<PAGE>   1
                                                                   EXHIBIT 10.70


                                SANTA MONICA BANK
                                  Member FDIC


                            [SANTA MONICA BANK LOGO]


                             BUSINESS LOAN AGREEMENT

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
  Principal      Loan Date      Maturity       Loan No        Call      Collateral          Account        Officer       Initials
<S>             <C>            <C>           <C>              <C>       <C>                 <C>            <C>         <C>
$500,000.00     07-07-1999     07-06-2000    2000314557                   5015                               RDB       [Not Legible]
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:   CALIFORNIA BEACH RESTAURANTS, INC., A           Lender:     SANTA MONICA BANK
            CALIFORNIA CORPORATION (TIN: 95-2693503)                    LOAN SERVICING CENTER
            17383 SUNSET BOULEVARD, #140                                1231 4TH STREET
            PACIFIC PALISADES, CA 90272                                 SANTA MONICA, CA 90401

====================================================================================================================================
</TABLE>


THIS BUSINESS LOAN AGREEMENT between CALIFORNIA BEACH RESTAURANTS, INC., A
CALIFORNIA CORPORATION ("Borrower") and SANTA MONICA BANK ("Lender") is made and
executed on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan or
loans and other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement. All such loans and
financial accommodations, together with all future loans and financial
accommodations from Lender to Borrower, are referred to in this Agreement
individually as the "Loan" and collectively as the "Loans." Borrower understands
and agrees that: (a) in granting, renewing, or extending any Loan, Lender is
relying upon Borrower's representations, warranties, and agreements, as set
forth in this Agreement; (b) the granting, renewing, or extending of any Loan by
Lender at all times shall be subject to Lender's sole judgment and discretion;
and (c) all such Loans shall be and shall remain subject to the following terms
and conditions of this Agreement.

TERM. This Agreement shall be effective as of JULY 6, 1999, and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

      AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
      this Business Loan Agreement may be amended or modified from time to time,
      together with all exhibits and schedules attached to this Business Loan
      Agreement from time to time.

      BORROWER. The word "Borrower" means CALIFORNIA BEACH RESTAURANTS, INC., A
      CALIFORNIA CORPORATION. The word "Borrower" also includes, as applicable,
      all subsidiaries and affiliates of Borrower as provided below in the
      paragraph titled "Subsidiaries and Affiliates."

      CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
      Compensation, and Liability Act of 1980, as amended.

      CASH FLOW. The words "Cash Flow" mean net income after taxes, and
      exclusive of extraordinary gains and income, plus depreciation and
      amortization.

      COLLATERAL. The word "Collateral" means and includes without limitation
      all property and assets granted as collateral security for a Loan, whether
      real or personal property, whether granted directly or indirectly, whether
      granted now or in the future, and whether granted in the form of a
      security interest, mortgage, deed of trust, assignment, pledge, chattel
      mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
      trust receipt, lien, charge, lien or title retention contract, lease or
      consignment intended as a security device, or any other security or lien
      interest whatsoever, whether created by law, contract, or otherwise.

      DEBT. The word "Debt" means all of Borrower's liabilities excluding
      Subordinated Debt. ERISA. The word "ERISA" means the Employee Retirement
      Income Security Act of 1974, as amended.

      EVENT OF DEFAULT. The words "Event of Default" mean and include without
      limitation any of the Events of Default set forth below in the section
      titled "EVENTS OF DEFAULT."

      GRANTOR. The word "Grantor" means and includes without limitation each and
      all of the persons or entities granting a Security Interest in any
      Collateral for the Indebtedness, including without limitation all
      Borrowers granting such a Security Interest.

      GUARANTOR. The word "Guarantor" means and includes without limitation each
      and all of the guarantors, sureties, and accommodation parties in
      connection with any Indebtedness.

      INDEBTEDNESS. The word "Indebtedness" means and includes without
      limitation all Loans, together with all other obligations, debts and
      liabilities of Borrower to Lender, or any one or more of them, as well as
      all claims by Lender against Borrower, or any one or more of them; whether
      now or hereafter existing, voluntary or involuntary, due or not due,
      absolute or contingent, liquidated or unliquidated; whether Borrower may
      be liable individually or jointly with others; whether Borrower may be
      obligated as a guarantor. surety, or otherwise; whether recovery upon such
      Indebtedness may be or hereafter may become barred by any statute of
      limitations; and whether such Indebtedness may be or hereafter may become
      otherwise unenforceable.

      LENDER. The word "Lender" means SANTA MONICA BANK, its successors and
      assigns.

      LIQUID ASSETS. The words "Liquid Assets" mean Borrower's cash on hand plus
      Borrower's readily marketable securities.

      LOAN. The word "Loan" or "Loans" means and includes without limitation any
      and all commercial loans and financial accommodations from Lender to
      Borrower, whether now or hereafter existing, and however evidenced,
      including without limitation those loans and financial accommodations
      described herein or described on any exhibit or schedule attached to this
      Agreement from time to time.

      NOTE. The word "Note" means and includes without limitation Borrower's
      promissory note or notes, if any, evidencing Borrower's Loan obligations
      in favor of Lender, as well as any substitute, replacement or refinancing
      note or notes therefor.

      PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and security
      interests securing Indebtedness owed by Borrower to Lender; (b) liens for
      taxes, assessments, or similar charges either not yet due or being
      contested in good faith; (c) liens of materialmen, mechanics,
      warehousemen, or carriers, or other like liens arising in the ordinary
      course of business and securing obligations which are not yet delinquent;
      (d) purchase money liens or purchase money security interests upon or in
      any property acquired or held by Borrower in the ordinary course of
      business to secure indebtedness outstanding on the date of this Agreement
      or permitted to be incurred under the paragraph of this Agreement


<PAGE>   2
07-07-1999                   BUSINESS LOAN AGREEMENT                      Page 2
Loan No 2000314557                  (Continued)
================================================================================

      titled "Indebtedness and Liens"; (e) liens and security interests which,
      as of the date of this Agreement, have been disclosed to and approved by
      the Lender in writing; and (f) those liens and security interests which in
      the aggregate constitute an immaterial and insignificant monetary amount
      with respect to the net value of Borrower's assets.

      RELATED DOCUMENTS. The words "Related Documents" mean and include without
      limitation all promissory notes, credit agreements, loan agreements,
      environmental agreements, guaranties, security agreements, mortgages,
      deeds of trust, and all other instruments, agreements and documents,
      whether now or hereafter existing, executed in connection with the
      Indebtedness.

      SECURITY AGREEMENT. The words "Security Agreement" mean and include
      without limitation any agreements, promises, covenants, arrangements,
      understandings or other agreements, whether created by law, contract, or
      otherwise, evidencing, governing, representing, or creating a Security
      Interest.

      SECURITY INTEREST. The words "Security Interest" mean and include without
      limitation any type of collateral security, whether in the form of a lien,
      charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
      chattel trust, factor's lien, equipment trust, conditional sale, trust
      receipt, lien or title retention contract, lease or consignment intended
      as a security device, or any other security or lien interest whatsoever,
      whether created by law, contract, or otherwise.

      SARA. The word "SARA" means the Superfund Amendments and Reauthorization
      Act of 1986 as now or hereafter amended.

      SUBORDINATED DEBT. The words "Subordinated Debt" mean indebtedness and
      liabilities of Borrower which have been subordinated by written agreement
      to indebtedness owed by Borrower to Lender in form and substance
      acceptable to Lender.

      TANGIBLE NET WORTH. The words "Tangible Net Worth" mean Borrower's total
      assets excluding all intangible assets (i.e., goodwill, trademarks,
      patents, copyrights, organizational expenses, and similar intangible
      items, but including leaseholds and leasehold improvements) less total
      Debt.

      WORKING CAPITAL. The words "Working Capital" mean Borrower's current
      assets, excluding prepaid expenses, less Borrower's current liabilities.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.

      LOAN DOCUMENTS. Borrower shall provide to Lender in form satisfactory to
      Lender the following documents for the Loan: (a) the Note, (b) Security
      Agreements granting to Lender security interests in the Collateral, (c)
      Financing Statements perfecting Lender's Security Interests; (d) evidence
      of insurance as required below; and (e) any other documents required under
      this Agreement or by Lender or its counsel, including without limitation
      any guaranties described below.

      BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
      substance satisfactory to Lender properly certified resolutions, duly
      authorizing the execution and delivery of this Agreement, the Note and the
      Related Documents, and such other authorizations and other documents and
      instruments as Lender or its counsel, in their sole discretion, may
      require.

      PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all fees,
      charges, and other expenses which are then due and payable as specified in
      this Agreement or any Related Document.

      REPRESENTATIONS AND WARRANTIES. The representations and warranties set
      forth in this Agreement, in the Related Documents, and in any document or
      certificate delivered to Lender under this Agreement are true and correct.

      NO EVENT OF DEFAULT. There shall not exist at the time of any advance a
      condition which would constitute an Event of Default under this Agreement.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

      ORGANIZATION. Borrower is a corporation which is duly organized, validly
      existing, and in good standing under the laws of the State of California
      and is validly existing and in good standing in all states in which
      Borrower is doing business. Borrower has the full power and authority to
      own its properties and to transact the businesses in which it is presently
      engaged or presently proposes to engage. Borrower also is duly qualified
      as a foreign corporation and is in good standing in all states in which
      the failure to so qualify would have a material adverse effect on its
      businesses or financial condition.

      AUTHORIZATION. The execution, delivery, and performance of this Agreement
      and all Related Documents by Borrower, to the extent to be executed,
      delivered or performed by Borrower, have been duly authorized by all
      necessary action by Borrower; do not require the consent or approval of
      any other person, regulatory authority or governmental body; and do not
      conflict with, result in a violation of, or constitute a default under (a)
      any provision of its articles of incorporation or organization, or bylaws,
      or any agreement or other instrument binding upon Borrower or (b) any law,
      governmental regulation, court decree, or order applicable to Borrower.

      FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
      Lender truly and completely disclosed Borrower's financial condition as of
      the date of the statement. and there has been no material adverse change
      in Borrower's financial condition subsequent to the date of the most
      recent financial statement supplied to Lender. Borrower has no material
      contingent obligations except as disclosed in such financial statements.

      LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
      required hereunder to be given by Borrower when delivered will constitute,
      legal, valid and binding obligations of Borrower enforceable against
      Borrower in accordance with their respective terms.

      PROPERTIES. Except as contemplated by this Agreement or as previously
      disclosed in Borrower's financial statements or in writing to Lender and
      as accepted by Lender, and except for property tax liens for taxes not
      presently due and payable, Borrower owns and has good title to all of
      Borrower's properties free and clear of all Security Interests, and has
      not executed any security documents or financing statements relating to
      such properties. All of Borrower's properties are titled in Borrower's
      legal name, and Borrower has not used, or filed a financing statement
      under, any other name for at least the last five (5) years.

      HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
      "disposal," "release," and "threatened release," as used in this
      Agreement, shall have the same meanings as set forth in the "CERCLA,"
      "SARA," the Hazardous Materials Transportation Act, 49 U.S.C. Section
      1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
      Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
      California Health and Safety Code, Section 25100, et sect., or other
      applicable state or Federal laws, rules, or regulations adopted pursuant
      to any of the foregoing. Except as disclosed to and acknowledged by Lender
      in writing, Borrower represents and warrants that: (a) During the period
      of Borrower's ownership of the properties, there has been no use,
      generation, manufacture, storage, treatment, disposal, release or
      threatened release of any hazardous waste or substance by any person on,
      under, about or from any of the properties. (b) Borrower has no knowledge
      of, of reason to believe that there has been (j) any use, generation,
      manufacture, storage, treatment, disposal, release, or threatened release
      of any hazardous waste or substance on, under, about or from the
      properties by any prior owners or occupants of any of the properties, or
      (ii) any actual or threatened litigation or claims of any kind by any
      person relating to such matters. (c) Neither Borrower nor any tenant,
      contractor, agent or other authorized user of any of the properties shall
      use, generate, manufacture, store, treat, dispose of, or release any
      hazardous waste of substance on, under, about or from any of the
      properties; and any such activity shall be conducted in compliance with
      all applicable federal, state,

<PAGE>   3
07-07-1999                   BUSINESS LOAN AGREEMENT                      Page 3
Loan No 2000314557                  (Continued)
================================================================================

      and local laws, regulations, and ordinances, including without limitation
      those laws, regulations and ordinances described above. Borrower
      authorizes Lender and its agents to enter upon the properties to make such
      inspections and tests as Lender may deem appropriate to determine
      compliance of the properties with this section of the Agreement. Any
      inspections or tests made by Lender shall be at Borrower's expense and for
      Lender's purposes only and shall not be construed to create any
      responsibility or liability on the part of Lender to Borrower or to any
      other person. The representations and warranties contained herein are
      based on Borrower's due diligence in investigating the properties for
      hazardous waste and hazardous substances. Borrower hereby (a) releases and
      waives any future claims against Lender for indemnity or contribution in
      the event Borrower becomes liable for cleanup or other costs under any
      such laws, and (b) agrees to indemnify and hold harmless Lender against
      any and all claims, losses, liabilities, damages, penalties, and expenses
      which Lender may directly or indirectly sustain or suffer resulting from a
      breach of this section of the Agreement or as a consequence of any use,
      generation, manufacture, storage, disposal, release or threatened release
      of a hazardous waste or substance on the properties. The provisions of
      this section of the Agreement, including the obligation to indemnify,
      shall survive the payment of the Indebtedness and the termination or
      expiration of this Agreement and shall not be affected by Lender's
      acquisition of any interest in any of the properties, whether by
      foreclosure or otherwise.

      LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
      proceeding or similar action (including those for unpaid taxes) against
      Borrower is pending or threatened, and no other event has occurred which
      may materially adversely affect Borrower's financial condition or
      properties, other than litigation, claims, or other events, if any, that
      have been disclosed to and acknowledged by Lender in writing.

      TAXES. To the best of Borrower's knowledge, all tax returns and reports of
      Borrower that are or were required to be filed, have been filed, and all
      taxes, assessments and other governmental charges have been paid in full,
      except those presently being or to be contested by Borrower in good faith
      in the ordinary course of business and for which adequate reserves have
      been provided.

      LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
      Borrower has not entered into or granted any Security Agreements, or
      permitted the filing or attachment of any Security Interests on or
      affecting any of the Collateral directly or indirectly securing repayment
      of Borrower's Loan and Note, that would be prior or that may in any way be
      superior to Lender's Security Interests and rights in and to such
      Collateral.

      BINDING EFFECT. This Agreement, the Note, all Security Agreements directly
      or indirectly securing repayment of Borrower's Loan and Note and all of
      the Related Documents are binding upon Borrower as well as upon Borrower's
      successors, representatives and assigns, and are legally enforceable in
      accordance with their respective terms.

      COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
      business or commercial related purposes.

      EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
      may have any liability complies in all material respects with all
      applicable requirements of law and regulations, and (i) no Reportable
      Event nor Prohibited Transaction (as defined in ERISA) has occurred with
      respect to any such plan, (ii) Borrower has not withdrawn from any such
      plan or initiated steps to do so, (iii) no steps have been taken to
      terminate any such plan, and (iv) there are no unfunded liabilities other
      than those previously disclosed to Lender in writing.

      LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business,
      or Borrower's Chief executive office, if Borrower has more than one place
      of business, is located at 17383 SUNSET BOULEVARD, #140, PACIFIC
      PALISADES, CA 90272. Unless Borrower has designated otherwise in writing
      this location is also the office or offices where Borrower keeps its
      records concerning the Collateral.

      YEAR 2000. Borrower warrants and represents that all software utilized in
      the conduct of Borrower's business will have appropriate capabilities and
      compatibility for operation to handle calendar dates falling on or after
      January 1, 2000, and all information pertaining to such calendar dates, in
      the same manner and with the same functionality as the software does
      respecting calendar dates falling on or before December 31, 1999. Further,
      Borrower warrants and represents that the data-related user interface
      functions, data-fields, and data-related program instructions and
      functions of the software include the indication of the century.

      INFORMATION. All information heretofore or contemporaneously herewith
      furnished by Borrower to Lender for the purposes of or in connection with
      this Agreement or any transaction contemplated hereby is, and all
      information hereafter furnished by or on behalf of Borrower to Lender will
      be, true and accurate in every material respect on the date as of which
      such information is dated or certified; and none of such information is or
      will be incomplete by omitting to state any material fact necessary to
      make such information not misleading.

      SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
      agrees that Lender, without independent investigation, is relying upon the
      above representations and warranties in extending Loan Advances to
      Borrower. Borrower further agrees that the foregoing representations and
      warranties shall be continuing in nature and shall remain in full force
      and effect until such time as Borrower's Indebtedness shall be paid in
      full, or until this Agreement shall be terminated in the manner provided
      above, whichever is the last to occur.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

      LITIGATION. Promptly inform Lender in writing of (a) all material adverse
      changes in Borrower's financial condition, and (b) all existing and all
      threatened litigation, claims, investigations, administrative proceedings
      or similar actions affecting Borrower or any Guarantor which could
      materially affect the financial condition of Borrower or the financial
      condition of any Guarantor.

      FINANCIAL RECORDS. Maintain its books and records in accordance with
      generally accepted accounting principles, applied on a consistent basis,
      and permit Lender to examine and audit Borrower's books and records at all
      reasonable times.

      ADDITIONAL INFORMATION. Furnish such additional information and
      statements, lists of assets and liabilities, agings of receivables and
      payables, inventory schedules, budgets, forecasts, tax returns, and other
      reports with respect to Borrower's financial condition and business
      operations as Lender may request from time to time.

      FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and
      ratios.

            CURRENT RATIO. Maintain a ratio of Current Assets to Current
            Liabilities in excess of 0.20 to 1.00. Except as provided above, all
            computations made to determine compliance with the requirements
            contained in this paragraph shall be made in accordance with
            generally accepted accounting principles, applied on a consistent
            basis, and certified by Borrower as being true and correct.

            INSURANCE. Maintain fire and other risk insurance, public liability
            insurance, and such other insurance as Lender may require with
            respect to Borrower's properties and operations, in form, amounts,
            coverages and with insurance companies reasonably acceptable to
            Lender. Borrower, upon request of Lender, will deliver to Lender
            from time to time the policies or certificates of insurance in form
            satisfactory to Lender, including stipulations that coverages will
            not be cancelled or diminished without at least ten (10) days' prior
            written notice to Lender. Each insurance policy also shall include
            an endorsement providing that coverage in favor of Lender will not
            be impaired in any way by any act, omission or default of Borrower
            or any other person. In connection with all policies covering assets
            in which Lender holds or is offered a security interest for the
            Loans, Borrower will provide Lender with such loss payable or other
            endorsements as Lender may require.

      INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
      each existing insurance policy showing such information as Lender may
      reasonably request, including without limitation the following: (a) the
      name of the insurer; (b) the risks insured; (c) the amount of the policy;
      (d) the properties insured; (e) the then current property values on the
      basis of which insurance has been obtained, and the manner of determining
      those values; and (f) the expiration date of the policy. In addition, upon
      request of Lender (however not more often than annually)


<PAGE>   4
07-07-1999                   BUSINESS LOAN AGREEMENT                      Page 4
Loan No 2000314557                  (Continued)
================================================================================

      Borrower will have an independent appraiser satisfactory to Lender
      determine, as applicable, the actual cash value or replacement cost of any
      Collateral. The cost of such appraisal shall be paid by Borrower.

      GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
      guaranties of the Loans in favor of Lender, executed by the guarantor
      named below, on Lender's forms, and in the amount and under the conditions
      spelled out in those guaranties.

      GUARANTOR                                                     AMOUNT
      ---------                                                     ------
      SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION          UNLIMITED

      OTHER AGREEMENTS. Comply with all terms and conditions of all other
      agreements, whether now or hereafter existing, between Borrower and any
      other party and notify Lender immediately in writing of any default in
      connection with any other such agreements.

      LOAN FEES AND CHARGES. In addition to all other agreed upon fees and
      charges, pay the following: $2,500.00.

      LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
      operations, unless specifically consented to the contrary by Lender in
      writing.

      TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
      indebtedness and obligations, including without limitation all
      assessments, taxes, governmental charges, levies and liens, of every kind
      and nature, imposed upon Borrower or its properties, income, or profits,
      prior to the date on which penalties would attach, and all lawful claims
      that, if unpaid, might become a lien or charge upon any of Borrower's
      properties, income, or profits. Provided however, Borrower will not be
      required to pay and discharge any such assessment, tax, charge, levy, lien
      or claim so long as (a) the legality of the same shall be contested in
      good faith by appropriate proceedings, and (b) Borrower shall have
      established on its books adequate reserves with respect to such contested
      assessment, tax, charge, levy, lien, or claim in accordance with generally
      accepted accounting practices. Borrower, upon demand of Lender, will
      furnish to Lender evidence of payment of the assessments, taxes, charges,
      levies, liens and claims and will authorize the appropriate governmental
      official to deliver to Lender at any time a written statement of any
      assessments, taxes, charges, levies, liens and claims against Borrower's
      properties, income, or profits.

      PERFORMANCE. Perform and comply with all terms, conditions, and provisions
      set forth in this Agreement and in the Related Documents in a timely
      manner, and promptly notify Lender if Borrower learns of the occurrence of
      any event which constitutes an Event of Default under this Agreement or
      under any of the Related Documents.

      OPERATIONS. Maintain executive and management personnel with substantially
      the same qualifications and experience as the present executive and
      management personnel; provide written notice to Lender of any change in
      executive and management personnel; conduct its business affairs in a
      reasonable and prudent manner and in compliance with all applicable
      federal, state and municipal laws, ordinances, rules and regulations
      respecting its properties, charters, businesses and operations, including
      without limitation, compliance with the Americans With Disabilities Act
      and with all minimum funding standards and other requirements of ERISA and
      other laws applicable to Borrower's employee benefit plans.

      INSPECTION. Permit employees or agents of Lender at any reasonable time to
      inspect any and all Collateral for the Loan or Loans and Borrower's other
      properties and to examine or audit Borrower's books, accounts, and records
      and to make copies and memoranda of Borrower's books, accounts, and
      records. If Borrower now or at any time hereafter maintains any records
      (including without limitation computer generated records and computer
      software programs for the generation of such records) in the possession of
      a third party, Borrower, upon request of Lender, shall notify such party
      to permit Lender free access to such records at all reasonable times and
      to provide Lender with copies of any records it may request, all at
      Borrower's expense.

      COMPLIANCE CERTIFICATE. Unless waived in writing by Lender, provide Lender
      at least annually and at the time of each disbursement of Loan proceeds
      with a certificate executed by Borrower's chief financial officer, or
      other officer or person acceptable to Lender, certifying that the
      representations and warranties set forth in this Agreement are true and
      correct as of the date of the certificate and further certifying that, as
      of the date of the certificate, no Event of Default exists under this
      Agreement.

      ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
      respects with all environmental protection federal, state and local laws,
      statutes, regulations and ordinances; not cause or permit to exist, as a
      result of an intentional or unintentional action or omission on its part
      or on the part of any third party, on property owned and/or occupied by
      Borrower, any environmental activity where damage may result to the
      environment, unless such environmental activity is pursuant to and in
      compliance with the conditions of a permit issued by the appropriate
      federal, state or local governmental authorities; shall furnish to Lender
      promptly and in any event within thirty (30) days after receipt thereof a
      copy of any notice, summons, lien, citation, directive, letter or other
      communication from any governmental agency or instrumentality concerning
      any intentional or unintentional action or omission on Borrower's part in
      connection with any environmental activity whether or not there is damage
      to the environment and/or other natural resources.

      ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
      notes, mortgages, deeds of trust, security agreements, financing
      statements, instruments, documents and other agreements as Lender or its
      attorneys may reasonably request to evidence and secure the Loans and to
      perfect all Security Interests.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

      INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
      course of business and indebtedness to Lender contemplated by this
      Agreement, create, incur or assume indebtedness for borrowed money,
      including capital leases, (b) except as allowed as a Permitted Lien, sell,
      transfer, mortgage, assign, pledge, lease, grant a security interest in,
      or encumber any of Borrower's assets, or (c) sell with recourse any of
      Borrower's accounts, except to Lender.

      CONTINUITY OF OPERATIONS. (a) Engage in any business activities
      substantially different than those in which Borrower is presently engaged,
      (b) cease operations, liquidate, merge, transfer, acquire or consolidate
      with any other entity, change ownership, change its name, dissolve or
      transfer or sell Collateral out of the ordinary course of business, (c)
      pay any dividends on Borrower's stock (other than dividends payable in its
      stock), provided, however that notwithstanding the foregoing, but only so
      long as no Event of Default has occurred and is continuing or would result
      from the payment of dividends, if Borrower is a "Subchapter S Corporation"
      (as defined in the Internal Revenue Code of 1986, as amended), Borrower
      may pay cash dividends on its stock to its shareholders from time to time
      in amounts necessary to enable the shareholders to pay income taxes and
      make estimated income tax payments to satisfy their liabilities under
      federal and state law which arise solely from their status as Shareholders
      of a Subchapter S Corporation because of their ownership of shares of
      stock of Borrower, or (d) purchase or retire any of Borrower's outstanding
      shares or alter or amend Borrower's capital structure.

      LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money
      or assets, (b) purchase, create or acquire any interest in any other
      enterprise or entity, or (c) incur any obligation as surety or guarantor
      other than in the ordinary course of business.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse


<PAGE>   5
07-07-1999                   BUSINESS LOAN AGREEMENT                      Page 5
Loan No 2000314557                  (Continued)
================================================================================

change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (d) any
Guarantor seeks, claims or otherwise attempts to limit, modify or, revoke such
Guarantor's guaranty of the Loan or any other loan with Lender.

SIXTY DAY OUT OF DEBT REQUIREMENT. Borrower agrees to be out of debt on this
credit for at least sixty (60) consecutive days after the Note date and before
the Note maturity date.

ADDITIONAL AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender
that, while this Agreement is in effect, Borrower will:

1OK'S AND 10Q'S. Furnish Lender with, 10k's due within one hundred five (105)
days of fiscal year end and 10q's due within sixty (60) days of quarter end.

GUARANTOR'S FINANCIAL STATEMENT. Cause to be delivered to Lender, as soon as
available but in no event later than one hundred five (105) days of each fiscal
year-end, Guarantor's Corporate balance sheet and profit and loss statement for
the period ended, audited by a certified public accountant acceptable to Lender.

DEBT SERVICE COVERAGE RATIO. Maintain a ratio of Earnings before Interest Tax
Depreciation and Amortization divided by Current Portion of Long-term Debt
(CPLTD) plus Interest of not less than 1.25 to 1.00 for the 2nd quarter ending
10/31/99 and 3rd quarter ending 1/31/2000, increasing AP 1.50 to 1.00
thereafter.

SUBLIMIT. Subject to the terms of this Agreement, Lender will issue commercial
letters of credit (each a "Letter of Credit") on behalf of Borrower to support
Borrower's purchase of inventory or for other business purposes agreed to by
Lender. At no time, however, shall the total face amount of all Letters of
Credit outstanding, less any partial draws paid under the Letters of Credit
exceed the sum of $450,000.00. There will be a 1.00% per annum fee for the
issuance of Letters of Credit.

(a) Upon Lender's request, Borrower promptly shall pay to Lender issuance fees
and such other fees, commissions, costs, and any out-of-pocket expenses charged
or incurred by Lender with respect to any Letter of Credit.

(b) The commitment by Lender to issue Letters of Credit shall, unless earlier
terminated in accordance with the terms of this Agreement, automatically
terminate on the Expiration Date and no Letter of Credit shall expire on a date
which is sixty (60) days after the Expiration Date.

(c) Each Letter of Credit shall be in form and substance satisfactory to Lender
and in favor of beneficiaries satisfactory to Lender, provided that Lender may
refuse to issue a Letter of Credit due to the nature of the transaction or its
terms or in connection with any transaction where Lender, due to beneficiary or
the nationality or residence of the beneficiary, would be prohibited by any
applicable law, regulation, or order from issuing such Letter of Credit. Under
no circumstances, however, will a Letter of Credit exceed one hundred twenty
(120) days from the issue date.

(d) Prior to the issuance of each Letter of Credit, and in all events prior to
any daily cutoff time Lender may have established for purposes thereof, Borrower
shall deliver to Lender a duly executed form of Lender's standard form of
application for issuance of letter of credit with proper insertions.

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the Indebtedness against any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

      DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
      on the Loans.

      OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
      perform when due any other term, obligation, covenant or condition
      contained in this Agreement or in any of the Related Documents, or failure
      of Borrower to comply with or to perform any other term, obligation,
      covenant or condition contained in any other agreement between Lender and
      Borrower.

      DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
      under any loan, extension of credit, security agreement, purchase or sales
      agreement, or any other agreement, in favor of any other creditor or
      person that may materially affect any of Borrower's property or Borrower's
      or any Grantor's ability to repay the Loans or perform their respective
      obligations under this Agreement or any of the Related Documents.

      FALSE STATEMENTS. Any warranty, representation or statement made or
      furnished to Lender by or on behalf of Borrower or any Grantor under this
      Agreement or the Related Documents is false or misleading in any material
      respect at the time made or furnished, or becomes false or misleading at
      any time thereafter.

      DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
      Documents ceases to be in full force and effect (including failure of any
      Security Agreement to create a valid and perfected Security Interest) at
      any time and for any reason.

      INSOLVENCY. The dissolution or termination of Borrower's existence as a
      going business, the insolvency of Borrower, the appointment of a receiver
      for any part of Borrower's property, any assignment for the benefit of
      creditors, any type of creditor workout, or the commencement of any
      proceeding under any bankruptcy or insolvency laws by or against Borrower.

      CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
      forfeiture proceedings, whether by judicial proceeding, self-help,
      repossession or any other method, by any creditor of Borrower, any
      creditor of any Grantor against any collateral securing the Indebtedness,
      or by any governmental agency. This includes a garnishment, attachment, or
      levy on or of any of Borrower's deposit accounts with Lender.

      EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
      respect to any Guarantor of any of the Indebtedness or any Guarantor dies
      or becomes incompetent, or revokes or disputes the validity of, or
      liability under, any Guaranty of the Indebtedness.

      ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
      condition, or Lender believes the prospect of payment or performance of
      the Indebtedness is impaired.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:


<PAGE>   6
07-07-1999                   BUSINESS LOAN AGREEMENT                      Page 6
Loan No 2000314557                  (Continued)
================================================================================

      AMENDMENTS. This Agreement, together with any Related Documents,
      constitutes the entire understanding and agreement of the parties as to
      the matters set forth in this Agreement. No alteration of or amendment to
      this Agreement shall be effective unless given in writing and signed by
      the party or parties sought to be charged or bound by the alteration or
      amendment.

      APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED
      BY LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER
      AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS
      OF LOS ANGELES COUNTY, THE STATE OF CALIFORNIA. THIS AGREEMENT SHALL BE
      GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
      CALIFORNIA.

      CAPTION HEADINGS. Caption headings in this Agreement are for convenience
      purposes only and are not to be used to interpret or define the provisions
      of this Agreement.

      MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Borrower under
      this Agreement shall be joint and several, and all references to Borrower
      shall mean each and every Borrower. This means that each of the persons
      signing below is responsible for all obligations in this Agreement.

      CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
      sale or transfer, whether now or later, of one or more participation
      interests in the Loans to one or more purchasers, whether related or
      unrelated to Lender. Lender may provide, without any limitation
      whatsoever, to any one or more purchasers, or potential purchasers, any
      information or knowledge Lender may have about Borrower or about any other
      matter relating to the Loan, and Borrower hereby waives any rights to
      privacy it may have with respect to such matters. Borrower additionally
      waives any and all notices of sale of participation interests, as well as
      all notices of any repurchase of such participation interests. Borrower
      also agrees that the purchasers of any such participation interests will
      be considered as the absolute owners of such interests in the Loans and
      will have all the rights granted under the participation agreement or
      agreements governing the sale of such participation interests. Borrower
      further waives all rights of offset or counterclaim that it may have now
      or later against Lender or against any purchaser of such a participation
      interest and unconditionally agrees that either Lender or such purchaser
      may enforce Borrower's obligation under the Loans irrespective of the
      failure or insolvency of any holder of any interest in the Loans. Borrower
      further agrees that the purchaser of any such participation interests may
      enforce its interests irrespective of any personal claims or defenses that
      Borrower may have against Lender.

      COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
      expenses, including without limitation attorneys' fees, incurred in
      connection with the preparation, execution, enforcement, modification and
      collection of this Agreement or in connection with the Loans made pursuant
      to this Agreement. Lender may pay someone else to help collect the Loans
      and to enforce this Agreement, and Borrower will pay that amount. This
      includes, subject to any limits under applicable law, Lender's attorneys'
      fees and Lender's legal expenses, whether or not there is a lawsuit,
      including attorneys' fees for bankruptcy proceedings (including efforts to
      modify or vacate any automatic stay or injunction), appeals, and any
      anticipated post-judgment collection services. Borrower also will pay any
      court costs, in addition to all other sums provided by law.

      NOTICES. All notices required to be given under this Agreement shall be
      given in writing, may be sent by telefacsimile (unless otherwise required
      by law), and shall be effective when actually delivered or when deposited
      with a nationally recognized overnight courier or deposited in the United
      States mail, first class, postage prepaid, addressed to the party to whom
      the notice is to be given at the address shown above. Any party may change
      its address for notices under this Agreement by giving formal written
      notice to the other parties, specifying that the purpose of the notice is
      to change the party's address. To the extent permitted by applicable law,
      if there is more than one Borrower, notice to any Borrower will constitute
      notice to all Borrowers. For notice purposes, Borrower will keep Lender
      informed at all times of Borrower's current addresses).

      SEVERABILITY. If a court of competent jurisdiction finds any provision of
      this Agreement to be invalid or unenforceable as to any person or
      circumstance, such finding shall not render that provision invalid or
      unenforceable as to any other persons or circumstances. If feasible, any
      such offending provision shall be deemed to be modified to be within the
      limits of enforceability or validity; however, if the offending provision
      cannot be so modified, it shall be stricken and all other provisions of
      this Agreement in all other respects shall remain valid and enforceable.

      SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
      provisions of this Agreement makes it appropriate, including without
      limitation any representation, warranty or covenant, the word "Borrower"
      as used herein shall include all subsidiaries and affiliates of Borrower.
      Notwithstanding the foregoing however, under no circumstances shall this
      Agreement be construed to require Lender to make any Loan or other
      financial accommodation to any subsidiary or affiliate of Borrower.

      SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
      behalf of Borrower shall bind its successors and assigns and shall inure
      to the benefit of Lender, its successors and assigns. Borrower shall not,
      however, have the right to assign its rights under this Agreement or any
      interest therein, without the prior written consent of Lender.

      SURVIVAL. All warranties, representations, and covenants made by Borrower
      in this Agreement or in any certificate or other instrument delivered by
      Borrower to Lender under this Agreement shall be considered to have been
      relied upon by Lender and will survive the making of the Loan and delivery
      to Lender of the Related Documents, regardless of any investigation made
      by Lender or on Lender's behalf.

      TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
      Agreement.

      WAIVER. Lender shall not be deemed to have waived any rights under this
      Agreement unless such waiver is given in writing and signed by Lender. No
      delay or omission on the part of Lender in exercising any right shall
      operate as a waiver of such right or any other right. A waiver by Lender
      of a provision of this Agreement shall not prejudice or constitute a
      waiver of Lender's right otherwise to demand strict compliance with that
      provision or any other provision of this Agreement. No prior waiver by
      Lender, nor any course of dealing between Lender and Borrower, or between
      Lender and any Grantor, shall constitute a waiver of any of Lender's
      rights or of any obligations of Borrower or of any Grantor as to any
      future transactions. Whenever the consent of Lender is required under this
      Agreement, the granting of such consent by Lender in any instance shall
      not constitute continuing consent in subsequent instances where such
      consent is required, and in all cases such consent may be granted or
      withheld in the sole discretion of Lender.
<PAGE>   7
07-07-1999                   BUSINESS LOAN AGREEMENT                      Page 7
Loan No 2000314557                  (Continued)
================================================================================

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF JULY
7, 1999.


BORROWER:

CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION

By: /s/ ALAN REDHEAD
    ------------------------------------
     ALAN REDHEAD, PRESIDENT


LENDER:

SANTA MONICA BANK

By: /s/ RICK BERGER
    ------------------------------------
    Authorized Officer


================================================================================


<PAGE>   8
                                SANTA MONICA BANK
                                  Member FDIC


                            [SANTA MONICA BANK LOGO]


                          COMMERCIAL SECURITY AGREEMENT


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
  Principal      Loan Date      Maturity       Loan No        Call      Collateral          Account        Officer       Initials
<S>             <C>            <C>           <C>              <C>       <C>                 <C>            <C>         <C>
$500,000.00     07-07-1999     07-06-2000    2000314557                   5015                               RDB       [Not Legible]
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:   CALIFORNIA BEACH RESTAURANTS, INC., A           Lender:     SANTA MONICA BANK
            CALIFORNIA CORPORATION (TIN: 95-2693503)                    LOAN SERVICING CENTER
            17383 SUNSET BOULEVARD, #140                                1231 4TH STREET
            PACIFIC PALISADES, CA 90272                                 SANTA MONICA, CA 90401

====================================================================================================================================
</TABLE>


THIS COMMERCIAL SECURITY AGREEMENT is entered into between CALIFORNIA BEACH
RESTAURANTS, INC., A CALIFORNIA CORPORATION (referred to below as "Grantor");
and SANTA MONICA BANK (referred to below as "Lender"). For valuable
consideration, Grantor grants to Lender a security interest in the Collateral to
secure the Indebtedness and agrees that Lender shall have the rights stated in
this Agreement with respect to the Collateral, in addition to all other rights
which Lender may have by law.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

      AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
      as this Commercial Security Agreement may be amended or modified from time
      to time, together with all exhibits and schedules attached to this
      Commercial Security Agreement from time to time.

      COLLATERAL. The word "Collateral" means the following described property
      of Grantor, whether now owned or hereafter acquired, whether now existing
      or hereafter arising, and wherever located:

            ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL
      INTANGIBLES

      In addition, the word "Collateral" includes all the following, whether now
      owned or hereafter acquired, whether now existing or hereafter arising,
      and wherever located:

      (a) All attachments, accessions, accessories, tools, parts, supplies,
      increases, and additions to and all replacements of and substitutions for
      any property described above.

      (b) All products and produce of any of the property described in this
      Collateral section.

      (c) All accounts, general intangibles. instruments, rents, monies,
      payments, and all other rights, arising out of a sale, lease, or other
      disposition of any of the property described in this Collateral section.

      (d) All proceeds (including insurance proceeds) from the sale,
      destruction, loss, or other disposition of any of the property described
      in this Collateral section.

      (e) All records and data relating to any of the property described in this
      Collateral section, whether in the form of a writing, photograph,
      microfilm, microfiche, or electronic media, together with all of Grantor's
      right, title, and interest in and to all computer software required to
      utilize, create, maintain, and process any such records or data on
      electronic media.

      EVENT OF DEFAULT. The words "Event of Default" mean and include without
      limitation any of the Events of Default set forth below in the section
      titled "Events of Default."

      GRANTOR. The word "Grantor" means CALIFORNIA BEACH RESTAURANTS, INC., A
      CALIFORNIA CORPORATION, its successors and assigns.

      GUARANTOR. The word "Guarantor" means and includes without limitation each
      and all of the guarantors, sureties, and accommodation parties in
      connection with the Indebtedness.

      INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
      the Note, including all principal and interest, together with all other
      indebtedness and costs and expenses for which Grantor is responsible under
      this Agreement or under any of the Related Documents.

      LENDER. The word "Lender" means SANTA MONICA BANK, its successors and
      assigns.

      NOTE. The word "Note" means the note or credit agreement dated July 7,
      1999, in the principal amount of $500,000,00 from CALIFORNIA BEACH
      RESTAURANTS, INC., A CALIFORNIA CORPORATION to Lender, together with all
      renewals of, extensions of, modifications of, refinancings of,
      consolidations of and substitutions for the note or credit agreement.

      RELATED DOCUMENTS. The words "Related Documents" mean and include without
      limitation all promissory notes, credit agreements, loan agreements,
      environmental agreements, guaranties, security agreements, mortgages,
      deeds of trust, and all other instruments, agreements and documents,
      whether now or hereafter existing, executed in connection with the
      Indebtedness.

RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest in
and hereby assigns, conveys, delivers, pledges, and transfers all of Grantor's
right, title and interest in and to Grantor's accounts with Lender (whether
checking, savings, or some other account), including all accounts held jointly
with someone else and all accounts Grantor may open in the future, excluding,
however, all IRA and Keogh accounts, and all trust accounts for which the grant
of a security interest would be prohibited by law. Grantor authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all Indebtedness
against any and all such accounts.

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

      PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
      statements and to take whatever other actions are requested by Lender to
      perfect and continue Lender's security interest in the Collateral. Upon
      request of Lender, Grantor will deliver to Lender any and all of the
      documents evidencing or constituting the Collateral, and Grantor will note
      Lender's interest upon any and all chattel paper if not delivered to
      Lender for possession by Lender. Grantor hereby appoints Lender as its
      irrevocable attorney-in-fact for the purpose of executing any documents
      necessary to perfect or to continue the security interest granted in this
      Agreement. Lender may at any time, and without further


<PAGE>   9
07-07-1999                COMMERCIAL SECURITY AGREEMENT                   Page 2
Loan No 2000314557                  (Continued)
================================================================================

      authorization from Grantor, file a carbon, photographic or other
      reproduction of any financing statement or of this Agreement for use as a
      financing statement. Grantor will reimburse Lender for all expenses for
      the perfection and the continuation of the perfection of Lender's security
      interest in the Collateral. Grantor promptly will notify Lender before any
      change in Grantor's name including any change to the assumed business
      names of Grantor. This is a continuing Security Agreement and will
      continue in effect even though all or any part of the Indebtedness is paid
      in full and even though for a period of lime Grantor may not be indebted
      to Lender.

      NO VIOLATION. The execution and delivery of this Agreement will not
      violate any law or agreement governing Grantor or to which Grantor is a
      party, and its certificate or articles of incorporation and bylaws do not
      prohibit any term or condition of this Agreement.

      ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
      accounts, chattel paper, or general intangibles, the Collateral is
      enforceable in accordance with its terms, is genuine, and complies with
      applicable laws concerning form, content and manner of preparation and
      execution, and all persons appearing to be obligated on the Collateral
      have authority and capacity to contract and are in fact obligated as they
      appear to be on the Collateral. At the time any account becomes subject to
      a security interest in favor of Lender, the account shall be a good and
      valid account representing an undisputed, bona fide indebtedness incurred
      by the account debtor, for merchandise held subject to delivery
      instructions or theretofore shipped or delivered pursuant to a contract of
      sale, or for services theretofore performed by Grantor with or for the
      account debtor; there shall be no setoffs or counterclaims against any
      such account; and no agreement under which any deductions or discounts may
      be claimed shall have been made with the account debtor except those
      disclosed to Lender in writing.

      LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver
      to Lender in form satisfactory to Lender a schedule of real properties and
      Collateral locations relating to Grantor's operations, including without
      limitation the following: (a) all real property owned or being purchased
      by Grantor; (b) all real property being rented or leased by Grantor; (c)
      all storage facilities owned, rented, leased, or being used by Grantor;
      and (d) all other properties where Collateral is or may be located. Except
      in the ordinary course of its business, Grantor shall not remove the
      Collateral from its existing locations without the prior written consent
      of Lender.

      REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extent
      the Collateral consists of intangible property such as accounts, the
      records concerning the Collateral) at Grantor's address shown above, or at
      such other locations as are acceptable to Lender. Except in the ordinary
      course of its business, including the sales of inventory, Grantor shall
      not remove the Collateral from its existing locations without the prior
      written consent of Lender. To the extent that the Collateral consists of
      vehicles, or other titled property, Grantor shall not take or permit any
      action which would require application for certificates of title for the
      vehicles outside the State of California, without the prior written
      consent of Lender.

      TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
      collected in the ordinary course of Grantor's business, Grantor shall not
      sell, offer to sell, or otherwise transfer or dispose of the Collateral.
      While Grantor is not in default under this Agreement, Grantor may sell
      inventory, but only in the ordinary course of its business and only to
      buyers who qualify as a buyer in the ordinary course of business. A sale
      in the ordinary course of Grantor's business does not include a transfer
      in partial or total satisfaction of a debt or any bulk sale. Grantor shall
      not pledge, mortgage, encumber or otherwise permit the Collateral to be
      subject to any lien, security interest, encumbrance, or charge, other than
      the security interest provided for in this Agreement, without the prior
      written consent of Lender. This includes security interests even if junior
      in right to the security interests granted under this Agreement. Unless
      waived by Lender, all proceeds from any disposition of the Collateral (for
      whatever reason) shall be held in trust for Lender and shall not be
      commingled with any other funds; provided however, this requirement shall
      not constitute consent by Lender to any sale or other disposition. Upon
      receipt, Grantor shall immediately deliver any such proceeds to Lender.

      TITLE. Grantor represents and warrants to Lender that it holds good and
      marketable title to the Collateral, free and clear of all liens and
      encumbrances except for the lien of this Agreement. No financing statement
      covering any of the Collateral is on file in any public office other than
      those which reflect the security interest created by this Agreement or to
      which Lender has specifically consented. Grantor shall defend Lender's
      rights in the Collateral against the claims and demands of all other
      persons.

      COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require, and
      insofar as the Collateral consists of accounts and general intangibles,
      Grantor shall deliver to Lender schedules of such Collateral, including
      such information as Lender may require, including without limitation names
      and addresses of account debtors and agings of accounts and general
      intangibles. Insofar as the Collateral consists of inventory and
      equipment, Grantor shall deliver to Lender, as often as Lender shall
      require, such lists, descriptions, and designations of such Collateral as
      Lender may require to identify the nature, extent, and location of such
      Collateral. Such information shall be submitted for Grantor and each of
      its subsidiaries or related companies.

      MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all
      tangible Collateral in good condition and repair. Grantor will not commit
      or permit damage to or destruction of the Collateral or any part of the
      Collateral. Lender and its designated representatives and agents shall
      have the right at all reasonable times to examine, inspect, and audit the
      Collateral wherever located. Grantor shall immediately notify Lender of
      all cases involving the return, rejection, repossession, loss or damage of
      or to any Collateral; of any request for credit or adjustment or of any
      other dispute arising with respect to the Collateral; and generally of all
      happenings and events affecting the Collateral or the value or the amount
      of the Collateral.

      TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
      assessments and liens upon the Collateral, its use or operation, upon this
      Agreement, upon any promissory note or notes evidencing the Indebtedness,
      or upon any of the other Related Documents. Grantor may withhold any such
      payment or may elect to contest any lien if Grantor is in good faith
      conducting an appropriate proceeding to contest the obligation to pay and
      so long as Lender's interest in the Collateral is not jeopardized in
      Lender's sole opinion. If the Collateral is subjected to a lien which is
      not discharged within fifteen (15) days, Grantor shall deposit with Lender
      cash, a sufficient corporate surety bond or other security satisfactory to
      Lender in an amount adequate to provide for the discharge of the lien plus
      any interest, costs, attorneys' fees or other charges that could accrue as
      a result of foreclosure or sale of the Collateral. In any contest Grantor
      shall defend itself and Lender and shall satisfy any final adverse
      judgment before enforcement against the Collateral. Grantor shall name
      Lender as an additional obligee under any surety bond furnished in the
      contest proceedings.

      COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
      with all laws, ordinances, rules and regulations of all governmental
      authorities, now or hereafter in effect, applicable to the ownership,
      production, disposition, or use of the Collateral. Grantor may contest in
      good faith any such law, ordinance or regulation and withhold compliance
      during any proceeding, including appropriate appeals, so long as Lender's
      interest in the Collateral, in Lender's opinion, is not jeopardized.

      HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
      never has been, and never will be so long as this Agreement remains a lien
      on the Collateral, used for the generation, manufacture, storage,
      transportation, treatment, disposal, release or threatened release of any
      hazardous waste or substance, as those terms are defined in the
      Comprehensive Environmental Response, Compensation, and Liability Act of
      1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
      Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
      ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
      1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
      Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
      California Health and Safety Code, Section 25100. et seq., or other
      applicable state or Federal laws, rules, or regulations adopted pursuant
      to any of the foregoing. The terms "hazardous waste" and "hazardous
      substance" shall also include, without limitation, petroleum and petroleum
      by-products or any fraction thereof and asbestos. The representations and
      warranties contained herein are based on Grantor's due diligence in
      investigating the Collateral for hazardous wastes and substances.


<PAGE>   10
07-07-1999                   BUSINESS LOAN AGREEMENT                      Page 3
Loan No 2000314557                  (Continued)
================================================================================

      Grantor hereby (a) releases and waives any future claims against Lender
      for indemnity or contribution in the event Grantor becomes liable for
      cleanup or other costs under any such laws, and (b) agrees to indemnify
      and hold harmless Lender against any and all claims and losses resulting
      from a breach of this provision of this Agreement. This obligation to
      indemnify shall survive the payment of the Indebtedness and the
      satisfaction of this Agreement.

      MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
      risks insurance, including without limitation fire, theft and liability
      coverage together with such other insurance as Lender may require with
      respect to the Collateral, in form, amounts, coverages and basis
      reasonably acceptable to Lender and issued by a company or companies
      reasonably acceptable to Lender. Grantor, upon request of Lender, will
      deliver to Lender from time to time the policies or certificates of
      insurance in form satisfactory to Lender, including stipulations that
      coverages will not be cancelled or diminished without at least ten (10)
      days' prior written notice to Lender and not including any disclaimer of
      the insurer's liability for failure to give such a notice. Each insurance
      policy also shall include an endorsement providing that coverage in favor
      of Lender will not be impaired in any way by any act, omission or default
      of Grantor or any other person. In connection with all policies covering
      assets in which Lender holds or is offered a security interest, Grantor
      will provide Lender with such loss payable or other endorsements as Lender
      may require. If Grantor at any time fails to obtain or maintain any
      insurance as required under this Agreement, Lender may (but shall not be
      obligated to) obtain such insurance as Lender deems appropriate, including
      if it so chooses "single interest insurance," which will cover only
      Lender's interest in the Collateral.

      APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
      any loss or damage to the Collateral. Lender may make proof of loss if
      Grantor fails to do so within fifteen (15) days of the casualty. All
      proceeds of any insurance on the Collateral, including accrued proceeds
      thereon, shall be held by Lender as part of the Collateral. If Lender
      consents to repair or replacement of the damaged or destroyed Collateral,
      Lender shall, upon satisfactory proof of expenditure, pay or reimburse
      Grantor from the proceeds for the reasonable cost of repair or
      restoration. If Lender does not consent to repair or replacement of the
      Collateral, Lender shall retain a sufficient amount of the proceeds to pay
      all of the Indebtedness, and shall pay the balance to Grantor. Any
      proceeds which have not been disbursed within six (6) months after their
      receipt and which Grantor has not committed to the repair or restoration
      of the Collateral shall be used to prepay the Indebtedness.

      INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
      reserves for payment of insurance premiums, which reserves shall be
      created by monthly payments from Grantor of a sum estimated by Lender to
      be sufficient to produce, at least fifteen (15) days before the premium
      due date, amounts at least equal to the insurance premiums to be paid. If
      fifteen (15) days before payment is due, the reserve funds are
      insufficient, Grantor shall upon demand pay any deficiency to Lender. The
      reserve funds shall be held by Lender as a general deposit and shall
      constitute a non-interest-bearing account which Lender may satisfy by
      payment of the insurance premiums required to be paid by Grantor as they
      become due. Lender does not hold the reserve funds in trust for Grantor,
      and Lender is not the agent of Grantor for payment of the insurance
      premiums required to be paid by Grantor. The responsibility for the
      payment of premiums shall remain Grantor's sole responsibility.

      INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
      Lender reports on each existing policy of insurance showing such
      information as Lender may reasonably request including the following: (a)
      the name of the insurer; (b) the risks insured; (c) the amount of the
      policy, (d) the property insured; (e) the then current value on the basis
      of which insurance has been obtained and the manner of determining that
      value; and (f) the expiration date of the policy. In addition, Grantor
      shall upon request by Lender (however not more often than annually) have
      an independent appraiser satisfactory to Lender determine, as applicable,
      the cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise modified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and even though no Event of
Default exists, Lender may exercise its rights to collect the accounts and to
notify account debtors to make payments directly to Lender for application to
the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a
failure to exercise reasonable care. Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral against prior parties,
nor to protect, preserve or maintain any security interest given to secure the
Indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due on the
Indebtedness.

      OTHER DEFAULTS. Failure of Grantor to comply with or to perform any other
      term, obligation, covenant or condition contained in this Agreement or in
      any of the Related Documents or in any other agreement between Lender and
      Grantor.

      DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
      under any loan, extension of credit, security agreement, purchase or sales
      agreement, or any other agreement, in favor of any other creditor or
      person that may materially affect any of Borrower's property or Borrower's
      or any Grantor's ability to repay the Loans or perform their respective
      obligations under this Agreement or any of the Related Documents.

      FALSE STATEMENTS. Any warranty, representation or statement made or
      furnished to Lender by or on behalf of Grantor under this Agreement, the
      Note or the Related Documents is false or misleading in any material
      respect, either now or at the time made or furnished.

      DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
      Documents ceases to be in full force and effect (including failure of any
      collateral documents to create a valid and perfected security interest or
      lien) at any time and for any reason.

      INSOLVENCY. The dissolution or termination of Grantor's existence as a
      going business, the insolvency of Grantor, the appointment of a receiver
      for any part of Grantor's property, any assignment for the benefit of
      creditors, any type of creditor workout, or the commencement of any
      proceeding under any bankruptcy or insolvency laws by or against Grantor.

      CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
      forfeiture proceedings, whether by judicial proceeding, self-help,
      repossession or any other method, by any creditor of Grantor or by any
      governmental agency against the Collateral or any other collateral
      securing the Indebtedness. This includes a garnishment of any of Grantor's
      deposit accounts with Lender.


<PAGE>   11
07-07-1999               COMMERCIAL SECURITY AGREEMENT                   Page 4
Loan No 2000314557                  (Continued)
================================================================================

      EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
      respect to any Guarantor of any of the Indebtedness or such Guarantor dies
      or becomes incompetent.

      ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
      condition, or Lender believes the prospect of payment or performance of
      the Indebtedness is impaired.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the California Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

      ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
      including any prepayment penalty which Grantor would be required to pay,
      immediately due and payable, without notice.

      ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
      or any portion of the Collateral and any and all certificates of title and
      other documents relating to the Collateral. Lender may require Grantor to
      assemble the Collateral and make it available to Lender at a place to be
      designated by Lender. Lender also shall have full power to enter upon the
      property of Grantor to take possession of and remove the Collateral. If
      the Collateral contains other goods not covered by this Agreement at the
      time of repossession, Grantor agrees Lender may take such other goods,
      provided that Lender makes reasonable efforts to return them to Grantor
      after repossession.

      SELL THE COLLATERAL. Lender shall have full power to sell, lease,
      transfer, or otherwise deal with the Collateral or proceeds thereof in its
      own name or that of Grantor. Lender may sell the Collateral at public
      auction or private sale. Unless the Collateral threatens to decline
      speedily in value or is of a type customarily sold on a recognized market,
      Lender will give Grantor reasonable notice of the time after which any
      private sale or any other intended disposition of the Collateral is to be
      made. The requirements of reasonable notice shall be met if such notice is
      given at least ten (10) days, or such lesser time as required by state
      law, before the time of the sale or disposition. All expenses relating to
      the disposition of the Collateral, including without limitation the
      expenses of retaking, holding, insuring, preparing for sale and selling
      the Collateral, shall become a part of the Indebtedness secured by this
      Agreement and shall be payable on demand, with interest at the Note rate
      from date of expenditure until repaid.

      APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall
      have the following rights and remedies regarding the appointment of a
      receiver: (a) Lender may have a receiver appointed as a matter of right,
      (b) the receiver may be an employee of Lender and may serve without bond,
      and (c) all fees of the receiver and his or her attorney shall become part
      of the Indebtedness secured by this Agreement and shall be payable on
      demand, with interest at the Note rate from date of expenditure until
      repaid.

      COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a
      receiver, may collect the payments, rents, income, and revenues from the
      Collateral. Lender may at any time in its discretion transfer any
      Collateral into its own name or that of its nominee and receive the
      payments, rents, income, and revenues therefrom and hold the same as
      security for the Indebtedness or apply it to payment of the Indebtedness
      in such order of preference as Lender may determine. Insofar as the
      Collateral consists of accounts, general intangibles, insurance policies,
      instruments, chattel paper, choses in action, or similar property, Lender
      may demand, collect, receipt for, settle, compromise, adjust, sue for,
      foreclose, or realize on the Collateral as Lender may determine, whether
      or not Indebtedness or Collateral is then due. For these purposes, Lender
      may, on behalf of and in the name of Grantor, receive, open and dispose of
      mail addressed to Grantor; change any address to which mail and payments
      are to be sent; and endorse notes, checks, drafts, money orders, documents
      of title, instruments and items pertaining to payment, shipment, or
      storage of any Collateral. To facilitate collection, Lender may notify
      account debtors and obligors on any Collateral to make payments directly
      to Lender.

      OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
      Lender may obtain a judgment against Grantor for any deficiency remaining
      on the Indebtedness due to Lender after application of all amounts
      received from the exercise of the rights provided in this Agreement.
      Grantor shall be liable for a deficiency even if the transaction described
      in this subsection is a sale of accounts or chattel paper.

      OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies
      of a secured creditor under the provisions of the Uniform Commercial Code,
      as may be amended from time to time. In addition, Lender shall have and
      may exercise any or all other rights and remedies it may have available at
      law, in equity, or otherwise.

      CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether
      evidenced by this Agreement or the Related Documents or by any other
      writing, shall be cumulative and may be exercised singularly or
      concurrently. Election by Lender to pursue any remedy shall not exclude
      pursuit of any other remedy, and an election to make expenditures or to
      take action to perform an obligation of Grantor under this Agreement,
      after Grantor's failure to perform, shall riot affect Lender's right to
      declare a default and to exercise its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

      AMENDMENTS. This Agreement, together with any Related Documents,
      constitutes the entire understanding and agreement of the parties as to
      the matters set forth in this Agreement. No alteration of or amendment to
      this Agreement shall be effective unless given in writing and signed by
      the party or parties sought to be charged or bound by the alteration or
      amendment.

      APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
      by Lender in the State of California. If there is a lawsuit, Grantor
      agrees upon Lender's request to submit to the jurisdiction of the courts
      of the State of California. This Agreement shall be governed by and
      construed in accordance with the laws of the State of California.

      ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of
      Lender's costs and expenses, including attorneys' fees and Lender's legal
      expenses, incurred in connection with the enforcement of this Agreement.
      Lender may pay someone else to help enforce this Agreement, and Grantor
      shall pay the costs and expenses of such enforcement. Costs and expenses
      include Lender's attorneys' fees and legal expenses whether or not there
      is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
      proceedings (and including efforts to modify or vacate any automatic stay
      or injunction), appeals, and any anticipated post-judgment collection
      services. Grantor also shall pay all court costs and such additional fees
      as may be directed by the court.

      CAPTION HEADINGS. Caption headings in this Agreement are for convenience
      purposes only and are not to be used to interpret or define the provisions
      of this Agreement.

      MULTIPLE PARTIES; Corporate Authority. All obligations of Grantor under
      this Agreement shall be joint and several, and all references to Grantor
      shall mean each and every Grantor. This means that each of the persons
      signing below is responsible for all obligations in this Agreement.

      NOTICES. All notices required to be given under this Agreement shall be
      given in writing, may be sent by telefacsimile (unless otherwise required
      by law), and shall be effective when actually delivered or when deposited
      with a nationally recognized overnight courier or deposited in the United
      States mail, first class, postage prepaid, addressed to the party to whom
      the notice is to be given at the address shown above. Any party may change
      its address for notices under this Agreement by giving formal written
      notice to the other parties, specifying that the purpose of the notice is
      to change the party's address. To the extent permitted by applicable law,
      if there is more than one Grantor, notice to any Grantor will constitute
      notice to all Grantors. For notice purposes, Grantor will keep Lender
      informed at ail times of Grantor's current addressees).

      POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
      attorney-in-fact, irrevocably, with full power of substitution to do the


<PAGE>   12
07-07-1999               COMMERCIAL SECURITY AGREEMENT                    Page 5
Loan No 2000314557                (Continued)
================================================================================

      following: (a) to demand, collect, receive, receipt for, sue and recover
      all sums of money or other property which may now or hereafter become due,
      owing or payable from the Collateral; (b) to execute, sign and endorse any
      and all claims, instruments, receipts, checks, drafts or warrants issued
      in payment for the Collateral; (c) to settle or compromise any and all
      claims arising under the Collateral, and, in the place and stead of
      Grantor, to execute and deliver its release and settlement for the claim;
      and (d) to file any claim or claims or to take any action or institute or
      take part in any proceedings, either in its own name or in the name of
      Grantor, or otherwise, which in the discretion of Lender may seem to be
      necessary or advisable. This power is given as security for the
      Indebtedness, and the authority hereby conferred is and shall be
      irrevocable and shall remain in full force and effect until renounced by
      Lender.

      PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted
      preference claim in Borrower's bankruptcy will become a part of the
      Indebtedness and, at Lender's option, shall be payable by Borrower as
      provided above in the "EXPENDITURES BY LENDER" paragraph.

      SEVERABILITY. If a court of competent jurisdiction finds any provision of
      this Agreement to be invalid or unenforceable as to any person or
      circumstance, such finding shall not render that provision invalid or
      unenforceable as to any other persons or circumstances. If feasible, any
      such offending provision shall be deemed to be modified to be within the
      limits of enforceability or validity; however, if the offending provision
      cannot be so modified, it shall be stricken and all other provisions of
      this Agreement in all other respects shall remain valid and enforceable.

      SUCCESSOR INTERESTS. Subject to the limitations set forth above on
      transfer of the Collateral, this Agreement shall be binding upon and inure
      to the benefit of the parties, their successors and assigns.

      WAIVER. Lender shall not be deemed to have waived any rights under this
      Agreement unless such waiver is given in writing and signed by Lender. No
      delay or omission on the part of Lender in exercising any right shall
      operate as a waiver of such right or any other right. A waiver by Lender
      of a provision of this Agreement shall not prejudice or constitute a
      waiver of Lender's right otherwise to demand strict compliance with that
      provision or any other provision of this Agreement. No prior waiver by
      Lender, nor any course of dealing between Lender and Grantor, shall
      constitute a waiver of any of Lender's rights or of any of Grantor's
      obligations as to any future transactions. Whenever the consent of Lender
      is required under this Agreement, the granting of such consent by Lender
      in any instance shall not constitute continuing consent to subsequent
      instances where such consent is required and in all cases such consent may
      be granted or withheld in the sole discretion of Lender.

      WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for
      the Indebtedness, Borrower irrevocably waives, disclaims and relinquishes
      all claims against such other person which Borrower has or would otherwise
      have by virtue of payment of the Indebtedness or any part thereof,
      specifically including but not limited to all rights of indemnity,
      contribution or exoneration.

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED JULY 7,
1999.


GRANTOR:

CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION

By: /s/ ALAN REDHEAD
    ------------------------------------
     ALAN REDHEAD, PRESIDENT

================================================================================
<PAGE>   13

                                SANTA MONICA BANK
                                  Member FDIC


                            [SANTA MONICA BANK LOGO]


                                PROMISSORY NOTE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
  Principal      Loan Date      Maturity       Loan No        Call      Collateral          Account        Officer       Initials
<S>             <C>            <C>           <C>              <C>       <C>                 <C>            <C>         <C>
$500,000.00     07-07-1999     07-06-2000    2000314557                   5015                               RDB       [Not Legible]
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:   CALIFORNIA BEACH RESTAURANTS, INC., A           Lender:     SANTA MONICA BANK
            CALIFORNIA CORPORATION (TIN: 95-2693503)                    LOAN SERVICING CENTER
            17383 SUNSET BOULEVARD, #140                                1231 4TH STREET
            PACIFIC PALISADES, CA 90272                                 SANTA MONICA, CA 90401

====================================================================================================================================
Principal Amount: $500,000.00                              Initial Rate: 9.000%                           Date of Note: July 7, 1999
</TABLE>

PROMISE TO PAY. CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION
("Borrower") promises to pay to SANTA MONICA BANK ("Lender"), or order, in
lawful money of the United States of America, the principal amount of Five
Hundred Thousand & 00/100 Dollars ($500,000.00) or so much as may be
outstanding, together with interest on the unpaid outstanding principal balance
of each advance. Interest shall be calculated from the date of each advance
until repayment of each advance.

PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN ONE
PAYMENT OF ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON JULY 6,
2000. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ACCRUED UNPAID
INTEREST BEGINNING AUGUST 6, 1999, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE DUE
ON THE SAME DAY OF EACH MONTH AFTER THAT. The annual interest rate for this Note
is computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Lender's address shown above or at such
other place as Lender may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the Prime rate as
published in the Wall Street Journal. When a range of rates has been published,
the higher of the rates will be used (the "Index"). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after
notice to Borrower. Lender will tell Borrower the current Index rate upon
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each DAY. THE INDEX CURRENTLY IS 8.000%. THE INTEREST RATE TO BE APPLIED TO THE
UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF 1.000 PERCENTAGE
POINT OVER THE INDEX, RESULTING IN AN INITIAL RATE OF 9.000%. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and
other prepaid finance charges are earned fully as of the date of the loan and
will not be subject to refund upon early payment (whether voluntary or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Note, Borrower understands that Lender is entitled to a
minimum interest charge of $50.00. Other than Borrower's obligation to pay any
minimum interest charge, Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments of accrued unpaid interest. Rather, they will reduce the
principal balance due.

LATE CHARGE. If a payment is 15 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT OR $5.00, WHICHEVER IS GREATER.

DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's ability to repay this Note or perform
Borrower's obligations under this Note or any of the Related Documents. (d) Any
representation or statement made or furnished to Lender by Borrower or on
Borrower's behalf is false or misleading in any material respect either now or
at the time made or furnished. (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property, Borrower makes an assignment for
the benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any guarantor dies or any of the other events described in this default
section occurs with respect to any guarantor of this Note. (h) A material
adverse change occurs in Borrower's financial condition, or Lender believes the
prospect of payment or performance of the Indebtedness is impaired.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity, Lender, at its option, may also, if permitted under applicable
law, increase the variable interest rate on this Note to 7.000 percentage points
over the Index. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
subject to any limits under applicable law, Lender's attorneys' fees and
Lender's legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also will pay any court costs, in
addition to all other sums provided by law. THIS NOTE HAS BEEN DELIVERED TO
LENDER AND ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT,
BORROWER AGREES UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE
COURTS OF LOS ANGELES COUNTY, THE STATE OF CALIFORNIA. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Note against any and all such accounts.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or

<PAGE>   14

07-07-1999                    PROMISSORY NOTE                          Page 2
Loan No 2000314557              (Continued)
==============================================================================

as provided in this paragraph. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following party or parties are authorized as provided
in this paragraph to request advances under the line of credit until Lender
receives from Borrower at Lender's address shown above written notice of
revocation of their authority: ALAN REDHEAD, PRESIDENT; and SAMUEL E.
CHILAKOS, SECRETARY. ANY ONE OF THE AUTHORIZED OFFICERS MAY REQUEST ADVANCES.
Borrower agrees to be liable for all sums either: (a) advanced in accordance
with the instructions of an authorized person or (b) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer printouts. Lender will have no
obligation to advance funds under this Note if: (a) Borrower or any guarantor
is in default under the terms of this Note or any agreement that Borrower or
any guarantor has with Lender, including any agreement made in connection with
the signing of this Note; (b) Borrower or any guarantor ceases doing business
or is insolvent; (c) any guarantor seeks, claims or otherwise attempts to
limit, modify or revoke such guarantor's guarantee of this Note or any other
loan with Lender; or (d) Borrower has applied funds provided pursuant to this
Note for purposes other than those authorized by Lender.

SIXTY DAY OUT OF DEBT REQUIREMENT. Borrower agrees to be out of debt on this
credit for at least sixty (60) consecutive days after the Note date and before
the Note maturity date.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses this Note, to
the extent allowed by law, waive any applicable statute of limitations,
presentment, demand for payment, protest and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.

BORROWER

CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION


By: /s/ ALAN REDHEAD
  ----------------------------------
  ALAN REDHEAD, PRESIDENT

<PAGE>   15


                                SANTA MONICA BANK
                                  Member FDIC


                            [SANTA MONICA BANK LOGO]

                          COMMERCIAL PLEDGE AGREEMENT

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
  Principal      Loan Date      Maturity       Loan No        Call      Collateral          Account        Officer       Initials
<S>             <C>            <C>           <C>              <C>       <C>                 <C>            <C>         <C>
$500,000.00     07-07-1999     07-06-2000    2000314557                   5015                               RDB       [Not Legible]
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:   CALIFORNIA BEACH RESTAURANTS, INC., A           Lender:     SANTA MONICA BANK
            CALIFORNIA CORPORATION (TIN: 95-2693503)                    LOAN SERVICING CENTER
            17383 SUNSET BOULEVARD, #140                                1231 4TH STREET
            PACIFIC PALISADES, CA 90272                                 SANTA MONICA, CA 90401

Grantor:    SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION (TIN: 95-4232409)
            17383 SUNSET BOULEVARD, #140,
            PACIFIC PALISADES, CA 90272
====================================================================================================================================
</TABLE>

  THIS COMMERCIAL PLEDGE AGREEMENT is entered into among CALIFORNIA BEACH
  RESTAURANTS, INC., A CALIFORNIA CORPORATION (referred to below as "Borrower");
  SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION (referred to below as
  "Grantor"); and SANTA MONICA BANK (referred to below as "Lender").

  GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to
  Lender a security interest in the Collateral to secure the Indebtedness and
  agrees that Lender shall have the rights stated in this Agreement with respect
  to the Collateral, in addition to all other rights which Lender may have by
  law.

  DEFINITIONS.  The following words shall have the following meanings when used
  in this Agreement:

     AGREEMENT. The word "Agreement" means this Commercial Pledge Agreement, as
     this Commercial Pledge Agreement may be amended or modified from time to
     time, together with all exhibits and schedules attached to this Commercial
     Pledge Agreement from time to time.

     BORROWER. The word "Borrower" means each and every person or entity signing
     the Note, including without limitation CALIFORNIA BEACH RESTAURANTS, INC.,
     A CALIFORNIA CORPORATION.

     COLLATERAL. The word "Collateral" means the following specifically
     described property, which Grantor has delivered or agrees to deliver (or
     cause to be delivered) immediately to Lender, together with all Income and
     Proceeds as described below:

        LICENSE AGREEMENT ENTERED INTO AS OF APRIL 21, 1992 BY AND BETWEEN SEA
        VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION ("LICENSOR") AND MCA
        DEVELOPMENT VENTURE TWO, A CALIFORNIA CORPORATION ("LICENSEE").

     In addition, the word "Collateral" includes all property of Grantor, in the
     possession of Lender (or in the possession of a third party subject to the
     control of Lender), whether now or hereafter existing and whether tangible
     or intangible in character, including without limitation each of the
     following:

         (A) ALL PROPERTY TO WHICH LENDER ACQUIRES TITLE OR DOCUMENTS OF TITLE.

         (B) ALL PROPERTY ASSIGNED TO LENDER.

         (C) ALL PROMISSORY NOTES, BILLS OF EXCHANGE, STOCK CERTIFICATES,
             BONDS, SAVINGS PASSBOOKS, TIME CERTIFICATES OF DEPOSIT, INSURANCE
             POLICIES, AND ALL OTHER INSTRUMENTS AND EVIDENCES OF AN OBLIGATION.

         (D) ALL RECORDS RELATING TO ANY OF THE PROPERTY DESCRIBED IN THIS
             COLLATERAL SECTION, WHETHER IN THE FORM OF A WRITING, MICROFILM,
             MICROFICHE, OR ELECTRONIC MEDIA.

     EVENT OF DEFAULT. The words "Event of Default" mean and include without
     limitation any of the Events of Default set forth below in the section
     titled "Events of Default."

     GRANTOR. The word "Grantor" means SEA VIEW RESTAURANTS, INC., A CALIFORNIA
     CORPORATION. Any Grantor who signs this Agreement, but does not sign the
     Note, is signing this Agreement only to grant a security interest in
     Grantor's interest in the Collateral to Lender and is not personally liable
     under the Note except as otherwise provided by contract or law (e.g.,
     personal liability under a guaranty or as a surety).

     GUARANTOR. The word "Guarantor" means and includes without limitation each
     and all of the guarantors, sureties, and accommodation parties in
     connection with the Indebtedness.

     INCOME AND PROCEEDS. The words "Income and Proceeds" mean all present and
     future income, proceeds, earnings, increases, and substitutions from or for
     the Collateral of every kind and nature, including without limitation all
     payments, interest, profits, distributions, benefits, rights, options,
     warrants, dividends, stock dividends, stock splits, stock rights,
     regulatory dividends, distributions, subscriptions, monies, claims for
     money due and to become due, proceeds of any insurance on the Collateral,
     shares of stock of different par value or no par value issued in
     substitution or exchange for shares included in the Collateral, and all
     other property Grantor is entitled to receive on account of such
     Collateral, including accounts, documents, instruments, chattel paper, and
     general intangibles.

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
     the Note, including all principal and interest, together with all other
     indebtedness and costs and expenses for which Borrower or Grantor is
     responsible under this Agreement or under any of the Related Documents.

     LENDER. The word "Lender" means SANTA MONICA BANK, its successors and
     assigns.

     NOTE. The word "Note" means the note or credit agreement dated July 7,
     1999, in the principal amount of $500,000.00 from Borrower to Lender,
     together with all renewals of, extensions of, modifications of,
     refinancings of, consolidations of and substitutions for the note or credit
     agreement.

     OBLIGOR. The word "Obligor" means and includes without limitation any and
     all persons or entities obligated to pay money or to perform some other act
     under the Collateral.

<PAGE>   16


   07-07-1999               COMMERCIAL PLEDGE AGREEMENT                 Page 2
   Loan No 2000314557              (Continued)
   ===========================================================================

        RELATED DOCUMENTS. The words "Related Documents" mean and include
        without limitation all promissory notes, credit agreements, loan
        agreements, environmental agreements, guaranties, security agreements,
        mortgages, deeds of trust, and all other instruments, agreements and
        documents, whether now or hereafter existing, executed in connection
        with the Indebtedness.

   BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under
   this Agreement or by applicable law, (a) Borrower agrees that Lender need not
   tell Borrower about any action or inaction Lender takes in connection with
   this Agreement; (b) Borrower assumes the responsibility for being and keeping
   informed about the Collateral; and (c) Borrower waives any defenses that may
   arise because of any action or inaction of Lender, including without
   limitation any failure of Lender to realize upon the Collateral or any delay
   by Lender in realizing upon the Collateral; and Borrower agrees to remain
   liable under the Note no matter what action Lender takes or fails to take
   under this Agreement.

   GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this
   Agreement is executed at Borrower's request and not at the request of Lender;
   (b) Grantor has the full right, power and authority to enter into this
   Agreement and to pledge the Collateral to Lender; (c) Grantor has established
   adequate means of obtaining from Borrower on a continuing basis information
   about Borrower's financial condition; and (d) Lender has made no
   representation to Grantor about Borrower or Borrower's creditworthiness.

   GRANTOR'S WAIVERS. Except as prohibited by applicable law, Grantor waives any
   right to require Lender to (a) make any presentment, protest, demand, or
   notice of any kind, including notice of change of any terms of repayment of
   the Indebtedness, default by Borrower or any other guarantor or surety, any
   action or non action taken by Borrower, Lender, or any other guarantor or
   surety of Borrower, or the creation of new or additional Indebtedness; (b)
   proceed against any person, including Borrower, before proceeding against
   Grantor; (c) proceed against any collateral for the Indebtedness, including
   Borrower's collateral, before proceeding against Grantor; (d) apply any
   payments or proceeds received against the Indebtedness in any order; (e) give
   notice of the terms, time, and place of any sale of any collateral pursuant
   to the Uniform Commercial Code or any other law governing such sale; (f)
   disclose any information about the Indebtedness, the Borrower, any
   collateral, or any other guarantor or surety, or about any action or
   nonaction of Lender; or (g) pursue any remedy or course of action in Lender's
   power whatsoever.

   Grantor also waives any and all rights or defenses arising by reason of (h)
   any disability or other defense of Borrower, any other guarantor or surety or
   any other person; (i) the cessation from any cause whatsoever, other than
   payment in full, of the Indebtedness, (j) the application of proceeds of the
   Indebtedness by Borrower for purposes other than the purposes understood and
   intended by Grantor and Lender; (k) any act of omission or commission by
   Lender which directly or indirectly results in or contributes to the
   discharge of Borrower or any other guarantor or surety, or the Indebtedness,
   or the loss or release of any collateral by operation of law or otherwise;
   (1) any statute of limitations in any action under this Agreement or on the
   Indebtedness; or (m) any modification or change in terms of the Indebtedness,
   whatsoever, including without limitation, the renewal, extension,
   acceleration, or other change in the time payment of the Indebtedness is due
   and any change in the interest rate.

   Grantor waives all rights and defenses arising out of an election of remedies
   by Lender, even though that election of remedies, such as non judicial)
   foreclosure with respect to security for a guaranteed obligation, has
   destroyed Grantor's rights of subrogation and reimbursement against Borrower
   by the operation of Section 580d of the California Code of Civil Procedure,
   or otherwise.

   This waiver includes, without limitation, any loss of rights Grantor may
   suffer by reason of any rights or protections of Borrower in connection with
   any anti-deficiency laws, or other laws limiting or discharging the
   Indebtedness or Borrower's obligations (including, without limitation,
   Section 726, 580a, 580b and 580d of the California Code of Civil Procedure).
   Grantor waives all rights and protections of any kind which Grantor may have
   for any reason, which would affect or limit the amount of any recovery by
   Lender from Grantor following a nonjudicial sale or judicial foreclosure of
   any real or personal property security for, the Indebtedness including, but
   not limited to, the right to any fair market value hearing pursuant to
   California Code of Civil Procedure Section 580a.

   Grantor understands and agrees that the foregoing waivers are waivers of
   substantive rights and defenses to which Grantor might otherwise be entitled
   under state and federal law. The rights and defenses waived include, without
   limitation, those provided by California laws of suretyship and guaranty,
   anti-deficiency laws, and the Uniform Commercial Code. Grantor acknowledges
   that Grantor has provided these waivers of rights and defenses with the
   intention that they be fully relied upon by Lender. Until all Indebtedness is
   paid in full, Grantor waives any right to enforce any remedy Lender may have
   against Borrower or any other guarantor, surety, or other person, and
   further, Grantor waives any right to participate in any collateral for the
   Indebtedness now or hereafter held by Lender.

   If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
   Indebtedness shall not at all times until paid be fully secured by collateral
   pledged by Borrower, Grantor hereby forever waives and relinquishes in favor
   of Lender and Borrower, and their respective successors, any claim or right
   to payment Grantor may now have or hereafter have or acquire against
   Borrower, by subrogation or otherwise, so that at no time shall Grantor be or
   become a "creditor" of Borrower within the meaning of 11 U.S.C. section
   547(b), or any successor provision of the Federal bankruptcy laws.

   RIGHT OF SETOFF. Grantor hereby grants Lender a contractual security interest
   in and hereby assigns, conveys, delivers, pledges, and transfers all of
   Grantor's right, title and interest in and to Grantor's accounts with Lender
   (whether checking, savings, or some other account), including all accounts
   held jointly with someone else and all accounts Grantor may open in the
   future, excluding, however, all IRA and Keogh accounts, and all trust
   accounts for which the grant of a security interest would be prohibited by
   law. Grantor authorizes Lender, to the extent permitted by applicable law, to
   charge or setoff all Indebtedness against any and all such accounts.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL.
Grantor represents and warrants to Lender that:

      OWNERSHIP. Grantor is the lawful owner of the Collateral free and clear of
      all security interests, liens, encumbrances and claims of others except as
      disclosed to and accepted by Lender in writing prior to execution of this
      Agreement.

      RIGHT TO PLEDGE.  Grantor has the full right, power and authority to enter
      into this Agreement and to pledge the Collateral.

      BINDING EFFECT. This Agreement is binding upon Grantor, as well as
      Grantor's heirs, successors, representatives and assigns, and is legally
      enforceable in accordance with its terms.

      NO FURTHER ASSIGNMENT. Grantor has not, and will not, sell, assign,
      transfer, encumber or otherwise dispose of any of Grantor's rights in the
      Collateral except as provided in this Agreement.

      NO DEFAULTS. There are no defaults existing under the Collateral, and
      there are no offsets or counterclaims to the same. Grantor will strictly
      and promptly perform each of the terms, conditions, covenants and
      agreements contained in the Collateral which are to be performed by
      Grantor, if any.

      NO VIOLATION. The execution and delivery of this Agreement will not
      violate any law or agreement governing Grantor or to which Grantor is a
      party, and its certificate or articles of incorporation and bylaws do not
      prohibit any term or condition of this Agreement.

   LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO COLLATERAL. Lender may hold
   the Collateral until all the Indebtedness has been paid and satisfied and
   thereafter may deliver the Collateral to any Grantor. Lender shall have the
   following rights in addition to all other rights it may have by law:

      MAINTENANCE AND PROTECTION OF COLLATERAL. Lender may, but shall not be
      obligated to, take such steps as it deems necessary or desirable to
      protect, maintain, insure, store, or care for the Collateral, including
      payment of any liens or claims against the Collateral. Lender may charge
      any cost incurred in so doing to Grantor.

<PAGE>   17


  07-07-1999                COMMERCIAL PLEDGE AGREEMENT                Page 3
  Loan No 2000314557              (Continued)
  =============================================================================

     INCOME AND PROCEEDS FROM THE COLLATERAL. Lender may receive all Income and
     Proceeds and add it to the Collateral. Grantor agrees to deliver to Lender
     immediately upon receipt, in the exact form received and without
     commingling with other property, all Income and Proceeds from the
     Collateral which may be received by, paid, or delivered to Grantor or for
     Grantor's account, whether as an addition to, in discharge of, in
     substitution of, or in exchange for any of the Collateral.

     APPLICATION OF CASH. At Lender's option, Lender may apply any cash, whether
     included in the Collateral or received as Income and Proceeds or through
     liquidation, sale, or retirement, of the Collateral, to the satisfaction of
     the Indebtedness or such portion thereof as Lender shall choose, whether or
     not matured.

     TRANSACTIONS WITH OTHERS. Lender may (a) extend time for payment or other
     performance, (b) grant a renewal or change in terms or conditions, or (c)
     compromise, compound or release any obligation, with any one or more
     Obligors, endorsers, or Guarantors of the Indebtedness as Lender deems
     advisable, without obtaining the prior written consent of Grantor, and no
     such act or failure to act shall affect Lender's rights against Grantor or
     the Collateral.

     ALL COLLATERAL SECURES INDEBTEDNESS. All Collateral shall be security for
     the Indebtedness, whether the Collateral is located at one or more offices
     or branches of Lender and whether or not the office or branch where the
     Indebtedness is created is aware of or relies upon the Collateral.

     COLLECTION OF COLLATERAL. Lender, at Lender's option may, but need not,
     collect directly from the Obligors on any of the Collateral all Income and
     Proceeds or other sums of money and other property due and to become due
     under the Collateral, and Grantor authorizes and directs the Obligors, if
     Lender exercises such option, to pay and deliver to Lender all Income and
     Proceeds and other sums of money and other property payable by the terms of
     the Collateral and to accept Lender's receipt for the payments.

     POWER OF ATTORNEY. Grantor irrevocably appoints Lender as Grantor's
     attorney-in-fact, with full power of substitution, (a) to demand, collect,
     receive, receipt for, sue and recover all Income and Proceeds and other
     sums of money and other property which may now or hereafter become due,
     owing or payable from the Obligors in accordance with the terms of the
     Collateral; (b) to execute, sign and endorse any and all instruments,
     receipts, checks, drafts and warrants issued in payment for the Collateral;
     (c) to settle or compromise any and all claims arising under the
     Collateral, and in the place and stead of Grantor, execute and deliver
     Grantor's release and acquittance for Grantor; (d) to file any claim or
     claims or to take any action or institute or take part in any proceedings,
     either in Lender's own name or in the name of Grantor, or otherwise, which
     in the discretion of Lender may seem to be necessary or advisable; and (e)
     to execute in Grantor's name and to deliver to the Obligors on Grantor's
     behalf, at the time and in the manner specified by the Collateral, any
     necessary instruments or documents.

     PERFECTION OF SECURITY INTEREST. Upon request of Lender, Grantor will
     deliver to Lender any and all of the documents evidencing or constituting
     the Collateral. When applicable law provides more than one method of
     perfection of Lender's security interest, Lender may choose the method(s)
     to be used. Upon request of Lender, Grantor will sign and deliver any
     writings necessary to perfect Lender's security interest. Grantor hereby
     appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose
     of executing any documents necessary to perfect or to continue the security
     interest granted in this Agreement. This is a continuing Security Agreement
     and will continue in effect even though all or any part of the Indebtedness
     is paid in full and even though for a period of time Borrower may not be
     indebted to Lender.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such
expenses shall become a part of the Indebtedness and, at Lender's option, will
(a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. This Agreement also will secure payment
of these amounts. Such right shall be in addition to all other rights and
remedies to which Lender may be entitled upon the occurrence of an Event of
Default.

LIMITATIONS ON OBLIGATIONS OF LENDER. Lender shall use ordinary reasonable care
in the physical preservation and custody of the Collateral in Lender's
possession, but shall have no other obligation to protect the Collateral or its
value. In particular, but without limitation, Lender shall have no
responsibility for (a) any depreciation in value of the Collateral or for the
collection or protection of any Income and Proceeds from the Collateral, (b)
preservation of rights against parties to the Collateral or against third
persons, (c) ascertaining any maturities, calls, conversions, exchanges, offers,
tenders, or similar matters relating to any of the Collateral, or (d) informing
Grantor about any of the above, whether or not Lender has or is deemed to have
knowledge of such matters. Except as provided above, Lender shall have no
liability for depreciation or deterioration of the Collateral.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

     DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
     on the Indebtedness.

     OTHER DEFAULTS. Failure of Borrower or Grantor to comply with or to perform
     any other term, obligation, covenant or condition contained in this
     Agreement or in any of the Related Documents or failure of Borrower to
     comply with or to perform any term, obligation, covenant or condition
     contained in any other agreement between Lender and Borrower.

     DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
     under any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's property or Borrower's or any
     Grantor's ability to repay the Loans or perform their respective
     obligations under this Agreement or any of the Related Documents.

     FALSE STATEMENTS. Any warranty, representation or statement made or
     furnished to Lender by or on behalf of Borrower or Grantor under this
     Agreement, the Note or the Related Documents is false or misleading in any
     material respect, either now or at the time made or furnished.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     documents to create a valid and perfected security interest or lien) at any
     time and for any reason.

     INSOLVENCY. The dissolution or termination of Borrower or Grantor's
     existence as a going business, the insolvency of Borrower or Grantor, the
     appointment of a receiver for any part of Borrower or Grantor's property,
     any assignment for the benefit of creditors, any type of creditor workout,
     or the commencement of any proceeding under any bankruptcy or insolvency
     laws by or against Borrower or Grantor.

     CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or Grantor or
     by any governmental agency against the Collateral or any other collateral
     securing the Indebtedness. This includes a garnishment of any of Borrower
     or Grantor's deposit accounts with Lender.

     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or such Guarantor dies or
     becomes incompetent.

     ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

<PAGE>   18


  07-07-1999                   COMMERCIAL PLEDGE AGREEMENT            Page 4
  Loan No 2000314557                  (Continued)
  =============================================================================

  RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
  Agreement, at any time thereafter, Lender may exercise any one or more of the
  following rights and remedies:

     ACCELERATE INDEBTEDNESS. Declare all Indebtedness, including any prepayment
     penalty which Borrower would be required to pay, immediately due and
     payable, without notice of any kind to Borrower or Grantor.

     COLLECT THE COLLATERAL. Collect any of the Collateral and, at Lender's
     option and to the extent permitted by applicable law, retain Possession of
     the Collateral while suing on the Indebtedness.

     SELL THE COLLATERAL. Sell the Collateral, at Lender's discretion, as a unit
     or in parcels, at one or more public or private sales. Unless the
     Collateral is perishable or threatens to decline speedily in value or is of
     a type customarily sold on a recognized market, Lender shall give or mail
     to Grantor, or any of them, notice at least ten (10) days in advance of the
     time and place of any public sale, or of the date after which any private
     sale may be made. Grantor agrees that any requirement of reasonable notice
     is satisfied if Lender mails notice by ordinary mail addressed to Grantor,
     or any of them, at the last address Grantor has given Lender in writing. If
     a public sale is held, there shall be sufficient compliance with all
     requirements of notice to the public by a single publication in any
     newspaper of general circulation in the county where the Collateral is
     located, setting forth the time and place of sale and a brief description
     of the property to be sold. Lender may be a purchaser at any public sale.

     REGISTER SECURITIES. Register any securities included in the Collateral in
     Lender's name and exercise any rights normally incident to the ownership of
     securities.

     SELL SECURITIES. Sell any securities included in the Collateral in a manner
     consistent with applicable federal and state securities laws,
     notwithstanding any other provision of this or any other agreement. If,
     because of restrictions under such laws, Lender is or believes it is unable
     to sell the securities in an open market transaction, Grantor agrees that
     Lender shall have no obligation to delay sale until the securities can be
     registered, and may make a private sale to one or more persons or to a
     restricted group of persons, even though such sale may result in a price
     that is less favorable than might be obtained in an open market
     transaction, and such a sale shall be considered commercially reasonable.
     If any securities held as Collateral are "restricted securities" as defined
     in the Rules of the Securities and Exchange Commission (such as Regulation
     D or Rule 144) or state securities departments under state "Blue Sky" laws,
     or if Borrower or Grantor is an affiliate of the issuer of the securities,
     Borrower and Grantor agree that neither Grantor nor any agent of Grantor
     will sell or dispose of any securities of such issuer without obtaining
     Lender's prior written consent.

     FORECLOSURE. Maintain a judicial suit for foreclosure and sale of the
     Collateral.

     TRANSFER TITLE. Effect transfer of title upon sale of all or part of the
     Collateral. For this purpose, Grantor irrevocably appoints Lender as its
     attorney-in-fact to execute endorsements, assignments and instruments in
     the name of Grantor and each of them (if more than one) as shall be
     necessary or reasonable.

     OTHER RIGHTS AND REMEDIES. Have and exercise any or all of the rights and
     remedies of a secured creditor under the provisions of the Uniform
     Commercial Code, at law, in equity, or otherwise.

     APPLICATION OF PROCEEDS. Apply any cash which is part of the Collateral, or
     which is received from the collection or sale of the Collateral, to
     reimbursement of any expenses, including any costs for registration of
     securities, commissions incurred in connection with a sale, attorney fees
     as provided below, and court costs, whether or not there is a lawsuit and
     including any fees on appeal, incurred by Lender in connection with the
     collection and sale of such Collateral and to the payment of the
     Indebtedness of Borrower to Lender, with any excess funds to be paid to
     Grantor as the interests of Grantor may appear. Borrower agrees, to the
     extent permitted by law, to pay any deficiency after application of the
     proceeds of the Collateral to the Indebtedness.

     CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether evidenced
     by this Agreement or by any other writing, shall be cumulative and may be
     exercised singularly or concurrently. Election by Lender to pursue any
     remedy shall not exclude pursuit of any other remedy, and an election to
     make expenditures or to take action to perform an obligation of Grantor
     under this Agreement, after Grantor's failure to perform, shall not affect
     Lender's right to declare a default and to exercise its remedies.

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
     LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AND
     GRANTOR AGREE UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE
     COURTS OF LOS ANGELES COUNTY, THE STATE OF CALIFORNIA. THIS AGREEMENT SHALL
     BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
     CALIFORNIA.

     ATTORNEYS' FEES; EXPENSES. Borrower and Grantor agree to pay upon demand
     all of Lender's costs and expenses, including attorneys' fees and Lender's
     legal expenses, incurred in connection with the enforcement of this
     Agreement. Lender may pay someone else to help enforce this Agreement, and
     Borrower and Grantor shall pay the costs and expenses of such enforcement.
     Costs and expenses include Lender's attorneys' fees and legal expenses
     whether or not there is a lawsuit, including attorneys' fees and legal
     expenses for bankruptcy proceedings (and including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Borrower and Grantor also shall pay all
     court costs and such additional fees as may be directed by the court.

     CAPTION HEADINGS. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     MULTIPLE PARTIES; Corporate Authority. All obligations of Borrower and
     Grantor under this Agreement shall be joint and several, and all references
     to Borrower shall mean each and every Borrower, and all references to
     Grantor shall mean each and every Grantor. This means that each of the
     persons signing below is responsible for all obligations in this Agreement.

     NOTICES. All notices required to be given under this Agreement shall be
     given in writing, may be sent by telefacsimile (unless otherwise required
     by law), and shall be effective when actually delivered or when deposited
     with a nationally recognized overnight courier or deposited in the United
     States mail, first class, postage prepaid, addressed to the party to whom
     the notice is to be given at the address shown above. Any party may change
     its address for notices under this Agreement by giving formal written
     notice to the other parties, specifying that the purpose of the notice is
     to change the party's address. To the extent permitted by applicable law,
     if there is more than one Borrower or Grantor, notice to any Borrower or
     Grantor will constitute notice to all Borrower and Grantors. For notice
     purposes, Borrower and Grantor will keep Lender informed at all times of
     Borrower and Grantor's current addresses).

     SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement to be invalid or unenforceable as to any person or
     circumstance, such finding shall not render that provision invalid or
     unenforceable as to any other persons or circumstances. If feasible, any
     such offending provision shall be deemed to be modified to be within the
     limits of enforceability or validity; however, if the offending provision
     cannot be so modified, it shall be stricken and all other provisions of
     this Agreement in all other respects shall remain valid and enforceable.

<PAGE>   19

  07-07-1999                   COMMERCIAL PLEDGE AGREEMENT              Page 5
  Loan No 2000314557                (Continued)
  ============================================================================

     SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer
     of the Collateral, this Agreement shall be binding upon and inure to the
     benefit of the parties, their successors and assigns.

     WAIVER. Lender shall not be deemed to have waived any rights under this
     Agreement unless such waiver is given in writing and signed by Lender. No
     delay or omission on the part of Lender in exercising any right shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Agreement shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Agreement. No prior waiver by Lender, nor any
     course of dealing between Lender and Grantor, shall constitute a waiver of
     any of Lender's rights or of any of Grantor's obligations as to any future
     transactions. Whenever the consent of Lender is required under this
     Agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

BORROWER AND GRANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS PLEDGE
AGREEMENT, AND BORROWER AND GRANTOR AGREE TO ITS TERMS. THIS AGREEMENT IS DATED
JULY 7, 1999.

BORROWER
CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION

By: /S/ ALAN REDHEAD
   -------------------------------------------
   ALAN REDHEAD, PRESIDENT

GRANTOR:

SEA VIEW RESTAURANTS, INC. CALIFORNIA CORPORATION

By: /S/ ALAN REDHEAD
   -------------------------------------------
   ALAN REDHEAD, PRESIDENT

  ============================================================================
<PAGE>   20


                              COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
  Principal      Loan Date      Maturity       Loan No        Call      Collateral          Account        Officer       Initials
<S>             <C>            <C>           <C>              <C>       <C>                 <C>            <C>         <C>
$500,000.00     07-07-1999     07-06-2000    2000314557                   5015                               RDB       [Not Legible]
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:   CALIFORNIA BEACH RESTAURANTS, INC., A           Lender:     SANTA MONICA BANK
            CALIFORNIA CORPORATION (TIN: 95-2693503)                    LOAN SERVICING CENTER
            17383 SUNSET BOULEVARD, #140                                1231 4TH STREET
            PACIFIC PALISADES, CA 90272                                 SANTA MONICA, CA 90401

Grantor:    SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION
            TIN: 95-4232409) 17383 SUNSET BOULEVARD, #140,
            PACIFIC PALISADES, CA 90272
====================================================================================================================================
</TABLE>

     AMOUNT OF GUARANTY.  The amount of this Guaranty is Unlimited.

     CONTINUING UNLIMITED GUARANTY. For good and valuable consideration, SEA
     VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION ("Guarantor") absolutely
     and unconditionally guarantees and promises to pay to SANTA MONICA BANK
     ("Lender") or its order, on demand, in legal tender of the United States of
     America, the Indebtedness (as that term is defined below) of CALIFORNIA
     BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION ("Borrower") to Lender on
     the terms and conditions set forth in this Guaranty. Under this Guaranty,
     the liability of Guarantor is unlimited and the obligations of Guarantor
     are continuing.

     DEFINITIONS. The following words shall have the following meanings when
     used in this Guaranty:

        BORROWER.  The word "Borrower" means CALIFORNIA BEACH RESTAURANTS,
        INC., A CALIFORNIA CORPORATION.

        GUARANTOR.  The word "Guarantor" means SEA VIEW RESTAURANTS, INC., A
        CALIFORNIA CORPORATION.

        GUARANTY.  The word "Guaranty" means this Guaranty made by Guarantor
        for the benefit of Lender dated July 7, 1999.

        INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
        sense and means and includes any and all of Borrower's liabilities,
        obligations, debts, and indebtedness to Lender, now existing or
        hereinafter incurred or created, including, without limitation, all
        loans, advances, interest, costs, debts, overdraft indebtedness, credit
        card indebtedness, lease obligations, other obligations, and liabilities
        of Borrower, or any of them, and any present or future judgments against
        Borrower, or any of them; and whether any such Indebtedness is
        voluntarily or involuntarily incurred, due or not due, absolute or
        contingent, liquidated or unliquidated, determined or undetermined;
        whether Borrower may be liable individually or jointly with others, or
        primarily or secondarily, or as guarantor or surety; whether recovery on
        the Indebtedness may be or may become barred or unenforceable against
        Borrower for any reason whatsoever; and whether the Indebtedness arises
        from transactions which may be voidable on account of infancy, insanity,
        ultra vires, or otherwise.

        LENDER.  The word "Lender" means SANTA MONICA BANK, its successors
        and assigns.

        RELATED DOCUMENTS. The words "Related Documents" mean and include
        without limitation all promissory notes, credit agreements, loan
        agreements, environmental agreements, guaranties, security agreements,
        mortgages, deeds of trust, and all other instruments, agreements and
        documents, whether now or hereafter existing, executed in connection
        with the Indebtedness.

     NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
     and continuous for so long as this Guaranty remains in force. Guarantor
     intends to guarantee at all times the performance and prompt payment when
     due, whether at maturity or earlier by reason of acceleration or otherwise,
     of all Indebtedness. Accordingly, no payments made upon the Indebtedness
     will discharge or diminish the continuing liability of Guarantor in
     connection with any remaining portions of the Indebtedness or any of the
     Indebtedness which subsequently arises or is thereafter incurred or
     contracted. Any married person who signs this Guaranty hereby expressly
     agrees that recourse may be had against both his or her separate property
     and community property.

     DURATION OF GUARANTY. This Guaranty will take effect when received by
     Lender without the necessity of any acceptance by Lender, or any notice to
     Guarantor or to Borrower, and will continue in full force until all
     Indebtedness incurred or contracted before receipt by Lender of any notice
     of revocation shall have been fully and finally paid and satisfied and all
     other obligations of Guarantor under this Guaranty shall have been
     performed in full. If Guarantor elects to revoke this Guaranty, Guarantor
     may only do so in writing. Guarantor's written notice of revocation must be
     mailed to Lender, by certified mail, at the address of Lender listed above
     or such other place as Lender may designate in writing. Written revocation
     of this Guaranty will apply only to advances or new Indebtedness created
     after actual receipt by Lender of Guarantor's written revocation. For this
     purpose and without limitation, the term "new Indebtedness" does not
     include Indebtedness which at the time of notice of revocation is
     contingent, unliquidated, undetermined or not due and which later becomes
     absolute, liquidated, determined or due. This Guaranty will continue to
     bind Guarantor for all Indebtedness incurred by Borrower or committed by
     Lender prior to receipt of Guarantor's written notice of revocation,
     including any extensions, renewals, substitutions or modifications of the
     Indebtedness. All renewals, extensions, substitutions, and modifications of
     the Indebtedness granted after Guarantor's revocation, are contemplated
     under this Guaranty and, specifically will not be considered to be new
     Indebtedness. This Guaranty shall bind the estate of Guarantor as to
     Indebtedness created both before and after the death or incapacity of
     Guarantor, regardless of Lender's actual notice of Guarantor's death.
     Subject to the foregoing, Guarantor's executor or administrator or other
     legal representative may terminate this Guaranty in the same manner in
     which Guarantor might have terminated it and with the same effect. Release
     of any other guarantor of termination of any other guaranty of the
     Indebtedness shall not affect the liability of Guarantor under this
     Guaranty. A revocation received by Lender from any one or more Guarantors
     shall not affect the liability of any remaining Guarantors under this
     Guaranty. The obligations of Guarantor under this Guaranty shall be in
     addition to any obligations of Guarantor, or any of them, under any other
     guaranties of the Indebtedness of Borrower or any other person heretofore
     or hereafter given to Lender unless such other guaranties are modified or
     revoked in writing; and this Guaranty shall not, unless herein provided,
     affect, invalidate, or supersede any such other guaranty. IT IS ANTICIPATED
     THAT FLUCTUATIONS MAY OCCUR IN THE AGGREGATE AMOUNT OF INDEBTEDNESS COVERED
     BY THIS GUARANTY, AND IT IS SPECIFICALLY ACKNOWLEDGED AND AGREED BY
     GUARANTOR THAT REDUCTIONS IN THE AMOUNT OF INDEBTEDNESS, EVEN TO ZERO
     DOLLARS ($0.00), PRIOR TO WRITTEN REVOCATION OF THIS GUARANTY BY GUARANTOR
     SHALL NOT CONSTITUTE A TERMINATION OF THIS GUARANTY. THIS GUARANTY IS
     BINDING UPON GUARANTOR AND GUARANTOR'S HEIRS, SUCCESSORS AND ASSIGNS SO
     LONG AS ANY OF THE GUARANTEED INDEBTEDNESS REMAINS UNPAID AND EVEN THOUGH
     THE INDEBTEDNESS GUARANTEED MAY FROM TIME TO TIME BE ZERO DOLLARS ($0.00).

     GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
     before or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT
     LESSENING GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO TIME: (A)
     PRIOR TO REVOCATION AS SET FORTH ABOVE, TO MAKE ONE OR MORE ADDITIONAL
     SECURED OR UNSECURED LOANS TO BORROWER, TO LEASE EQUIPMENT OR OTHER GOODS
     TO BORROWER, OR OTHERWISE TO EXTEND ADDITIONAL CREDIT TO BORROWER; (B) TO
     ALTER, COMPROMISE, RENEW, EXTEND, ACCELERATE, OR OTHERWISE CHANGE ONE OR
     MORE LIMES THE TIME FOR PAYMENT OR OTHER TERMS OF THE INDEBTEDNESS OR ANY
     PART OF THE INDEBTEDNESS, INCLUDING INCREASES AND DECREASES OF THE RATE OF
     INTEREST ON THE INDEBTEDNESS; EXTENSIONS MAY BE REPEATED AND MAY BE FOR
     LONGER THAN THE ORIGINAL LOAN TERM; (C) TO TAKE AND HOLD SECURITY FOR THE
     PAYMENT OF THIS GUARANTY OR THE INDEBTEDNESS, AND EXCHANGE, ENFORCE, WAIVE,
     SUBORDINATE, FAIL OR DECIDE NOT TO PERFECT, AND RELEASE ANY SUCH SECURITY,
     WITH OR WITHOUT THE SUBSTITUTION OF NEW COLLATERAL; (D) TO RELEASE,
     SUBSTITUTE, AGREE NOT TO SUE, OR DEAL WITH ANY ONE OR MORE OF BORROWER'S

<PAGE>   21

  07-07-1999                 COMMERCIAL GUARANTY                      Page 2
  Loan No 2000314557             (Continued)
  ============================================================================

  sureties, endorsers, or other guarantors on any terms or in any manner Lender
  may choose; (e) to determine how, when and what application of payments and
  credits shall be made on the Indebtedness; (f) to apply such security and
  direct the order or manner of sale thereof, including without limitation, any
  nonjudicial sale permitted by the terms of the controlling security agreement
  or deed of trust, as Lender in its  discretion may determine; (g) to sell,
  transfer, assign, or grant participations in all or any part of the
  Indebtedness; and (h) to assign or transfer this Guaranty in whole or in part.

  GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
  to Lender that (a) no representations or agreements of any kind have been made
  to Guarantor which would limit or qualify in any way the terms of this
  Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
  request of Lender; (c) Guarantor has full power, right and authority to enter
  into this Guaranty; (d) the provisions of this Guaranty do not conflict with
  or result in a default under any agreement or other instrument binding upon
  Guarantor and do not result in a violation of any law, regulation, court
  decree or order applicable to Guarantor; (e) Guarantor has not and will not,
  without the prior written consent of Lender, sell, lease, assign, encumber,
  hypothecate, transfer, or otherwise dispose of all or substantially all of
  Guarantor's assets, or any interest therein; (f) upon Lender's request,
  Guarantor will provide to Lender financial and credit information in form
  acceptable to Lender, and all such financial information which currently has
  been, and all future financial information which will be provided to Lender is
  and will be true and correct in all material respects and fairly present the
  financial condition of Guarantor as of the dates the financial information is
  provided; (g) no material adverse change has occurred in Guarantor's financial
  condition since the date of the most recent financial statements provided to
  Lender and no event has occurred which may materially adversely affect
  Guarantor's financial condition; (h) no litigation, claim, investigation,
  administrative proceeding or similar action (including those for unpaid taxes)
  against Guarantor is pending or threatened; (i) Lender has made no
  representation to Guarantor as to the creditworthiness of Borrower; and (j)
  Guarantor has established adequate means of obtaining from Borrower on a
  continuing basis information regarding Borrower's financial condition.
  Guarantor agrees to keep adequately informed from such means of any facts,
  events, or circumstances which might in any way affect Guarantor's risks under
  this Guaranty, and Guarantor further agrees that, absent a request for
  information, Lender shall have no obligation to disclose to Guarantor any
  information or documents acquired by Lender in the course of its relationship
  with Borrower.

  GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
  any right to require Lender to (a) make any presentment, protest, demand, or
  notice of any kind, including notice of change of any terms of repayment of
  the Indebtedness, default by Borrower or any other guarantor or surety, any
  action or nonaction taken by Borrower, Lender, or any other guarantor or
  surety of Borrower, or the creation of new or additional Indebtedness; (b)
  proceed against any person, including Borrower, before proceeding against
  Guarantor; (c) proceed against any collateral for the Indebtedness, including
  Borrower's collateral, before proceeding against Guarantor; (d) apply any
  payments or proceeds received against the Indebtedness in any order; (e) give
  notice of the terms, time, and place of any sale of the collateral pursuant to
  the Uniform Commercial Code or any other law governing such sale; (f) disclose
  any information about the Indebtedness, the Borrower, the collateral, or any
  other guarantor or surety, or about any action or nonaction of Lender; or (g)
  pursue any remedy or course of action in Lender's power whatsoever.

  Guarantor also waives any and all rights or defenses arising by reason of (h)
  any disability or other defense of Borrower, any other guarantor or surety or
  any other person; (i) the cessation from any cause whatsoever, other than
  payment in full, of the Indebtedness; (j) the application of proceeds of the
  Indebtedness by Borrower for purposes other than the purposes understood and
  intended by Guarantor and Lender; (k) any act of omission or commission by
  Lender which directly or indirectly results in or contributes to the discharge
  of Borrower or any other guarantor or surety, or the Indebtedness, or the loss
  or release of any collateral by operation of law or otherwise; (1) any statute
  of limitations in any action under this Guaranty or on the Indebtedness; or
  (m) any modification or change in terms of the Indebtedness, whatsoever,
  including without limitation, the renewal, extension, acceleration, or other
  change in the time payment of the Indebtedness is due and any change in the
  interest rate, and including any such modification or change in terms after
  revocation of this Guaranty on Indebtedness incurred prior to such revocation.

  Guarantor waives all rights and any defenses arising out of an election of
  remedies by Lender even though that election of remedies, such as a
  nonjudicial foreclosure with respect to security for a guaranteed obligation,
  has destroyed Guarantor's rights of subrogation and reimbursement against
  Borrower by operation of Section 580d of the California Code of Civil
  Procedure or otherwise.

  Guarantor waives all rights and defenses that Guarantor may have because
  Borrower's obligation is secured by real property. This means among other
  things: (1) Lender may collect from Guarantor without first foreclosing on any
  real or personal property collateral pledged by Borrower. (2) If Lender
  forecloses on any real property collateral pledged by Borrower: (A) The amount
  of Borrower's obligation may be reduced only by the price for which the
  collateral is sold at the foreclosure sale, even if the collateral is worth
  more than the sale price. (B) Lender may collect from Guarantor even if
  Lender, by foreclosing on the real property collateral, has destroyed any
  right Guarantor may have to collect from Borrower. This is an unconditional
  waiver of any rights and defenses Guarantor may have because Borrower's
  obligation is secured by real property. These rights and defenses include, but
  are not limited to, any rights and defenses based upon Section 580a, 580b,
  580d, or 726 of the Code of Civil Procedure.

  Guarantor understands and agrees that the foregoing waivers are waivers of
  substantive rights and defenses to which Guarantor might otherwise be entitled
  under state and federal law. The rights and defenses waived include, without
  limitation, those provided by California laws of suretyship and guaranty,
  anti-deficiency laws, and the Uniform Commercial Code. Guarantor acknowledges
  that Guarantor has provided these waivers of rights and defenses with the
  intention that they be fully relied upon by Lender. Until all Indebtedness is
  paid in full, Guarantor waives any right to enforce any remedy Lender may have
  against Borrower or any other guarantor, surety, or other person, and further,
  Guarantor waives any right to participate in any collateral for the
  Indebtedness now or hereafter held by Lender.

  If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
  Indebtedness shall not at all times until paid be fully secured by collateral
  pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
  of Lender and Borrower, and their respective successors, any claim or right to
  payment Guarantor may now have or hereafter have or acquire against Borrower,
  by subrogation or otherwise, so that at no time shall Guarantor be or become a
  "creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
  successor provision of the Federal bankruptcy laws.

  GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
  agrees that each of the waivers set forth above is made with Guarantor's full
  knowledge of its significance and consequences and that, under the
  circumstances, the waivers are reasonable and not contrary to public policy or
  law. If any such waiver is determined to be contrary to any applicable law or
  public policy, such waiver shall be effective only to the extent permitted by
  law or public policy.

  LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
  against the moneys, securities or other property of Guarantor given to Lender
  by law, Lender shall have, with respect to Guarantor's obligations to Lender
  under this Guaranty and to the extent permitted by law, a contractual security
  interest in and a right of setoff against, and Guarantor hereby assigns,
  conveys, delivers, pledges, and transfers to Lender all of Guarantor's right,
  title and interest in and to, all deposits, moneys, securities and other
  property of Guarantor now or hereafter in the possession of or on deposit with
  Lender, whether held in a general or special account or deposit, whether held
  jointly with someone else, or whether held for safekeeping or otherwise,
  excluding however all IRA, Keogh, and trust accounts. Every such security
  interest and right of setoff may be exercised without demand upon or notice to
  Guarantor. No security interest or right of setoff shall be deemed to have
  been waived by any act or conduct on the part of Lender or by any neglect to
  exercise such right of setoff or to enforce such security interest or by any
  delay in so doing. Every right of setoff and security interest shall continue
  in full force and effect until such right of setoff or security interest is
  specifically waived or released by an instrument in writing executed by
  Lender.

  SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
  Indebtedness of Borrower to Lender, whether now existing or hereafter created,
  shall be prior to any claim that Guarantor may now have or hereafter acquire
  against Borrower, whether or not Borrower


<PAGE>   22


  07-07-1999                   COMMERCIAL GUARANTY                       Page 3
  Loan No 2000314557              (Continued)
  =============================================================================

  becomes insolvent. Guarantor hereby expressly subordinates any claim Guarantor
  may have against Borrower, upon any account whatsoever, to any claim that
  Lender may now or hereafter have against Borrower. In the event of insolvency
  and consequent liquidation of the assets of Borrower, through bankruptcy, by
  an assignment for the benefit of creditors, by voluntary liquidation, or
  otherwise, the assets of Borrower applicable to the payment of the claims of
  both Lender and Guarantor shall be paid to Lender and shall be first applied
  by Lender to the Indebtedness of Borrower to Lender. Guarantor does hereby
  assign to Lender all claims which it may have or acquire against Borrower or
  against any assignee or trustee in bankruptcy of Borrower; provided however,
  that such assignment shall be effective only for the purpose of assuring to
  Lender full payment in legal tender of the Indebtedness. If Lender so
  requests, any notes or credit agreements now or hereafter evidencing any debts
  or obligations of Borrower to Guarantor shall be marked with a legend that the
  same are subject to this Guaranty and shall be delivered to Lender. Guarantor
  agrees, and Lender hereby is authorized, in the name of Guarantor, from time
  to time to execute and file financing statements and continuation statements
  and to execute such other documents and to take such other actions as Lender
  deems necessary or appropriate to perfect, preserve and enforce its rights
  under this Guaranty.

  MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
  of this Guaranty:

     INTEGRATION, AMENDMENT. Guarantor warrants, represents and agrees that this
     Guaranty, together with any exhibits or schedules incorporated herein,
     fully incorporates the agreements and understandings of Guarantor with
     Lender with respect to the subject matter hereof and all prior
     negotiations, drafts, and other extrinsic communications between Guarantor
     and Lender shall have no evidentiary effect whatsoever. Guarantor further
     agrees that Guarantor has read and fully understands the terms of this
     Guaranty; Guarantor has had the opportunity to be advised by Guarantor's
     attorney with respect to this Guaranty; the Guaranty fully reflects
     Guarantor's intentions and parol evidence is not required to interpret the
     terms of this Guaranty. Guarantor hereby indemnities and holds Lender
     harmless from all losses, claims, damages, and costs (including Lender's
     attorneys' fees) suffered or incurred by Lender as a result of any breach
     by Guarantor of the warranties, representations and agreements of this
     paragraph. No alteration or amendment to this Guaranty shall be effective
     unless given in writing and signed by the parties sought to be charged or
     bound by the alteration or amendment.

     APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted by
     Lender in the State of California. If there is a lawsuit, Guarantor agrees
     upon Lender's request to submit to the jurisdiction of the courts of LOS
     ANGELES County, State of California. This Guaranty shall be governed by and
     construed in accordance with the laws of the State of California.

     ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
     Lender's costs and expenses, including attorneys' fees and Lender's legal
     expenses, incurred in connection with the enforcement of this Guaranty.
     Lender may pay someone else to help enforce this Guaranty, and Guarantor
     shall pay the costs and expenses of such enforcement. Costs and expenses
     include Lender's attorneys' fees and legal expenses whether or not there is
     a lawsuit, including attorneys' fees and legal expenses for bankruptcy
     proceedings (and including efforts to modify or vacate any automatic stay
     or injunction), appeals, and any anticipated post-judgment collection
     services. Guarantor also shall pay all court costs and such additional fees
     as may be directed by the court.

     NOTICES. All notices required to be given by either party to the other
     under this Guaranty shall be in writing, may be sent by telefacsimile
     (unless otherwise required by law), and, except for revocation notices by
     Guarantor, shall be effective when actually delivered or when deposited
     with a nationally recognized overnight courier, or when deposited in the
     United States mail, first class postage prepaid, addressed to the party to
     whom the notice is to be given at the address shown above or to such other
     addresses as either party may designate to the other in writing. All
     revocation notices by Guarantor shall be in writing and shall be effective
     only upon delivery to Lender as provided above in the section titled
     "DURATION OF GUARANTY." If there is more than one Guarantor, notice to any
     Guarantor will constitute notice to all Guarantors. For notice purposes,
     Guarantor agrees to keep Lender informed at all times of Guarantor's
     current address.

     INTERPRETATION. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. Caption
     headings in this Guaranty are for convenience purposes only and are not to
     be used to interpret or define the provisions of this Guaranty. If a court
     of competent jurisdiction finds any provision of this Guaranty to be
     invalid or unenforceable as to any person or circumstance, such finding
     shall not render that provision invalid or unenforceable as to any other
     persons or circumstances, and all provisions of this Guaranty in all other
     respects shall remain valid and enforceable. If any one or more of Borrower
     or Guarantor are corporations or partnerships, it is not necessary for
     Lender to inquire into the powers of Borrower or Guarantor or of the
     officers, directors, partners, or agents acting or purporting to act on
     their behalf, and any Indebtedness made or created in reliance upon the
     professed exercise of such powers shall be guaranteed under this Guaranty.

     WAIVER. Lender shall not be deemed to have waived any rights under this
     Guaranty unless such waiver is given in writing and signed by Lender. No
     delay or omission on the part of Lender in exercising any right shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Guaranty shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Guaranty. No prior waiver by Lender, nor any
     course of dealing between Lender and Guarantor, shall constitute a waiver
     of any of Lender's rights or of any of Guarantor's obligations as to any
     future transactions. Whenever the consent of Lender is required under this
     Guaranty, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

REINSTATEMENT OF LIABILITY. The liability of Guarantor hereunder shall be
reinstated and revived, and the rights of Lender shall continue with respect to
any amounts on account of the Indebtedness, which shall thereafter be required
to be restored or returned by Lender upon the bankruptcy, insolvency or
reorganization of Borrower or for any other reason, as though such amount had
not been paid.

OTHER GUARANTIES. The liability of Guarantor hereunder shall be reinstated and
revived, and the rights of Lender shall continue with respect to any amounts on
account of the Indebtedness, which shall thereafter be required to be restored
or returned by Lender upon the bankruptcy, insolvency or reorganization of
Borrower or for any other reason, as though such amount had not been paid.

<PAGE>   23


07-07-1999                    COMMERCIAL GUARANTY                     Page 4
Loan No 2000314557               (Continued)
===============================================================================

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE-GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS GUARANTY
IS DATED JULY 7, 1999.

GUARANTOR:

SEA VIEW RESTAURANTS INC., A CALIFORNIA CORPORATION

By:/s/ ALAN REDHEAD
  ----------------------------------------
  ALAN REDHEAD, PRESIDENT
<PAGE>   24


                           NOTICE OF FINAL AGREEMENT

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
  Principal      Loan Date      Maturity       Loan No        Call      Collateral          Account        Officer       Initials
<S>             <C>            <C>           <C>              <C>       <C>                 <C>            <C>         <C>
$500,000.00     07-07-1999     07-06-2000    2000314557                   5015                               RDB       [Not Legible]
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:   CALIFORNIA BEACH RESTAURANTS, INC., A           Lender:     SANTA MONICA BANK
            CALIFORNIA CORPORATION (TIN: 95-2693503)                    LOAN SERVICING CENTER
            17383 SUNSET BOULEVARD, #140                                1231 4TH STREET
            PACIFIC PALISADES, CA 90272                                 SANTA MONICA, CA 90401

====================================================================================================================================
</TABLE>

BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND AGREES THAT: (A) THE WRITTEN
LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, (B) THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND (C) THE WRITTEN LOAN
AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.
-------------------------------------------------------------------------------
As used in this Notice, the following terms have the following meanings:

     LOAN. The term "Loan" means the following described loan: a Variable Rate
     (1.000% over Prime rate as published in the Wall Street Journal. When a
     range of rates has been published, the higher of the rates will be used,
     making an initial rate of 9.000%), Nondisclosable Revolving Line of Credit
     Loan to a Corporation for $500,000.00 due on July 6, 2000.

     PARTIES. The term "Parties" means SANTA MONICA BANK and any and all
     entities or individuals who are obligated to repay the loan or have pledged
     property as security for the Loan, including without limitation the
     following:

     BORROWER:   CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION
     GRANTOR #1: SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION
     GUARANTOR:  SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION

     LOAN AGREEMENT. The term "Loan Agreement" means one or more promises,
     promissory notes, agreements, undertakings, security agreements, deeds of
     trust or other documents, or commitments, or any combination of those
     actions or documents, relating to the Loan, including without limitation
     the following:


                                NECESSARY FORMS

Corporate Resolution to Borrow                Corporate Resolution to Guarantee
Corporate Resolution to Grant Collateral      Loan Agreement/Negative Pledge
Promissory Note/Change In Terms Agr.          Commercial Guaranty
Security Agreement                            Commercial Pledge Agreement
UCC-I                                         Agreement to Provide Insurance
Disbursement Request and Authorization        Notice of Final Agreement
<PAGE>   25

07-07-1999                 NOTICE OF FINAL AGREEMENT                   Page 2
Loan No 2000314557               (Continued)
=============================================================================

Each Party who signs below, other than SANTA MONICA BANK, acknowledges,
represents, and warrants to SANTA MONICA BANK that it has received, read and
understood this Notice of Final Agreement. This Notice is dated July 7. 1999.

BORROWER

CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION

By: /s/ ALAN REDHEAD
  ---------------------------------
  ALAN REDHEAD, PRESIDENT

GRANTOR

SEA VIEW RESTAURANTS, INC. A CALIFORNIA CORPORATION

By: /s/ ALAN REDHEAD                       By: /s/ SAMUEL E. CHILAKOS
  ----------------------------------          -------------------------------
  ALAN REDHEAD, PRESIDENT                     SAMUEL E. CHILAKOS, SECRETARY


GRANTOR

SEA VIEW RESTAURANTS, INC. A CALIFORNIA CORPORATION

By: /s/ ALAN REDHEAD                       By: /s/ SAMUEL E. CHILAKOS
  ----------------------------------          --------------------------------
  ALAN REDHEAD, PRESIDENT                     SAMUEL E. CHILAKOS, SECRETARY


LENDER:
SANTA MONICA BANK

By: /s/ RICK BERGER
   ---------------------------------
   Authorized Officer

=============================================================================
<PAGE>   26

                                SANTA MONICA BANK
                                  Member FDIC


                            [SANTA MONICA BANK LOGO]


                         COMMERCIAL SECURITY AGREEMENT

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
  Principal      Loan Date      Maturity       Loan No        Call      Collateral          Account        Officer       Initials
<S>             <C>            <C>           <C>              <C>       <C>                 <C>            <C>         <C>
$500,000.00     07-07-1999     07-06-2000    2000314557                   5015                               RDB       [Not Legible]
------------------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan
or item.
------------------------------------------------------------------------------------------------------------------------------------

Borrower:   CALIFORNIA BEACH RESTAURANTS, INC., A           Lender:     SANTA MONICA BANK
            CALIFORNIA CORPORATION (TIN: 95-2693503)                    LOAN SERVICING CENTER
            17383 SUNSET BOULEVARD, #140                                1231 4TH STREET
            PACIFIC PALISADES, CA 90272                                 SANTA MONICA, CA 90401

Grantor:    SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION (TIN: 95-4232409)
            17383 SUNSET BOULEVARD, #140,
            PACIFIC PALISADES, CA 90272
====================================================================================================================================
</TABLE>

THIS COMMERCIAL SECURITY AGREEMENT is entered into among CALIFORNIA BEACH
RESTAURANTS, INC., A CALIFORNIA CORPORATION (referred to below as "Borrower");
SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION (referred to below as
"Grantor"); and SANTA MONICA BANK (referred to below as "Lender"). For valuable
consideration, Grantor grants to Lender a security interest in the Collateral
to secure the indebtedness and agrees that Lender shall have the rights stated
in this Agreement with respect to the Collateral, in addition to all other
rights which Lender may have by law.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.

     AGREEMENT. The word "Agreement" means this Commercial Security Agreement,
     as this Commercial Security Agreement may be amended or modified from time
     to time, together with all exhibits and schedules attached to this
     Commercial Security Agreement from time to time.

     BORROWER. The word "Borrower" means each and every person or entity
     signing the Note, including without limitation CALIFORNIA BEACH
     RESTAURANTS, INC., A CALIFORNIA CORPORATION.

     COLLATERAL. The word "Collateral" means the following described property
     of Grantor, whether now owned or hereafter acquired, whether now existing
     or hereafter arising, and wherever located:

          ALL INVENTORY, CHATTEL PAPER, ACCOUNTS, EQUIPMENT AND GENERAL
          INTANGIBLES

     In addition, the word "Collateral" includes all the following, whether now
     owned or hereafter acquired, whether now existing or hereafter arising,
     and wherever located:

          (a)  All attachments, accessions, accessories, tools, parts,
          supplies, increases, and additions to and all replacements of and
          substitutions for any property described above.

          (b)  All products and produce of any of the property described in
          this Collateral section.

          (c)  All accounts, general intangibles, instruments, rents, monies,
          payments, and all other rights, arising out of a sale, lease, or
          other disposition of any of the property described in this Collateral
          section.

          (d)  All proceeds (including insurance proceeds) from the sale,
          destruction, loss, or other disposition of any of the property
          described in this Collateral section.

          (e)  All records and data relating to any of the property described
          in this Collateral section, whether in the form of a writing,
          photograph, microfilm, microfiche, or electronic media, together with
          all of Grantor's right, title, and interest in and to all computer
          software required to utilize, create, maintain, and process any such
          records or data on electronic media.

     EVENT OF DEFAULT. The words "Event of Default" mean and include without
     limitation any of the Events of Default set forth below in the section
     titled "Events of Default."

     GRANTOR. The word "Grantor" means SEA VIEW RESTAURANTS, INC., A CALIFORNIA
     CORPORATION. Any Grantor who signs this Agreement, but does not sign the
     Note, is signing this Agreement only to grant a security interest in
     Grantor's interest in the Collateral to Lender and is not personally
     liable under the Note except as otherwise provided by contract or law
     (e.g., personal liability under a guaranty or as a surety).

     GUARANTOR. The word "Guarantor" means and includes without limitation each
     and all of the guarantors, sureties, and accommodation parties in
     connection with the indebtedness.

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
     the Note, including all principal and interest, together with all other
     indebtedness and costs and expenses for which Grantor or Borrower is
     responsible under this Agreement or under any of the Related Documents.

     LENDER. The word "Lender" means SANTA MONICA BANK, its successors and
     assigns.

     NOTE. The word "Note" means the note or credit agreement dated July 7,
     1999, in the principal amount of $500,000.00 from Borrower to Lender,
     together with all renewals of, extensions of, modifications of,
     refinancings of, consolidations of and substitutions for the note or
     credit agreement.

     RELATED DOCUMENTS. The words "Related Documents" mean and include without
     limitation all promissory notes, credit agreements, loan agreements,
     environmental agreements, guaranties, security agreements, mortgages,
     deeds of trust, and all other instruments, agreements and documents,
     whether now or hereafter existing, executed in connection with the
     Indebtedness.

BORROWER'S WAIVERS AND RESPONSIBILITIES. Except as otherwise required under
this Agreement or by applicable law, (a) Borrower agrees that Lender need not
tell Borrower about any action or inaction Lender takes in connection with this
Agreement; (b) Borrower assumes the

<PAGE>   27
07-07-1999               COMMERCIAL SECURITY AGREEMENT                    Page 2
Loan No 2000314557                (Continued)
================================================================================

responsibility for being and keeping informed about the Collateral; and (c)
Borrower waives any defenses that may arise because of any action or inaction of
Lender, including without limitation any failure of Lender to realize upon the
Collateral or any delay by Lender in realizing upon the Collateral; and
Borrower agrees to remain liable under the Note no matter what action Lender
takes or fails to take under this Agreement.

GRANTOR'S REPRESENTATIONS AND WARRANTIES. Grantor warrants that: (a) this
Agreement is executed at Borrower's request and not at the request of Lender;
(b) Grantor has the full right, power and authority to enter into this
Agreement and to pledge the Collateral to Lender; (c) Grantor has established
adequate means of obtaining from Borrower on a continuing basis information
about Borrower's financial condition; and (d) Lender has made no representation
to Grantor about Borrower or Borrower's creditworthiness.

GRANTOR'S WAIVERS. Except as prohibited by applicable law, grantor waives any
right to require Lender to (a) make any presentment, protest, demand, or notice
of any kind, including notice of change of any terms of repayment of the
Indebtedness, default by Borrower or any other guarantor or surety, any action
or nonaction taken by Borrower, Lender, or any other guarantor or surety of
Borrower, or the creation of new or additional Indebtedness; (b) proceed against
any person, including Borrower, before proceeding against Grantor; (c) proceed
against any collateral for the Indebtedness, Indebtedness, including Borrower's
collateral, before proceeding against Grantor; (d) apply any payments or
proceeds received against the Indebtedness in any order; (e) give notice of the
terms, time and place of any sale of any collateral pursuant to the Uniform
Commercial Code or any other law governing such sale; (f) disclose any
information about the Indebtedness, the Borrower, any collateral, or any other
guarantor or surety, or about any action or nonaction of Lender; or (g) pursue
any remedy or course of action in Lender's power whatsoever.

Grantor also waives any and all rights or defenses arising by reason of (h) any
disability or other defense of Borrower, any other guarantor or surety or any
other person; (i) the cessation from any cause whatsoever, other than payment in
full, of the Indebtedness; (j) the application of proceeds of the Indebtedness
by Borrower for purposes other than the purposes understood and intended by
Grantor and Lender; (k) any act of omission or commission by Lender which
directly or indirectly results in or contributes to the discharge of Borrower
or any other guarantor or surety, or the Indebtedness, or the loss or release of
any collateral by operation of law or otherwise; (l) any statute of limitations
in any action under this Agreement or on the Indebtedness; or (m) any
modification or change in terms of the Indebtedness, whatsoever, including
without limitation, the renewal, extension, acceleration, or other change in
the time payment of the Indebtedness as due and any change in the interest rate.

Grantor waives all rights and defenses arising out of an election of remedies
by Lender, even though that election of remedies, such as nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
Grantor's rights of subrogation and reimbursement against Borrower by the
operation of Section 580d of the California Code of Civil Procedure, or
otherwise.

This waiver includes, without limitation, any loss of rights Grantor may suffer
by reason of any rights or protections of Borrower in connection with any
anti-deficiency laws, or other laws limiting or discharging the Indebtedness or
Borrower's obligations (including, without limitation, Section 726, 580a, 580b,
and 580d of the California Code of Civil Procedure). Grantor waives all rights
and protections of any kind which Grantor may have for any reason, which would
affect or limit the amount of any recovery by Lender from Grantor following a
nonjudicial sale or judicial foreclosure of any real or personal property
security for the Indebtedness including, but not limited to, the right to any
fair market value hearing pursuant to California Code of Civil Procedure
Section 580a.

Grantor understands and agrees that the foregoing waivers are waivers of
substantive rights and defenses to which Grantor might otherwise be entitled
under state and federal law. The rights and defenses waived include, without
limitation, those provided by California laws of suretyship and guaranty,
anti-deficiency laws, and the Uniform Commercial Code. Grantor acknowledges
that Grantor has provided these waivers of rights and defenses with the
intention that they be fully relied upon by Lender. Until all Indebtedness is
paid in full, Grantor waives any right to enforce any remedy Lender may have
against Borrower or any other guarantor, surety, or other person, and further,
Grantor waives any right to participate in any collateral for the Indebtedness
now or hereafter held by Lender.

If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Grantor hereby forever waives and relinquishes in favor of
Lender and Borrower, and their respective successors, any claim or right to
payment Grantor may now have or hereafter have or acquire against Borrower, by
subrogation or otherwise, so that at no time shall Grantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.

RIGHTS OF SETOFF. Grantor hereby grants Lender a contractual security
interest in and hereby assigns, conveys, delivers, pledges, and transfers all of
Grantor's right, title and interest in and to Grantor's accounts with Lender
(whether checking, savings, or some other account), including all accounts held
jointly with someone else and all accounts Grantor may open in the future,
excluding, however, all IRA and Keogh accounts, and all trust accounts for
which the grant of a security interest would be prohibited by law. Grantor
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all Indebtedness against any and all such accounts.

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

   PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such financing
   statements and to take whatever other actions are requested by Lender to
   perfect and continue Lender's security interest in the Collateral. Upon
   request of Lender, Grantor will deliver to Lender any and all of the
   documents evidencing or constituting the Collateral, and Grantor will note
   Lender's interest upon any and all chattel paper if not delivered to Lender
   for possession by Lender. Grantor hereby appoints Lender as its irrevocable
   attorney-in-fact for the purpose of executing any documents necessary to
   perfect or to continue the security interest granted in this Agreement.
   Lender may at any time, and without further authorization from Grantor, file
   a carbon, photographic or other reproduction of any financing statement or
   of this Agreement for use as a financing statement. Grantor will reimburse
   Lender for all expenses for the perfection and the continuation of the
   perfection of Lender's security interest in the Collateral. Grantor promptly
   will notify Lender before any change in Grantor's name including any change
   to the assumed business names of Grantor. THIS IS A CONTINUING SECURITY
   AGREEMENT AND WILL CONTINUE IN EFFECT EVEN THOUGH ALL OR ANY PART OF THE
   INDEBTEDNESS IS PAID IN FULL AND EVEN THOUGH FOR A PERIOD OF TIME BORROWER
   MAY NOT BE INDEBTED TO LENDER.

   NO VIOLATION. The execution and delivery of this Agreement will not violate
   any law or agreement governing Grantor or to which Grantor is a party, and
   its certificate or articles of incorporation and bylaws do not prohibit any
   term or condition of this Agreement.

   ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
   accounts, chattel paper, or general intangibles, the Collateral is
   enforceable in accordance with its terms, is genuine, and complies with
   applicable laws concerning form, content and manner of preparation and
   execution, and all persons appearing to be obligated on the Collateral have
   authority and capacity to contract and are in fact obligated as they appear
   to be on the Collateral. At the time any account becomes subject to a
   security interest in favor of Lender, the account shall be a good and valid
   account representing an undisputed, bona fide indebtedness incurred by the
   account debtor, for merchandise held subject to delivery instructions or
   theretofore shipped or delivered pursuant to a contract of sale, or for
   services theretofore performed by Grantor with or for the account debtor;
   there shall be no setoffs or counterclaims against any such account; and no
   agreement under which any deductions or discounts may be claimed shall have
   been made with the account debtor except those disclosed to Lender in
   writing.

   LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver to
   Lender in form satisfactory to Lender a schedule or real properties and
   Collateral locations relating to Grantor's operations, including without
   limitation the following: (a) all real property owned or being purchased by
   Grantor; (b) all real property being rented or leased by Grantor; (c) all
   storage facilities owned, rented, leased, or being used by Grantor; and (d)
   all other properties where Collateral is or may be located. Except in the
   ordinary course of its business, Grantor shall not remove the Collateral from
   its existing locations without the prior written consent of Lender.
<PAGE>   28
07-07-1999                 COMMERCIAL SECURITY AGREEMENT                 Page 3
Loan No 2000314557                   (Continued)

================================================================================

REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the extend the
Collateral consists of intangible property such as accounts, the records
concerning the Collateral) at Grantor's address shown above, or at such other
locations as are acceptable to Lender. Except in the ordinary course of its
business, including the sales of inventory, Grantor shall not remove the
Collateral from its existing locations without the prior written consent of
Lender. To the extent that the Collateral consists of vehicles, or other titled
property, Grantor shall not take or permit any action which would require
application for certificates of title for the vehicles outside the State of
California, without the prior written consent of Lender.

TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business,  Grantor shall not sell,
offer to sell, or otherwise transfer or dispose of the Collateral. While Grantor
is not in default under this Agreement, Grantor may sell inventory, but only in
the ordinary course of its business and only to buyers who qualify as a buyer in
the ordinary course of business. A sale in the ordinary course of Grantor's
business does not include a transfer in partial or total satisfaction of a debt
or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise
permit the Collateral to be subject to any lien, security interest, encumbrance,
or charge, other than the security interest provided for in this Agreement,
without the prior written consent of Lender. This includes security interests
even if junior in right to the security interests granted under this Agreement.
Unless waived by Lender, all proceeds from any disposition of the Collateral
(for whatever reason) shall be held in trust for Lender and shall not be
commingled with any other funds: provided however, this requirement shall not
constitute consent by Lender to any sale or other disposition. Upon receipt,
Grantor shall immediately deliver any such proceeds to Lender.

TITLE. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and encumbrances
except for the lien of this Agreement. No financing statement covering any of
the Collateral is on file in any public office other than those which reflect
the security interest created by this Agreement or to which Lender has
specifically consented. Grantor shall defend Lender's rights in the Collateral
against the claims and demands of all other persons.

COLLATERAL SCHEDULES AND LOCATIONS. As often as Lender shall require, and
insofar as the Collateral consists of accounts and general intangibles, Grantor
shall deliver to Lender schedules of such Collateral, including such information
as Lender may require, including without limitation names and addresses of
account debtors and agings of accounts and general intangibles. Insofar as the
Collateral consists of inventory and equipment, Grantor shall deliver to Lender,
as often as Lender shall require, such lists, descriptions, and designations of
such Collateral as Lender may require to identify the nature, extent, and
location of such Collateral. Such information shall be submitted for Grantor and
each of its subsidiaries or related companies.

MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all tangible
Collateral in good condition and repair. Grantor will not commit or permit
damage to or destruction of the Collateral or any part of the Collateral. Lender
and its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the Collateral wherever located.
Grantor shall immediately notify Lender of all cases involving the return,
rejection, repossession, loss or damage of or to any Collateral; of any request
for credit or adjustment or of any other dispute arising with respect to the
Collateral; and generally of all happenings and events affecting the Collateral
or the value or the amount of the Collateral.

TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes, assessments
and liens upon the Collateral, its use or operation, upon this Agreement, upon
any promissory note or notes evidencing the Indebtedness, or upon any of the
other Related Documents. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender's interest in
the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is
subjected to a lien which is not discharged within fifteen (15) days, Grantor
shall deposit with Lender cash, a sufficient corporate surety bond or other
security satisfactory to Lender in an amount adequate to provide for the
discharge of the lien plus any interest, costs, attorneys' fees or other charges
that could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings.

COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly with
all laws, ordinances, rules and regulations of all governmental authorities, now
or hereafter in effect applicable to the ownership, production, disposition, or
use of the Collateral. Grantor may contest in good faith any such law, ordinance
or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Lender's interest in the Collateral, in Lender's
opinion, is not jeopardized.

HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral never
has been, and never will be so long as this Agreement remains a lien on the
Collateral, used for the generation, manufacture, storage, transportation,
treatment, disposal, release or threatened release of any hazardous waste or
substance, as those terms are defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization act of
1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
California Health and Safety Code, Section 25100, et seq., or other applicable
state or Federal laws, rules, or regulations adopted pursuant to any of the
foregoing. The terms "hazardous waste" and "hazardous substance" shall also
include, without limitation, petroleum and petroleum by-products or any fraction
thereof and asbestos. The representations and warranties contain herein are
based on Grantor's due diligence in investigating the Collateral for hazardous
wastes and substances. Grantor hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Grantor becomes liable
for cleanup or other costs under any such laws, and (b) agrees to indemnify and
hold harmless Lender against any and all claims and losses resulting from a
breach of this provision of this Agreement. This obligation to indemnify shall
survive the payment of the Indebtedness and the satisfaction of this Agreement.

MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all risks
insurance, including without limitation fire, theft and liability coverage
together with such other insurance as Lender may require with respect to the
Collateral, in form, amounts, coverages and basis reasonably acceptable to
Lender and issued by a company or companies reasonably acceptable to Lender.
Grantor, upon request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at least
ten (10) days' prior written notice to Lender and not including any disclaimer
of the insurer's liability for failure to give such a notice. Each insurance
policy also shall include and endorsement providing that coverage in favor of
Lender will not be impaired in any way by any act, omission, or default of
Grantor or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require. If
Grantor at any time fails to obtain or maintain any insurance as required under
this Agreement, Lender may (but shall not be obligated to) obtain such insurance
as Lender deems appropriate, including if it so chooses "single interest
insurance," which will cover only Lender's interest in the Collateral.

APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of any
loss or damage to the Collateral. Lender may make proof of loss if Grantor fails
to do so within fifteen (15) days of the casualty. All proceeds of any insurance
on the Collateral, including accrued proceeds thereon, shall be held by Lender
as part of the Collateral. If Lender consents to repair or replacement of the
damaged or destroyed Collateral, Lender shall, upon satisfactory proof of
expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost
of repair or restoration. If Lender does not consent to repair or replacement of
the Collateral, Lender shall retain a sufficient amount of the proceeds to pay
all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds
which have not been disbursed within six (6) months after their receipt and
<PAGE>   29
07-07-1999               COMMERCIAL SECURITY AGREEMENT                    Page 4
Loan No 2000314557                (Continued)

================================================================================

     which Grantor has not committed to the repair or restoration of the
     Collateral shall be used to prepay the indebtedness.

     INSURANCE RESERVES. Lender may require Grantor to maintain with lender
     reserves for payment of insurance premiums, which reserves shall be
     created by monthly payments from Grantor of a sum estimated by Lender to
     be sufficient to produce, at least fifteen (15) days before the premium
     due date, amounts at least equal to the insurance premiums to be paid. If
     fifteen (15) days before payment is due, the reserve funds are
     insufficient, Grantor shall upon demand pay any deficiency to Lender. The
     reserve funds shall be held by Lender as a general deposit and shall
     constitute a non-interest-bearing account which Lender may satisfy by
     payment of the insurance premiums required to be paid by Grantor as they
     become due. Lender does not hold the reserve funds in trust for Grantor,
     and Lender is not the agent of Grantor for payment of the insurance
     premiums required to be paid by Grantor. The responsibility for the
     payment of premiums shall remain Grantor's sole responsibility.

     INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to
     lender reports on each existing policy of insurance showing such
     information as Lender may reasonably request including the following: (a)
     the name of the insurer; (b) the risks insured; (c) the amount of the
     policy; (d) the property insured; (e) the then current value on the basis
     of which insurance has been obtained and the manner of determining that
     value; and (f) the expiration date of the policy. In addition, Grantor
     shall upon request by Lender (however not more often than annually) have
     an independent appraiser satisfactory to Lender determine, as applicable,
     the cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest
in such Collateral. Until otherwise notified by Lender, Grantor may collect any
of the Collateral consisting of accounts. At any time and even though no Event
of Default exists, Lender may exercise its rights to collect the accounts and
to notify account debtors to make payments directly to Lender for application
to the Indebtedness. If Lender at any time has possession of any Collateral,
whether before or after an Event of Default, Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as
Lender, in Lender's sole discretion, shall deem appropriate under the
circumstances, but failure to honor any request by Grantor shall not of itself
be deemed to be a failure to exercise reasonable care. Lender shall not be
required to take any steps necessary to preserve any rights in the Collateral
against prior parties, nor to protect, preserve or maintain any security
interest given to secure the Indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may (but
shall not be obligated to) pay all costs for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender for
such purposes will then bear interest at the rate charged under the Note from
the date incurred or paid by Lender to the date of repayment by Grantor. All
such expenses shall become a part of the Indebtedness and, at Lender's option,
will (a) be payable on demand, (b) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due
during either (i) the term of any applicable insurance policy or (ii) the
remaining term of the Note, or (c) be treated as a balloon payment which will
be due and payable at the Note's maturity. This Agreement also will secure
payment of these amounts. Such right shall be in addition to all other rights
and remedies to which Lender may be entitled upon the occurrence of an Event of
Default.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

     DEFAULT ON INDEBTEDNESS. Failure of borrower to make any payment when due
     on the Indebtedness.

     OTHER DEFAULTS. Failure of Grantor or Borrower to comply with or to
     perform any other term, obligation, covenant or condition contained in
     this Agreement or in any of the Related Documents or failure of Borrower
     to comply with or to perform any term, obligation, covenant or condition
     contained in any other agreement between Lender and Borrower.

     DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
     under any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or
     person that may materially affect any of Borrower's property or Borrower's
     or any Grantor's ability to repay the Loans or perform their respective
     obligations under this Agreement or any of the Related Documents.

     FALSE STATEMENTS. Any warranty, representation or statement made or
     furnished to Lender by or on behalf of Grantor or Borrower under this
     Agreement, the Note or the Related Documents is false or misleading in any
     material respect, either now or at the time made or furnished.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
     Documents ceases to be in full force and effect (including failure of any
     collateral documents to create a valid and perfected security interest or
     lien) at any time and for any reason.

     INSOLVENCY. The dissolution or termination of Grantor or Borrower's
     existence as a going business, the insolvency of Grantor or Borrower, the
     appointment of a receiver for any part of Grantor or Borrower's property,
     any assignment for the benefit of creditors, any type of creditor workout,
     of the commencement of any proceeding under any bankruptcy or insolvency
     laws by or against Grantor or Borrower.

     CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Grantor or Borrower
     or by any governmental agency against the Collateral or any other
     collateral securing the Indebtedness. This includes a garnishment of any
     of Grantor or Borrower's deposit accounts with Lender.

     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
     respect to any Guarantor of any of the Indebtedness or such Guarantor dies
     or becomes incompetent.

     ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of
     the Indebtedness is impaired.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the California Uniform Commercial Code. In addition and
without limitation, Lender may exercise any one or more of the following rights
and remedies:

     ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
     including any prepayment penalty which Borrower would be required to pay,
     immediately due and payable, without notice.

     ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all
     or any portion of the Collateral and any and all certificates of title and
     other documents relating to the Collateral. Lender may require Grantor to
     assemble the Collateral and make it available to Lender at a place to be
     designated by Lender. Lender also shall have full power to enter upon the
     property of Grantor to take possession of and remove the Collateral. If
     the Collateral contains other goods not covered by this Agreement at the
     time of repossession, Grantor agrees Lender may take such other goods,
     provided that Lender makes reasonable efforts to return them to Grantor
     after repossession.

     SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer,
     or otherwise deal with the Collateral or proceeds thereof in its own name
     or that of Grantor. Lender may sell the Collateral at public auction or
     private sale. Unless the Collateral threatens to decline speedily in value
     or is of a type customarily sold on a recognized market, Lender will give
     Grantor reasonable notice of the time after which any private sale or
     other intended disposition of the Collateral is to be made. The
     requirements of reasonable notice shall be met if such notice is given at
     least ten
<PAGE>   30

07-07-1999                 COMMERCIAL SECURITY AGREEMENT                  Page 5
Loan No 2000314557                (Continued)
================================================================================

(10) days, or such lesser time as required by state law, before the time of the
sale or disposition. All expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid.

APPOINT RECEIVER. To the extent permitted by applicable law, Lender shall have
the following rights and remedies regarding the appointment of a receiver: (a)
Lender may have a receiver appointed as a matter of right, (b) the receiver may
be an employee of Lender and may serve without bond, and (c) all fees of the
receiver and his or her attorney shall become part of the indebtedness secured
by this Agreement and shall be payable on demand, with interest at the Note rate
from date of expenditure until repaid.

COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a receiver,
may collect the payments, rents, income, and revenues from the Collateral.
Lender may at any time in its discretion transfer any Collateral into its own
name or that of its nominee and receive the payments, rents, income, and
revenues therefrom and hold the same as security for the Indebtedness or apply
it to payment of the Indebtedness in such order of preference as Lender may
determine. Insofar as the Collateral consists of accounts, general intangibles,
insurance policies, instruments, chattel paper, choses in action, or similar
property, Lender may demand, collect, receipt for, settle, compromise, adjust,
sue for, foreclose, or realize on the Collateral as Lender may determine,
whether or not Indebtedness or Collateral is then due. For these purposes,
Lender may, on behalf of and in the name of Grantor, receive, open and dispose
of mail addressed to Grantor; change any address to which mail and payments are
to be sent; and endorse notes, checks, drafts, money orders, documents of title,
instruments and items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, Lender may notify account debtors and
obligors on any Collateral to make payments directly to Lender.

OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Borrower for any deficiency remaining on
the Indebtedness due to Lender after application of all amounts received from
the exercise of the rights provided in this Agreement. Borrower shall be liable
for a deficiency even if the transaction described in this subsection is a sale
of accounts or chattel paper.

OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies of a
secured creditor under the provisions of the Uniform Commercial Code, as may be
amended from time to time. In addition, Lender shall have and may exercise any
or all other rights and remedies it may have available at law, in equity or
otherwise.

CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether evidenced by
this Agreement or the Related Documents or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Grantor or Borrower under this Agreement, after Grantor or Borrower's failure to
perform, shall not affect Lender's right to declare a default and to exercise
its remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

AMENDMENTS. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.

APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Grantor and Borrower
agree upon Lender's request to submit to the jurisdiction of the courts of the
State of California. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

ATTORNEYS' FEES; EXPENSES. Grantor and Borrower agree to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement. Lender
may pay someone else to help enforce this Agreement, and Grantor and Borrower
shall pay the costs and expenses of such enforcement. Costs and expenses include
Lender's attorneys' fees and legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings (and
including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor and
Borrower also shall pay all court costs and such additional fees as may be
directed by the court.

CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.

MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor and Borrower
under this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower, and all references to Grantor shall mean
each and every Grantor. This means that each of the persons signing below is
responsible for ALL obligations in this Agreement.

NOTICES. All notices required to be given under this Agreement shall be given in
writing, may be sent by telefacsimile (unless otherwise required by law), and
shall be effective when actually delivered or when deposited with a nationally
recognized overnight courier or deposited in the United States mail, first
class, postage prepaid, addressed to the party to whom the notice is to be given
at the address shown above. Any party may change its address for notices under
this Agreement by giving formal written notice to the other parties, specifying
that the purpose of the notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one Grantor or Borrower,
notice to any Grantor or Borrower will constitute notice to all Grantor and
Borrowers. For notice purposes, Grantor and Borrower will keep Lender informed
at all times of Grantor and Borrower's current address(es).

POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, collect, receive, receipt for, sue and recover all
sums of money or other property which may now or hereafter become due, owing
or payable from the Collateral; (b) to execute, sign and endorse any and all
claims, instruments, receipts, checks, drafts or warrants issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under the
Collateral, and, in the place and stead of Grantor, to execute and deliver its
release and settlement for the claim; and (d) to file any claim or claims or to
take any action or institute or take part in any proceedings, either in its own
name or in the name of Grantor, or otherwise, which in the discretion of Lender
may seem to be necessary or advisable. This power is given as security for the
Indebtedness, and the authority hereby conferred is and shall be irrevocable and
shall remain in full force and effect until renounced by Lender.

PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted preference
claim in Borrower's bankruptcy will become a part of the Indebtedness and, at
Lender's option, shall be payable by Borrower as provided above in the
"EXPENDITURES BY LENDER" paragraph.

SEVERABILITY. If a court of competent jurisdiction finds any provision of this
Agreement to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.

SUCCESSOR INTERESTS. Subject to the limitations set forth above on transfer of
the Collateral, this Agreement shall be binding upon and inure to the benefit of
the parties, their successors and assigns.

WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by
<PAGE>   31
07-07-1999               COMMERCIAL SECURITY AGREEMENT                    Page 6
Loan No 2000314557                (Continued)
================================================================================
   Lender. No delay or omission on the part of Lender in exercising any right
   shall operate as a waiver of such right or any other right. A waiver by
   Lender of a provision of this Agreement shall not prejudice or constitute a
   waiver of Lender's right otherwise to demand strict compliance with that
   provision or any other provision of this Agreement. No prior waiver by
   Lender, nor any course of dealing between Lender and Grantor, shall
   constitute a waiver of any of Lender's rights or of any of Grantor's
   obligations as to any future transactions. Whenever the consent of Lender is
   required under this Agreement, the granting of such consent by Lender in any
   instance shall not constitute continuing consent to subsequent instances
   where such consent is required and in all cases such consent may be granted
   or withheld in the sole discretion of Lender.

   WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for the
   Indebtedness, Borrower irrevocably waivers, disclaims and relinquishes all
   claims against such other person which Borrower has or would otherwise have
   by virtue of payment of the Indebtedness or any part thereof, specifically
   including but not limited to all rights of indemnity, contribution or
   exoneration.

BORROWER AND GRANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
COMMERCIAL SECURITY AGREEMENT, AND BORROWER AND GRANTOR AGREE TO ITS TERMS.
THIS AGREEMENT IS DATED JULY 7, 1999.

BORROWER:

CALIFORNIA BEACH RESTAURANTS, INC., A CALIFORNIA CORPORATION

By: /s/ ALAN REDHEAD
    ------------------------------------
    ALAN REDHEAD, PRESIDENT

GRANTOR:

SEA VIEW RESTAURANTS, INC., A CALIFORNIA CORPORATION

By: /s/ ALAN REDHEAD
    ------------------------------------
    ALAN REDHEAD, PRESIDENT
================================================================================