LEASE

         THIS LEASE is entered into between James L. Gattis,  hereinafter called
"Landlord", and Pacific Capital Bancorp, hereinafter called "Tenant."

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:

                               ARTICLE 1. PREMISES

         Section 1.01: Landlord hereby leases to Tenant, and Tenant hereby hires
from Landlord,  for the term, at the rental and upon the  conditions  herein set
forth,  those certain  Premises  consisting of  approximately  5,365 square feet
located on the first floor at the  property  commonly  known as 517 Main Street,
Salinas, California.

                                 Quiet Enjoyment

         Section  1.02:  The  Landlord  covenants  and agrees that the Tenant on
paying the rent and  performing  the  covenants  contained  herein shall and may
peaceably and quietly hold and enjoy the Premises for the term of this Lease.

                                  Subordination

         Section 1.03: This Lease shall be subordinate and subject at

all times to any mortgage or deed of trust covering the Premises or which

at any time  hereafter  shall be made, and to all advances made, or hereafter to
be made,  upon the security  hereof;  provided,  however,  such agreement by the
parties to subordinate  this Lease to any  after-acquired  mortgages or deeds of
trust is expressly  conditioned  upon the mortgagee or  beneficiary  of any such
mortgage  or  deed  of  trust  agreeing  in  writing,   in  form  and  substance
satisfactory to Tenant, to recognize and honor all rights of Tenant hereunder so
long a Tenant is not in material  default of any  provision of this Lease (after
the expiration of any applicable cure period.)

                                 ARTICLE 2. USE
                                  Permitted Use

         Section  1.01:  The  Premises  are to be used  for bank  functions  and
related uses and for no other purpose without the written consent of Landlord.

                                 Prohibited Use

         Section 2.02:  Tenant shall not do or permit  anything to be done in or
about the Premises,  nor bring,  nor keep anything therein which will in any way
affect fire or other  insurance  upon the building,  or any of its contents,  or
which shall in any way conflict with any law, ordinance, rule,

or regulation affecting the occupancy and use of the Premises, which are 2

                                       75

<PAGE>

or may hereafter be enacted or  promulgated by any public  authority,  or in any
way obstruct or interfere  with the rights of other tenants of the building,  or
injure  or annoy  them,  nor use,  nor allow the  Premises  to be used,  for any
improper, immoral, unlawful or objectionable purpose.

                                   Assignment

         Section 2.03:  Tenant shall not assign,  mortgage or  hypothecate  this
Lease, or any interest therein,  or permit the use of the Premises,  or any part
thereof,  without the prior  written  consent of  Landlord.  Consent to any such
assignment  or  subletting  shall not operate as a waiver o the  necessity for a
consent  to any  subsequent  assignment  or  subletting,  and the  terms of such
consent shall be binding upon any person holding by, under,  or through  Tenant.
Landlord's consent will not be unreasonably withheld.

         Any such  assignment or subletting  without such consent shall be void,
and shall,  at the option of Landlord,  terminate  this Lease.  This Lease shall
not, nor shall any interest therein be assignable, as to the interest of Tenant,
by operation of law, without the written consent of Landlord.  In the event that
the Premises are leased to more than one Tenant,  this Lease shall automatically
transfer to the survivor or survivors, in the event of death of one Tenant.

                                      Signs

         Section   2.04:   Tenant   will  not   permit  or  suffer   any  signs,
advertisements,  or notices to be  displayed,  inscribed  upon or affixed on any
part of the outside or inside of the Premises,  or in the building of which they
are a part,  except as Landlord or Landlord's  architect  may approve.  Any such
approved sign shall be manufacture and installed at Tenant's sole cost.

                              Rules and Regulations

         Section 2.05: Tenant agrees to observe faithfully,  and comply strictly
with, the rules and regulations  promulgated  from time to time by the Landlord,
as in the Landlord's judgment are necessary for the safety, care and cleanliness
of the building or for the preservation of good order therein.

                                 ARTICLE 3. TERM
                                      Term

         Section  3.01:  The term of this Lease  shall be for a period of twenty
nine (29) months  commencing of the lst day of December,  1996 and ending of the
30th day of April, 1999.

                             Delivery and Possession

                                       76
<PAGE>

         Section 3.02: In the event of the inability of Landlord to

deliver  possession of the Premises at the time of the  commencement of the term
of this Lease,  neither  Landlord  nor its agents shall be liable for any damage
caused thereby, nor shall this Lease thereby become void or voidable,  nor shall
the term herein specified be in any way extended, but in such event Tenant shall
not be liable for any rent until such time as Landlord  can deliver  possession.
The provisions of Subdivision  (1) of Section 1932 of the California  Civil Code
shall not  apply to this  Lease,  and the  Tenant  waives  the  benefit  of such
provisions.

                              Surrender of Premises

         Section  3,03:  (a) Tenant  agrees to  surrender  the  Premises  at the
termination  of the tenancy  herein  created,  in the same  condition  as herein
agreed they have been  received,  reasonable  use and wear thereof and damage by
the act of God or by the elements excepted.

                               Notice of Surrender

         Section 3.03:  (b) Tenant  shall,  at least thirty (30) days before the
last day of the term hereof,  give to Landlord a written  notice of intention to
surrender  the  Premises on that date,  but nothing  contained  herein  shall be
construed  as an  extension  of the term hereof or as consent of Landlord to any
holding over by Tenant.

                                  Holding Over

         Section 3.04: If Tenant holds possession of the Premises after the term
of this Lease,  Tenant  shall,  at the option of  Landlord,  to be  exercised by
Landlord's  giving written  notice to Tenant and not otherwise,  become a tenant
from month to month upon the terms and conditions  herein  specified,  so far as
applicable, at the same a monthly rental as that paid for the final month of the
Lease, payable in advance, in lawful money, and shall continue to be such tenant
until  thirty  (30) days after  Tenant  shall have given to Landlord or Landlord
shall have  given to Tenant a written  notice of  intention  to  terminate  such
monthly  tenancy.  Unless  Landlord  shall exercise the option hereby given him,
Tenant  shall be a tenant at  sufferance  only,  whether or not  Landlord  shall
accept  any rent  from  Tenant  while  Tenant is so  holding  over.  such  liens

                                 Quitclaim Deed

         Section 3.05: Upon the expiration or earlier termination of this Lease,
Tenant  agrees to deliver a quitclaim  deed in favor of Landlord  releasing  its
interest in the Premises.

                                Option to Renew

                                       77
<PAGE>

         Section 3.06: (a) Tenant is hereby granted and shall,  if Tenant is not
at the time in default  under this  Lease,  have  options to renew this Lease as
follows:

lst Option               5 years (May 1, 1999 to April 30, 2004)

2nd Option               5 years (May 1, 2004 to April 30, 2009)

Any extension shall be on the same terms, covenants,  and conditions and subject
to the same exceptions and reservations  herein  contained,  with the rent to be
paid by Tenant to Landlord  under each option to be  increased  each year in the
same manner as described in Section 4.01 herein.

         (b) Each  option  shall be  exercised  only by Tenant's  delivering  to
Landlord  in person or by United  States  mail on or before one  hundred  eighty
(180) days before  expiration of the term hereof,  or any renewed term,  written
notice of his election to renew this Lease as herein provided.

         (c) Failure to exercise an option shall terminate Tenant's rights under
this section to any further options or extension of this Lease.

                                 ARTICLE 4. RENT
                                     Rental

         Section 4.01: Tenant shall pay rent, free from all claims,  demands, or
set-offs against Landlord or any kind or character  whatsoever,  in advance,  to
the  Landlord at 376-A Main Street,  Salinas,  California  93901,  or such other
place  as  Landlord  may  designate  the  sum of  FIFTY  FOUR  THOUSAND  DOLLARS
($54,000.00) per year payable at the rate of FOUR THOUSAND, FIVE HUNDRED DOLLARS
($4,500.00) per month payable on the Ist of each month.

         Section 4.02:  Commencing  December 1, 1997 and upon the  expiration of
each twelve (12)  calendar  month  period  thereafter,  the monthly rent of Four
Thousand,  Five Hundred Dollars and no cents  ($4,500.00)  shall be increased by
multiplying said rent by a fraction, which fraction, shall have as its numerator
the  Consumer   Price  Index  for  all  items  for  the  San   Francisco/Oakland
Metropolitan  area  (1977=100),  as published by the U.S.  Department  of Labor,
Bureau of Labor  Statistics  for month of September just prior to the applicable
twelve (12) month period,  and which such fraction shall have as its denominator
said Consumer  Price Index as published  for the month of September  1996. In no
event shall the rent be less than the rent paid for the prior year. In the event
the said bureau  should  cease to publish  said Index  figure,  then any similar
Index published by any other branch or department of the U.S.  Government  shall
be used, and if none is so published then another Index generally  recognized as

                                       78
<PAGE>

authoritative  shall be substituted by agreement of the parties hereto, or if no
such agreement of the parties hereto,  or if no such agreement is reached within
a reasonable time, Lessor shall select another Index.

                         ARTICLE 5. TAXES AND UTILITIES

                                      Taxes

                  Section  5.01:  In addition to the rental to be paid by Tenant
to Landlord,  as set forth herein, Tenant agrees to pay to Landlord on a prorata
basis all taxes and  assessments  levied  against  the leased  Premises  and the
building.  Landlord  shall  furnish  copies of any tax bills  pertaining  to the
demised  Premises  as  a  condition  of  receiving  said  additional  rent.  The
additional  rent is to be paid within  sixty (60) days after demand by Landlord.
The provisions  herein  contained shall apply to taxes levied or assessed by any
public  body,  whether or not such public body shall have  previously  levied or
assessed taxes against the herein described property or any part thereof. Tenant
shall pay all taxes levied against any personal property belonging to Tenant and
located on the leased  Premises.  The term "Real Property Tax" shall not include
any increase in tax which is imposed as a result of a transfer,  either  partial
or total, of Lessor's interest in the premises.

                                    Utilities

Section  5.02:  Tenant shall pay for all water,  gas,  heat,  trash  collection,
telephone,  electricity,  power and all other utilities and janitorial  services
which may be furnished  to or used in or about the  Premises  during the term of
this Lease.

                       ARTICLE 6. IMPROVEMENTS AND REPAIRS

                                     Repairs

         Section 6.01: Tenant has examined and inspected and knows the condition
of the  Premises  and every part thereof and has received the same in good order
and repair and accepts the same in their  present  condition.  Tenant shall take
good care of the  Premises and they shall not be altered,  repaired,  or changed
without the written consent of Landlord.  Unless  otherwise  provided by written
agreement, all alterations,  improvements and changes that may be required shall
be done either by or under the direction of Landlord, but at the cost of Tenant,
and shall be the  property of  Landlord,  and shall  remain upon and be rendered
with the Premises,  excepting however that, at Landlord's option,  Tenant shall,
at its expense, when surrendering the Premises, remove from the Premises and the
building all partitions,  counters,  railing, etc., installed in the Premises by
or at the cost of Tenant.  All damage or injury done to the  Premises by Tenant,
or by any person who may be in or upon the Premises  with the consent of Tenant,
shall be paid for by Tenant.

                                 Mechanic's Lien

                                       79
<PAGE>

         Section 6.02:  The Tenant shall not suffer or permit any  mechanic's or
materialmen's  liens to be filed  against the fee of the real  property of which
the  Premises  form a part nor against the  Tenant's  leasehold  interest in the
Premises. Landlord shall have the right at all reasonable times to post and keep
posted on the Premises any notices which it deems  necessary for protection from
such liens. If any such liens are so filed,  landlord, at its election,  may pay
and satisfy the same and, in such event, the sums so paid by the Landlord,  with
interest  at the rate of ten  percent  (10%) per annum from the date of payment,
shall be deemed to be  additional  rent due and  payable  by the  Tenant at once
without notice or demand.

                     ARTICLE 7. DESTRUCTION AND CONDEMNATION
                                   Destruction

         Section  7.01:  If the  Premises or the  building  wherein the same are
situated  shall be destroyed by fire or other  cause,  or be so damaged  thereby
that they are untenantable and cannot be rendered  tenantable within ninety (90)
days from the date of such  destruction or damage,  this Lease may be terminated
by Landlord or Tenant by written  notice.  In case the damages or destruction be
not such as to  permit a  termination  of the  Lease as above  provided,  then a
proportionate  reduction shall be made in the rent herein reserved corresponding
to the time  during  which and to the portion of the  Premises  of which  Tenant
shall be deprived of possession. The provisions of Subdivision 2 of Section 1932
of the California Civil Code, and of Subdivision 4 of Section 1933 of that Code,
shall not apply to this  Lease,  and Tenant  hereby  waives the  benefit of such
provisions.

                                  Condemnation

Section  7.02:  If the  whole  or any  part of the  Premises  shall  be taken or
condemned b any competent  authority  under power of eminent domain for a public
or quasi-public use or purpose,  or if any adjacent  property or street shall be
so taken or  condemned,  or  reconfigured  or vacated by such  authority in such
manner as to require the use,  reconstruction  or  remodeling of any part of the
Premises,  or if Landlord shall grant a deed or other instrument in lieu of such
taking by  eminent  domain or  condemnation,  Landlord  shall have the option to
terminate  this Lease upon  ninety  (90) days  prior  written  notice to Tenant,
provided such notice is given not later than one hundred eighty (180) days after
the date of such taking, condemnation,  reconfiguration, vacation, deed or other
instrument.  Tenant shall have reciprocal termination rights if the whole or any
material  part of the  Premises  is  taken,  or if  access  to the  Premises  is
materially  impaired.  Landlord shall be entitled to receive the entire award or
payment in connection therewith, except that Tenant shall have the right to file
any  separate  claim  available  to Tenant for any taking of  Tenant's  personal
property  and  fixtures  belonging  to  Tenant  and  removable  by  Tenant  upon
expiration  of the term  hereof and for moving  expenses,  so long as such claim
does not  diminish the award  available  to Landlord,  and such claim is payable
separately  to  Tenant.  All rent  shall be  apportioned  as of the date of such
termination,  or the date of such taking,  whichever  shall first

                                       80
<PAGE>

occur.  If any part of the Premises shall be taken,  and this Lease shall not be
so terminated, the rent payable hereunder shall be proportionately abated.

                              ARTICLE 8. INDEMNITY
                            No Liability of Landlord

         Section 8.01:  Landlord shall not be liable to Tenant for any injury or
damage  that  may  result  to any  person  or  property  by or  from  any  cause
whatsoever, and without limiting the generality of the foregoing, whether caused
by water  leakage of any  character  from the room,  walls,  basement,  or other
portion of the Premises, or caused by gas, fire, oil, electricity,  or any cause
whatsoever,  in, on, or about the Premises or any part thereof,  except for such
injury or damage resulting from the negligence or willful misconduct of Landlord
or any of Landlord's agents, servants, or employees.

                                    Insurance

         Section 8.02: Tenant agrees to maintain in full force and effect at all
times during the term of this Lease or any renewal thereof, public liability and
property damage insurance  insuring both Tenant and Landlord in amounts not less
than FIVE  HUNDRED  THOUSAND  DOLLARS  ($500,000-00)  per person and ONE MILLION
DOLLARS ($1,000,000.00) per occurrence for injury to or death of persons, and in
the amount of not less than FIVE  HUNDRED  THOUSAND  DOLLARS  ($500,000.00)  for
injury to or loss of property.  Tenant shall also  provide  fire  insurance  and
glass insurance in amounts reasonably required by Landlord. Tenant shall furnish
to Landlord  copies of such policies or  certificates  issued  showing that said
policies  are in force  and  effect  and  providing  that at least ten (10) days
written notice will be provided to Landlord  before  termination or cancellation
of any insurance.

                           Indemnification of Landlord

         Section 8.03:  Tenant agrees to hold Landlord  harmless from and defend
Landlord against any and all claims or liability for any injury or damage to any
person or property whatsoever (1) occurring in, on, or about the Premises or any
part thereof; and (2) occurring in, on or about

any  facilities  (including  without  prejudice  to the  generality  of the term
"facilities",  stairways,  passageways,  or hallways, when such injury or damage
shall be  caused  in part or in whole by the act,  negligence  or fault  of,  or
omission of any duty with respect to the same by Tenant,  his agents,  servants,
or employees.)

                               ARTICLE 9. DEFAULT

                                       81
<PAGE>

                           Acts Constituting a Default

Section 9.01: Any and all of the following actions shall constitute a default of
this Lease:

                  (a)  Use of  the  Premises  for  any  purpose  other  than  as
authorized in this Lease; or

                  (b)  Default  in the  payment  of rent or any other sums owing
when due; or

                  (c) Abandonment or vacation of Tenant from the Premises; or

                  (d) Assignment of the Premises by Tenant,  either  voluntarily
or by operation of law,  whether by judgment,  executions,  death,  or any other
means, without the consent of Landlord; or

                  (e) The filing by Tenant or any other person of a voluntary or
involuntary  petition in bankruptcy or an arrangement by or against Tenant;  the
adjudication of Tenant as a bankrupt or insolvent; the appointment of a

receiver of the business or of the assets of Tenant, except a receiver appointed
at the instance or request of Landlord;  the general or any other  assignment by
Tenant for the benefit of his creditors; or

                  (f) A  default  in  the  performance  of  any  of  the  terms,
covenants, and conditions herein contained; or

                  (g) The  inability of Tenant to pay the rent herein  specified
or to perform any of the terms, covenants, or conditions herein by it to be kept
or performed.

                              Remedies Upon Default

         Section 9.02: In the event of a default of this Lease,  and in addition
to all other rights and remedies  Landlord may have at law  including the rights
specified in Section  1951.2 of the California  Civil Code,  Landlord shall have
the option to do any or all of the foregoing:

                               Reentry of Premises

                  (a) Immediately reenter and remove all persons and property in
a public  warehouse  or  elsewhere  at the cost of, and for the  account of, the
Tenant,  provided,  however,  notwithstanding  anything to the  contrary in this
Section 9.02 (a) or any other  provision of this Lease,  Landlord shall not have
the right to take possession of any of Tenant's  business records or the records
or personal property of any customer of Tenant located in

the Premises, and provided further, that any rights and remedies of

                                       82
<PAGE>

Landlord  hereunder  are  subject  to the right  and power of the  Office of the
Comptroller  of the Currency  and/or any other bank  regulatory  agency to enter
upon and assume  control of the Premises and of any  personal  property  located
therein.

                               Collection of Rent

                  (b) To collect by suit or otherwise  each  installment of rent
or other sum as it becomes due hereunder,  or to enforce,  by suit or otherwise,
any other term or provision  hereof on the part of Tenant required to be kept or
performed,  it being specifically agreed that all unpaid installments of rent or
other sums shall bear interest at the highest rate permitted by law from the due
date thereof until paid.

                              Termination of Lease

                  (c)  Terminate  this Lease,  in which event  Tenant  agrees to
immediately surrender the possession of the Premises, and to pay to Landlord, in
addition to any other remedy  Landlord may have, all damages  Landlord may incur
by reason of its default, including the cost of recovering the Premises.

                               Measure of Damages

                  (d) The damages Landlord may recover include:

                           (1)    The  worth at the time of award of the  unpaid
                                  rent  which  had  been  earned  at the time of
                                  termination of the Lease;

                           (2)    The  worth at the time of award of the  amount
                                  by which the unpaid rent which would have been
                                  earned  after  termination  of the Lease until
                                  the time of award exceeds the amount of rental
                                  loss  that  Tenant   proves  could  have  been
                                  reasonably avoided;

                           (3)    The  worth at the time of award of the  amount
                                  by which the  unpaid  rent for the  balance of
                                  the term after the time of award  exceeds  the
                                  amount of rental  loss  that  Tenant  provides
                                  could be reasonably avoided; and

                           (4)    Any  other  amount   necessary  to  compensate
                                  Landlord for all detriment  proximately caused
                                  by Tenant's failure to perform his obligations
                                  under this Lease.

                               Removal of Property

         Section 9.03: Tenant hereby irrevocably appoints landlord, as agent and
attorney-in-fact of Tenant, to enter upon the Premises,  in the event of default
by Tenant in the payment of any rent herein  reserved,  or in the performance of
any term,  covenant or  condition  herein  contained  to be kept or

                                       83
<PAGE>

performed by Tenant,  and to remove any and all furniture and personal  property
whatsoever situated upon the Premises, and to place such property in storage for
the account of and at the expense of Tenant. In the event that 'Tenant shall not
pay the cost of storing any such property after the property has been stored for
a period  of  ninety  (90)  days or more,  Landlord  may sell any or all of such
property, at places as Landlord in his sole discretion may deem proper,  without
notice to Tenant or any demand  upon  Tenant for the payment of any part of such
charges or the removal of any of such property,  and shall apply the proceeds of
such sale,  including reasonable  attorney's fees actually incurred;  second, to
the

payment of the costs of or charges for storing any such  property;  third to the
payment of any other sums of money  which may then or  thereafter  be due to the
Landlord from Tenant under any of the terms thereof; and fourth, the balance, if
any, to Tenant.

                                Waiver of Damages

         Section  9.04:  Tenant hereby waives all claims for damages that may be
caused by Landlord's reentering and taking possession of the

Premises or removing and storing furniture and property, as herein provided, and
will save Landlord harmless from loss, costs or damages occasioned thereby,  and
no such reentry shall be  considered or construed to be a forcible  entry as the
same is defined in the Code of Civil Procedure of the State of California.

                                Waiver of Breach

         Section 9.05:  Landlord's  failure to take  advantage of any default or
breach of  covenant  on the part of Tenant  shall not be, or be  construed  as a
waiver  thereof,  nor shall any custom or practice which may grow up between the
parties in the course of administering  this instrument be construed to waive or
lessen the right of  Landlord to insist  upon the  performance  by Tenant of any
term,  covenant or  condition  hereof,  or to exercise  any rights  given him on
account of any such default. a waiver of a particular breach, or default,  shall
not be  deemed  to be a waiver  of the same or any  other  subsequent  breach or
default. The acceptance of rent hereunder shall not be, or be construed to be, a
waiver of any term, covenant or condition of this Lease.

                               Cumulative Remedies

         Section  9.06:  The  foregoing   remedies  of  Landlord  shall  not  be
exclusive,  but shall be  cumulative  and in  addition  to all  remedies  now or
hereafter allowed by law or elsewhere provided.

                             Landlord Curing Default

                                       84
<PAGE>

         Section 9.07:  Upon ten (10) days prior written notice to the Tenant by
the Landlord,  it is agreed that the Landlord may cure any default by the Tenant
hereunder and, if necessary,  may enter upon the Premises for such purpose,  and
in such  event the cost  thereof to  Landlord  shall be deemed  additional  rent
payable by the Tenant, which shall become immediately due and payable.

                       ARTICLE 10. INSPECTION AND NOTICES
                                   Inspection)

         Section 10.01:  Subject to any applicable  regulations of the Office of
the Controller of the Currency or any other bank regulatory agency,  Tenant will
permit  Landlord  and its  agents  to enter  into and upon the  Premises  at all
reasonable  times for the purpose of inspecting  the same, or for the purpose of
protecting  owner's  reversions,  or to make  alterations  or  additions  to the
Premises  or to any other  portion of the  building  in which the  Premises  are
situated,  without  any  rebate of rent to Tenant for any loss of  occupancy  or
quiet enjoyment of the Premises,  or damage,  injury,  or inconvenience  thereby
occasioned,  and will permit  landlord at any time within ninety (90) days prior
to the expiration of this Lease to bring upon the Premises,  for the purposes of
inspection or display, prospective tenants thereof.

                                     Notices

         Section  10.02:  Any  notice,  demand  or  communication  under,  or in
connection with, this Lease may be served upon Landlord by personal service,  or
by mailing the same by registered mail in the United States Post Office, postage
prepaid,  and  directed to Landlord at 376-A Main  Street,  Salinas,  California
93901, and may likewise be served on Tenant by personal service or by so mailing
the same  addressed to Tenant at 517 Main  Street,  Salinas,  California  93901.
Either  Landlord or Tenant may change such address by notifying  the other party
in writing  as to such new  address as Tenant or  Landlord  may desire  used and
which address shall continue as the address until further written notice.

                         ARTICLE 11. GENERAL PROVISIONS
                                    Covenants

         Section  11.0l.:  It is mutually  agreed that the letting  hereunder is
made upon and subject to the terms, covenants,  and conditions of this Lease and
that Tenant covenants as a material part of the consideration for this Lease, to
keep and perform each and all of said terms,  covenants and conditions by him to
be kept or  performed,  and that this Lease is made upon the  condition  of such
performance.

                                       85
<PAGE>

Provisions  Deemed  Covenants and Conditions  Section 11.02:  The parties hereto
agree  that all the  provisions  hereof are to be  construed  as  covenants  and
conditions as though the words importing such covenants and conditions were used
in each instance and that all of the  provisions  hereof shall bind and inure to
the  benefit  of  the  parties  hereto  and  their   respective   heirs,   legal
representatives, successors and assigns.

                               Time of the Essence

         Section  11.03:  Time  is of the  essence  in the  performance  of each
provision of this Lease.

                               Cumulative Remedies

         Section 11.04:  The specified  remedies to which Landlord or Tenant may
resort  under the terms of this  Lease are  cumulative  and not  intended  to be
exclusive of any other remedies  afforded by law. The waiver of the  performance
of any  covenant,  term or  condition of this Lease by Landlord and Tenant shall
not be construed as a waiver of any subsequent breach of the same covenant, term
or condition.

                                 Attorney's Fees

         Section  11.05:  In the event that suit is brought for the  recovery of
any rent due  hereunder,  or for the  recovery  of  possession  of said  demised
Premises, or for the breach of any of the terms,  conditions or covenant of this
Lease, the prevailing party shall be entitled to receive  attorney's fees, costs
and necessary  disbursements,  in addition to any other relief to which it or he
may be entitled.

                              Interest on Money Due

         Section  11.06:  Any sum  accruing  to  Landlord  or  Tenant  under the
provisions of this Lease which shall not be paid when due shall bear interest at
the rate of ten percent (10%) per annum from the date written notice  specifying
such nonpayment is served upon the defaulting party until paid.

                                   Invalidity

         Section 11.07-. If any term, covenant,  condition, or provision of this
Lease  is held by a court  of  competent  jurisdiction  to be  invalid,  void or
unenforceable, the remainder of the provisions hereof shall remain in full force
and effect and shall in no way be affected, impaired, or invalidated thereby.

                                     Agency

         Section  11-08:  Nothing  contained  in this  Lease  shall be deemed or
construed  by  the  parties  hereto  or  by  any  third  person  to  create  the
relationship  of principal and agent or of partnership or of joint venture or of
any other association other than Landlord and Tenant.

                                       86
<PAGE>

                                   Extensions

         Section  11.09:  All references to the term of this Lease shall include
any extensions of such term.

                                    Captions)

         Section 11.10: The captions of articles of this Lease are for reference
only and are not to be construed in any way as a part of this Lease.

                          Binding Effect: Counterparts

         Section  11.1l.:  This Lease shall not be binding and in effect until a
counterpart  hereof has been  executed and  delivered by the parties each to the
other.

                                    Execution

         Section 11.12: The parties have executed this Lease at the place and on
the dates specified immediately above their respective signatures.

LANDLORD:                                   TENANT:

Executed at Salinas, Ca                     Executed at Salinas, Ca
            ---------------                             -----------
on  October 29, 1996                        on  November 20, 1996
    -----------------------                     -------------------


                                             Pacific Capital Bancorp

/s/ James L. Gattis                          /s/  Dennis A. DeCius
----------------------------                 ------------------------
James L. Gattis                              Dennis A. DeCius
                                             EVP and CFO


                                       87