<PAGE>

                              SIXTH AMENDMENT TO GATEWAY
                             PLAZA OFFICE BUILDING LEASE


     THIS SIXTH AMENDMENT to GATEWAY PLAZA Office Building lease ("Amendment")
is made as of the 11th day of May, 1998, by and between LACERA Gateway Property,
Inc., a California corporation ("Landlord") and PAULA INSURANCE COMPANY, a
California corporation ("Tenant").


                                       RECITALS

     A.   Landlord's predecessor-in-interest, PASADENA GATEWAY PLAZA, a
California limited partnership and Tenant's predecessor-in-interest PAN AMERICAN
UNDERWRITERS, INC., a Nevada corporation, entered into that certain Gateway
Plaza Office Lease (the "Original Lease") dated January 1, 1989, pursuant to
which Tenant's predecessor-in-interest leased from Landlord's
predecessor-in-interest approximately 28,862 rentable square feet (the "Original
Premises") on the second and third floors of that certain office building (the
"Building") located at 300 North Lake Avenue, Pasadena, California 91101.

     B.   Landlord's predecessor-in-interest and Tenant's
predecessor-in-interest entered into that certain Lease Amendment to Gateway
Plaza Office Lease, dated September 28, 1989 (the "First Amendment"), pursuant
to which Article 2.2(a) of the Original Lease was modified to reflect the
addition of 1,255 rentable square feet, located on the second floor of the
Building, to the Original Premises (such additional space plus the Original
Premises to be collectively referred to as the "Expanded Premises").

     C.   PAN AMERICAN UNDERWRITERS, INC's right, title and interest under the
Original Lease, as amended by the First Amendment, was assigned to Tenant
effective May 1, 1993, in accordance with the provisions set forth in the
attached Gateway Plaza Assignment and Assumption of Lease and Consent (the
"Assignment").

     D.   Landlord and Tenant entered into that certain Lease Amendment to 
Gateway Plaza Office Lease, dated April 27, 1993 (the "Second Amendment"), 
pursuant to which Article 28.24 was included to surrender an area on the 
second floor containing approximately 4,788 rentable square feet from the 
Revised Original Lease (the Expanded Premises less the reduced space to be 
collectively referred to as the "Revised Original Premises").

     E.   Landlord and Tenant entered into that certain Lease Amendment to
Gateway Plaza Office Lease, dated September 15, 1994 (the "Third Amendment"),
pursuant to which Article 1.6 was amended to incorporate an area on the second
floor, commonly referred to as Suite 202, containing approximately 1,405
rentable square feet to the Revised Original Premises (the Revised Original
Premises plus the additional space to be collectively referred to as the
"Revised Premises").

     F.   Landlord and Tenant entered into that certain Fourth Amendment to
Office Lease dated May 12, 1995 (the "Fourth Amendment") pursuant to which the
Basic Rent for the Premises was modified and certain other modifications were
made to the Lease.

     G.   Landlord and Tenant entered into that certain Fifth Amendment to
Gateway Plaza Office Building Lease (the "Fifth Amendment") pursuant to which
Tenant leased temporary expansion premises in the Building.

<PAGE>

     H.   The Original Lease, as amended by the First Amendment, Assignment,
Second Amendment, Third Amendment, Fourth Amendment, and Fifth Amendment, are
hereinafter collectively referred to as the "Lease".

     I.   Tenant desires, and Landlord has agreed, to lease certain temporary
expansion premises (the "Second Temporary Expansion Area") in the Building.


                                      AGREEMENT

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties agree as
follows:

     1.   DEFINED TERMS.  Each capitalized term used in this Amendment shall 
have the same meaning ascribed to such term in the Lease, except that the 
following terms shall have the following meanings:

          (a)  "Premises"  shall mean those spaces commonly known as Suite 200,
Suite 202, Suite 205, Suite 210 and Suite 250 on the second floor and Suite 300
on the third floor, as outlined in the floor plan attached as Exhibit "A" to the
Fourth Amendment.

          (b)  "Rentable Area of the Premises" shall be deemed to be Suite 200
which contains approximately 3,248 rentable square feet, Suite 202 which
contains approximately 1,405 rentable square feet, Suite 205 which contains
approximately 963 rentable square feet, Suite 210 which contains approximately
2,504 rentable square feet, Suite 250 which contains approximately 3,650
rentable square feet and Suite 300 which contains approximately 22,103 rentable
square feet, thus reflecting a total of approximately 33,873 rentable square
feet.

          (c)  "Tenant's Share" for the Premises shall be deemed to be 11.44%.

     2.   LEASE OF SECOND TEMPORARY EXPANSION AREA. Tenant hereby agrees to
lease from Landlord and Landlord agrees to lease to Tenant certain expansion
area in the Building commonly know as Suite 204 and comprised of approximately
1,121 rentable square feet (the "Second Temporary Expansion Area") as shown as
the cross-hatched area on Exhibit "A" attached hereto.

     3.   TEMPORARY EXPANSION AREA LEASE TERM. The lease term for the Second
Temporary Expansion Area (the "Second Temporary Term") shall commence May 15,
1998 (the "Second Commencement Date") if Tenant shall execute and deliver to
Landlord this Amendment no later than May 8, 1998.  The Second Commencement Date
shall be delayed one (1) day for each day past May 8, 1998 that Tenant shall not
deliver the Tenant-executed Amendment to Landlord.  The expiration date of the
Second Temporary Term (the "Second Expiration Date") shall be April 30, 1999,
unless sooner terminated pursuant to the terms of the Lease, as amended hereby.

     4.   BASIC RENT FOR SECOND TEMPORARY EXPANSION AREA. (a) The Basic Rent 
for the Second Temporary Expansion Area shall be $2,410.15 per month, 
pro-rated for any partial month's tenancy, (b) The first installment of Basic 
Rent for the Second Temporary Expansion Area shall be due and payable on the 
commencement date of the Second Temporary Term, with subsequent installments 
of Basic Rent applicable to the Second Temporary Expansion Area, due and 
payable on the first day of each month thereafter, (c) The Basic Rent for the 
Premises is not affected by this Amendment, (d) Tenant confirms that the 
Second Temporary Expansion Area will be used for general and administrative 
offices and for no other purpose whatsoever, and that no toxic or hazardous 
materials will be stored, kept or used in the Second Temporary Expansion 
Area, (e) "Tenant's Share" for the Second Temporary Expansion

<PAGE>

Area shall be 0.40%, (f) The Base Year for determining Tenant's Share of 
Operating Expenses and Taxes, as defined in the Original Lease, as amended,
shall be the Calendar Year 1998.

     5.   CONDITION OF THE SECOND TEMPORARY EXPANSION AREA; IMPROVEMENT
ALLOWANCE. No promises by Landlord to alter, remodel, improve, repair,
redecorate or clean the Second Temporary Expansion Area, or any part thereof,
have been made, and no representation respecting the condition of the Second
Temporary Expansion Area of the Building or with respect to the suitability or
fitness of either for any purpose, has been made to Tenant.  Execution of this
Amendment shall service as Tenant's acceptance of the Second Temporary Expansion
Area "As is, with all faults", and Tenant shall not be entitled to receive any
credit, allowance, or other concession from Landlord in respect to the Second
Temporary Expansion Area.

     6.   BROKERS.  Tenant represents that except for Heitman Properties Ltd.,
Tenant has not retained, contracted or dealt with any real estate broker, 
salesperson or finder in connection with this Amendment.  Tenant shall agree to
indemnify and hold Landlord and Heitman Properties Ltd. Harmless from and
against any and all liabilities and claims for commissions and fees arising out
of a breach of the foregoing representation.  Landlord shall be responsible for
the payment of any commissions or fees due to Heitman Properties ltd.

     7.   PARKING.  Tenant shall be granted parking rights for three (3) 
additional unreserved parking spaces in Landlord's parking structure at rates 
that may be posted or quoted to the public for the parking spaces so 
requested.

     8.   COUNTERPARTS.  This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.

     9.   AMENDMENTS.  Except as modified by this Amendment, the provisions of
the Lease shall remain in the full force and effect.

     10.  CONFLICT.  If any conflict exits between the terms or provisions
of the Lease and the terms or provisions of this Amendment, the terms and 
provisions of this Amendment shall govern and control.

     11.  SUBMISSION OF INSTRUMENT.  The submission of this Amendment by 
Landlord to Tenant or its broker or other agent does not constitute an offer 
to Tenant to lease the Second Temporary Expansion Area.  This Amendment shall 
have no force and effect until it is executed and delivered by Tenant to 
Landlord and executed by Landlord; provided, however, that upon execution of 
this Amendent by Tenant and delivery to Landlord, such execution and delivery 
by Tenant shall, in consideration of the time and expense incurred by 
Landlord in reviewing the Amendment and proposed use of the Second Temporary 
Expansion Area, constitute an offer by Tenant to lease the Second Temporary 
Expansion Area upon the terms and conditions set forth herein (which offer to 
lease shall be irrevocable for twenty (20) business days following the date 
of delivery).

     12.  EXCULPATION OF LANDLORD AND HEITMAN.  Notwithstanding anything to the
contrary contained in this Amendment or in any riders or addenda hereto attached
(collectively the "Lease Document"), it is expressly understood and agreed by
and between the parties that:

     (a) The recourse of Tenant or its successors or assigns against Landlord 
with respect to the alleged breach by or on the part of landlord of any 
representation, warranty, covenant, undertaking or agreement contained in any 
of the Lease Documents (collectively, "Landlord's

<PAGE>

Lease Undertakings") shall extend only to Landlord's interest in the real estate
of which the premises are demised under the Lease Documents are a part
("Landlord's Real Estate") and not to any other assets of Landlord or its
constituent partners;

     (b) Neither Heitman Capital Management Corporation nor Heitman 
Properties Ltd., nor any of their respective directors, officers, employees 
or agents shall have any personal liability whatsoever with respect to any 
breach by Landlord of any of Landlord's Lease Undertakings; and

     (c) Except to the extent of Landlord's interest in Landlord's Real 
Estate, no personal liability or personal responsibility of any sort with 
respect to any of Landlord's Lease Undertakings is assumed by, or shall at any 
time be asserted or enforceable against, Landlord, Heitman Capital Management 
Corporation or Heitman Properties Ltd., or against any of their respective 
directors, officers, shareholders, employees, agents constituent partners, 
beneficiaries, trustees or representatives.

     IN WITNESS WHEREOF, the parties have executed this Sixth Amendment to
Gateway Plaza Office Building Lease as of the day and year first written.


LANDLORD:
LACERA Gateway Property, Inc.,
a California corporation

By:  HEITMAN CAPITAL MANAGEMENT CORPORATION,
     an Illinois corporation, its agent

     By:  /s/ [ILLEGIBLE]
        -----------------------

     Its: VICE PRESIDENT
         ----------------------

TENANT:
PAULA INSURANCE COMPANY,
a California corporation

By:  /s/ [ILLEGIBLE]
   -------------------------

Its: Chief Financial Officer
    ------------------------


By:  /s/ Bradley K. Serwin
   -------------------------

Its: Secretary
    ------------------------


<PAGE>


                          SEVENTH AMENDMENT TO GATEWAY
                           PLAZA OFFICE BUILDING LEASE


     THIS SEVENTH AMENDMENT to GATEWAY PLAZA Office Building Lease 
("Amendment") is made as of the 17th day of September, 1998, by and between 
LACERA Gateway Property, Inc., a California corporation ("Landlord") and 
PAULA INSURANCE COMPANY, a California corporation ("Tenant").


                                  RECITALS

    A.   Landlord's predecessor-in-interest, PASADENA GATEWAY PLAZA, a 
California limited partnership and Tenant's predecessor-in-interest PAN 
AMERICAN UNDERWRITERS, INC., a Nevada corporation, entered into that certain 
Gateway Plaza Office Lease (the "Original Lease") dated January 1, 1989, 
pursuant to which Tenant's predecessor-in-interest leased from Landlord's 
predecessor-in-interest approximately 28,862 rentable square feet (the 
"Original Premises") on the second and third floors of that certain office 
building (the "Building") located at 300 North Lake Avenue, Pasadena, 
California 91101.

    B.   Landlord's predecessor-in-interest and Tenant's 
predecessor-in-interest entered into that certain Lease Amendment to Gateway 
Plaza Office Lease, dated September 28, 1989 (the "First Amendment"), 
pursuant to which Article 2.2(a) of the Original Lease was modified to 
reflect the addition of 1,255 rentable square feet, located on the second 
floor of the Building, to the Original Premises.

    C.   PAN AMERICAN UNDERWRITERS, INC's right, title and interest under the 
Original Lease, as amended by the First Amendment, was assigned to Tenant 
effective May 1, 1993, in accordance with the provisions set forth in that 
certain Gateway Plaza Assignment and Assumption of Lease and Consent (the 
"Assignment").

    D.   Landlord and Tenant entered into that certain Lease Amendment to 
Gateway Plaza Office Lease, dated April 27, 1993 (the "Second Amendment"), 
pursuant to which Article 28.24 was included to surrender an area on the 
second floor, containing approximately 4,766 rentable square feet, from the 
Original Lease, as amended.

    E.   Landlord and Tenant entered into that certain Lease Amendment to 
Gateway Plaza Office Lease, dated September 16, 1994 (the "Third Amendment"), 
pursuant to which Article 1.6 was amended to incorporate into the Original 
Lease, as amended, an area on the second floor, commonly referred to as Suite 
202, containing approximately 1,405 rentable square feet.

    F.   Landlord and Tenant entered into that certain Fourth Amendment to 
Office Lease dated May 12, 1995 (the "Fourth Amendment") pursuant to which 
the Basic Rent in the Original Lease, as amended, was modified, and certain 
other modifications were made to the Original Lease, as amended.

    G.   Landlord and Tenant entered into that certain Fifth Amendment to 
Gateway Plaza Office Building Lease (the "Fifth Amendment") pursuant to which 
Tenant leased temporary expansion premises in the Building.


                                   Page 1 of 5


<PAGE>



    H.   Landlord and Tenant entered into that certain Sixth Amendment to 
Gateway Plaza Office Building Lease (the "Sixth Amendment") pursuant to which 
Tenant leased temporary expansion premises (the "Second Temporary Expansion 
Area") in the Building.

    I.   The Original Lease, as amended by the First Amendment, Assignment, 
Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment and 
Sixth Amendment is hereinafter collectively referred to as the "Lease".

    J.   Tenant desires, and Landlord has agreed, to (i) lease certain 
temporary expansion premises (the "Third Temporary Expansion Area") in the 
Building; (ii) extend the term of the Lease an additional 12 months (the 
"Twelve Month Extension Of Lease Term"); and (iii) adjust the Basic Rent 
provision of the Lease (the "Basic Rent Adjustment").


                                   AGREEMENT

    NOW, THEREFORE, for good and valuable consideration, the receipt and 
sufficiency of which are hereby acknowledged by the parties, the parties 
agree as follows:

    1.   LEASE OF THIRD TEMPORARY EXPANSION AREA. Tenant hereby agrees to 
lease from Landlord and Landlord agrees to lease to Tenant certain expansion 
area in the Building commonly known as Suite 206 and comprised of 
approximately 1,706 rentable square feet (the "Third Temporary Expansion 
Area") as shown as the cross-hatched area on Exhibit "A" attached hereto; 
provided however, if Tenant does not execute and deliver to Landlord this 
Amendment by September 14, 1998, this Amendment shall be null and void and 
shall have no further force and effect.

    2.   DEFINED TERMS. Each capitalized term used in this Amendment shall 
have the same meaning ascribed to such term in the Lease, except that the 
following terms shall have the following meanings:

         (a)  "Main Premises" shall mean the Premises less the Third 
Temporary Expansion Area.

         (b)  "Premises" shall mean those spaces commonly known as Suite 200, 
Suite 202, Suite 204, Suite 205, Suite 206, Suite 210 and Suite 250 on the 
second floor and Suite 300 on the third floor, as outlined in the floor plans 
attached as exhibit "A" and exhibit "A-1".

         (c)  "Rentable Area of the Premises" shall be deemed to be: Suite 200
which contains approximately 3,248 rentable square feet, Suite 202 which 
contains approximately 1,405 rentable square feet, Suite 204 which contains 
approximately 1,121 rentable square feet, Suite 205 which contains 
approximately 963 rentable square feet, Suite 206 which contains 
approximately 1,706 rentable square feet, Suite 210 which contains 
approximately 2,504 rentable square feet, Suite 250 which contains 
approximately 3,650 rentable square feet and Suite 300 which contains 
approximately 22,103 rentable square feet, thus reflecting a total of 
approximately 36,700 rentable square feet.

         (d)  "Tenant's Share" for the Main Premises shall be deemed to be 
11.84%.


                                   Page 2 of 5




<PAGE>


    3.   TEMPORARY EXPANSION AREA LEASE TERM. The lease term for the Third 
Temporary Expansion Area (the "Third Temporary Term") shall commence 
September 15, 1998 (the "Third Commencement Date") and shall expire on April 
30, 1999 (the "Third Temporary Term Expiration Date"), unless sooner 
terminated pursuant to the terms of the Lease, as amended hereby.

    4.   BASIC RENT AND OTHER CHARGES FOR THE THIRD TEMPORARY EXPANSION 
AREA. (a) The Basic Rent for the Third Temporary Expansion Area shall be 
$3,667.90 per month, pro-rated for any partial month's tenancy. (b) The first 
installment of Basic Rent for the Third Temporary Expansion Area shall be due 
and payable on or before the Third Commencement Date, with subsequent monthly 
installments of Basic Rent for the Third Temporary Expansion Area due and 
payable on or before the first day of each month thereafter. (c) The Basic 
Rent for the Main Premises shall not be affected by the addition of the Third 
Temporary Expansion Area. (d) "Tenant's Share" for the Third Temporary 
Expansion Area shall be 0.60%. (e) The Base Year for the Third Temporary 
Expansion Area for determining Tenant's Share of Operating Expenses and Taxes 
(as defined in the Original Lease, as amended) for the Third Temporary 
Expansion Area shall be the Calendar Year 1998.

    5.   USE.   Tenant confirms that the Third Temporary Expansion Area will 
be used for general and administrative offices and for no other purpose 
whatsoever, and that no toxic or hazardous materials will be stored, kept or 
used in the Third Temporary Expansion Area.

    6.   CONDITION OF THE THIRD TEMPORARY EXPANSION AREA; IMPROVEMENT 
ALLOWANCE. No promises by Landlord to alter, remodel, improve, repair, 
redecorate or clean the Third Temporary Expansion Area, or any part thereof, 
have been made, and no representation or warranty respecting the condition of 
the Third Temporary Expansion Area or Building, or with respect to the 
suitability or fitness of either for any purpose, has been made to Tenant.
Execution of this Amendment shall serve as Tenant's acceptance of the Third 
Temporary Expansion Area "As Is, with all faults", and Tenant shall not be 
entitled to receive any credit, allowance, or other concession from Landlord 
in respect to the Third Temporary Expansion Area.

    7.   TWELVE MONTH EXTENSION OF LEASE TERM. Article 1.5 of the Lease shall 
be amended as follows: Effective May 1, 1999 the phrase "Lease Term" shall 
mean the term of this Lease, with respect to the Premises (including the 
Third Temporary Expansion Area) which shall be a period of twelve months, 
commencing on May 1, 1999 unless the Lease Term is terminated earlier 
pursuant to any of the provisions of this Lease or pursuant to law.

    8.   BASIC RENT ADJUSTMENT. Effective May 1, 1999 Article 1.6 of the 
Lease shall be deleted in its entirety and replaced with the following: 
Commencing May 1, 1999 through and including April 30, 2000 the Basic Rent 
for the Premises (including the Third Temporary Expansion Area) shall be 
Seventy-eight thousand nine hundred and five dollars ($78,905.00), per month.

    9.   BROKERS. Tenant represents that except for Heitman Properties Ltd 
and CB Richard Ellis, Tenant has not retained, contracted or dealt with any 
real estate broker, salesperson or finder in connection with this Amendment. 
Tenant shall agree to indemnify and hold Landlord and Heitman Properties Ltd. 
harmless from and against any and all liabilities and claims for commissions 
and fees arising out of a breach of the foregoing representation. Landlord 
shall be 


                                   Page 3 of 5


<PAGE>


responsible for the payment of any commissions or fees due to Heitman 
Properties Ltd. and CB Richard Ellis.

    10.  PARKING. Tenant shall be granted parking rights for four (4) 
additional unreserved parking spaces in Landlord's parking structure at rates 
that may be posted or quoted to the public from time to time to be rented at 
Tenants option.

    11.  COUNTERPARTS. This Amendment may be executed in any number of 
counterparts, each of which shall be an original, but all of which shall 
constitute one and the same instrument.

    12.  AMENDMENTS. Except as modified by this Amendment, the provisions of 
the Lease shall remain in full force and effect.

    13.  CONFLICT. If any conflict exists between the terms or provisions of 
the Lease and the terms or provisions of this Amendment, the terms and 
provisions of this Amendment shall govern and control.

    14.  SUBMISSION OF INSTRUMENT. The submission of this Amendment by 
Landlord to Tenant or its broker or other agent does not constitute an offer 
to Tenant to lease the Third Temporary Expansion Area. This Amendment shall 
have no force and effect until it is executed and delivered by Tenant to 
Landlord and executed by Landlord; provided, however, that upon execution of 
this Amendment by Tenant and delivery to Landlord, such execution and 
delivery by Tenant shall, in consideration of the time and expense incurred 
by Landlord in reviewing the Amendment and proposed use of the Third 
Temporary Expansion Area, constitute an offer by Tenant to lease the Third 
Temporary Expansion Area upon the terms and conditions set forth herein 
(which offer to lease shall be irrevocable for twenty (20) business days 
following the date of delivery).

    15.  EXCULPATION OF LANDLORD AND HEITMAN. Notwithstanding anything to the 
contrary contained in the Lease, this Amendment or in any riders or addenda 
attached thereto (collectively the "Amended Lease Documents"), it is 
expressly understood and agreed by and between the parties that:

    (a) The recourse of Tenant or its successors or assigns against Landlord 
with respect to the alleged breach by or on the part of Landlord of any 
representation, warranty, covenant, undertaking or agreement contained in any 
of the Amended Lease Documents (collectively, "Landlord's Lease 
Undertakings") shall extend only to Landlord's interest in the real estate of 
which the Premises are a part ("Landlord's Real Estate") and not to any other 
assets of Landlord or its constituent partners;

    (b) Neither Heitman Properties Ltd., nor any of their respective 
directors, officers, employees or agents shall have any personal liability 
whatsoever with respect to any breach by Landlord of any of Landlord's Lease 
Undertakings; and

    (c) Except to the extent of Landlord's interest in Landlord's Real 
Estate, no personal liability or personal responsibility of any sort with 
respect to any of Landlord's Lease Undertakings is assumed by, or shall at any 
time be asserted or enforceable against, Landlord, or Heitman Properties 
Ltd., or against any of their respective directors, officers, shareholders, 
employees, agents constituent partners, beneficiaries, trustees or 
representatives.


                                   Page 4 of 5


<PAGE>


    IN WITNESS WHEREOF, the parties have executed this Seventh Amendment to 
Gateway Plaza Office Building Lease as of the day and year first written.



LANDLORD:                                 TENANT:
LACERA Gateway Property, Inc.,            PAULA INSURANCE COMPANY,
a California corporation                  a California corporation


By: /s/ David L. Muir                     By: /s/ [ILLEGIBLE]
    -------------------------                 --------------------------
Its: DAVID L. MUIR                        Its: Sr. V.P./C.F.O.
     VICE PRESIDENT                           --------------------------
     & GENERAL COUNSEL                    By: /s/ Bradley K. Serwin
    -------------------------                 --------------------------
                                          Its: Sr. V.P.
                                              --------------------------



                                   Page 5 of 5