<PAGE>   1

                                                                   EXHIBIT 10.20



                                      LEASE

                                     BETWEEN

    FRANKLIN STREET PROPERTIES, LLC, a California limited liability company,

                                   as Landlord

                                       and

               CENTRAL COAST BANK CORP., a California corporation,

                                    as Tenant

                               Marina, California


                                 April 16, 1998





                                       28
<PAGE>   2

                                      LEASE

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S>                                                                              <C>
ARTICLE 1 -   BASIC LEASE PROVISIONS .......................................      1
ARTICLE 2 -   PREMISES .....................................................      1
ARTICLE 3 -   TERM..........................................................      2
ARTICLE 4 -   POSSESSION ...................................................      3
ARTICLE 5 -   TENANT'S CONSTRUCTION.........................................      3
ARTICLE 6 -   RENTAL .......................................................      3
ARTICLE 7 -   INTENTIONALLY DELETED ........................................      4
ARTICLE 8 -   TAXES ........................................................      4
ARTICLE 9 -   UTILITIES ....................................................      5
ARTICLE 10 -  TENANT'S CONDUCT OF BUSINESS .................................      5
ARTICLE 11 -  MAINTENANCE, REPAIRS AND ALTERATIONS .........................      6
ARTICLE 12 -  COMMON AREA...................................................      7
ARTICLE 13 -  ASSIGNMENT AND SUBLETTING ....................................      8
ARTICLE 14 -  INSURANCE ....................................................      9
ARTICLE 15 -  DAMAGE .......................................................     11
ARTICLE 16 -  EMINENT DOMAIN................................................     12
ARTICLE 17 -  DEFAULTS BY TENANT ...........................................     12
ARTICLE 18 -  DEFAULTS BY LANDLORD .........................................     13
ARTICLE 19 -  SUBORDINATION, ATTORNMENT AND TENANT'S CERTIFICATE ...........     13
ARTICLE 20 -  QUIET ENJOYMENT...............................................     14
ARTICLE 21 -  TITLE OF LANDLORD.............................................     14
ARTICLE 22 -  MISCELLANEOUS.................................................     14
</TABLE>

       EXHIBIT A - SITE PLAN DEPICTING PREMISES

       EXHIBIT B - RULES AND REGULATIONS

       EXHIBIT C - CONSTRUCTION PROVISIONS



                                       29
<PAGE>   3

LEASE

          THIS LEASE (this "Lease") is made and entered into as of the date set
forth in Section 1.1 by and between Landlord and Tenant.

ARTICLE 1 - BASIC LEASE PROVISIONS
         1.1 Effective Date: March, 1998
         1.2 Landlord: FRANKLIN STREET PROPERTIES, LLC, a California limited 
             liability company.
         1.3 Tenant: CENTRAL COAST BANK CORP., a California corporation
         1.4 Tenant's Trade Name: Cypress Bank. (Article 10)

          1.5 Project: Project on Reservation Road, Marina, California,
including site of current Cypress Bank building at 228 Reservation Road, to be
named "Cypress Bank Plaza", subject to approval of applicable governmental
authorities.

          1.6 Premises: Approximately as depicted on the site plan attached
hereto as Exhibit A, containing approximately three thousand (3,000) square feet
of Floor Area. (Article 2)

          1.7 Term: Six (60) months, with three (3) Option Terms of sixty (60)
months each. (Article 3)

          1.8 Minimum Annual Rent: Twelve Dollars ($12.00) per square foot of
Floor Area in the Premises, subject to adjustment on each yearly anniversary of
the Commencement Date occurring during the Term (as extended by the Option
Term(s), as applicable, as set forth in Section 6.1 below. (Article 6)

          1.9 Use of Premises: The Premises shall be used for the operation of
retail branch bank and operations incidental thereto, and for no other use or
purpose. (Article 10)

          1.10 Security Deposit: None.

          1.11 Broker(s): None. (Article 22)

          1.12 Notices: (Article 22)

To Landlord:      To Tenant:

Franklin Street Properties, LLC              Central Coast Bank Corp.
204 Franklin Street                          1658 Fremont Boulevard
Redwood City, California 94063               Seaside, California 93955
Attn: Matthew H. Howarth                     Attn: John McCarthy

          This Article 1 is intended to supplement and/or summarize the
provisions set forth in the balance of this Lease. If there is any conflict
between any provisions contained in this Article I and the balance of this
Lease, the balance of this Lease shall control.

ARTICLE 2 - PREMISES

          2.1 Premises. Landlord leases to Tenant and Tenant leases from
Landlord, for the "Term" (as defined in Article 3) and upon the covenants and
conditions set forth in this Lease, the premises described in Section 1.6
("Premises").

          2.2 Reservation. Landlord reserves the right to use the exterior
walls, floor, roof and plenum in, above and below the Premises for the repair,
maintenance, use and replacement of pipes, ducts, utility lines and systems and
structural elements serving the Project and for such other purposes as Landlord
deems necessary. In exercising its rights reserved herein, Landlord shall not
unreasonably interfere with the operation of Tenant's business on the Premises.



                                       30
<PAGE>   4

          2.3 Floor Area. The term "Floor Area", as used in this Lease, shall
mean all areas designated by Landlord for the exclusive use of a tenant (subject
to the Landlord's reservation set forth in Section 2.2 above) measured from the
exterior surface of exterior walls (and extensions, in the case of openings) and
from the center of interior demising walls, and shall include, but not be
limited to, restrooms, mezzanines, warehouse or storage areas, clerical or
office areas and employee areas. The Premises contain approximately the number
of square feet of Floor Area specified in Section 1.6. Landlord and Tenant shall
each have the right during the first ninety (90) days following the Commencement
Date to cause the Floor Area of the Premises to be remeasured by a licensed
architect. If an error is found in the measurement of the Floor Area, the
measuring party shall cause its architect to certify the correct measurement to
the other party for approval, which approval shall not be unreasonably withheld
or delayed. In the event that the non-measuring party within ten (10) days of
its receipt of such certification notifies the measuring party of its objection
to the measuring party's determination of the Floor Area, then Landlord and
Tenant and their respective architects shall meet within ten (10) days of such
notification of objection and resolve any disputes and come to agreement on the
actual Floor Area of the Premises in a manner consistent with the definition and
manner of determination of the Floor Area of the Premises contained in this
Section 2.3. In the event that the non-measuring party fails to so notify the
measuring party of its objection to such certification within such time period,
then such determination of the Floor Area as so certified shall be deemed to be
correct. Upon determination of the actual Floor Area of the Premises in the
manner set forth herein, the Minimum Annual Rent and all other charges payable
by Tenant under this Lease which are determined with reference to the Floor Area
of the Premises shall be adjusted accordingly.

          ARTICLE 3 - TERM

          3.1 Term. This Lease shall be effective from and after the Effective
Date specified in Section 1.1. The term of this Lease ("Term") shall commence on
the date (the "Commencement Date") of the earlier of: (a) the date Tenant
initially opens for business to the public in the Premises, or (b) sixty (60)
days following the "Substantial Completion of the Premises" (as defined in
Section 4.1 below). The Term shall continue, unless sooner terminated in
accordance with the provisions of this Lease, for the number of months specified
in Section 1.7 from the Commencement Date (except that if the Commencement Date
is not the first day of a calendar month, then the Term shall be measured from
the first day of the calendar month following the Commencement Date).

          3.2 Extension Options. Tenant shall have the option to extend the Term
of this Lease for three (3) additional periods of sixty (60) months each as set
forth in Article 1 of this Lease (each such period being referred to herein as
an "Option Term") only by giving Landlord written notice by the later to occur
of (A) fifteen (15) days following Tenant's receipt of written notice from
Landlord reminding Tenant of the expiration date for Tenant's , ~ exercise of
such option (which notice from Landlord shall not be delivered earlier than
fifteen (15) months prior to the expiration of the then applicable Term), or (B)
at least one (1) year before the expiration of the then applicable Term. All of
the terms, covenants, conditions, provisions and agreements applicable to the
initial Term shall be applicable to the Option Terms, including, without
limitation, adjustment of the Minimum Annual Rent on each anniversary of the
Commencement Date occurring during each Option Term. Time is of the essence with
respect to Tenant's exercise of the options to extend the Term of this Lease
provided herein. The option to extend the Term pursuant hereto by the Option
Terms shall not be personal to the original Tenant signatory to this Lease and
shall be exercisable by or for the benefit of any assignee or subtenant of
Tenant (including, without limitation, an assignee in connection with a
"Permitted Transfer" pursuant to Section 13.4 below); provided, however, that in
the event of Tenant's exercise of an option to extend pursuant hereto following
any assignment of this Lease (other than to an assignee in connection with a
Permitted Transfer pursuant to Section 13.4 below) or while any sublease remains
in effect with respect to the Premises, Minimum Annual Rent shall be increased
as of the commencement of the applicable Option Term to equal the greater of (1)
the amount which would otherwise then be due based upon the adjustment provided
for in Section 6.1 below, or (2) the "Fair Market Rent" (as hereinafter defined)
for the Premises as of the commencement of such Option Term, and Minimum Annual
Rent as so adjusted upon the commencement of such Option Term shall be further
adjusted on each anniversary of the Commencement Date occurring during such
Option Term in accordance with Section 6.1 below. All references in this Lease
to the "Term" shall be deemed to mean the initial Term as extended by the Option
Terms, as applicable. If applicable pursuant to the foregoing, the Fair Market
Rent for each Option Term shall be determined as follows:



                                       31
<PAGE>   5

               (a) For purposes of this Lease, the "Fair Market Rent" shall mean
the prevailing annual fair market rental rate as of the commencement of each
Option Term for tenants of premises comparable to the Premises in comparable
retail centers in the vicinity of the Premises for periods comparable to the
Option Term. Following Tenant's exercise of its option to extend the Term by the
applicable Option Term, Landlord and Tenant shall meet and endeavor in good
faith to agree upon the Fair Market Rent. If Landlord and Tenant fail to reach
agreement by the date which is six (6) months prior to the commencement of the
applicable Option Term, then, within twenty (20) days thereafter, each party, at
its own cost and by giving notice to the other party, shall appoint a licensed
commercial real estate agent with at least seven (7) years full-time experience
as a real estate agent active in leasing of retail projects in the area of the
Premises to appraise and set the Fair Market Rent for the Option Term. If a
party does not appoint an agent within twenty (20) days after the other party
has given notice of the name of its agent, the single agent appointed shall be
the sole agent and shall set the Fair Market Rent for the Option Term. If there
are two (2) agents appointed by the parties as stated above, the agents shall
meet within ten (10) days after the second agent has been appointed and attempt
to set Fair Market Rent for the Option Term. If the two (2) agents are unable to
agree on such Fair Market Rent within thirty (30) days after the second agent
has been appointed, they shall, within twenty (20) days after the last day the
two (2) agents were to have set such Fair Market Rent, attempt to select a third
agent who shall be a licensed commercial real estate agent meeting the
qualifications stated above. If the two (2) agents are unable to agree on the
third agent within such twenty (20) day period, either Landlord or Tenant may
request the Chairman of the Program Committee for the Northern California
Chapter of the International Council of Shopping Centers (ICSC) to select a
third agent meeting the qualifications stated in this subsection. Each of the
parties shall bear one-half (1/2) of the cost of appointing the third agent and
of paying the third agent's fee. No agent shall be employed by, or otherwise be
engaged in business with or affiliated with, Landlord or Tenant, except as an
independent contractor.

               (b) Within thirty (30) days after the selection of the third
agent, a majority of the agents shall set the Fair Market Rent for the Option
Term. If a majority of the agents are unable to set such Fair Market Rent within
the stipulated period of time, each agent shall make a separate determination of
such Fair Market Rent and the three (3) appraisals shall be added together and
the total shall be divided by three (3). The resulting quotient shall be the
Fair Market Rent for the Premises for the Option Term. However, if the low
appraisal is more than ten percent (10%) lower than the middle appraisal, the
low appraisal shall be disregarded, and if the high appraisal is more than ten
percent (10%) higher than the middle appraisal, the high appraisal shall be
disregarded. If only one (1) appraisal is disregarded, the remaining two (2)
appraisals shall be added together and their total divided by two (2), and the
resulting quotient shall be Fair Market Rent for the Option Term. If both the
lowest appraisal and the highest appraisal are disregarded as stated in this
subsection, the middle appraisal shall be the Fair Market Rent for the Option
Term.

               (c) Each agent shall hear, receive and consider such information
as Landlord and Tenant each care to present regarding the determination of Fair
Market Rent for the Option Term and each agent shall have access to the
information used by each other agent. Upon determination of the Fair Market Rent
for the Option Term, the agents shall immediately notify the parties hereto in
writing of such determination by certified mail, return receipt requested.


                                       32
<PAGE>   6

ARTICLE 4 - POSSESSION

          4.1 Substantial Completion. The term "Substantial Completion of the
Premises", as used in this Lease, shall mean the date Landlord notifies Tenant
in writing that "Landlord's Work" (as specified in Exhibit C) is substantially
complete with the exception of customary punch-list items as do not materially
interfere with Tenant's performance of the Tenant's Work (which punch-list items
shall be promptly corrected by Landlord).

          4.2 Delivery of Possession. Tenant shall accept possession of the
Premises from. Landlord upon Substantial Completion of the Premises. Tenant
shall deliver each of the following to Landlord prior to Substantial Completion
of the Premises: (a) executed copies of policies of insurance or certificates
thereof (as required under Article 14); (b) "Final Plans" (as defined in Exhibit
C); and (c) a copy of Tenant's building permit, if issued by such date.

          4.3 Termination of Existing Lease. The parties hereby acknowledge that
Tenant is presently in occupancy of an existing building at 228 Reservation Road
in a separate portion of the Project (the "Existing Premises") pursuant to that
certain Lease (the "Existing Lease") dated November 1, 1993 by and between The
Six-Pac, A Joint Venture, as landlord, and Cypress Coast Bank, as tenant. Tenant
may continue in occupancy under the Existing Lease so long as the same is
permitted by applicable governmental authorities during the performance of
Landlord's Work. In addition, the parties hereby agree that, in consideration of
Tenant's agreement to perform its obligations under this Lease (including,
without limitation, Tenant's obligations for performance of Tenant's Work
pursuant to Exhibit C attached hereto), Tenant shall be entitled to a
conditional abatement of its obligation for payment of base rent under the
Existing Lease (provided that nothing contained herein shall entitle Tenant to
any abatement of Tenant's obligations under the Existing Lease for payment of
additional rent, amounts with respect to taxes, insurance, utilities,
maintenance, other reimbursable costs or other charges, as applicable under the
Existing Lease), accruing with respect to the period following Landlord's
acquisition of title to the Project until the the Commencement Date not to
exceed a maximum aggregate abatement of Fifty Thousand Dollars ($50,000.00)
(after which maximum aggregate abatement, if applicable, Tenant shall resume
payment of base rent under the Existing Lease); provided that if this Lease is
hereafter terminated due to Tenant's default hereunder, then, in addition to all
other rights and remedies of Landlord as set forth in this Lease, the entire
amount of rent so conditionally abated shall be immediately due and payable from
Tenant to Landlord. Tenant shall have sixty (60) days following the Substantial
Completion of the Premises within which to complete its relocation from the
Existing Premises to the Premises (including, without limitation, the removal of
all items of Tenant's personal property from the Existing Premises) and within
which to vacate and surrender the Existing Premises. Upon the expiration of such
sixty (60) day period, the Existing Lease shall terminate and neither party
thereto shall have any further liability or obligation thereunder (except for
liabilities and obligations accruing under the Existing Lease through to such
termination date and liabilities and obligations under the Existing Lease which
survive the early termination of such Existing Lease). If Tenant fails to so
vacate and surrender the Existing Premises on or before the expiration of such
sixty (60) day period, Tenant's continued occupancy of such Existing Premises
shall constitute a material default by Tenant under the Existing Lease and this
Lease which shall not be subject to any period for cure. Further, Tenant agrees,
as a material consideration to Landlord's agreement to enter into this Lease,
that notwithstanding anything to the contrary contained in the Existing Lease,
that any such occupancy of the Existing Premises following the expiration of
such sixty (60) day period shall constitute a holding over creating a tenancy at
sufferance, and during the period of such holding over, Tenant shall pay as base
rent to Landlord under the Existing Lease an amount equal to five hundred
percent (500%) of the base rent specified in the Existing Lease as being in
effect under the Existing Lease prior to the early termination of the Existing
Lease (meaning such base rent as would have been due under the Existing Lease
prior to such early termination but for the conditional abatement provided for
herein).

ARTICLE 5 - TENANT'S CONSTRUCTION

          Tenant shall commence construction of Tenant's Work upon Substantial
Completion of the Premises and delivery of possession of the Premises to Tenant,
and shall diligently prosecute same to completion. Tenant shall deliver to
Landlord a copy of the certificate of occupancy for the Premises issued by the
appropriate governmental agency upon completion of Tenant's Work.

ARTICLE 6 - RENTAL



                                       34
<PAGE>   7

          6.1 Minimum Annual Rent. Tenant shall pay as "Minimum Annual Rent" for
the Premises the sum of Twelve Dollars ($12.00) per square foot of Floor Area
within the Premises, provided that the Minimum Annual Rent shall be adjusted on
each yearly anniversary of the Commencement Date occurring during the Term, as
the Term may be extended by the Option Term(s) pursuant hereto, if applicable
(each such yearly anniversary date referred to herein as an "Adjustment Date"),
to equal the product obtained by multiplying the Minimum Annual Rent in effect
immediately prior to the applicable Adjustment Date by a fraction, the
numerator of which is the "Index" (as hereinafter defined) for the calendar
month which is three (3) full calendar months prior to such Adjustment Date and
the denominator of which is the Index which is fifteen (15) full calendar
months prior to such Adjustment Date; provided, however, that in no event shall
any such adjustment result in a decrease in Minimum Annual Rent or in an
increase of Minimum Annual Rent in excess of three percent (3%) per annum on a
cumulative and compounding basis. For purposes of this Lease, the "Index" shall
mean the Consumer Price Index published by the United States Department of
Labor, Bureau of Labor Statistics (the "Bureau") "All Items" for All Urban
Consumers in the San Francisco-Oakland-San Jose metropolitan area, (1982-84 =
100). Should the Bureau discontinue the publication of the Index, publish the
same less frequently or alter the same in some other manner, the most nearly
comparable index or procedure as determined by Landlord shall be substituted
therefor. The Minimum Annual Rent as adjusted shall be the Minimum Annual Rent
until the next Adjustment Date. Minimum Annual Rent shall be payable in equal
monthly installments, in advance, on or before the first (1st) day of each
month, without prior demand and without offset or deduction (except as
expressly and specifically provided in this Lease), commencing on the
Commencement Date. Should the Commencement Date be a day other than the first
(1st) day of a calendar month, then the monthly installment of Minimum Annual
Rent for the first partial month shall be equal to one-thirtieth (1/30th) of
the monthly installment of Minimum Annual Rent for each day from the
Commencement Date to the end of the partial month.

          6.2 Additional Rent. Tenant shall pay, as "Additional Rent", all
sums required to be paid by Tenant to Landlord pursuant to this Lease in
addition to Minimum Annual Rent. Landlord shall have the same rights and
remedies for the nonpayment of Additional Rent as it has with respect to the
nonpayment of Minimum Annual Rent. It is the intention of the Landlord and
Tenant that the Minimum Annual Rent and Additional Rent to be paid hereunder
shall be paid to Landlord absolutely net without deduction of any amount of any
amount of any nature whatsoever, except as otherwise expressly and specifically
provided in this Lease.

          6.3 Place of Payment. Tenant shall pay Minimum Annual Rent and
Additional Rent to Landlord at the address specified in Section 1.12, or to
such other address and/or person as Landlord may from time to time designate in
writing to Tenant.

          6.4 Late Payments. Tenant acknowledges that late payment by Tenant to
Landlord of Minimum Annual Rent or Additional Rent will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which are
impracticable or extremely difficult to ascertain. Such costs include, but are
not limited to, processing and accounting charges, and late charges which may be
imposed upon Landlord by the terms of any mortgage or trust deed covering the
Premises or any part of the Project. Accordingly, if any installment of Minimum
Annual Rent or Additional Rent is not received by Landlord from Tenant within
five (5) days after the date when due, Tenant shall immediately pay to
Landlord, as Additional Rent, a late charge equal to five percent (5%) of the
delinquent amount. Landlord and Tenant agree that this late charge represents a
reasonable estimate of the costs and expenses Landlord will incur and is fair
compensation to Landlord for its loss suffered by reason of late payment by
Tenant. In addition, if Tenant fails to pay when the same is due any Minimum
Annual Rent or Additional Rent, the unpaid amounts shall bear interest at the
rate per annum (the "Interest Rate") equal to the greater of (a) ten percent
(10%) or (b) the "prime rate" charged by Wells Fargo Bank N.A. plus two (2)
percentage points, but in no event to exceed the maximum lawful rate, from the
date such amount was originally due to and including the date of payment.
Payment of such interest shall not excuse or cure any default by Tenant.
Acceptance of any late charges or interest by Landlord shall in no event
constitute a waiver of Tenant's default with respect to such overdue amount,
nor prevent Landlord from exercising any of its other rights and remedies under
this Lease.

                       ARTICLE 7 - INTENTIONALLY DELETED

                               ARTICLE 8 - TAXES

          8.1 Real Property Taxes.

              (a) As used in this Lease, the term "Taxes" shall include any
form of tax or assessment, license fee, license tax, possessory interest tax,
tax or excise on rental, or any other levy, charge, expense of imposition
imposed by any Federal, state, county or city authority having jurisdiction, or
any political subdivision thereof, or any school, agricultural, lighting,
drainage or other improvement or special assessment district on any interest of
Landlord or Tenant (including any legal or equitable interest of Landlord or
its mortgagee, if any) in the Premises, the remainder of the Project or the
underlying realty. The term "Taxes" shall not include Landlord's general income
taxes, inheritance, estate or gift taxes.

              (b) From and after the Rent Commencement Date, Tenant shall pay
to Landlord as Additional Rent, a share of the Taxes pursuant to Section 8.1(c)
below. Taxes for any partial year shall be prorated. Landlord, at its option,
may collect Tenant's payment of its share of Taxes after the actual amount of
Taxes are ascertained or in advance, monthly or quarterly, based upon estimated
Taxes. If Landlord elects to collect Tenant's share of Taxes based upon
estimates, Tenant shall pay to Landlord from and after the Rent Commencement
Date, and thereafter on the first (1st) day of each month or quarter during the
Term (as determined by Landlord), an amount estimated by Landlord to be the
monthly or quarterly Taxes payable by Tenant. Landlord may periodically adjust
the estimated amount. If Landlord collects Taxes based upon estimated amounts,
then following the end of each calendar year or, at Landlord's option, its
fiscal year, Landlord shall furnish Tenant with a statement covering the year
just expired showing the total Taxes for the Project for such year, the total
Taxes payable by Tenant for such year, and the payments previously made by
Tenant with respect to such year, as set forth above. If the actual Taxes
payable for such year exceed Tenant's prior payments, Tenant shall pay to
Landlord the deficiency within ten (10) days after its receipt of the statement.
If Tenant's payments exceed the actual Taxes payable for that year, Tenant shall
be entitled to offset the excess against the next payment(s) of Taxes and/or
other Additional Rent that become due to Landlord; provided that Landlord shall
refund to Tenant the amount of any overpayment for the last year of the Term.
Landlord shall furnish to Tenant copies of the bills for the Taxes for the
Project from which the Taxes payable by Tenant hereunder were computed upon
Tenant's written request.

               (c) Tenant's share of the Taxes shall be determined by
multiplying all of the Taxes on the portion of the Project which is the tax
parcel including the Premises, by a fraction, the numerator of which shall be
the Floor Area of the Premises and the denominator of which shall be the Floor
Area existing and for which a certificate of occupancy has been issued in such
portion of the Project as of the commencement of the applicable calendar or
fiscal year; provided, however, that for purposes of determining Tenant's share
of Taxes allocable to land within the tax parcel including the Premises (as
opposed to Taxes on building improvements), it shall be deemed that Landlord has
completed construction of both the Premises containing 3,000 square feet of
Floor Area and the adjacent building shown on Exhibit A as containing 13,905
square feet of Floor Area.

          8.2 Other Property Taxes. Tenant shall pay, prior to delinquency, all
taxes, assessments, license fees and public charges levied, assessed or imposed
upon its business operation, trade fixtures, merchandise and other personal
property in, on or upon the Premises. If any such items of property are assessed
with property of Landlord, then the assessment shall be equitably divided
between Landlord and Tenant.

          8.3 Contesting Taxes. If Landlord contests any Taxes levied or
assessed during the Term, Tenant shall not be required to pay any portion of the
costs or expenses incurred by Landlord in connection with such contest; however,
if Landlord is successful in such contest, Landlord may deduct from the portion
of any refund received which is payable to Tenant, Tenant's proportionate share
of all such costs and expenses determined pursuant to the formula set forth in
Section 8.1(c) for the allocation of Taxes. Landlord shall pay to Tenant that
portion of the total refund remaining, if any, which is attributable to Tenant's
proportionate share of Taxes prorated in the same manner as set forth in Section
8.1(c).

ARTICLE 9 - UTILITIES

          Tenant agrees to pay directly to the appropriate utility company all
charges for utility services supplied to Tenant for which there is a separate
meter and/or submeter to the Premises. Tenant agrees to pay to Landlord its
share of all charges for utility services supplied to the Premises for which
there is no separate meter or submeter upon billing by Landlord of Tenant's
share, as reasonably determined by Landlord based upon estimated actual usage.

ARTICLE 10 - TENANT'S CONDUCT OF BUSINESS

          10.1 Permitted Trade Name and Use. Tenant shall use the Premises under
the trade name specified in Section 1.4 or any other trade name as Tenant
desires. Tenant shall use the Premises solely for the use specified in Section
1.9 and for no other use or purpose.

          10.2 Covenant to Open and Operate. Tenant covenants to open for
business to the public with the Premises fully fixturized promptly following
(but in any event within sixty (60) days following) the Commencement Date and
thereafter to operate continuously and uninterruptedly in the Premises
throughout the Term the business described in Section 1.9, subject to temporary
closures for casualty, condemnation, remodel, or force majeure (as defined in
Section 22.7) which prevents Tenant from conducting its normal business
operations in the Premises.

          10.3 Hours of Business. From and after the Rent Commencement Date,
Tenant shall keep the entire Premises continuously open for business during
those days and hours as are customary and usual for the type of business
operated by Tenant. Tenant shall have its window displays, exterior signs and
exterior advertising 



                                       35
<PAGE>   8

displays adequately illuminated continuously during those
hours and days that the Premises are required to be open for business to the
public.

          10.4 Hours for Deliveries. Tenant shall use its reasonable efforts to
require all deliveries, (exclusive of United Parcel Service and U.S. Postal
Service), loading, unloading and services to the Premises to be completed
between 7:00 a.m. and 10:00 a.m. each day. All deliveries, loading, unloading
and services to the Premises shall be accomplished within the service areas of
the Project.

          10.5 Tenant's Signs.

               (a) Tenant shall be permitted to use the standard interior window
signage used from time to time in its other stores in California without the
need for Landlord's prior approval so long as such signage is professionally
prepared and maintained in a neat manner, complies with all applicable laws,
ordinances and regulations, and does not, at any time, occupy more than
twenty-five percent (25%) of the storefront windows or doors.

               (b) Tenant shall not affix upon the exterior of the Premises any
sign, advertising placard, name, insignia, trademark, descriptive material or
other like item (collectively, the "Exterior Signs"), except for one Exterior
Sign over the entrance to the Premises subject to (i) compliance with all
governmental requirements, and (ii) Landlord's prior written approval of such
sign, which approval shall not be unreasonably withheld. All of the Exterior
Signs shall be erected by Tenant at its sole cost and expense, and Tenant shall
maintain all of its Exterior Signs in good condition and repair during the Term.

          10.6 Project Name. Tenant shall use the name of the Project in its
advertising as the address reference for the Premises. Tenant shall not use the
name of the Project for any other purpose.

          10.7 Exclusive Use Right. So long as Tenant is continuously operating
from the Premises for the permitted use specified in Section 1.9 (subject only
to closures due to force majeure occurrences beyond Tenant's reasonable control
and/or repairs or restoration work being performed following casualty or
condemnation), Landlord shall not lease any portion of the Project for use for
the primary purpose of the operation of a retail branch bank.


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<PAGE>   9
ARTICLE 11 - MAINTENANCE, REPAIRS AND ALTERATIONS

          11.1 Landlord's Maintenance Obligations. Landlord shall maintain in
good condition and repair the structural components and foundations, roof
structure (as opposed to the roof membrane, which shall be maintained and
repaired by Tenant pursuant to Section 11.3 below) and exterior surfaces of the
exterior walls of the building of which the Premises is a part (exclusive of
doors, door frames, door checks, windows, window frames and, unless Landlord
elects to include cleaning of the storefronts and storefront awnings of tenants
of the Project as part of Common Area maintenance pursuant to Section 12.2
below, storefronts and storefront awnings); provided, however, if any repairs or
replacements are necessitated by the negligence or willful acts of Tenant or
anyone claiming under Tenant or by reason of Tenant's failure to observe or
perform any conditions or agreements contained in this Lease, or caused by
alterations, additions or improvements made by Tenant or anyone claiming under
Tenant, the cost of same shall be the sole responsibility of Tenant. It is
acknowledged by Tenant that the cost of some of Landlord's maintenance
obligations referenced in the preceding sentence shall be prorated and paid as
Common Area Costs. Notwithstanding anything to the 



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<PAGE>   10

contrary contained in this Lease, Landlord shall not be liable for failure to
make repairs required to be made by Landlord under the provisions of this Lease
unless Tenant has previously notified Landlord in writing of the need for such
repairs and Landlord has failed to commence and complete the repairs within a
reasonable period of time following receipt of Tenant's written notification.

          11.2 Landlord's Right of Entry. Landlord, its agents, contractors,
servants and employees may enter the Premises during normal business hours
following reasonable notice to Tenant (except in a case of emergency): (a) to
examine the Premises; (b) to show the Premises to existing or prospective
lenders, purchasers and/or, during the final year of the Term, tenants; (c) to
perform any obligation or exercise any right or remedy of Landlord under this
Lease; (d) to perform work necessary to comply with laws, ordinances, rules or
regulations of any public authority or of any insurance underwriter; and (e) to
perform work that Landlord deems necessary to prevent waste or deterioration in
connection with the Premises should Tenant fail to commence such work within ten
(10) days after written notice from Landlord of the need for such work (or if
more than ten (10) days shall be required because of the nature of the work, if
Tenant shall fail to diligently proceed to commence to perform such work after
written notice). If Landlord makes any repairs which Tenant is obligated to make
pursuant to the terms of this Lease, Tenant shall pay the cost of such repairs
to Landlord, as Additional Rent, promptly upon receipt of a bill from Landlord
for same.

          11.3 Tenant's Maintenance Obligations. Except for the portions and
components of the Premises to be maintained by Landlord as set forth in Section
11.1, Tenant, at its expense, shall keep the Premises and all utility facilities
and systems exclusively serving the Premises ("Tenant Utility Facilities") in
first-class order, condition and repair and shall make replacements necessary to
keep the Premises and Tenant Utility Facilities in such condition. All
replacements shall be of a quality equal to or exceeding that of the original.
Tenant shall contract with a service company approved by Landlord for the
regular (but not less frequently than quarterly) maintenance, repair and/or
replacement (when necessary) of the heating, ventilating and air conditioning
equipment serving the Premises (the "HVAC System") and shall provide Landlord
with a copy of any service contract within ten (10) days following its
execution, provided that if Tenant fails to do so within ten (10) days following
written notice thereof from Landlord, Landlord may contract with a service
company of its own choosing (or provide such service itself) for the
maintenance, repair and/or replacement of the HVAC System and bill Tenant
periodically for the cost of same or based upon estimates in a manner similar to
the way in which Common Area Costs are estimated and billed. Landlord shall be
entitled to obtain an administration fee of fifteen percent (15%) on all of the
HVAC System expense billed to Tenant.

          11.4 Alterations.

               (a) After initially opening the Premises for business, Tenant
shall not make or cause to be made to thc Premises or the Tenant Utility
Facilities any addition, renovation, alteration, reconstruction or change
(collectively, "Alterations") (i) involving structural changes or additions,
(ii) affecting the exterior storefront, fire sprinkler systems, exterior walls,
floor slab, or roof of the Premises, (iii) requiring or resulting in any
penetration of the roof, demising walls or floor slab of the Premises, without
first obtaining the written consent of Landlord, which consent shall not be
unreasonably withheld, or (iv) costing in excess of Five Thousand Dollars
($5,000.00) and not described in clauses (i), (ii) or (iii) above.

               (b) All Alterations shall be made under the supervision of a
competent licensed architect or competent licensed structural engineer
satisfactory to Landlord and shall be made in accordance with plans and
specifications with respect thereto, approved in writing by Landlord before the
commencement of work.

               (c) Tenant shall provide Landlord with not less than fifteen (15)
days prior written notice of the commencement of any Alterations in the Premises
and Landlord shall have the right to enter upon the Premises to post customary
notices of non-responsibility with respect thereto. Tenant, at its cost, shall
obtain all required governmental permits and approvals for all Alterations and
all such Alterations shall be performed strictly in accordance with all
applicable laws, ordinances, rules or regulations of any public authority, in a
good and workmanlike manner and diligently prosecuted to completion to the end
that the Premises shall at all times be a complete unit except during the period
of work. Construction work in connection with any Alterations shall be performed
in such manner as not to obstruct the access to the Premises or otherwise
interfere with the operation of business by any other occupant of the Project.
Such Alterations shall be considered as improvements and shall become an
integral part of the Premises upon installation thereof and shall not be removed
by Tenant; provided, however, if Landlord elects, Landlord shall have the right
to cause Tenant to remove any or all such Alterations upon the expiration of the
Lease Term or 



                                       38
<PAGE>   11

earlier termination of this Lease pursuant to Section 22.8 below, except,
however, that Tenant shall not be required to remove any vault installed in the
Premises by Tenant. All improvements to the Premises by Tenant including, but
not limited to, light fixtures, floor coverings and partitions and other items
comprising Tenant's Work pursuant to Exhibit C, but excluding trade fixtures and
signs, shall be deemed to be the property of Landlord upon installation thereof.
Within thirty (30) days after the completion of any Alterations, Tenant shall
deliver to Landlord a set of "as built" plans depicting the Alterations as
actually constructed or installed. If Tenant shall make any permitted
Alterations, Tenant shall carry "Builder's All Risk" insurance in an amount
determined by Landlord covering the construction of such Alterations and such
other insurance as Landlord may reasonably require. All of such Alterations
shall be insured by Tenant pursuant to Section 14.1(d) immediately upon
completion thereof.

               (d) Tenant shall pay all costs for work performed by or on
account of it and shall keep the Premises and the Project free and clear of
mechanics' liens or any other liens. Tenant shall give Landlord immediate notice
of any lien filed against the Premises or the Project as a result of any work of
improvement performed by or on behalf of Tenant. Tenant shall immediately cause
any lien to be discharged or removed of record by either paying the amount
thereof or recording a statutory lien release bond in an amount equal to one
hundred fifty percent (150%) of the amount of said lien, or such other amount as
may be adequate to cause the lien to be released as an encumbrance against the
Premises and the Project. If Tenant fails to do so, Landlord shall have the
right, but not the obligation, in addition to all other rights and remedies
available to Landlord under this Lease, and after ten (10) days prior written
notice to Tenant, to either pay and discharge such lien, without regard to the
validity thereof, or procure and cause to be recorded a statutory lien release
bond and to (i) collect from Tenant as Additional Rent; or (ii) deduct from any
tenant improvement allowance or any other amount payable by Landlord to Tenant
under this Lease (A) all costs incurred by Landlord in paying and discharging
such lien, or in procuring such bond, and (B) all expenses incurred by Landlord
in connection with such lien, including attorneys' fees and costs, recording
fees and administrative costs and expenses.

ARTICLE 12 - COMMON AREA

          12.1 Definition of Common Area. The term "Common Area", as used in
this Lease, shall mean all areas within the exterior boundaries of the Project,
now or later made available for the general use of Landlord and other persons
entitled to occupy Floor Area in the Project.

          12.2 Use of Common Area. The use and occupancy by Tenant of the
Premises shall include the nonexclusive use of the Common Area (except those
portions of the Common Area on which have been constructed or placed permanent
or temporary kiosks, displays, carts and stands and except areas used in the
maintenance or operation of the Project) in common with Landlord and the other
tenants of the Project and their customers and invitees.

          12.3 Control of and Changes to Common Area. Subject to Section 22.10,
Landlord shall have the sole and exclusive control of the Common Area, and the
right to make changes to the Common Area. Landlord's rights shall include, but
not be limited to, the right to (a) restrain the use of the Common Area by
unauthorized persons; (b) utilize from time to time any portion of the Common
Area for promotional, entertainment and related matters; (c) place permanent or
temporary kiosks, displays, carts and stands in the Common Area and to lease
same to tenants; provided, however, no such items will be placed in a manner
which will materially interfere with Tenant's ability to operate its business
from the Premises, materially impair ingress, egress or other access to or from
the Premises, or materially impair the visibility of the Premises; (d)
temporarily close any portion of the Common Area for repairs, improvements or
Alterations, to discourage noncustomer use, to prevent dedication or an easement
by prescription or for any other reason deemed sufficient in Landlord's
reasonable judgment; and (e) renovate, upgrade or change the shape and size of
the Common Area or add, eliminate or change the location of improvements to the
Common Area including, without limitation, buildings, parking areas, roadways
and curb cuts, and to construct buildings on the Common Area.

          12.4 Common Area Costs. The term "Common Area Costs", as used in this
Lease, shall mean all costs and expenses incurred by Landlord in (a) operating,
managing, policing, insuring, repairing and maintaining the Common Area
(including, without limitation, any onsite management and/or security offices),
(b) maintaining, repairing and replacing the exterior surface of exterior walls
(and storefronts and storefront awnings if Landlord has elected to include the
cleaning of same as part of Common Area maintenance) and 



                                       39
<PAGE>   12

maintaining, and (c) operating, insuring, repairing, replacing and maintaining
all utility facilities and systems including, without limitation, sanitary sewer
lines and systems, fire protection lines and systems, security lines and systems
and storm drainage lines and systems not exclusively serving the premises of any
tenant or store ("Common Utility Facilities"), mall furniture and equipment,
seasonal and holiday decorations, Common Area lighting fixtures, Project sign
monuments or pylons (but not the tenant identification signs thereon) and
directional signage. Common Area Costs shall include, without limitation, the
following: expenses for maintenance, landscaping, repaving, resurfacing,
repairs, replacements, painting, lighting, cleaning, trash removal, security,
fire protection and similar items; depreciation or rental on equipment; charges,
surcharges and other levies related to the requirements of any federal, state or
local governmental agency; expenses related to the Common Utility Facilities;
comprehensive or commercial general liability insurance on the Common Area;
standard "all risks" fire and extended coverage insurance with, at Landlord's
option, an earthquake damage endorsement covering the Common Areas; costs of
management of the Project (whether such management services are provided by
Landlord or a third party contractor); and a sum (the "Supervision Fee") payable
to Landlord for administration and overhead in an amount equal to ten percent
(10%) of the Common Area Costs exclusive of insurance premiums paid in
connection with the Common Areas.

          12.5 Proration of Common Area Costs. The Common Area Costs shall be
prorated in the following manner:

               (a) From and after the Rent Commencement Date, Tenant shall pay
to Landlord, on the first (1st) day of each calendar month, an amount estimated
by Landlord to be the monthly amount of Tenant's share of the Common Area Costs.
The estimated monthly charge may be adjusted periodically by Landlord on the
basis of Landlord's reasonably anticipated costs.

               (b) Following the end of each calendar year or, at Landlord's
option, its fiscal year, Landlord shall furnish to Tenant a statement covering
the calendar or fiscal year (as the case may be) just expired, showing by cost
category the actual Common Area Costs for that year, the total Floor Area of the
Project, the amount of Tenant's share of the Common Area Costs for that year,
and the monthly payments made by Tenant during that year for the Common Area
Costs. If Tenant's share of the Common Area Costs exceeds Tenant's prior
payments, Tenant shall pay to Landlord the deficiency within ten (10) days after
receipt of such annual statement. If Tenant's payments for the calendar year
exceed Tenant's actual share of the Common Area Costs, and provided Tenant is
not in arrears as to the payment of any Minimum Annual Rent or Additional Rent,
Tenant may offset the excess against payments of Common Area Costs next due
Landlord. An appropriate proration of Tenant's share of the Common Area Costs as
of the Rent Commencement Date and the expiration date of the Term shall be made.

               (c) Tenant's share of the Common Area Costs shall be determined
by multiplying the Common Area Costs by a fraction, the numerator of which is
the number of square feet of Floor Area in the Premises and the denominator of
which is the number of square feet of Floor Area in the Project existing and for
which a certificate of occupancy has been issued as of the commencement of the
applicable calendar or fiscal year (as the case may be); provided, however, that
for purposes of determining Tenant's share of Common Area Costs, it shall be
deemed that Landlord has completed construction of both the Premises containing
3,000 square feet of Floor Area and the adjacent building shown on Exhibit A as
containing 13,905 square feet of Floor Area. Notwithstanding the foregoing, if
any one or more owner(s) or tenant(s) of a portion of the Project separately
maintains its own Common Area, Common Area Costs shall not include costs
relating to the Common Area so maintained by such owner or tenant, and the Floor
Area on such owner's or tenant's parcel shall not be included in the denominator
for purposes of calculation of Tenant's share of Common Area Costs.

  ARTICLE 13 - ASSIGNMENT AND SUBLETTING

          13.1 Landlord's Consent Required. Tenant shall not assign, sublet,
enter into franchise, license or concession agreements, change ownership or
voting control, mortgage, encumber, pledge hypothecate or otherwise transfer
(including any transfer by operation of law) all or any part of this Lease or
Tenant's interest in the Premises (collectively, a "Transfer") without first
procuring the written consent of Landlord, which consent shall not be
unreasonably withheld, subject to the terms, covenants and conditions contained
in this Lease.



                                       40
<PAGE>   13

          13.2 Procedures. Should Tenant desire to enter into a Transfer, other
than any Transfer which is expressly stated in this Article 13 not to require
the prior written consent of Landlord, Tenant shall request, in writing,
Landlord's consent to the proposed Transfer at least sixty (60) days before the
intended effective date of the proposed Transfer, which request shall include
the following: (a) full particulars of the proposed Transfer including its
nature, effective date, terms and conditions; (b) if the Transfer contemplates a
change in the trade name of the Premises, the new proposed trade name of the
proposed transferee; (c) a description of the identity, net worth and previous
business experience of the proposed transferee,"(d) a complete business plan
prepared by the proposed transferee; and (e) any further information relevant to
the proposed Transfer which Landlord shall reasonably request. Within thirty
(30) days after receipt of Tenant's request for consent to the proposed Transfer
together with all of the above-required information, Landlord shall respond and
shall have the right either to: (i) consent to the proposed Transfer; (ii)
refuse to consent to the proposed Transfer; or (iii) terminate this Lease, such
termination to be effective thirty (30) days after Tenant's receipt of
Landlord's notice electing to so terminate; provided, however, that Tenant shall
have the right to nullify such an election to terminate by agreeing (in written
notice delivered to Landlord within fifteen (15) days following Tenant's receipt
of such notice from Landlord electing to terminate), to withdraw Tenant's
request for consent to such Transfer, in which event this Lease shall continue
in full force and effect as if Tenant had never made such request for consent.
Landlord's consent to a proposed Transfer shall only be given if and when
Landlord has notified Tenant in writing that Landlord consents to such proposed
Transfer. If Landlord shall exercise its termination right hereunder, Landlord
shall have the right to enter into a lease or other occupancy agreement directly
with the proposed transferee, and Tenant shall have no right to any of the rents
or other consideration payable by such proposed transferee under such other
lease or occupancy agreement. If Landlord refuses to consent to the Transfer,
Landlord shall state in its response the reason(s) for such refusal in
reasonable detail.

          13.3 Standard for Consent.

               (a) Tenant agrees that Landlord may refuse its consent to the
proposed Transfer on any reasonable grounds, and (by way of example and without
limitation) Tenant agrees that it shall be reasonable for Landlord to withhold
its consent if any of the following situations exist or may exist: (i) the
proposed transferee proposes to change the use of the Premises from the
permitted use pursuant to Section 10.1; (ii) the proposed transferee's financial
condition is inadequate to support all of the financial and other obligations of
Tenant under this Lease; (iii) the business reputation or character of the
proposed transferee is not reasonably acceptable to Landlord; (iv) the proposed
transferee is not likely to conduct on the Premises a business of a quality
substantially equal to that conducted by Tenant; or (v) the nature of the
proposed transferee's proposed or likely use of the Premises would impose an
increased burden on the Common Area, or involve any unreasonable risk of the
presence, use, release or discharge of Hazardous Materials, as defined in
Section 22.3.

               (b) Any purported Transfer without Landlord's prior written
consent shall be void and of no force or effect and shall not confer any estate
or benefit on anyone. A consent to one (1) Transfer by Landlord shall not be
deemed to be a consent to any subsequent Transfer to any other party.

          13.4 Permitted Transfer. Tenant shall have the right without
Landlord's consent, but upon fifteen (15) days prior written notice to Landlord,
to enter into a Transfer to any subsidiary corporation of Tenant, Tenant's
parent corporation or to any corporation succeeding to substantially all of the
assets Tenant as a result of a consolidation or merger, or to a corporation
acquiring all or substantially all of the stock or assets of Tenant ("Permitted
Transfer"), provided that the transferee under such Permitted Transfer has a net
worth equal to or greater than the net worth of Tenant as of the execution of
this Lease or the time of such proposed Permitted Transfer (whichever is
greater), and prior to the effective date of any such Transfer the assignee or
sublessee executes and delivers to Landlord an instrument reasonably acceptable
to Landlord containing an express assumption of all of Tenant's obligations
under this Lease.

          13.5 No Release; Form. No Transfer or Permitted Transfer, whether with
or without Landlord's consent, shall relieve Tenant from its covenants and
obligations under this Lease. Any Transfer shall be evidenced by an instrument
in form and content satisfactory to Landlord and executed by Tenant and the
transferee, assignee, sublessee, licensee or concessionaire, as the case may be.

          13.6 Transfer Rent. If Tenant shall enter into a Transfer hereunder
(other than a Permitted Transfer, as to which the provisions of this Section
13.6 shall not be applicable), Tenant shall pay to Landlord fifty percent (50%)
of any "transfer premium" (as hereinafter defined). In the event of a
subletting, "transfer premium" shall 



                                       41
<PAGE>   14

mean all rent, additional rent or other consideration payable by such subtenant
to Tenant or on behalf of Tenant in connection with the subletting in excess of
the rent, additional rent and other sums payable by Tenant under this Lease
during the term of the sublease on a per square foot basis if less than all of
the Premises is subleased, less the costs actually incurred by Tenant to secure
the sublease, including, without limitation, attorneys' fees and brokerage
commissions. In the event of a Transfer other than a subletting, "transfer
premium" shall mean key money, bonus money or other consideration paid by the
assignee to Tenant in connection with such Transfer, and any payment in excess
of fair market value for services rendered by Tenant to transferee or for
assets, fixtures, inventory, equipment, or furniture transferred by Tenant to
transferee in connection with such Transfer, less the costs actually incurred by
Tenant to secure the Transfer, including, without limitation, attorneys' fees
and brokerage commissions. If part of the transfer premium shall be payable by
the transferee other than in cash, then Landlord's share of such non-cash
consideration shall be in such form as is reasonably satisfactory to Landlord.

                             ARTICLE 14 - INSURANCE

          14.1 Tenant's Insurance. Tenant, at its sole cost and expense,
commencing on the earlier of the date of Substantial Completion of the Premises,
or the date Tenant is given earlier access to the Premises, and continuing
during the Term, shall procure, pay for and keep in full force and effect the
following types of insurance, in at least the amounts and in the forms specified
below:

               (a) Comprehensive or commercial general liability insurance with
coverage limits of not less than Three Million Dollars ($3,000,000.00) combined
single limit for bodily injury, personal injury, death and property damage
liability per occurrence or the limit carried by Tenant, whichever is greater,
insuring against any and all liability of the insureds with respect to the
Premises or arising out of the maintenance, use or occupancy of the Premises or
related to the exercise of any rights of Tenant pursuant to this Lease, subject
to increases in amount as Landlord may reasonably require from time to time to
insure that the insurance maintained by Tenant hereunder is in amounts
consistent with prudent practice in the shopping center industry. All such
liability insurance shall specifically insure the performance by Tenant of the
indemnity agreement as to liability for injury to or death of persons and injury
or damage to property set forth in Section 14.5. Further, all such liability
insurance shall include, but not be limited to, personal injury, blanket
contractual, cross-liability and severability of interest clauses, broad form
property damage, independent contractors, owned, nonowned and hired vehicles
and, if alcoholic beverages are served, sold, consumed or obtained in the
Premises, liquor law liability.

               (b) Worker's compensation coverage in an amount adequate to
comply with law, and employer's liability coverage with a limit of not less than
One Million Dollars ($1,000,000.00).

               (c) Plate glass insurance covering all plate glass on the
Premises at full replacement value. Tenant shall have the option either to
insure this risk or to self-insure.

               (d) Insurance covering all of Tenant's Work, Tenant's leasehold
improvements and Alterations permitted under Article 1 1, in an amount not less
than their full replacement value from time to time, including replacement cost
endorsement, providing protection against any peril included within the
classification Fire and Extended Coverage, sprinkler damage, vandalism,
malicious mischief and such other additional perils as covered in an "all risks"
standard insurance policy. Any policy proceeds shall be used for the repair or
replacement of the property damaged or destroyed unless this Lease shall cease
and terminate under the provisions of Article 15.

          14.2 Policy Form. All policies of insurance required of Tenant herein
shall be issued by insurance companies with a general policy holder's rating of
not less than "A" and a financial rating of not less than Class "X", as rated in
the most current available "Best's Key Rating Guide", and which are qualified to
do business in the State of California. All such policies, except for the
Workers' Compensation coverage, shall name and shall be for the mutual and joint
benefit and protection of Landlord, Tenant and Landlord's agents and
mortgagee(s) or beneficiary(ies) as additional insureds. The policies described
in clauses (c) and (e) of Section 14.1 shall also name Landlord and Landlord's
mortgagee(s) or beneficiary(ies) as loss payees, and Landlord shall furnish to
Tenant the names and addresses of such mortgagee(s) and beneficiary(ies).
Executed copies of the policies of insurance or certificates thereof shall be
delivered to Landlord prior to Tenant, its agents or employees entering the
Premises for any purpose. Thereafter, executed copies of renewal policies or
certificates thereof shall be delivered to Landlord within thirty (30) days
prior to the expiration of the term 



                                       42
<PAGE>   15

of each policy. All policies of insurance delivered to Landlord must contain a
provision that the company writing the policy will give to Landlord thirty (30)
days' prior written notice of any cancellation or lapse or the effective date of
any reduction in the amounts of insurance. All policies required of Tenant
herein shall be endorsed to read that such policies are primary policies and any
insurance carried by Landlord or Landlord's property manager shall be
noncontributing with such policies. No policy required to be maintained by
Tenant shall have a deductible greater than Twenty-Five Thousand Dollars
($25,000.00) unless approved in writing by Landlord.

          14.3 Blanket Policies. Notwithstanding anything to the contrary
contained in this Article 14, Tenant's obligation to carry insurance may be
satisfied by coverage under a so-called blanket policy or policies of insurance;
provided, however, that the coverage afforded Landlord will not be reduced or
diminished and the requirements set forth in this Lease are otherwise satisfied
by such blanket policy or policies.

          14.4 Reimbursement of Insurance Premiums by Tenant. Landlord, at all
times from and after Substantial Completion of the Premises, shall maintain in
effect during the Term a policy or policies of insurance covering the building
of which the Premises are a part (including boiler and machinery) in an amount
not less than ninety percent (90%) of the full replacement cost (exclusive of
the cost of excavations, foundations and footings) or the amount of insurance
Landlord's mortgagee(s) or beneficiary(ies) may require Landlord to maintain,
whichever is the greater, providing protection against any peril generally
included in the classification "Fire and Extended Coverage", loss of rental
income insurance and such other additional insurance as covered in an "all
risks" standard insurance policy, with earthquake coverage insurance if deemed
necessary by Landlord in Landlord's sole judgment or if required by Landlord's
mortgagee(s) or beneficiary(ies) or by any federal, state, county, city or local
authority. Landlord's obligation to carry this insurance may be brought within
the coverage of any so-called blanket policy or policies of insurance carried
and maintained by Landlord. From and after the Rent Commencement Date, Tenant
agrees to pay to Landlord, as Additional Rent, its share of the cost to Landlord
of this insurance, The cost of such insurance for any partial year of the Term
shall be prorated. Payment shall be made in the same manner set forth for
payment of Taxes in Section 8.1(b). Tenant's share of the premiums for this
insurance shall be a fractional portion of the premiums, the numerator of which
shall be the Floor Area of the Premises and the denominator of which shall be
the Floor Area of all areas existing within the Project and for which a
certificate of occupancy has been issued which are covered by this insurance as
of the commencement of the applicable calendar or fiscal year. Tenant
acknowledges that Landlord shall have the right to maintain commercially
reasonable deductibles and/or self-insured retention's in connection with any
insurance carried by Landlord pursuant to this Lease, as determined by Landlord
in its reasonable business judgment. In the event of an insurance loss covered
by the insurance carried by Landlord pursuant to this Lease, Tenant shall be
required to pay its share of such deductibles or self-insured retention's, as
determined pursuant to this Section 14.4 or Section 12.5, as applicable.

          14.5 Indemnity. "Landlord" for the purposes of this Section 14.5 shall
mean and include Landlord and Landlord's directors, officers, shareholders,
agents and employees. To the fullest extent permitted by law, Tenant covenants
with Landlord that Landlord shall not be liable for any damage or liability of
any kind or for any injury to or death of persons or damage to property of
Tenant or any other person occurring from and after Substantial Completion of
the Premises (or such earlier date if Tenant is given earlier access to the
Premises) from any cause whatsoever related to the use, occupancy or enjoyment
of the Premises by Tenant or any person thereon or holding under Tenant
including, but not limited to, damages resulting from any labor dispute. Tenant
shall pay for, defend (with an attorney approved by Landlord), indemnify, and
save Landlord harmless against and from any real or alleged damage or injury and
from all claims, judgments, liabilities, costs and expenses, including
attorney's fees and costs, arising out of or connected with Tenant's use of the
Premises and its facilities, or any repairs, Alterations or improvements
(including original improvements and fixtures specified as Tenant's Work) which
Tenant may make or cause to be made upon the Premises, any breach of this Lease
by Tenant and any loss or interruption of business or loss of rental income
resulting from any of the foregoing; provided, however (and though Tenant shall
in all cases accept any tender of defense of any action or proceeding in which
Landlord is named or made a party and shall, notwithstanding any allegations of
negligence or misconduct on the part of Landlord, defend Landlord as provided
herein), Tenant shall not be liable for such damage or injury to the extent and
in the proportion that the same is ultimately determined to be attributable to
the negligence or misconduct of Landlord, and Landlord shall pay for, defend,
indemnify, and save Tenant harmless against and from any and all claims,
judgments, liabilities, costs and expenses, including attorneys fees and costs,
resulting from any such damage or injury. The obligations to indemnify set forth
in this Section 14.5 shall include all attorneys' fees, litigation 



                                       43
<PAGE>   16

costs, investigation costs and court costs and all other costs, expenses and
liabilities incurred by the indemnified party from the first notice that any
claim or demand is to be made or may be made. All indemnity obligations under
this Section 14.5 shall survive the expiration or termination of this Lease.

          14.6 Waiver of Subrogation. Landlord and Tenant each waive any rights
each may have against the other on account of any loss or damage occasioned to
Landlord or Tenant, as the case may be, their respective property, the Premises
or its contents, or to other portions of the Project arising from any liability,
loss, damage or injury caused by fire or other casualty for which property
insurance is carried or required to be carried pursuant to this Lease. The
insurance policies obtained by Landlord and Tenant pursuant to this Lease shall
contain endorsements waiving any right of subrogation which the insurer may
otherwise have against the noninsuring party. If Landlord has contracted with a
third party for the management of the Project, the waiver of subrogation by
Tenant herein shall also run in favor of such third party.

          14.7 Failure by Tenant to Maintain Insurance. If Tenant refuses or
neglects to secure and maintain insurance policies complying with the provisions
of this Article 14, or to provide copies of policies or certificates or copies
of renewal policies or certificates within the time provided in Section 14.2,
Landlord may, after providing written notice to Tenant of its intention to do
so, secure the appropriate insurance policies and Tenant shall pay, upon thirty
(30) days following demand, the cost of same to Landlord, as Additional Rent.

                               ARTICLE 15 - DAMAGE

          15.1 Insured Casualty. In the case of damage by fire or other perils
covered by the insurance specified in Section 14.4, the following provisions
shall apply:

               (a) Within a period of sixty (60) days after all applicable
permits have been obtained (which permits Landlord shall promptly apply for and
diligently seek), Landlord shall commence such repair, reconstruction and
restoration of the Premises as Landlord, in its reasonable business judgment,
deems necessary, and shall diligently prosecute the same to completion;
provided, however, that Tenant, at its cost, shall repair and restore all items
of Tenant's Work and replace its stock in trade, trade fixtures, furniture,
furnishings and equipment. Tenant shall commence this work promptly upon
delivery of possession of the Premises to Tenant and shall diligently prosecute
same to completion.

               (b) Notwithstanding the foregoing, if the Premises is totally
destroyed, or if the Project is destroyed to an extent of at least fifty percent
(50%) of the then full replacement cost thereof as of the date of destruction,
then Landlord shall have the right to terminate this Lease by written notice
delivered to Tenant within ninety (90) days following the date of such casualty.
In addition, if the Premises or a portion of the Project Common Areas which
materially and adversely affects operation of Tenant's business from the
Premises is damaged or destroyed during the Term and it is reasonably estimated
that repair or restoration after such casualty which Landlord is obligated under
the Lease to undertake will take more than two hundred seventy (270) days after
the issuance of the building permit for such work to complete, then Tenant shall
have the right to terminate this Lease by written notice delivered to Landlord
within twenty (20) days following Tenant's receipt of written notice of such
estimate. Further, if during the final year of the Term of this Lease, the
Premises is damaged or destroyed by casualty materially affecting the operation
of Tenant's business from the Premises and requiring more than ninety (90) days
(or such lesser time as is then remaining in the Term) to repair, then either
party shall have the right to terminate this Lease by delivery of written notice
to the other party delivered within forty-five (45) days following such
casualty. If this Lease is terminated pursuant hereto, then Landlord shall be
entitled to retain any insurance proceeds payable by reason of such destruction,
except that portion of any award attributable to Tenant's trade fixtures and
equipment.

          15.2 Uninsured Casualty. If the Premises or the Project are damaged as
a result of any casualty not covered by the insurance specified in Section 14.4,
Landlord, within ninety (90) days following the date of such damage, shall
commence repair, reconstruction or restoration of the Premises to the extent
provided herein and shall diligently prosecute the same to completion, or
Landlord may elect within said ninety (90) days not to so repair, reconstruct or
restore the damaged property, in which event, at Landlord's option, this Lease
shall cease and terminate upon the expiration of such ninety (90) day period. In
the event Landlord elects to restore the Premises, Tenant shall have the same
repair, restoration and replacement obligations it has pursuant to Section
15.1(a).



                                       44
<PAGE>   17

          15.3 Distribution of Proceeds. In the event of the termination of this
Lease pursuant to this Article 15, all proceeds from the Fire and Extended
Coverage insurance carried pursuant to Article 14 and all insurance covering
Tenant's Work and Tenant's leasehold improvements, but excluding proceeds for
trade fixtures, merchandise, signs and other personal property, shall be
disbursed and paid to Landlord.

          15.4 Abatement. In the event of repair, reconstruction and
restoration, as provided in this Article 15, the Minimum Annual Rent and
Additional Rent payable hereunder shall be thereafter abated proportionately
with the degree to which Tenant's use of the Premises is impaired during the
remainder of the period of repair, reconstruction and restoration; provided,
however, the amount of Minimum Annual Rent and Additional Rent abated pursuant
to this Section 15.4 shall in no event exceed the amount of loss of rental
income insurance proceeds actually received by Landlord. Tenant shall continue
the operation of its business on the Premises during any such period to the
extent reasonably practicable from the standpoint of prudent business
management. Tenant shall not be entitled to any compensation or damages from
Landlord for loss of use of the whole or any part of the Premises or the
building of which the Premises are a part, Tenant's personal property or any
inconvenience or annoyance occasioned by such damage, repair, reconstruction or
restoration.

          15.5 Waiver of Termination. Tenant waives any statutory rights of
termination which may arise by reason of any partial or total destruction of the
Premises.

                           ARTICLE 16 - EMINENT DOMAIN

          16.1 Taking. The term "Taking", as used in this Article 16, shall mean
an appropriation or taking under the power of eminent domain by any public or
quasi-public authority or a voluntary sale or conveyance in lieu of condemnation
but under threat of condemnation.

          16.2 Total Taking. In the event of a Taking of the entire Premises,
this Lease shall terminate and expire as of the date possession is delivered to
the condemning authority and Landlord and Tenant shall each be released from any
liability accruing pursuant to this Lease after the date of such termination,
but Minimum Annual Rent and Additional Rent for the last month of Tenant's
occupancy shall be prorated and Landlord shall refund to Tenant any Minimum
Annual Rent and Additional Rent paid in advance.

          16.3 Partial Taking. If (a) there is a Taking of a material portion of
the Premises and, regardless of the amount taken, the remainder of the Premises
is not, in Tenant's sole but reasonable business judgment, suitable for the
continued operation of Tenant's business, Tenant may terminate this Lease; or
(b) there is a Taking of a portion of the Premises and, regardless of the amount
taken, the remainder of the Premises is not one (1) undivided parcel of
property, either Landlord or Tenant may terminate this Lease, upon giving notice
in writing of such election to the other party within thirty (30) days after
receipt by Tenant from Landlord of written notice that a portion of the Premises
has been so appropriated or taken. In each case, the termination of this Lease
shall be effective as of the date Tenant is required to vacate the Premises, or
the portion of the Premises taken.

          16.4 Award. The entire award or compensation in any such condemnation
proceeding, whether for a total or partial Taking, or for diminution in the
value of the leasehold or for the fee, shall belong to and be the property of
Landlord; and, in any event, the holder of any mortgage or deed of trust
encumbering the Project shall have a first priority to the extent of the unpaid
balance of principal and interest on its loan. Without derogating the rights of
Landlord or said lender under the preceding sentence, Tenant shall be entitled
to recover from the condemning authority such compensation as may be separately
awarded by the condemning authority to Tenant or recoverable 1'rom the
condemning authority by Tenant in its own right for the taking of trade fixtures
and equipment owned by Tenant and for the expense of removing and relocating its
trade fixtures and equipment, but only in the event that the compensation
awarded to Tenant shall be in addition to and shall not diminish the
compensation awarded to Landlord as provided above.

          16.5 Continuation of Lease. In the event of a Taking, if Landlord and
Tenant elect not to terminate this Lease as provided above (or have no right to
so terminate), Landlord agrees, at Landlord's cost and expense as soon as
reasonably possible after the Taking, to restore the Premises (to the extent of
the condemnation proceeds) on the land remaining to a complete unit of like
quality and character as existed prior to the Taking and, thereafter, Minimum
Annual Rent and Additional Rent payable by Tenant hereunder 



                                       45
<PAGE>   18

shall be reduced on an equitable basis, taking into account the relative value
of the portion taken as compared to the portion remaining, and Landlord shall be
entitled to receive the total award or compensation in such proceedings.

                         ARTICLE 17 - DEFAULTS RY TENANT

          17.1 Events of Default. Should Tenant at any time be in default with
respect to any payment of Minimum Annual Rent, Additional Rent or any other
charge payable by Tenant pursuant to this Lease for a period of ten (10) days
after written notice from Landlord to Tenant (provided, however, any notice
shall be in lieu of, and not in addition to, any notice required under Section
1161 of the Code of Civil Procedure of California or any similar, superseding
statute), or should Tenant be in default in the prompt and full performance of
any other of its promises, covenants or agreements herein contained for more
than thirty (30) days (provided, however, if the default cannot be rectified or
cured within such thirty (30) day period, the default shall be deemed to be
rectified or cured if Tenant, within such thirty (30) day period, shall have
commenced to rectify or cure the default and shall thereafter diligently and
continuously prosecute same to completion) after written notice thereof from
Landlord to Tenant specifying the particulars of the default (provided, however,
any notice shall be in lieu of, and not in addition to, any notice required
under Section 1161 of the Code of Civil Procedure of California or any similar,
superseding statute), then Landlord may treat the occurrence of any one (1) or
more of the foregoing events as a breach of this Lease and, in addition to any
or all other rights or remedies of Landlord by law provided, Landlord shall have
the right, at Landlord's option, without further notice or demand of any kind to
Tenant or any other person, (a) to declare the Term ended and to re-enter and
take possession of the Premises and remove all persons therefrom, or (b) without
declaring this Lease terminated and without terminating Tenant's right to
possession, to re-enter the Premises and occupy the whole or any part for and on
account of Tenant and to collect any unpaid rentals and other charges which have
become payable or which may thereafter become payable, or (c) even though it may
have re-entered the Premises as provided in clause (b) above, to thereafter
elect to terminate this Lease and all of the rights of Tenant in or to the
Premises. In any case in which Landlord shall re-enter and occupy the whole or
any part of the Premises, by unlawful detainer proceedings or otherwise,
Landlord, at its option, may repair, alter, subdivide or change the character of
the Premises from time to time in such manner as Landlord deems best, may relet
the Premises or any part thereof and receive the rents therefor, and none of
such actions shall constitute a termination of this Lease, a release of Tenant
from any liability hereunder, or result in the release or exoneration of any
Guarantor, if any. Landlord shall not be deemed to have terminated this Lease or
the liability of Tenant to pay any Minimum Annual Rent, Additional Rent or other
charges later accruing by any re-entry of the Premises pursuant to Section
17.1(b) above, or by any action in unlawful detainer or otherwise to obtain
possession of the Premises, unless Landlord shall have notified Tenant in
writing that it has so elected to terminate this Lease. Tenant waives any and
all rights of redemption granted under any present and future laws in the event
Landlord obtains the right to possession of the Premises by reason of the
violation by Tenant of any of the covenants and conditions of this Lease or
otherwise.

          17.2 Termination of Lease. Should Landlord elect to terminate this
Lease pursuant to the provisions of clauses (a) or (c) of Section 17.1 above,
Landlord may recover from Tenant, as damages, the following: (a) the worth at
the time of award of any unpaid rental which had been earned at the time of the
termination, plus (b) the worth at the time of award of the amount by which the
unpaid rental which would have been earned after termination until the time of
award exceeds the amount of rental loss Tenant proves could have been reasonably
avoided, plus (c) the worth at the time of award of the amount by which the
unpaid rental for the balance of the Term after the time of award exceeds the
amount of rental loss that Tenant proves could be reasonably avoided, plus (d)
any other amounts necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which, in the ordinary course of things, would be likely to result
therefrom (specifically including, but not limited to, brokerage commissions
applicable to the remaining Term of this Lease and advertising expenses
incurred, reasonably necessary expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant) plus, at Landlord's
election, any other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by the laws of the State of California. As used in
clauses (a) and (b) above, the "worth at the time of award" is computed by
allowing interest at the Interest Rate. As used in clause (c) above, the "worth
at the time of award" is computed by discounting such amount at the discount
rate of the Federal Reserve Bank situated nearest to the location of the Project
at the time of award plus one percent (1%).



                                       46
<PAGE>   19

          17.3 Definition of Rental. For purposes of this Article 17 only, the
term "rental" shall be deemed to be Minimum Annual Rent, Additional Rent and all
other sums required to be paid by Tenant pursuant to the terms of this Lease.
All sums, other than Minimum Annual Rent, shall, for the purpose of calculating
any amount due under clause (c) of Section 17.2 above, be computed on the basis
of the average monthly amount accruing during the immediately preceding sixty
(60) month period, except that if it becomes necessary to compute these sums
before the sixty (60) month period has occurred, then these sums shall be
computed on the basis of the average monthly amount accruing during the shorter
period.

                        ARTICLE 18 - DEFAULTS BY LANDLORD

          18.1 Landlord's Liability. If Landlord fails to perform any of the
covenants, provisions or conditions contained in this Lease on its part to be
performed within thirty (30) days after written notice of default (or if more
than thirty (30) days shall be required because of the nature of the default, if
Landlord shall fail to diligently proceed to commence to cure the default after
written notice), then Landlord shall be liable to Tenant for all damages
sustained by Tenant as a direct result of Landlord's breach and Tenant sh2l not
be entitled to terminate this Lease as a result thereof. Notwithstanding
anything contained in this Lease to the contrary, it is expressly understood and
agreed that any judgment against Landlord resulting from any default or other
claim under this Lease shall be satisfied only out of the net rents, issues,
profits and other income actually received from the operation of the Project,
and Tenant shall have no claim against Landlord (as Landlord is defined in
Section 14.5) or any of Landlord's personal assets for satisfaction of any
judgment with respect to this Lease. Notwithstanding the foregoing, in the case
of a bona fide emergency, provided Tenant first makes a reasonable, good faith
effort to notify Landlord or the manager of the Project, Tenant shall be
entitled to make such repairs as are necessary to remove the emergency for
Landlord's account and Landlord will reimburse Tenant for the cost paid by
Tenant in doing so within thirty (30) days after Tenant's delivery to Landlord
of an invoice, together with reasonable back up documentation, for same.

          18.2 Cure by Lender. If any part of the Premises is at any time
subject to a first mortgage or a first deed of trust, and this Lease or the
rentals due from Tenant hereunder are assigned by Landlord to a mortgagee,
trustee or beneficiary ("Lender" for purposes of this Article 18 only) and
Tenant is given written notice of the assignment including the mailing address
of Lender, then Tenant shall also give written notice of any default by Landlord
to Lender, specifying the default in reasonable detail and affording Lender a
reasonable opportunity to make performance for and on behalf of Landlord. If and
when Lender has made performance on behalf of Landlord, the default shall be
deemed cured.

         ARTICLE 19 - SUBORDINATION, ATTORNMENT AND TENANT'S CERTIFICATE

          19.1 Subordination. Upon written request of Landlord, Landlord's
mortgagee, the beneficiary of a deed of trust of Landlord or a lessor of
Landlord, Tenant will subordinate its rights pursuant to this Lease in writing
to the lien of any mortgage, deed of trust or the interest of any lease in which
Landlord is the lessee (or, at Landlord's option, cause the lien of said
mortgage, deed of trust or the interest of any lease in which Landlord is the
lessee to be subordinated to this Lease) and to all advances made or hereafter
to be made upon the security thereof.

          19.2 Attornment. In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by Landlord encumbering the Premises, or should a
lease in which Landlord is the lessee be terminated, Tenant shall attorn to the
purchaser or lessor under such lease upon any foreclosure, sale or lease
termination and recognize the purchaser or lessor as Landlord under this Lease,
provided that the purchaser or lessor shall acquire and accept the Premises
subject to this Lease.

          19.3 Estoppel Certificates. Tenant agrees, upon not less than ten (10)
days following Tenant's receipt of prior written notice from Landlord, to
execute, acknowledge and deliver to Landlord, a statement in writing in such
form as may reasonably be required by Landlord or Landlord's beneficiary or
transferee ("Tenant's Certificate"), certifying: (a) the date of commencement of
this Lease; (b) the fact that this Lease is unmodified and in full force and
effect (or, if there have been modifications hereto, that this Lease is in full
force and effect, as modified, and stating the date and nature of such
modifications); (c) the date to which the Minimum Monthly Rent and other sums
payable under this Lease have been paid; (d) that there are no current defaults
under this Lease by either Landlord or Tenant except as specified in such
statement; and



                                       47
<PAGE>   20

(e) such other matters respecting this Lease or the Premises as are reasonably
requested. Landlord and Tenant intend that any statement delivered pursuant to
this Section 19.3 may be relied upon by any existing or prospective mortgagee,
beneficiary, encumbrancer, transferee or purchaser of the interest of Landlord
in the Project, Premises or this Lease.

                          ARTICLE 20 - QUIET ENJOYMENT

          Upon Tenant's payment of Minimum Annual Rent and Additional Rent and
its observation and performance of all of the covenants, terms and conditions of
this Lease to be observed and performed by Tenant, Tenant shall peaceably and
quietly hold and enjoy the Premises from and after delivery thereof to Tenant;
subject, however, to (a) the rights of the parties as set forth in this Lease,
(b) any deed of trust or ground or underlying leases to which this Lease is
subordinate, and (c) all matters of record to which this Lease is subject;
provided that none of the items specified in clause (c) above shall materially
diminish the rights or materially increase the obligations of Tenant under this
Lease, or materially interfere with or prevent the use of the Premises for the
use specified in Section 1.9.

                         ARTICLE 21 - TITLE OF LANDLORD

          This Lease is made subject to all matters of record, now or hereafter
existing as such documents have been heretofore or may hereafter be
supplemented, implemented, modified, replaced or amended, it being understood
that none of the aforementioned documents shall prevent Tenant from using the
Premises for the purpose set forth in Section 1.9. Tenant agrees that, as to its
leasehold estate, it and all persons in possession or holding under it will
conform to and not contravene the provisions of said matters and, within ten
(10) days after request therefor, shall execute and return to Landlord documents
in recordable form subordinating this Lease to any matter now or hereafter of
record.

                           ARTICLE 22 - MISCELLANEOUS

          22.1 Notices. Every notice, demand or request (collectively "Notice")
required hereunder or by law to be given by either party to the other shall be
in writing. Every provision of this Lease which provides that either party shall
notify the other of any particular matter shall be governed by this Section.
Notices shall be given by personal service or by United States certified or
registered mail, postage prepaid, return receipt requested, or by same-day or
overnight private courier, addressed to the party to be served at the address
indicated in Section 1.12 or such other address as the party to be served may
from time to time designate in a Notice to the other party. Notice personally
served shall be effective when delivered to the party upon whom such Notice is
served. If served by registered or certified mail, Notice shall be conclusively
deemed served on the date shown on the return receipt, but if delivery is
refused or the Notice is unclaimed, Notice shall conclusively be deemed given
forty eight (48) hours after mailing. If served by telegram, mailgram or private
courier, Notice to the addressee shall be conclusively deemed given as confirmed
by the telegraphic agency or private courier service making delivery. Copies of
any Notice shall be sent to the addresses, if any, designated for service of
copies of Notices in Section 1.12; but the inadvertent failure to serve a copy
of a Notice, either to the address so designated or in the manner provided in
this Section, shall not render service of Notice invalid if the original Notice
is served in accordance with this Section.

          22.2 Financial Statements. Within fifteen (15) days after Landlord's
written request, Tenant shall furnish Landlord with financial statements or
other reasonable financial information reflecting Tenant's current financial
condition, certified by Tenant or its financial officer. If Tenant is a
publicly-traded corporation, delivery of Tenant's last published financial
information shall be satisfactory for purposes of this Section 22.2. Any
information obtained from Tenant's financial statements shall be confidential
and shall not be disclosed other than to carry out the purposes of this Lease;
provided, however, Landlord shall incur no liability for the inadvertent
disclosure of any such information. Landlord may divulge the contents of any
financial statements in connection with any financing arrangement or sale of
Landlord's interest in the Premises or Project or in connection with any
administrative or judicial proceedings.

          22.3 Hazardous Materials.

               (a) Tenant, at its sole cost and expense, shall comply with all
laws relating to the storage, use, handling and disposal of hazardous, toxic or
radioactive matter including, without limitation, those materials identified in
Sections 66680 and 66685 of Title 22 of the California Administrative Code,
Division 4, Chapter 



                                       48
<PAGE>   21

30 ("Title 22"), as amended from time to time (collectively, "Hazardous
Materials"). Tenant represents and warrants that, except for materials falling
within the definition of "Hazardous Materials" which are normally used and
properly disposed of in the ordinary course of Tenant's business, or which are
sold in Tenant's store in the ordinary course of Tenant's business, neither
Tenant, nor its agents, servants, employees, contractors, nor anyone else acting
on Tenant's behalf will store, dispose of, produce, use, transport or
manufacture any Hazardous Materials on the Premises or any portion of the
Project. Tenant shall notify Landlord and provide to Landlord a copy or copies
of the following environmental entitlements or inquiries related to the
Premises: Notices of violation, notices to comply, citations, inquiries, reports
filed pursuant to self-reporting requirements and reports filed pursuant to any
governmental law or regulation relating to underground tanks.

               (b) The clean-up and disposal of any Hazardous Materials located
or released onto or about the Project by Tenant or its agents, contractors or
employees shall be performed by Tenant at Tenant's sole cost and expense and
shall be performed in accordance with all applicable laws, rules, regulations
and ordinances, pursuant to a site assessment and removal/remediation plan
prepared by a licensed and qualified geotechnical engineer and submitted to and
approved in writing by Landlord prior to the commencement of any work. The
foregoing notwithstanding, Landlord in Landlord's sole and absolute discretion
may elect, by written notice to Tenant, to perform the clean-up and disposal of
such Hazardous Materials from the Premises and/or the Project. In such event,
Tenant shall pay to Landlord the actual cost of same upon receipt from Landlord
of Landlord's written invoice therefor.

               (c) Notwithstanding any other term or provision of this Lease,
Tenant shall permit Landlord or Landlord's agents or employees to enter the
Premises at any time, upon reasonable notice, to inspect, monitor and/or take
emergency or long-term remedial action with respect to Hazardous Materials on or
affecting the Premises or to discharge Tenant's obligations hereunder with
respect to such Hazardous Materials when Tenant has failed, after demand by
Landlord, to do so. All costs and expenses incurred by Landlord in connection
with performing Tenant's obligations hereunder shall be reimbursed by Tenant to
Landlord within ten (10) days of Tenant's receipt of written request therefor.

               (d) In the event that any Hazardous Materials are discharged in
the Premises or the Project by Landlord or any of its agents, servants,
employees, contractors or anyone else acting on behalf of Landlord, and such
discharge is required to be remediated pursuant to applicable laws or the same
has a material and adverse affect upon Tenant's use of or operation of its
business from the Premises, Landlord shall diligently perform or cause to be
performed the necessary clean-up of such Hazardous Materials on or affecting the
Premises at no expense to Tenant. Notwithstanding the foregoing, if it is
reasonably estimated that the clean-up of such Hazardous Materials will cause
the Premises to be untenantable or require Tenant to close its business therein
for more than two hundred seventy (270) days, Tenant shall each have the right
to terminate this Lease upon written notice to Landlord within thirty (30) days
after the date of the completion of an assessment of the discharge.

               (e) The indemnification agreements set forth in this Section 22.3
shall survive the expiration of the Lease, or the earlier termination thereof.

          22.4 Project Remodeling. At any time during the Term, Landlord may
remodel or expand, in any manner, the existing Project, which work may include
the addition of shops and/or the addition of new buildings to the Project
(collectively, the "remodeled Center"). Landlord's work will not unreasonably
interfere with the normal operations of Tenant's business from the Premises.

          22.5 Failure to Substantially Complete Premises. The parties hereby
acknowledge that Landlord does not own the Project or any portion thereof, but
is presently negotiating for the purchase of all or a portion of the Project
area. Accordingly, notwithstanding anything to the contrary contained herein,
(a) if for any reason whatsoever Substantial Completion of the Premises has not
occurred on or before the last day of the twenty-fourth (24th) month following
the Effective Date, or (b) if Landlord should at any time postpone or abandon
the acquisition, development or construction of the Project or that portion of
the Project in which the Premises are located, then either party may elect to
terminate this lease by giving thirty (30) days' notice of such election to the
other party. If such notice is given, this Lease and the rights and obligations
of the parties pursuant to this Lease shall cease and terminate. If this Lease
is terminated pursuant to this Section 22.5, neither party shall have any
further or additional rights, remedies, claims or liability arising out of this
Lease or the termination of this Lease, and the Existing Lease shall not
terminate as provided in Section 4.3 above,



                                       49
<PAGE>   22

but instead shall continue in full force and effect in accordance with the terms
and conditions of the Existing Lease.

          22.6 Trade Fixtures, Personal Property, and Alterations. Upon the
expiration or earlier termination of the Term, Tenant shall remove from the
Premises all of Tenant's trade fixtures, furniture, equipment, signs,
improvements, additions and Alterations to the extent such items are not
permanently affixed to the Premises, and immediately repair any damage
occasioned to the Premises by reason of such removal so as to leave the Premises
in a neat and clean condition. Tenant may encumber or finance its movable
fixtures and equipment installed in the Premises, and no such encumbrance or
financing shall be deemed a Transfer, provided such encumbrance or financing
creates a security interest in such movable fixtures and equipment, only, and
confers no interest in the Premises. All trade fixtures, signs and other
personal property installed in or attached to the Premises by Tenant must be new
or like new when so installed or attached.

          22.7 Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, governmental restrictions, governmental
regulations, governmental controls, judicial orders, enemy or hostile
governmental action, civil commotion, fire or other casualty, and other causes
(except financial) beyond the reasonable control of the party obligated to
perform, shall excuse the performance by that party and extend the time for
performance by that party for a period equal to the prevention, delay or
stoppage, except the obligations imposed with regard to Minimum Annual Rent and
Additional Rent to be paid by Tenant pursuant to this Lease; provided the party
prevented, delayed or stopped shall have given the other party written notice
thereof within thirty (30) days of such event causing the prevention, delay or
stoppage.

          22.8 Termination and Holding Over. This Lease shall terminate without
further notice upon the expiration of the Term. Tenant shall have no right to
extend or renew this Lease upon the expiration of the Term. Upon the expiration
or earlier termination of the Term, Tenant shall peaceably and quietly surrender
the Premises broom-clean and in the same condition (including, at Landlord's
option, the demolition and removal of any Alterations made by Tenant to the
Premises, unless at the time Landlord gave its consent to such Alterations,
Landlord agreed in writing that Tenant would not have to demolish and remove
such Alterations upon the termination of this Lease) as the Premises were in
upon delivery of possession of same to Tenant by Landlord, reasonable wear and
tear and any damage to the Premises which Tenant is not required to repair
pursuant to Article 15 or Article 16 excepted. Tenant shall remove from the
Premises all of Tenant's trade fixtures, furniture, equipment, signs,
improvements, additions and Alterations to the extent such items are not
permanently affixed to the Premises, and immediately repair any damage
occasioned to the Premises by reason of such removal so as to leave the Premises
in a neat and clean condition. Should Tenant hold over in the Premises beyond
the expiration or earlier termination of this Lease, the holding over shall not
constitute a renewal or extension of this Lease or give Tenant any rights under
this Lease. In such event, Landlord may, in its sole discretion, treat Tenant as
a tenant at will, subject to all of the terms and conditions in this Lease,
except that Minimum Annual Rent shall be an amount equal to one hundred fifty
percent (150%) of Minimum Annual Rent which was payable by Tenant for the twelve
(12) month period immediately preceding the expiration or earlier termination of
this Lease.

          22.9 Miscellaneous Provisions.

               (a) Any waiver by either party of a breach by the other party of
a covenant of this Lease shall not be construed as a waiver of a subsequent
breach of the same covenant. The consent or approval by either party to anything
requiring such party's consent or approval shall not be deemed a waiver of such
party's right to withhold consent or approval of any subsequent similar act. No
breach of a covenant of this Lease shall be deemed to have been waived by the
other party unless the waiver is in writing and is signed by such party.

               (b) Except as provided herein to the contrary, and subject to the
specific limitations contained in Article 18, the respective rights and remedies
of the parties specified in this Lease shall be cumulative and in addition to
any rights and remedies not specified in this Lease. It is understood that there
are no oral or written agreements or representations between the parties hereto
affecting this Lease and this Lease supersedes and cancels any and all previous
negotiations, arrangements, representations, brochures, agreements and
understandings, if any, between Landlord and Tenant. No provision of this Lease
may be amended except by an agreement in writing signed by Landlord and Tenant.
If any provision of this Lease or the application of such provision to any
person, entity or circumstance is found invalid or unenforceable by a 



                                       50
<PAGE>   23

court of competent jurisdiction, such determination shall not affect the other
provisions of this Lease and all other provisions of this Lease shall be deemed
valid and enforceable.

               (c) This Lease shall be governed by and construed in accordance
with the laws of the State of California without giving effect to the choice of
law provisions thereof.

               (d) Subject to the terms of this Lease, all rights and
obligations of Landlord and Tenant under this Lease shall extend to and bind the
respective heirs, executors, administrators and the permitted concessionaires,
successors, subtenants and assignees of the parties. If there is more than one
(1) Tenant hereunder, each shall be bound jointly and severally by the terms,
covenants and agreements contained in this Lease.

               (e) Except for the delivery of possession of the Premises to
Tenant, time is of the essence of all provisions of this Lease of which time is
an element. For purposes of this Lease, a "business day" shall mean any day
other than a Saturday, Sunday or a holiday recognized by the United States
Postal Service.

               (f) If Tenant or Landlord is a corporation, partnership or
limited liability company, each individual executing this Lease on behalf of the
corporation or partnership (in his/her representative capacity only) represents
and warrants that he or she is duly authorized to execute and deliver this Lease
on behalf of the corporation or partnership and that this Lease is binding upon
the corporation or partnership.

               (g) Tenant shall observe faithfully and comply with, and shall
cause its employees and invitees to observe faithfully and comply with,
reasonable and nondiscriminatory rules and regulations governing the Project as
may from time to time be promulgated by Landlord, which rules and regulations
currently include the provisions of Exhibit B.

               (h) Landlord and Tenant each represent and warrant that it has
had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, and that it knows of no other real estate broker,
agent or finder who is or might be entitled to a commission or fee in connection
with this Lease. In the event of any claim for broker's or finder's fees or
commissions in connection with this Lease, Landlord shall indemnify, hold
harmless and defend Tenant from and against any and all liability, claims,
demands, damages and costs (including, without limitation, reasonable attorneys'
fees and other litigation expenses) on account of such claim if it shall be
based upon any statement, representation or agreement claimed to have been made
by Landlord and Tenant shall indemnify, hold harmless and defend Landlord from
and against any and all liability, claims, demands, damages and costs
(including, without limitation, reasonable attorneys' fees and other litigation
expenses) on account of such claim if it shall be based upon any statement,
representation or agreement claimed to have been made by Tenant.

               (i) Neither this Lease nor any memorandum hereof shall be
recorded by either party hereto.

               (j) Should Landlord sell, exchange or assign this Lease (other
than a conditional assignment as security for a loan), then Landlord, as
transferor, shall be relieved of any and all obligations on the part of Landlord
accruing under this Lease from and after the date of such transfer provided that
Landlord's successor in interest shall assume such obligations from and after
such date. Written notice of any such transfer shall be given to Tenant.

               (k) Landlord and Tenant desire and intend that any disputes
arising between them with respect to or in connection with this Lease be subject
to expeditious resolution in a court trial without a jury. Therefore, Landlord
and Tenant each hereby waive the right to trial by jury of any cause of action,
claim, counterclaim or cross-complaint in any action, proceeding or other
hearing brought by either Landlord against Tenant or Tenant against Landlord on
any matter whatsoever arising out of, or in any way connected with, this Lease,
the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises or any claim of injury or damage, or the enforcement of any remedy
under any law, statute, or regulation, emergency or otherwise, now or hereafter
in effect.

               (1) In the event either party shall institute any action or
proceeding against the other party relating to this Lease, the unsuccessful
party in such action or proceeding shall reimburse the successful party for its
disbursements incurred in connection therewith and for its reasonable attorneys'
fees and costs as fixed by the court. In addition to the foregoing award of
attorneys' fees and costs to the successful party, the 



                                       51
<PAGE>   24

successful party in any lawsuit on this Lease shall be entitled to its
attorneys' fees and costs incurred in any post-judgment proceedings to collect
or enforce the judgment. This provision is separate and several and shall
survive the merger of this Lease into any judgment on this Lease.

          22.10 Exhibits. The following Exhibits are attached to this Lease and,
by this reference, made a part of this Lease:

               Exhibit A - Site plan (the "Site Plan") of the Project. Landlord,
at any time, may change the shape, size, location, number and extent of the
improvements shown on Exhibit A and eliminate, add or relocate any improvements
to any portion of the Project, and may add land to and/or withdraw land from the
Project. Notwithstanding the foregoing, Landlord agrees that no changes or
additions to the buildings or Common Area immediately adjacent to the Premises
shall, except temporarily and for periods of reasonable duration during the
construction of any such changes or additions, do any of the following: (a)
materially and adversely interfere with Tenant's ability to operate its business
from the Premises; or (b) materially and adversely impair ingress, egress or
other access to or from the Premises. Landlord agrees that any such changes or
additions shall be made in a manner consistent with first class Projects, and
Landlord shall take reasonable steps to minimize the unreasonable adverse impact
upon the Premises occasioned by any such changes or additions.



                                       52
<PAGE>   25

                   Exhibit B - Rules and Regulations.

                   Exhibit C - Construction Provisions.

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

Landlord:                                   Tenant:

FRANKLIN STREET PROPERTIES, LLC,            CENTRAL COAST BANK CORP.,
A California limited liability company      a California corporation

By: /s/ Matt Howarth                        By:  /s/ Harry D. Wardwell
   -------------------------------               -------------------------------
   Print Name: Matt Howarth                      Print Name: Harry D. Wardwell
               ------------                                  -----------------
Its: Partner                                Its: President, Cypress Bank
     -------                                     -----------------------



                                       53
<PAGE>   26



                                    EXHIBIT B
                              RULES AND REGULATIONS

          1. Tenant shall keep the Premises in a neat and clean condition, free
from any objectionable noises, odors or nuisances, shall operate its business
without unreasonable noise or vibration emanating from the Premises, and shall
comply with all applicable health, safety and police laws, ordinances and
regulations of any governmental authority having jurisdiction over the Premises
or the Project; provided, however, the foregoing shall not be construed to
require Tenant to perform any repairs which are the obligation of Landlord
pursuant to this Lease. In addition, Tenant shall, at its sole cost and expense,
keep Tenant's installation and/or pick-up areas adjacent to the Building in a
neat and clean condition, and shall be responsible for removing from the Project
any litter or debris resulting from Tenant's use of such installation and/or
pick-up areas. Tenant shall not sell merchandise from vending machines or allow
any coin or token operated vending machine on the Premises, except those
provided for the convenience of Tenant's employees and pay telephones provided
for the convenience of its customers. Tenant shall deposit trash and rubbish
only within receptacles approved by Landlord. Landlord shall cause trash
receptacles to be emptied at Tenant's cost and expense; provided, however, at
Landlord's option, Landlord may provide trash removal services, the cost of
which shall be paid for by Tenant either (a) as a Common Area Expense, or (b)
pursuant to an equitable proration of said costs by Landlord. Tenant shall not
display or sell merchandise or allow carts, signs or any other object to be
stored or to remain outside the Premises. Tenant shall not erect any aerial or
antenna on the roof, exterior walls or any other portion of the Premises. Tenant
shall not solicit or distribute materials in the Common Area. Landlord, from
time to time, may establish further reasonable and nondiscriminatory rules and
regulations for the Project, and Tenant shall abide by same provided that they
neither materially increase Tenant's obligations nor materially diminish
Tenant's rights under this Lease. Tenant shall neither conduct on the Premises,
nor advertise with 'respect to the Premises, any liquidation, "going out of
business", distress, "lost our lease" or similar sale.

          2. No advertising medium shall be utilized by Tenant which can be
heard or seen outside the Premises including, without limitation, flashing
lights, searchlights, loudspeakers, phonographs, radios or televisions;
provided, however, Tenant shall be permitted to use music and video within the
Premises as part of its merchandising so long as the volume of same is
maintained at levels which do not cause Disturbance of other tenants of the
Project. Tenant shall not display, paint or place any handbill, bumper sticker
or other advertising device on any vehicle parked in the Common Area. Tenant
shall not distribute any handbills or other advertising matter in the Project.

          3. Tenant and its employees shall park their vehicles only in the
parking areas from time to time designated for that purpose by Landlord (if such
an employee parking area is designated). Without limiting the generality of the
foregoing, if Landlord implements any program related to parking, parking
facilities or transportation facilities including, but not limited to, any
reasonable program of parking validation, employee shuttle transportation during
peak traffic periods or other program to limit, control, enhance, regulate or
assist parking by customers of the Project, Tenant agrees to participate in the
program and to pay its proportionate share of the costs of the program under
reasonable and nondiscriminatory rules and regulations from time to time
established by Landlord, provided that a majority of the other retail tenants of
the Project occupying premises with Floor Area equal to or less than that
occupied by Tenant are also required by their leases to participate in and pay
their proportionate shares of the costs of the program. Tenant shall furnish
Landlord with a list of its and its employees' vehicle license numbers at any
time during the Term within fifteen (15) days after Landlord's written request.
Tenant acknowledges that Landlord shall have the right to cause to be towed any
vehicle belonging to Tenant or Tenant's employees parked in violation of these
provisions and/or to attach violation stickers or notices to any such vehicle.
Tenant agrees to assume responsibility for compliance by its employees with
these parking provisions and to cooperate with Landlord and its agents in
collecting all costs and expenses incurred by Landlord in connection with
Landlord's reasonable efforts to enforce such regulations from Tenant's
employees who violate same.



                                       54
<PAGE>   27

                                    EXHIBIT C
                                  CONSTRUCTION
                                   PROVISIONS

          1. Description of Landlord's Work. Attached hereto as Schedule 1 and
incorporated herein by this reference is a description of the improvements
within the Premises which will be provided by Landlord at Landlord's sole cost
and expense (the "Landlord's Work"). Following the Substantial Completion of the
Premises, Landlord shall not be liable for the condition of the Premises or for
the performance of any work in the Premises except as specifically otherwise set
forth in this Lease, provided that Landlord shall promptly correct any such
punch-list items with respect to Landlord's Work identified in written notice
from Tenant to Landlord within sixty (60) days following the delivery of
possession of the Premises to Tenant (or as soon thereafter as reasonably
practicable). Landlord shall not be obligated to perform any work or provide any
facilities in relation to the Premises or Project except as set forth in this
Section 1, or as otherwise set forth in this Lease. Where two (2) types of
materials or structures are indicated, Landlord will have the option of using
either.

          2. Description of Tenant's Work. The work to be done by Landlord in
satisfying its obligation to construct the Premises under this Lease shall be
limited to that described in Section 1 above. All other work to be done in the
Premises shall be provided by Tenant at Tenant's sole cost and expense (the
"Tenant's Work"). Tenant's Work shall include, but shall not be limited to, the
purchase and/or installation and/or performance of the following (including any
and all applicable architectural and engineering fees therefor), except to the
extent the same is included within Landlord's Work, if applicable:

          A.   Floors: Tenant shall provide all floor coverings and base in the
               Premises.

          B.   Walls. Tenant shall construct all interior partition walls and
               shall provide all wall finishes.

          C.   Plumbing: Tenant shall provide all additional plumbing beyond
               that provided for toilet room as Landlord's work.

          D.   Gas Service: Tenant shall apply for and pay any fees associated
               with installation of a gas meter and shall pay for the extension
               of service lines to the Premises.

          E.   Telephone: Tenant shall provide all telephone equipment and
               distribution systems and connections to main terminal backboard.
               All equipment required for Tenant's telephone will be located
               within Tenant's Premises.

          F.   Fire Sprinklers: Tenant, at its sole cost and expense, shall
               modify the existing fire sprinkler system as required by building
               or fire officials.

          G.   Signs: Tenant shall provide all storefront signs in conformance
               with the approved sign program for the Project. In addition to
               Landlord's approval, Tenant shall obtain the approval of all
               governmental entities having jurisdiction. The approval by
               Landlord is separate and in addition to local governmental
               approval. Tenant may maintain such professionally prepared
               interior signs as Tenant desires, subject to compliance with the
               requirements of all applicable governmental authorities.

          H.   Utilities: Tenant shall apply for and pay all fees associated
               with all utility services and permits, any increase in the
               serving capacity of water, electrical, HVAC, sewer or gas
               services due to Tenant's requirements and any additional
               equipment necessitated thereby.

               3.   Provisions For Completion of Plans and Specifications and
                    Construction of Premises.

                         (a) The procedure for approval of Tenant's plans and
specifications is as follows:

                    (i) Within thirty (30) days of receipt of a set of building
plans, Tenant shall prepare and submit to Landlord four (4) sets of
fully-dimensioned one-quarter inch (1/4") or one-eighth inch (1/8") scale
drawings and specifications prepared by Tenant's licensed architect at Tenant's
expense, which drawings shall 



                                       55
<PAGE>   28

indicate clearly and in detail all specific changes and alterations to the
Premises including, but not limited to, the storefront, interior partitions,
fixture plans, plumbing, lighting, electrical outlets and all of Tenant's Work,
as described above. Any and all such plans shall be subject to Landlord's prior
written approval, which approval shall not be unreasonably withheld or delayed.
Landlord shall have ten (10) business days within which to approve or disapprove
Tenant's proposed plans. In the event Landlord shall disapprove Tenant's plans,
Landlord shall provide Tenant with written objections, and Tenant shall have ten
(10) business days within which to amend its proposed plans and incorporate
Landlord's required changes. Landlord's review of plans and specifications for
Tenant's Work as set forth herein, shall be for Landlord's sole purpose and
shall not imply Landlord's review of the same, or obligate Landlord to review
the same, for quality, design, compliance with laws or other like matters.
Accordingly, notwithstanding that any plans and specifications for Tenant's Work
are reviewed by Landlord or its space planner, architect, engineers and/or
consultants, and notwithstanding any advice or assistance which may be rendered
to Tenant by Landlord or Landlord's space planner, architect, engineers and/or
consultants, Landlord shall have no liability whatsoever in connection therewith
and shall not be responsible for any omissions or errors contained in the plans
and specifications. for Tenant's Work, and Tenant's waiver and indemnity set
forth in Section 14.5 of this Lease shall specifically apply to the plans and
specifications for Tenant's Work.


                    (ii) Upon Landlord's approval of Tenant's proposed plans,
Tenant shall promptly submit such approved plans to the appropriate governmental
authority for plan checking and the issuance of a building permit. In the event
such governmental authority requires any changes to such approved plans prior to
the issuance of a building permit, Tenant shall, at its sole cost and expense,
promptly change such plans pursuant to such governmental request and submit such
changed plans to Landlord for its approval, which approval shall not be
unreasonably withheld or delayed. Landlord shall have five (5) business days
within which to approve or disapprove such changed plans. In the event Landlord
shall disapprove such changed plans, Landlord shall provide Tenant with written
objections, and Tenant shall have five (5) business days within which to amend
such plans and incorporate Landlord's required changes. Upon Landlord's approval
of the changed plans, Tenant shall promptly resubmit such plans to the
appropriate governmental authority for plan checking and the issuance of a
building permit as previously set forth in this Subparagraph (b). Upon Tenant's
receipt of a building permit and any other necessary governmental approvals for
Tenant's Work based upon plans approved by Landlord (the "Final Approved
Plans"), and delivery of possession of the Premises, Tenant shall promptly
commence construction of Tenant's Work and shall diligently pursue such
construction to completion in accordance with the Final Approved Plans.

                    (iii) No changes, modifications or alterations to the Final
Approved Plans may be made without the prior written consent of Landlord, which
approval shall not be unreasonably withheld or delayed. Any additional costs and
expenses including, without limitation, increased fees which Landlord is
required to pay for architectural, engineering and other similar services that
are made necessary by reason of any change, modification or alteration to the
Final Approved Plans, any additional construction costs including costs of
change orders charged by Landlord's contractor and any and all other costs,
expenses and/or damages incurred or suffered by Landlord by reason of the
changes, modifications or alterations to the Final Approved Plans and any delays
to the extent caused by such changes, modifications or alterations to the Final
Approved Plans shall be at the sole cost and expense of Tenant and shall be paid
by Tenant to Landlord (based upon a reasonably detailed estimate of such cost
and expense which shall be subject to Tenant's written approval as a condition
to Landlord's obligation to consent to such proposed changes, modifications or
alterations) before the performance of the work requested by Tenant.

               (b) Tenant shall not commence any work in the Premises unless and
until the following conditions have been met: (i) Final Approved Plans shall
have been achieved; (ii) Landlord shall have reasonably approved Tenant's
contractor; (iii) Tenant shall have obtained all permits and approvals from all
appropriate governmental authorities for the Tenant's Work and shall furnish
Landlord with copies of all such permits; (iv) Tenant, its contractor and
subcontractors (collectively, "Tenant's Agents") shall have procured all
insurance required under the provisions of this Lease and shall have furnished
Landlord with certificates of such insurance in accordance with the provisions
of this Lease; and (v) Landlord shall have consented to the commencement of
Tenant's Work, which consent shall not be unreasonably withheld or delayed.

               (c) (i) The Tenant's Work shall be constructed in accordance with
the Final Approved Plans in a good and workmanlike manner and in compliance with
all applicable laws. Neither Tenant nor Tenant's 



                                       56
<PAGE>   29

Agents shall interfere with, obstruct, or delay, any other work in the Premises
or customary Common Area use or operations of other Project occupants. Tenant
and Tenant's Agents shall abide by all reasonable rules made by Landlord's
contractor and provided to Tenant or Tenant's contractor in writing with respect
to the storage of materials and coordination of work with other work being
performed in the Project. Each of Tenant's Agents shall guarantee to Tenant and
for the benefit of Landlord that the portion of the Tenant's Work for which it
is responsible shall be free from any defects in workmanship and materials for a
period of not less than one (1) year from the date of completion thereof. Each
of Tenant's Agents shall be responsible for the replacement or repair, without
additional charge, of all work done or furnished in accordance with its contract
that shall become defective within one (1) year after the later to occur of (i)
completion of the work performed by such contractor or subcontractors and (ii)
the Rent Commencement Date. The correction of such work shall include, without
additional charge, all additional expenses and damages incurred in connection
with such removal or replacement of all or any part of the Tenant's Work, and/or
the Premises and/or Common Areas that may be damaged or disturbed thereby. All
such warranties or guarantees as to materials or workmanship of or with respect
to the Tenant's Work shall be written such that such guarantees or warranties
shall inure to the benefit of Landlord and Tenant, as their respective interests
may appear, and can be directly enforced by any of them. Tenant covenants to
give to Landlord any assignment or other assurances which may be necessary to
effect such right of direct enforcement.

                         (ii) All of Tenant's Agents shall carry worker's
compensation insurance covering all of their respective employees, and shall
also carry commercial general liability insurance in an amount not less than One
Million Dollars ($1,000,000.00) combined single limit for personal injury,
bodily injury and property damage, naming Landlord, and at Landlord's option,
Landlord's lender, each as an additional insured thereunder, with companies
meeting the standards set forth in Section 14.2 of the Lease, and the policies
therefor shall inure to the benefit of Tenant and Landlord, as their interests
may appear. Certificates for all insurance carried pursuant hereto shall be
delivered to Landlord before the commencement of construction of the Tenant's
Work and all such policies of insurance must contain a provision that the
company writing said policy will give Landlord thirty (30) days prior written
notice of any cancellation or lapse of the effective date or any reduction in
the amounts of such insurance. In the event that the Tenant's Work is damaged by
any cause during the course of the construction thereof, Tenant shall diligently
proceed to repair the same at Tenant's sole cost and expense. Tenant and
Tenant's Agents shall maintain all of the foregoing insurance coverage in force
until the Tenant's Work is completed. All insurance required hereunder (except
Workers' Compensation) shall preclude subrogation claims by the insurer against
anyone insured thereunder and shall provide that it is primary insurance as
respects Landlord and that any other insurance maintained by Landlord is excess
and noncontributing with the insurance required hereunder.



                         (iii) Within ten (10) days after completion of
construction of the Tenant's Work, Tenant shall cause a Notice of Completion to
be recorded in the office of the Recorder of the County in which the Project is
located in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute, and shall furnish a copy thereof to
Landlord upon such recordation. If Tenant fails to do so within a reasonable
period following written notice from Landlord, Landlord may execute and file the
same on behalf of Tenant as Tenant's agent for such purpose, at Tenant's sole
cost and expense. Within thirty (30) days following the completion of the
Tenant's Work, Tenant shall deliver to Landlord a set of as-built drawings for
the Premises. Tenant shall obtain a certificate of occupancy for the Premises
promptly following completion of the Tenant's Work.

          4. Allowance. Tenant shall be entitled to a one-time allowance (the
"Allowance") in an amount equal to Fifty Thousand Dollars ($50,000.00) less the
aggregate sum of base rent under the Existing Lease abated pursuant to Section
4.3 of the Lease of which this Exhibit is a part, for the costs of construction
of the Tenant's Work. The Allowance shall be disbursed to Tenant within thirty
(30) days following the last to occur of (i) Tenant's delivery of properly
executed mechanic's lien releases in compliance with applicable laws with
respect to Tenant's Work, and (ii) substantial completion of Tenant's Work and
opening for business to the public from the Premises in accordance with the
terms and conditions of this Lease.



                                       57
<PAGE>   30

          5. Operation from Existing, Premises During Construction. Tenant may
continue in occupancy under the Existing Lease so long as the same is permitted
by applicable governmental authorities during the performance of Landlord's
Work, and during such period, Landlord shall use reasonable efforts and
diligence to provide Tenant with reasonable means of access to the Existing
Premises and parking areas serving the Existing Premises, provided that the
parties shall coordinate activities so as to allow for Landlord's construction
to be performed without increase in cost or delays in time for performance.



                                       58
<PAGE>   31

                                   SCHEDULE 1

                         Description of Landlord's Work

1.   Landlord agrees to construct for the Tenant the area designated as Demised
     Premises on Exhibit "A". Landlord shall prepare, at his sole cost and
     expense, plans and specifications for the site work at the Shopping Center,
     the improvements comprising the Shopping Center and Landlord's Work.
     Landlord's Work shall be completed in accordance with all applicable
     governing codes and in a good and workmanlike manner.

          A.   Floors: Landlord shall provide a smooth finished concrete slab
               without floor covering or base. The floor shall be one (1) level
               without depressions.

          B.   Storefront: Landlord shall provide and install a storefront per
               Landlord's architect's design with a glass entry door/doors as
               shown on Landlord's drawings, the color of which shall be
               selected by Landlord's architect.

          C.   Demising Wall: Landlord shall provide 5/8" gypsum board on metal
               or wood stud wall, concrete masonry unit, and/or concrete walls
               ready for paint. No paint or other finish shall be provided.

          D.   Electrical: Landlord shall provide electrical service consisting
               of a 200 amp 120/208V meter/main section in a designated
               electrical room or area, conduit and wire to a minimum 24 circuit
               electrical panel within Tenant's premises. Electrical meter is
               Tenant's responsibility.

          E.   Heating. Ventilating. and Air Conditioning ("HVAC" herein):
               Landlord shall provide a fully operational packaged rooftop air
               conditioning and heating unit which will be installed by
               Landlord's HVAC contractor. Such air conditioning unit to
               accommodate a minimum of one (1) ton per 400 square feet of
               leasable area. The HVAC system to include ducts, grilles and
               thermostat. The toilet room shall be ventilated as required by
               code.

          F.   Telephone: Landlord shall supply one (1) telephone outlet at the
               rear of the Premises with conduit stubbed above Tenant's
               suspended ceiling. A one inch conduit shall extend from Tenant's
               Premises to a designated main telephone backboard.

          G.   Fire Sprinklers: Landlord shall provide a fire sprinkler system
               to a density and head spacing conforming with NFPA and local fire
               jurisdiction for light hazard occupancies to Factory Mutual
               standards. (Note: Tenant shall make any modifications made
               necessary by Tenant's Work or Tenant's use of the Premises.)

          H.   Gas Service: Landlord shall provide gas line and meter to a
               designated exterior location in accordance with Landlord' working
               drawings and specifications.

          I.   Rear Door: Landlord shall provide a painted 3' x 7' hollow (or
               solid, if required) metal door with standard lockset only if
               indicated on plans.

          J.   Lighting: Three rows of four (4) tube recessed fluorescent
               fixtures shall be provided with such fixtures 10' on center
               located 5' on center from demising wall.

          K.   Electrical Outlets: Landlord shall provide 110 volt duplex wall
               and ceiling receptacles as required by code. A minimum of ten
               (10) wall receptacles shall be located in the sales area and one
               (1) receptacle in each toilet room.

          L.   Toilet Room: Landlord shall provide two toilet rooms with the
               following in each: One (1) water closet, one (1) lavatory, one
               (1) exhaust fan, one o (1) light fixture with switch, one (1) 110
               volt duplex wall receptacle, 4' high marlite wainscot as required
               by local code, and as shown on Landlord's drawings. Sheet vinyl
               floor coverings with rubber base shall be provided. A dedicated
               circuit is provided for the purpose of future "insta-hot" 



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               type water heater by Tenant. Toilet room shall comply with
               Uniform Building Code handicap requirements.

          M.   Ceiling: Landlord shall provide 24" x 48" x 5/8" acoustical tile
               in a 24" x 24" regular pattern finish and white metal "T" bar
               suspended grid. Ceiling height shall be ten (10) feet or as
               indicated on the drawings.

          N.   Sign Lighting: Landlord shall provide sign lighting circuit and
               junction box on a common area "house" electrical meter. Junction
               box shall be located by Landlord and Tenant shall be responsible
               to connect thereto.

          O.   Tenant's Responsibility: All improvements other than those
               itemized above to be provided by Tenant at its sole cost and
               expense, including design and engineering fees.

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