lessor shall
have the right to assume the maintenance and operation of the Common Area at any
time upon not less than thirty (30) days’ prior written notice to Lessee. (c)
Deliveries. Lessee agrees that all removal of garbage and refuse shall be made
only by way of Lessee’s rear service door. Lessee may receive and deliver goods
and merchandise through the front door of the Premises.

(d) Lessor’s Reserved Rights. Lessor expressly reserves the right to (i) make
such changes to the Common Area as Lessor deems appropriate or desirable
including, but not limited to, changing the direction of driveways and
accessways; changing the configuration, size, orientation or location of vehicle
parking stalls; limiting ingress or egress through curb cuts; or requiring
one-way traffic flow, (ii) to construct a building on that portion of the Common
Area designated on Exhibit B-1 as “Future Building” and to use reasonable,
limited portions of the Common Area for the staging of construction trailer,
materials and equipment in connection with such construction, provided, however,
that such construction related use of the Common Area by Lessor shall be
conducted in a manner which will not substantially interfere with Lessee’s right
to use the Common Area as set forth in Paragraph 9(a); and (iii) to close the
Common Area from time to time to prevent the creation of any public right or
easement to any portion of the Common Area. Lessee’s right to use the Common
Area as set out in Paragraph 9(a) is expressly subject and subordinate to the
rights of Lessor set out in this Paragraph 9(d).

10. CONDITION OF THE PREMISES AND PROPERTY.

Prior to the Commencement Date, Lessee has occupied the Premises as the
“Sublessee” under a Sublease between Lessee and Wells Fargo Bank, N.A. Lessee
acknowledges that Lessor has not agreed to make any improvements to the
Premises, the Building, the Property or the improvements located thereon. By
execution of this Lease, Lessee accepts the Premises, the Building, the Property
and the improvements located thereon in their existing “AS-IS” condition and
acknowledges and agrees that the Premises, the Building, the Property and the
improvements located thereon are in the condition required by the provisions of
this Lease.

Lessor expressly disclaims all warranties, express or implied, as to the
fitness, condition or suitability of the Premises, the Building, the Property or
any improvements located thereon. Lessee hereby waives and releases Lessor from
any deficiencies in the Premises, the Building, the Property and the
improvements located thereon.

11. REPAIRS. MAINTENANCE AND REPLACEMENTS.

(a) By Lessee. Lessee shall, at all times, at Lessee’s expense, keep and
maintain the Building, and every part thereof, in good order, condition and
repair, and shall maintain, repair and replace as necessary all portions of the
Building including, without limitation, (i) the foundations, structural elements
of the Building; (ii) the roof membrane and roof drains, gutters and downspouts
of the Building; (iii) the main water, sewer and electrical utility lines and
facilities serving the Building; and (iv) the interior and exterior walls of the
Building. The obligations of Lessee under this Paragraph 11(a) shall include,
but shall not be limited to: (A) exterior entrances; (B) all glass and plate
glass and window frames and moldings; (C) all permitted signs; (D) partitions,
doors, door jams, door closures and door hardware; (E) all fixtures, equipment
and appurtenances (including all electrical, lighting, heating, and plumbing
fixtures, equipment lines and systems); (F) all mechanical systems (including
any heating, ventilating and/or air conditioning system serving the Building,
including leaks around ducts, pipes, vents or other parts of the heating,
ventilating, air conditioning or plumbing systems which protrude through the
roof); (G) all ceilings; (H) all interior walls and interior surfaces of
exterior walls; (I) the exterior surface of the exterior walls of the Building
(Lessee shall keep the exterior walls of the Building in a neat and clean
condition, free of graffiti; Lessee shall paint the exterior walls in a color or
colors selected by Lessor not less frequently than once every five [5] years);
and (J) compliance with all current and future governmental requirements
relating to the Building or the use and occupancy of the Building. Lessee shall
maintain in force during the Term, at Lessee’s expense, a service and
preventative maintenance contract with an authorized heating, ventilating and
air conditioning service company providing for quarterly inspection and
maintenance of all heating, ventilating and. air conditioning equipment serving
the Building. Lessee shall provide Lessor with a copy of such contract.

Lessee shall perform such maintenance, repairs and replacements in a prompt and
timely manner so as to preserve the Building and its contents and occupants from
damage and injury. In the case of emergency threatening property or life Lessee
shall make such maintenance, repairs or replacements as soon as practicable. If
the nature of the required non-emergency maintenance, repairs or replacements
reasonably requires more than ten (10) days to complete, then Lessee shall not
be in default of its obligation under this Paragraph 11 (a) if Lessee commences
the required maintenance, repairs or replacements within such ten (10) day
period and thereafter pursues and completes such maintenance, repairs or
replacements with diligence..

Lessee hereby waives all right to make repairs at the expense of Lessor as
provided in California Civil Code Sections 1941 and 1942, or by any similar
ordinance, statute or regulation now or hereafter in effect.

Lessee shall have the right to collect from the lessee of the 585 Lighthouse
Avenue premises such lessee’s proportionate share of the cost of maintaining the
Building, which lessee’s proportionate share is 32.13% as provided in the lease
of such lessee. Lessor shall not be liable to Lessee for the refusal or failure
of the Lessee of the 585 Lighthouse Avenue premises to pay such lessee’s
proportionate share. Lessee shall maintain on the Premise complete books and
records of the maintenance, repairs and replacements performed by Lessee
puliuMf’to this” P¥ragrapKTi7a)/‘Such books and records shall be available to
Lessor for review and copying at the Premises upon not less than twenty-four
(24) hours’ prior written notice.

(b) No Lessor Obligation. Lessee agrees that Lessor has no obligation or
responsibility under this Lease to perform any maintenance, repairs or
replacements with respect to the Building and that Lessee shall have sole
responsibility for the performance of all maintenance, repairs and replacements
with respect to the Building.

Lessor shall not be liable for damages or loss, of any kind or nature by reason
of Lessee’s failure to comply with and perform he duties and obligations imposed
under Paragraph 11 (a). Lessee hereby indemnifies and agrees to protect, defend
and hold Lessor harmless from and against any and all claims, damages, losses,
liabilities, actions, causes of action, judgments, settlements, costs and
expenses (including reasonable attorneys’ fees and court costs) that may be
incurred by Lessor as the result of, or as the alleged result of, the failure of
Lessee to comply with and perform the duties and obligations imposed under
Paragraph 11(a).

12. ALTERATIONS AND COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS.

(a) Alterations by Lessee. Lessee shall not have the right to make any
alterations, additions or improvements (collectively, “Alterations”) in or about
the Premises without first obtaining Lessor’s written consent, which consent
shall not be unreasonably withheld. As a condition to granting such consent,
Lessor may require Lessee to provide Lessor, at Lessee’s sole cost and expense,
with a lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alterations to insure Lessor against any liability for
mechanic’s and materialmen’s liens and to insure completion of the Alterations.

Any Alterations that Lessee shall desire to make shall be presented to Lessor in
written form, with proposed detailed plans, specifications and working drawings
and the names and resumes of the proposed contractor or contractors. If Lessor
shall give its consent, such consent shall be deemed conditioned upon Lessee
acquiring all required permits and approvals from all appropriate governmental
authorities, the furnishing of copies of such permits and approvals to Lessor
prior to the commencement of the work and the compliance by Lessee with all
conditions of said permits and approvals in a timely manner. All alterations,
improvements, or additions shall be made in conformance with all legal
requirements including, but not limited to, all building and fire and life
safety codes and the Americans With Disabilities Act, and shall be performed by
licensed contractors approved by Lessor.

Lessee shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for the benefit of Lessee at or for use in
the Premises, and shall keep the Premises and the Property free of any and all
mechanic’s or materialmen’s liens related to any such claims. Lessee shall give
Lessor not less than ten (10) days’ written notice prior to the commencement of
any work in or about the Premises, and Lessor shall have the right to post and
maintain notices of non-responsibility in or on the Premises or the Property as
provided by law. If any mechanic’s or materialmen’s lien is filed against the
Premises or the Property during the Term as the result of any claim for labor or
materials furnished or alleged to have been furnished to or for Lessee or the
Premises, then Lessee shall immediately remove the same by statutory bond or
payment. If Lessee shall fail to remove any such mechanic’s or materialmen’s
lien within ten (10) days after the filing of the same, Lessor may, at the cost
and expense of Lessee, bond or pay such lien, and the costs incurred by Lessor
in bonding or paying any such lien shall be immediately payable by Lessee to
Lessor, together with an administrative fee of ten percent (10%) of such costs
and interest at the Interest Rate, upon demand as Additional Charges.

If Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend itself and Lessor against
the same and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof against Lessor or the Premises
or the Property. Lessee hereby indemnifies and agrees to protect, defend and
hold Lessor harmless from and against any and all claims, demands and liens
which may be assessed or filed against the Premises or the Property for labor or
materials furnished or alleged to have been furnished to or for the benefit of
Lessee at or for use in the Premises or on the Property.

If Lessee makes any Alterations without the prior written approval of Lessor,
Lessor may, at any time during the Term, require that Lessee remove any or all
of such Alterations at Lessee’s sole expense. All Alterations made by Lessee
(excepting only the furniture, trade fixtures and equipment of Lessee which are
not so attached to the Premises that the removal thereof will damage the
Premises) which may be made on the Premises, shall be the property of Lessor and
shall remain upon and be surrendered with the Premises at the expiration or
sooner termination of the Term; provided, however, that Lessor shall have the
right to require Lessee to remove, at Lessee’s sole cost and expense, any or all
Alterations by written notice given to Lessee not later than thirty (30) days
prior to the expiration of the Term or within thirty (30) days after the earlier
termination of the Term.

(b) Compliance With Governmental Requirements by Lessee. Lessee shall, at the
sole cost and expense of Lessee, promptly and properly observe and comply with
all present and future orders, regulations, directives, rules, requirements,
laws, statutes or ordinances (including, but not limited to, the Americans with
Disabilities Act) and requirements of all governmental authorities (including,
but not limited to, federal, regional, state, county and municipal governments
and their departments, bureaus, boards and officials), and the Board of Fire
Underwriters, and any other board or organization exercising similar functions,
arising from or related to the use or occupancy of the Building, or which apply
to the Building or to any improvements thereon. Subject to the approval of
Lessor, Lessee shall have the right to contest or review, by administrative or
legal action, at Lessee’s sole cost and expense, any such order, regulation,
directive, rule, requirement, law, statute, or ordinance and to have the same
canceled, removed, revoked or modified, provided that such contest shall not
subject Lessor or the Property to any possible civil or criminal liability as a
result of such contest, that the title of Lessor in and to the Premises, the
Building and the Property is not subjected to lien or possible forfeiture as a
result of any such contest, and that any insurance on the Premises, the Building
or Property is not adversely effected by such contest. Lessor may require Lessee
to post a bond or other security with Lessor to assure payment and performance
on the part of Lessee in the event the contest is determined adversely to the
position of Lessee. Lessee hereby indemnifies and agrees to protect, defend arid
hold Lessor, the Premises, Building and Property harmless from and against any
liability as a result of any such contest by Lessee. Such proceedings shall be
conducted promptly, and shall include, if Lessee so decides, appropriate
appeals. Whenever any such requirements become absolute after a contest, Lessee
shall timely comply with the same or so much thereof as shall have become
absolute.

13. UTILITIES.

(a)  Lessee to Contract and Pay for Utilities. Lessee shall contract directly
with the utility suppliers and pay all bills for all water, gas, electricity,
heat, power, telephone, cable communications, refuse pick-up and disposal, sewer
service, and any other utilities, materials, and services, together with any
taxes and surcharges thereon, furnished to or used by Lessee on or about the
Premises.

(b) Interruption or Curtailment of Service. Lessor shall not be liable for the
interruption or failure to provide, or any curtailment, of any utility service
to the Premises or the Property.

(c) Compliance With Utility Reduction Requests. Lessee shall comply with all
utility supplier and governmental requests and requirements for the reduction,
curtailment or limitation of utilities or services provided to or consumed on
the Premises, whether voluntary or mandated. Lessee hereby indemnifies and
agrees to protect, defend and hold Lessor, the Premises, Building and Property
harmless from and against any liability as a result of any failure by Lessee to
comply with such requests.

14. ADVERTISING AND SIGNS.

(a) Signs and Other Advertising Media. Lessee shall not erect, install or affix
to any part of the outside or inside of the Premises, or to any exterior or
interior window or door, signs or advertising media or window or door lettering,
pictures or placards, without Lessor’s prior written consent, which consent
shall not be unreasonably withheld. All signs and other advertising media must
comply with all governmental requirements. Lessor shall have the right to remove
any non-approved or non-complying sign, placard, picture, advertisement, name or
notice without notice to Lessee and the cost of such removal shall be
immediately payable by Lessee to Lessor, together with interest at the Interest
Rate, upon demand as Additional Charges. Lessee shall maintain its permitted
signs and other advertising media in good and attractive condition and repair.
Lessee agrees not to use any advertising or other media (including loudspeakers,
phonographs or radio broadcasts) that may be heard or experienced outside the
Premises. Lessee shall maintain all show windows of the Premises in a heat and
clean condition.

(b) Exterior Displays. Lessee shall not keep or display any merchandise on or
otherwise obstruct the sidewalks or walkways adjacent to the Premises. Lessee
shall not install any exterior lighting or plumbing fixtures, shades or awnings
or any exterior decorations or painting without Lessor’s prior written consent,
which consent may be granted or withheld in the sole discretion of Lessor.

15. ASSIGNMENT AND SUBLETTING.

(a)  Consent Required. Lessee shall not assign this Lease, or any interest in
this Lease, voluntarily or involuntarily, and shall not sublet the Premises or
any part thereof, or any right or privilege appurtenant to the Premises, or
allow or suffer any person other than the employees of Lessee to occupy or use
the Premises or any portion thereof, without obtaining in each instance the
prior written consent of Lessor pursuant to the terms and conditions set forth
in this Paragraph 15, which consent shall not be unreasonably withheld.

(b)  Documentation. Prior to any assignment, sublease or occupancy agreement
which Lessee desires to make, Lessee shall provide to Lessor: (i) the name,
address and telephone number of the proposed assignee, sublessee or occupant;
(ii) true and complete copies of all documents relating to the prospective
agreement to assign, sublease or allow, occupancy; (iii) a current business
resume of the proposed assignee, sublessee or occupant; (iv) a current financial
statement for the proposed assignee, sublessee or occupant; (v) current
financial references for the proposed assignee, sublessee or occupant; (vi)
copies of the tax returns of the proposed assignee, sublessee or occupant for
the preceding two (2) tax years; and (vii) a written description of all
compensation to be received by Lessee in connection with such proposed
assignment, sublease or occupancy. Within thirty (30) days after the receipt of
such information, and such other information as Lessor shall be reasonably
requested, Lessor shall either consent in writing to such proposed assignment,
sublease or occupancy subject to the terms and conditions hereinafter set forth,
or notify Lessee in writing that Lessor refuses such consent, specifying
reasonable grounds for such refusal.

(c) Partnership or Limited Liability Company. If Lessee is a partnership or
limited liability company, a transfer, voluntary or involuntary, of all or any
part of an interest in the partnership or limited liability company, the
interest of any partner in the partnership or the interest of any member of the
limited liability company or the dissolution of the partnership or limited
liability company, shall be deemed as assignment requiring the prior written
consent of Lessor.

(d) Corporation. If Lessee is a corporation, any dissolution, merger,
consolidation, or other reorganization of Lessee, or the transfer, either in
single or a series of transfers, of ten percent (10%) or more of the capital
stock of Lessee, or the sale, or series of sales within any twelve (12) month
period, of all or substantially all of the assets of Lessee located in, on, or
about the Premises, shall be deemed an assignment requiring the prior written
consent of Lessor.

(e) Basis for Approval or Rejection. Lessor and Lessee agree that it shall be
reasonable for Lessor to reject any proposed assignment or sublease on the
following grounds:

(i) Lack of Financial Capacity. The proposed assignee, sublessee or occupant
does not have the financial capacity to fulfill the monetary obligations under
the assignment, sublease or occupancy arrangement.

(ii) Inappropriate Use. The use proposed by the assignee, sublessee or occupant
is not permitted under the provisions of Paragraph 6, or would expose Lessor or
the Property to additional liability, or involves the use of additional
Hazardous Materials or greater quantities of Hazardous Materials.

(iii) Lack of Experience. The proposed assignee, sublessee or occupant has less
than ten (10) years’ active full-time experience in the operation of the
business proposed to be operated by the assignee, sublessee or occupant on the
Premises.

(iv) Nearby Location. The proposed assignee, sublessee or occupant has a direct
or indirect interest in a business similar to that to be conducted on the
Premises which is located within five (5) miles of the Premises.

(v)Business Reputation. The proposed assignee, sublessee or occupant has
defaulted on any material obligation or filed for protection, or has been
declared a bankrupt, under the Bankruptcy Code within the ten (10) years
preceding the proposed effective date of the proposed assignment, sublease or
occupancy arrangement.

(f) Bonus Rent. If Lessor shall consent to any assignment, sublease or occupancy
agreement by Lessee, such consent shall be conditioned upon Lessee paying to
Lessor all consideration received by Lessor in connection with such assignment,
sublease or occupancy arrangement as and when received by Lessee.

(g) No Effect on Obligations of Lessee. No consent by Lessor to any assignment,
sublease or occupancy arrangement shall release Lessee from any obligations
under this Lease or alter the primary liability of Lessee for the payment of the
Rent and performance of the obligations to be performed by Lessee under this
Lease.

(h) Lessor’s Remedies. Any assignment, sublease or occupancy arrangement made by
Lessee without the prior written consent of Lessor shall at Lessor’s election be
void, and, at the option of Lessor, shall constitute a material default under
this Lease. The consent by Lessor to any assignment, sublease or occupancy
arrangement by Lessee shall not constitute a waiver of the provisions of this
Paragraph 15, including the requirement that the prior written consent of Lessor
be obtained with respect to any subsequent proposed assignment, sublease or
occupancy arrangement. If Lessee shall purport to assign this Lease, or sublease
all or any portion of the Premises, or permit any person or persons other than
Lessee to occupy the Premises, without Lessor’s prior written consent, Lessor
may collect rent from the person or persons then or thereafter occupying the
Premises and apply the amount collected less the costs of collection to the Rent
to be paid under this Lease, but no such collection shall be deemed a waiver of
Lessor’s rights and remedies under this Paragraph 15, or the acceptance of any
such purported assignee, sublessee or occupant, or a release of Lessee from the
obligation to timely perform all of the covenants to be performed by Lessee
contained in this Lease.

16. ACCESS TO THE PREMISES.

(a) Access to the Premises. Lessor and its designees shall have the right to
enter upon the Premises upon reasonable notice to Lessee (except in the case of
emergency, in which case no notice shall be required) and at all reasonable
hours (and in case of emergency, at any time) without diminution or abatement of
Rent and without liability to Lessee (i) to inspect the Premises and the
Building; (ii) to make repairs, additions or alterations to the Premises, the
Building or the Property (and for such purposes erect and install scaffolding,
pipes, conduits and other necessary structures in and through the Premises or
the Building where reasonably required by the character of the work to be
performed, always providing that reasonable access to the Premises shall be
provided); (iii) to show the Premises to prospective purchasers and lenders;
(iv) to determine whether Lessee is complying with its obligations under this
Lease; (v) to serve or post any notice required or permitted under the
provisions of this Lease, and (vi) for any other lawful purpose. Any entry upon
the Premises or Building or portions thereof obtained by Lessor in accordance
with this Paragraph 16 shall not be construed or deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises or the Building or an
eviction, actual or constructive, of Lessee from the Premises or the Property or
any portion thereof.

(b) Access for Prospective Lessees. For a period commencing one hundred eighty
(180) days prior to the date scheduled for expiration of the Term, Lessor shall
have reasonable access to the Premises for the purpose of exhibiting the same to
prospective lessees and to post any customary “To Let” or “To Lease” signs upon
the Premises.

17. EMINENT DOMAIN.

(a)  Entire or Substantial Taking. If during the Term title to all of the
Premises, or so much of the Premises that the Premises will not be reasonably
suited for Lessee’s continued occupancy for the uses and purposes permitted
under this Lease as reasonably determined by Lessor, shall be taken for any
public or quasi-public use under any statute or by right of eminent domain, or
by private purchase in lieu thereof, or by deed in threat of any such taking by
eminent domain, then this Lease shall terminate as of the date that possession
of the Premises, or part thereof, is taken.

(b)  Partial Taking. If during the Term title to any part of the Premises shall
be so taken and the remaining part of the Premises would be reasonably suitable
for Lessee’s continued occupancy for the purposes and uses permitted under this
Lease as reasonably determined by Lessor, then this Lease shall, only as to the
part so taken, terminate as of the date that possession of such part of the
Premises is so taken and the Fixed Minimum Rent shall be reduced in the same
proportion that the floor area of the portion of the Premises so taken bears to
the original Floor Area of the Premises, and Lessor shall, to the extent of any
award received by Lessor for the part of the Premises so taken, make all
necessary repairs or alterations to the Premises so as to constitute the
remaining portion of the Premises as a complete architectural unit; provided
that such repairs shall not include any furniture, trade fixtures, equipment or
personal property of Lessee, all of which shall be repaired or replaced at the
sole cost and expenses of Lessee. A just and proportionate part of the Fixed
Minimum Rent shall be abated during such restoration if such restoration shall
substantially interference with the continued conduct of the business of Lessee
on the Premises.

(c)  Disposition of Proceeds. All compensation awarded or paid upon any total,
substantial or partial taking shall belong to and be the sole property of
Lessor, whether such compensation be awarded or paid as compensation for
diminution in value of the leasehold or to the fee or for the value of any
improvements located on the Premises or otherwise; provided, however, that
Lessee shall be entitled to seek and receive a separate award for any taking of
Lessee’s furniture, trade fixtures, equipment and other personal property, for
disruption and loss of business and for relocation expenses, provided that the
seeking and receipt of any such separate award shall not diminish the award or
compensation otherwise payable to Lessor for the taking. Lessee shall not have
any claim against Lessor with respect to any taking or any award received by
Lessor as compensation for any taking.

(d) Temporary Taking. If all or any portion of the Premises is taken for a
limited period of time during the Term, this Lease shall remain in full force
and effect, Lessee shall continue to perform all of the terms, conditions and
covenants of this Lease and Lessee shall be entitled to receive the entire award
made in connection with any such temporary taking. Any temporary taking the
duration of which exceeds twelve (12) consecutive calendar months shall be
deemed a substantial taking and shall be governed by the provisions of Paragraph
17(a).

(e) Taking Near End of Term. Notwithstanding any provision of this Paragraph 17
to the contrary, any taking which occurs during the last twenty-four (24) months
of the Term shall be treated as a substantial taking and shall be governed by
the provisions of Paragraph 17(a); provided, however, if the period for exercise
of the Option pursuant to Paragraph 3(b) has not expired and Lessee validly
exercises the Option within thirty (30) days after Lessor gives Lessee written
notice of the proposed taking, then such taking shall not be subject to the
provisions of this Paragraph 17(e).

(f) Further Assurances. Lessor and Lessee each agrees to execute and deliver to
the other all instruments that may be required or appropriate to effectuate the
provisions of this Paragraph 17.

(g) Waiver of Statutory Rights. Lessor and Lessee agree that the provisions of
this Paragraph 17 shall control the rights and obligations of Lessor and Lessee
with respect to any taking of the Premises by eminent domain, and Lessor and
Lessee each hereby waives the provisions of California Code of Civil Procedure
Sections 1265.110, et seq. and any other ordinance, law or statute now or
hereafter in effect which would grant to Lessor or Lessee the right to terminate
this Lease in the event of a taking of the Premises by eminent domain. ‘

18. DAMAGE OR DESTRUCTION.

(a)  Lessor to Rebuild. In the event the Premises shall be partially or totally
destroyed by fire or other casualty insured under the fire and extended coverage
insurance to be maintained by Lessor pursuant to Paragraph 7(b), then the
Premises shall be repaired by Lessor as soon as practicable as provided in
Paragraph 18(c), unless Lessor shall elect not to repair as provided in
Paragraph 18(b). Should such damage or destruction substantially interfere with
the business of Lessee conducted in the Premises, then a just and proportionate
part of the Fixed Minimum Rent shall be abated until such interference ceases.

(b) Lessor Option to Terminate.

(i) Substantial, Uninsured Damage or Building Damage. If (i) more than fifty
percent (50%) of the Floor Area of the Premises are destroyed or damaged by fire
or other casualty insured under Lessor’s fire and extended coverage insurance;
(ii) the Premises are destroyed or damaged to the extent of hot less than
thirty-three and one-third percent (331/3%) of the replacement cost thereof;
(iii) the Premises are partially or totally destroyed by a cause or casualty not
covered the fire and extended coverage insurance to be maintained by Lessor
pursuant to Paragraph 7(b); or (iv) the Building is destroyed or damaged to the
extent of not less than thirty-three and one-third percent (331/3%) of the
replacement cost of the Building, then upon the occurrence of any such event
Lessor may elect to terminate this Lease by written notice given to Lessee not
later than ninety (90) days after the occurrence of any such damage or
destruction, such termination to be effective as of the date of such notice. If
Lessor does not elect to so terminate this Lease, Lessor shall repair or rebuild
the Premises in accordance with the provisions of Paragraph 18(c).

(ii) Premises Damage Near End of Term, If the Premises are damaged or destroyed
by any cause during the last twenty-four (24) months of the Term, then Lessor
may elect to terminate this Lease by written notice given to Lessee not later
than ninety (90) days after the occurrence of any such damage or destruction,
such termination to be effective as of the date of such notice.

(iii) Building Damage Near End of Term. If any portion of the Building is
damaged or destroyed by any cause during the last twenty-four (24) months of the
Term whether or not the Premises are damaged or destroyed, then Lessor may elect
to terminate this Lease by written notice given to Lessee not later than ninety
(90) days after the occurrence of any such damage or destruction, such
termination to be effective as of the date of such notice.

(c) Portions to be Rebuilt by Lessor and Lessee. The obligation of Lessor should
Lessor elect or be obligated to repair or rebuild shall be limited to the basic
shell of the Premises, and Lessee shall forthwith, at Lessee’s sole cost and
expense, replace or fully repair or replace all leasehold improvements and
Alterations, exterior signs, trade fixtures, equipment, display cases and other
installations made by Lessee. All insurance proceeds payable under the fire and
extended coverage insurance to be maintained by Lessor pursuant to Paragraph
7(b) shall be payable solely to Lessor, and Lessee shall have no interest in
such proceeds. Notwithstanding any provision of this Paragraph 18 to the
contrary, Lessor’s obligation to rebuild shall be limited to the insurance
proceeds actually received and retained by Lessor and shall not include any
insurance proceeds paid and retained by any lender holding a security interest
in the Property.

(d)  Waiver of Statutory Rights. Lessor and Lessee each agree that the
provisions of this Paragraph 18 shall control the rights and obligations of
Lessor and Lessee with respect to any damage or destruction of the Premises, and
Lessor and Lessee each hereby waives the provisions of California Civil Code
Sections 1932 and 1933(4) and any other ordinance, law or statute now or
hereafter in effect which would grant to Lessor or Lessee the right to terminate
this Lease in the event of damage or destruction of the Premises.

19. HOLD HARMLESS.

(a) Hold Harmless. Lessee hereby indemnifies and agrees to protect, defend and
hold Lessor, and its officers, directors, agents, contractors, employees and
invitees, and any lender holding a security interest in the Property
(collectively, “Lessor Parties”) harmless from and against any and all claims,
damages, losses, liabilities, actions, causes of action, judgments, settlements,
costs and expenses (including reasonable attorneys’ fees and court costs)
(collectively, “Claims”) arising from, related to or connected with the (j) use
or occupancy of the Premises; (ii) any activity conducted on the Premises or the
Property by Lessee or its officers, directors, agents, contractors, employees,
invitees, licensees or contractors (collectively, “Lessee Parties”); (iii) the
conduct of Lessee’s business in the Premises; (iv) the failure of Lessee to
abide by the provisions of this Lease; (v) any breach or default by Lessee under
this Lease; and (vi) any activity, work or thing done, permitted or suffered by
Lessee or any Lessee Parties, and any act or omission by Lessee or any Lessee
Parties in, on or about the Premises, the Property or elsewhere, except to the
extent such Claims are proven to be the result of the sole active gross
negligence or willful misconduct of Lessor. In case any claim, action or
proceeding is brought against Lessor and/or any Lessor Party by reason of any
such Claim, Lessee shall, upon notice from Lessor, defend such Claim, Lessor
and/or any Lessor Party at Lessee’s expense by counsel reasonably satisfactory
to Lessor and any Lessor Party, and Lessor and any Lessor Party shall cooperate
with Lessee in such defense but without cost or liability to Lessor or any
Lessor Party.

(b) Assumption of Risk. As a material part of the consideration to Lessor for
the execution of this Lease, Lessee hereby assumes all risk of damage to all
property of Lessee and others in, on or about the Premises or the Property, and
for injury to or death of persons, in, upon or about the Premises or Property,
arising from any cause whatsoever, and Lessee hereby waives and releases all
claims with respect to any such loss, injury or death against Lessor and the
Lessor Parties.

20. DEFAULT AND REMEDIES.

(a)  Default. Lessee shall be in default of this Lease if: (i) Lessee fails to
pay any Rent or other sum within five (5) days after the date such payment is
due under this Lease; (ii) Lessee fails to timely perform any other obligation
of Lessee to be performed under this Lease within ten (10) days after receipt of
written notice from Lessor; (iii) Lessee vacates or abandons the Premises; (iv)
Lessee’s interest in this Lease or in the Premises, or any part thereof, is
assigned or transferred; either voluntarily or by operation of law without the
prior written consent of Lessor; (v) a petition under the Bankruptcy Code or any
other insolvency, bankruptcy or debtor protection law is filed by or against
Lessee or any Guarantor named in the Lease Summary; (vi) Lessee or any of
Guarantor named in the Lease Summary makes an assignment for the benefit of its,
his or her creditors; or (vii) any of Guarantor named in the Lease Summary shall
attempt to revoke its, his or her guaranty of this Lease or shall claim
exoneration under such guaranty of this Lease. .

(b) Remedies. In the event of any default by Lessee under this Lease, Lessor
shall have the following rights and remedies:

(i) Continuation of Lease. Lessor shall have the remedy described in California
Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's
breach and abandonment and recover rent as it becomes due, if lessee has right
to sublet or assign, subject only to reasonable limitations). Lessor may
re-enter the Premises by summary proceedings or otherwise, remove all persons
and property from the Premises without liability to Lessee or any other person
for damage sustained by reason of such removal, and relet the Premises at such
rental and upon such terms and conditions as Lessor in its sole discretion may
deem advisable. Lessor may store any property of Lessee in a public warehouse or
elsewhere, at Lessee’s expense, or otherwise dispose of such property in any
manner provided by law. In the event Lessor re-enters the Premises, Lessee shall
remain liable for the Rent and all other sums payable under this Lease, plus the
reasonable cost of obtaining possession of and reletting the Premises,
including, without limitation, any repairs and alterations necessary to prepare
the Premises for reletting, the cost of marketing the Premises for reletting and
any brokerage commission due on the reletting, less the rents received from such
reletting. Lessee shall pay to Lessor the difference between the rent received
by Lessor from the reletting and the Rent and other sums due under this Lease
monthly on the date herein provided for the payment of Fixed Minimum Rent. No
such re-entry, taking of possession or reletting of the Premises by Lessor shall
be construed as an election on the part of Lessor to terminate this Lease unless
specific written of such termination is given to Lessee. Notwithstanding any
such re-entry, Lessor may at any time thereafter elect to terminate this Lease
for such previous default by written notice given to Lessee.

(ii) Termination of Lease. Lessor shall have the remedy described in California
Civil Code Section 1951.2. Lessor may terminate this Lease by written notice
given at any time to Lessee following any default by Lessee. Should Lessor so
elect to terminate this Lease, Lessor shall recover from Lessee:

(A) The worth, at the time of award, of the unpaid Rent which had been earned at
the time of termination;

(B) The worth, at the time of award, of the amount by which the unpaid Rent
which would have been earned after termination until the time of award exceeds
the amount of such rental loss that Lessee proves could have been reasonably
avoided;

(C) The worth at the time of award of the amount by which the unpaid Rent for
the balance of the term after the time of award exceeds the amount of such
rental loss that Lessee proves could be reasonably avoided; and

(D) Any other amount necessary to compensate Lessor for all the detriment
proximately caused by the failure of Lessee to perform its obligations under
this Lease or which in the ordinary course of things would be likely to result
therefrom, including but not limited to, the cost of recovering possession of
the Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorneys’ fees, and that portion of the
leasing commission paid by Lessor applicable to the unexpired Term of this
Lease.

The worth at the time of award of the amounts referred to in Paragraphs
20(b)(ii)(A), (B) and (D) is to be computed by allowing interest at ten percent
(10%) per annum, or the maximum lawful rate. The worth at the time of award of
the amount referred to in Paragraph 20(b)(ii)(C) is to be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1 %).

(iii) Right to Perform. Following any default by Lessee, Lessor shall have the
right, but not the obligation, to perform any obligation of Lessee under this
Lease which Lessee has failed to perform, and all costs incurred by Lessor in
such performance shall be immediately payable by Lessee to Lessor, together with
interest at the Interest Rate, upon demand as Additional Charges.

(iv) Other Remedies. Lessor shall have all other remedies now or hereafter
provided by law or in equity for the default by Lessee. The rights and remedies
of Lessor under this Lease and provided by law or in equity are cumulative and
not exclusive, and Lessor may exercise such rights and remedies in such order as
Lessor may determine.

(c)  Receiver. Should a receiver be appointed in any action by Lessor against
Lessee, the receiver may take possession of any and all personal property
belonging to Lessee that is used in the business being conducted on the
Premises, and Lessee agrees that the entry and/or possession by such a receiver
shall not constitute an eviction of Lessee from the Premises or any portion
thereof. Lessee agrees to indemnify and hold Lessor harmless from and against
any and all liability arising out of any such entry and taking of possession by
such receiver. Neither the application for the appointment of such receiver, nor
the appointment itself, shall constitute an election on Lessor’s part to
terminate this Lease, unless Lessor gives a written notice of such termination
to Lessee.

(d)  Additional Rent. All sums payable by Lessee to Lessor or to third parties
under this Lease shall be payable as and included within the term “Rent”. For
purposes of any unlawful detainer action by Lessor against Lessee pursuant to
California Code of Civil Procedure Sections 1161-1174, or any similar or
successor statutes, Lessor shall be entitled to recover as Rent not only the
Fixed Minimum Rent, Additional Rent and Additional Charges, but all other sums
specified in this Lease as may then be payable.

21. BANKRUPTCY. Lessee agrees that if (i) all or substantially all of the
Lessee’s assets shall be placed in the hands of a receiver or trustee; (ii)
Lessee makes an assignment for the benefit of creditors; (iii) Lessee is finally
adjudicated a bankrupt; (iv) Lessee institutes any proceeding under the
Bankruptcy Code (as the same now exists or under any amendment thereof which may
hereafter be enacted) or under any other law or statute relating to the subject
of bankruptcy, insolvency or debtor relief, wherein Lessee seeks to be
adjudicated a bankrupt, or to be discharged of its debts, or to effect a plan of
arrangement, liquidation, composition or reorganization; or (v) any involuntary
proceeding is filed against Lessee under the Bankruptcy Code or any such
bankruptcy, insolvency or debt or relief laws or statutes, then upon the
occurrence of any such event this Lease and any interest of Lessee in and to the
Premises shall not become an asset in any of such proceedings and, in any such
event and in addition to any and all rights or remedies of Lessor under this
Lease or provided by law, it shall be lawful for Lessor to re-enter the Premises
and take possession thereof and remove all persons therefrom and immediately to
terminate this Lease by written notice to Lessee, and following such termination
by Lessor, Lessee shall have no further rights or claims under this Lease.

22. WAIVERS. Any waiver by Lessor of any covenant or condition contained in this
Lease, or of any breach or default by Lessee, shall not be construed as a
subsequent waiver of the same or any other covenant or condition, or a waiver of
any subsequent breach or default, and any consent or approval by Lessor to or of
any act by Lessee requiring the consent or approval of Lessor shall not be
deemed to waive or render unnecessary Lessor’s consent or approval to or of any
subsequent similar act by Lessee. The acceptance by Lessor of Rent or Additional
Charges or any other payment due under this Lease shall not constitute a waiver
of any concurrent or preceding breach or default by Lessee of any term, covenant
or condition of this Lease, other, than the failure of Lessee to pay the
particular rental or payment so accepted, regardless of Lessor’s knowledge of
such concurrent or proceeding breach or default at the time of acceptance of
such rent or payment. No waiver by Lessor shall be effective unless it is made
in writing and signed by Lessor.

23. NO ACCORD AND SATISFACTION. No payment by Lessee or receipt by Lessor of a
lesser amount than the Rent or other sums required to be paid under this Lease
shall be deemed to be other than on account of the earliest Rent or other sums
due and payable hereunder, nor shall any endorsement or statement on any check
or any writing accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Lessor may accept any such check or payment without prejudice
to the right of Lessor to recover the balance of such Rent or other sums or
pursue any other remedy provided in this Lease.

24. SUBORDINATION AND ATTORNMENT.

(a)  Subordination. Lessee agrees that this Lease is and shall be and remain
subordinate to all mortgages, trust deeds and security devices that are now or
may hereafter be placed upon the Premises or the Property and to any and all
advances made or to be made thereunder, and to all renewals, replacements and
extensions thereof. If any mortgagee, beneficiary or secured party elects to
have this Lease superior to its mortgage, trust deed or security device by
notice to Lessee, then this Lease shall be deemed superior to the lien of any
such mortgage, trust deed or security device.

(b)  Attornment by Lessee. If any proceedings are brought for foreclosure of any
mortgage, trust deed or other security device placed upon the Premises or
Property, or if the Premises or Property are sold under such mortgage, trust
deed or security device by the exercise of the power of sale, or if a deed in
lieu of any such foreclosure is issued by Lessor, then Lessee shall, at the
election of the mortgagee, beneficiary, secured party or purchaser, attorn to
the mortgagee, beneficiary, secured party or purchaser upon any such
foreclosure, sale or deed in lieu and recognize such mortgagee, beneficiary,
secured party or purchaser as Lessor under this Lease. Any successor in interest
to Lessor following foreclosure or conveyance in lieu thereof shall not be (i)
liable for any act or omission of Lessor or any prior lessor or with respect to
events occurring prior to acquisition of ownership; (ii) subject to any offsets
or defenses which Lessee might have against any Lessor or any prior lessor;
(iii) bound by prepayment by Lessee of more than one(1) month’s Fixed Minimum
Rent; or (iv) bound to return the Security Deposit unless the same is received
by such successor in interest.

(c) Additional Documents. The provisions of this Paragraph 24 shall be
self-operative and shall not require the execution of any additional documents
to be effective. However, Lessee agrees to execute (and acknowledge if required
by Lessor or any mortgagee, beneficiary or secured party) and deliver, within
ten (10) days after receipt of any written request and in the form requested by
Lessor or such mortgagee, beneficiary or secured party, any additional documents
evidencing the subordination or priority of this Lease with respect to the lien
of any such mortgage or deed of trust, or security device.

25. ESTOPPEL CERTIFICATES. Lessee agrees at any time, and within ten (10) days
after written request by Lessor, to execute, acknowledge and deliver to Lessor a
statement in writing certifying (i) that this Lease is unmodified and in full
force and effect (or if there have been modifications, that this Lease is in
full force and effect as modified and stating the modifications); (ii) the dates
to which the Rent and Additional Charges have been paid in advance, if any;
(iii) acknowledging Lessee’s acceptance of the Premises; (iv) confirming the
Commencement Date and the Expiration Date; (iv) confirming the current amount of
the Fixed Minimum Rent and Additional Rent; and (v) such other matters as Lessor
may request. Any such statement delivered pursuant to this Paragraph 25 may be
relied upon by any prospective purchaser, mortgagee, or assignee of any
mortgagee of the Premises or the Property.

26. SURRENDER AND HOLDING OVER.

(a) Surrender of the Premises. Upon the Expiration Date or sooner termination of
the Term, Lessee shall (i) quit and surrender the Premises, broom clean, in good
condition and repair (reasonable wear and tear and damage by acts of God or fire
excepted), together with all Alterations which may have been made in, to or on
the Premises, except any Alterations that Lessee shall be required to remove in
accordance to Paragraph 12(a); (ii) remove all its movable furniture, trade
fixtures and personal property from the Premises and all movable furniture,
trade fixtures and personal property not so removed shall be deemed abandoned by
Lessee; and (iii) remove all Hazardous Materials from the Premises and clean-up
or remediate, to the satisfaction of Lessor, any Hazardous Materials that have
been released in, on or about the Premises or the Property by Lessee or Lessee
Parties. Lessee shall indemnify, protect, defend and hold harmless Lessor from
and against all loss or liability resulting from any delay by Lessee in so
surrendering the Premises including, without limitation, any claims made by any
succeeding lessee.

(b) Holding Over. If Lessee should remain in possession of the Premises after
the Expiration Date or the earlier termination of the Term, or if Lessee shall
fail to surrender the Premises to Lessor in the condition required in Paragraph
26(a), without the express written consent of Lessor, Lessee shall be a tenant
at sufferance, shall be guilty of trespass and shall be liable to Lessor for all
damage resulting to Lessor from such holding over, including, but not limited
to, the claims of any succeeding lessee or the damage suffered by Lessor in
losing the opportunity to lease the Premises to another lessee, and Lessee shall
pay to Lessor as Rent during the period of such hold over two hundred percent
(200%) of the Rent payable by Lessee for the final month of the Term, such hold
over rent to be paid monthly in advance.

27. SALE OF THE PREMISES BY LESSOR. In the event of any sale, exchange, transfer
or change in ownership of the Premises or the Property by Lessor and assignment
by Lessor of this Lease, the Lessor shall be and is hereby entirely free and
relieved of all liability under any and all of its covenants an obligations
contained in or derived from this Lease occurring after the date of consummation
of any such transaction. Lessee agrees to look solely to the successor to Lessor
for the performance of the obligations of Lessor under this Lease from and after
the date of consummation of any such transaction.

28.  NOTICES. All notices, statements, demands, requests, consents, approvals,
authorizations, offers, agreements, appointments or designations under this
Lease by either party to the other shall be in writing and shall be sufficiently
given if delivered in person or sent by United States Postal Service certified
mail, return receipt requested, postage prepaid. Any notice to Lessee shall be
addressed to the address of Lessee shown in. the Lease Summary or to the
Premises. Any notice to Lessee may be served upon any individual occupying the
Premises. If there is more than one person or entity comprises Lessee, any
notice required or permitted by the terms of this Lease may be given by or to
any one such person or entity, and shall have the same force and effect as if
given by or to all such persons or entities. Any notice to Lessor shall be
addressed to Lessor at Lessor’s address shown in the Lease Summary or at such
other place as Lessor may from time to time designate by written notice to
Lessee. Notices shall be effective upon the date of personal service, or the
date of delivery or attempted delivery as shown on the United States Postal
Service return receipt. Each party may change its address for notices by notice
given in the manner provided in this Paragraph 28; provided, however, that
notice may always be given to Lessee addressed to the Premises.

29.BROKERS. Lessee warrants that Lessee has not had any dealings with any
realtor, broker or agent in connection with the Premises or the negotiation of
this Lease. Lessee agrees to indemnify, protect, defend and hold Lessor harmless
from and against any cost, expense or liability for any compensation,
commission, fee or charge claimed by any realtor, broker, agent or person with
respect to the leasing of the Premises by Lessee and/or the negotiation of this
Lease.

30. LIMITATION OF LESSOR’S LIABILITY. In the event Lessee makes any claim or
asserts any cause of action against Lessor as a result of Lessor’s default or
alleged default under this Lease, then (a) Lessee’s sole and exclusive remedy
shall be against current rents, issues, profits and other income that Lessor
receives from its. operation of the Property, net of all then current operating
expenses, liabilities and debt service associated with said operation (the
“Property Assets”); (b) no other real, personal or mixed property or other
assets of Lessor, wherever located, shall be subject to any levy on any judgment
obtained by Lessee against Lessor; (c) none of the trustees of Lessor shall be
personally liable to Lessee and none of the real, personal or mixed property or
other assets of any of such trustees shall be subject to levy on any judgment
obtained by Lessee against Lessor; (d) if such Property Assets are insufficient
to satisfy any judgment obtained by Lessee, then Lessee will not institute any
further action, suit, claim or demand, at law or in equity, against Lessor for
or on account of such deficiency; and (e) Lessee shall not have the right to
perform the obligations of Lessor or to deduct the costs of such performance
from the Rent or other sums due under this Lease. The limitations set forth in
this Paragraph 30 shall be applicable to, and enforced by, Lessor and/or any
partner, trustee, officer, employee, agent or property manager of Lessor.

31.LESSOR RIGHT TO PERFORM. In the event Lessee shall fail to timely perform any
obligation of Lessee to be performed under this Lease, Lessor may, but shall not
be obligated, after giving written notice to Lessee, to perform such obligation.
The cost incurred by Lessor in performing any such obligation shall be
immediately payable by Lessee to Lessor, together with an administrative fee of
ten percent (10%) of such cost and interest at the Interest Rate, upon demand as
Additional Charges.

32. GENERAL PROVISIONS.

(a)  Relationship. Nothing contained in this Lease shall be deemed or construed
by the parties hereto or by any third person to create the relationship of
principal and agent or any partnership, joint venture or other association
between Lessor and Lessee, and neither the method of computation of rent nor
any. other provision contained in this Lease, nor any acts of Lessor and/or
Lessee, shall be deemed to create any relationship between Lessor and Lessee,
other than the relationship of lessor and lessee.

(b)  Binding on Successors. Each and all of the provisions of this Lease shall
be binding upon and inure to the benefit of the parties hereto, and except as
otherwise provided elsewhere in this Lease, their respective heirs, executors,
administrators, successors and assigns, subject at all times to all agreements
and restrictions contained elsewhere in this Lease with respect to the
assignment, transfer, encumbering or subletting of all or any part of the
interest of Lessee in this Lease.

(c)Captions. The captions of the Paragraphs of this Lease are for convenience
only and shall not be considered or referred to in resolving questions of
interpretation or construction.

(d) Joint and Several Liability. If more than one person or entity executes this
Lease as Lessee, each of them is jointly and severally liable for the keeping,
observing and performing of all of the terms, covenants, conditions, provisions
and agreements of this Lease to be kept, observed and performed by Lessee.

(e) Entire Agreement. This Lease is and shall be considered to be the only
agreement between the parties hereto and their representatives and agents
relating to the leasing of the Premises. All prior negotiations, written and
oral agreements between Lessor and Lessee have been merged into, included in and
are superseded by this Lease. There are no other agreements, representations or
warranties between the Lessor and Lessee relating to the leasing of the Premises
which are not set out in this Lease. In entering into this Lease, neither Lessor
nor Lessee is relying upon any agreement, representation or warranty that is not
set forth in this Lease.

(f)Governing Law. The laws of the State of California applicable to residents of
the State of California shall govern the validity, performance, and enforcement
of this Lease. This Lease shall not be construed presumptively either for or
against Lessor or Lessee.

(g)Time of Essence. Time is of the essence with respect to the performance of
each of the covenants and agreements contained in this Lease.

(h) Severability. Any provision or provisions of this Lease which are finally
adjudicated by a court of competent jurisdiction to be invalid, void or illegal
shall in no way affect, impair, or invalidate any other provision of this Lease,
and the remaining provisions of this Lease shall nevertheless remain in full
force and effect.

(i) Attorney’s Fees and Costs. In the event any action is brought by either
party hereto against the other with respect to this Lease, or by reason of the
breach of any covenant of condition on the part of the other party, or arising
out of this Lease, then and in that event the party in whose favor final
judgment shall be entered shall be entitled to have and recover from the other
party the actual court costs incurred and reasonable attorney’s fees and
reasonable expert witness fees incurred by the prevailing party as fixed by the
court wherein such judgment shall be entered.

(j) No Recording. Neither this Lease nor any abstract or short form of this
Lease shall be recorded.

(k) Amendment. This Lease may be amended only by a subsequent writing executed
by Lessor and Lessee. No course of conduct or dealing between Lessor and Lessee
shall amend any of the provisions of this Lease, or constitute a waiver of the
performance of or compliance with any of the provisions of this Lease.

(l) Financial Information, Lessee shall deliver to Lessor copies of Lessee’s
balance sheet and profit and loss statement and any other financial information
prepared by or for Lessee within thirty (30) days of such preparation, but not
less than annually during the Term. Such financial information shall be
certified as accurate by an independent certified public accountant. Lessor
shall not disclose such financial information to. third parties, except for
disclosure to Lessor’s accountants and attorneys’, prospective lenders and
purchasers of the Property and as required by court order or law.

(m) Waiver of Jury Trial. Lessor and Lessee hereby waive any and all rights to a
trial by jury in any action, proceeding or counterclaim (any claim for injury or
damage and any emergency or statutory remedy, in respect thereof) brought by
either party against the other party on any matter arising out of or in any way
connected with this Lease, the relationship of Lessor and Lessee, and/or
Lessee’s use or occupancy of the Premises. Lessor and Lessee agree that this
Paragraph 32(m) constitutes a written consent to waiver of trial by jury within
the meaning of Section 631(a)(2) of the California Code of Civil Procedure, and
Lessor and Lessee hereby authorize and empower the each other to file this
Paragraph 32(m) and/or this Lease, as-required, with the clerk or judge of any
court of competent jurisdiction as a written consent to waiver of jury trial.

(n) Attachments. The following items are attached to and incorporated into this
Lease and form a part of this Lease:

Lease Summary

Exhibit A     Diagram of Premises

Exhibit B-1     Diagram of the Property

Exhibit B-2     Legal Description of the Property

THE SUBMISSION OF THIS LEASE TO LESSEE SHALL BE FOR EXAMINATION PURPOSES ONLY,
AND DOES NOT AND SHALL NOT CONSTITUTE A RESERVATION OF OR OPTION FOR LESSEE TO
LEASE, OR OTHERWISE CREATE ANY INTEREST OF LESSEE IN THE PREMISES.

IN WITNESS WHEREOF, the Lessor and Lessee have duly executed this Lease on the
day and year first above written.

"LESSOR"   "LESSEE"       JULIET B. HOOKER, KATHERINE B  CENTRAL COAST
BANKCORP,  CONGDON AND WILLIAM C. BURKETT,  a California corporation 
Co-Trustees of the William Andrew Burkett    Trust dated March 13, 1985, as to
an    undivided one half interest, and JULIET B  By: /s/ HARRY D. WARDWELL 
HOOKER, KATHERINE B. CONGDON and  Name: Harry Wardwell  WILLIAM C. BURKETT,
Co-trustees    of the Juliet J. Burkett Testamentary Trust    dated March 13,
1981, as to an undivided  Title: Senior Vice President  one-half interest
(collectively doing  Business as Burkett Land Company)      /s/ JULIET B.
HOOKER  By____________________________  Juliet B. Hooker, Co-Trustee 
Name__________________________    Title___________________________  /s/
KATHERINE B. COGDON    Katherine B. Congdon, Co-Trustee        /s/ WILLIAM C.
BURKETT    William C. Burkett, Co-Trustee   

EXHIBIT A — DIAGRAM OF THE PREMISES

[Graphic Omitted]

EXHIBIT B-1 — DIAGRAM OF THE PROPERTY

[Graphic Omitted]

EXHIBIT B-2 - LEGAL DESCRIPTION OF THE PROPERTY

That certain real property located in the City of Monterey, County of Monterey,
State of California described as follows:

Lot two (2) in Block four (4), as shown and so designed on the “Map of Littles
Survey of New Monterey, Monterey, California, as surveyed by W. C. Little,
September 1886” filed December 1, 1886, in the office of the County Recorder of
the County of Monterey, State of California, and now on file and of record in
said office in Map Book One, Cities and Towns, at Page 12 therein.

A portion of Block 4, as shown and so designated on Map entitled, “Map of
Littles Survey of New Monterey, Monterey, California”, as surveyed by W. C.
Little, September 1886 filed in the office of the County Recorder of the County
of Monterey, State of California, December 1, 1886 in Volume 1, Cities and
Towns, at page 12 therein; more particularly described as follows:

Beginning at the most Southerly comer of Hoffman Avenue and Lighthouse Avenue as
shown on said map and running thence Southwesterly along the Southeastern line
of Hoffman Avenue a distance of 120 feet to the most Northerly corner of Lot 1,
in said Block; thence Southeasterly along the Northeasterly line of said Lot 1,
50 feet to the most Northerly corner of Lot 2 in said Block; thence at right
angles Northeasterly and parallel with Hoffman Avenue a distance of 120 feet to
the Southwesterly line of Lighthouse Avenue; thence at right angles
Northwesterly following the said line of Lighthouse Avenue 50 feet to the point
of beginning.