# LEASE
AGREEMENT

# Lease Summary

591
and 599 Lighthouse AvenueMonterey, California 93940

Lease
Date: December 30, 2004

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

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

Lessee:
CENTRAL COAST BANCORP, a California corporation

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

Premises:
591 and 599 Lighthouse Avenue, Monterey, California



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

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

Initial
Term: Sixty (60) months

# 

Initial
Term Commencement Date: January 1, 2005

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

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

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

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

Security
Deposit: $5,438.40.

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

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

# Table
of Contents

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

Attachments

Lease
Summary

Exhibit
A     Diagram of Premises.

Exhibit
B-1   Diagram of the Property

Exhibit
B-2   Legal Description of the Property

# LEASE AGREEMENT

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

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

1.
DEFINITIONS. As used in this Lease:

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

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

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

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

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

# 

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

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

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

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

3.
TERM.  ----

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

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

4.
RENT.

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

(b)  Annual
Adjustment of Fixed Minimum Rent. The Fixed Minimum Rent shall be  adjusted annually
on each anniversary of the Commencement Date during the Term  (each, an Adjustment
Date)in the manner provided in this  Paragraph4(b),. except that the
adjustment of Fixed Minimum Rent  occurring on any Adjustment Date that is also the date
of commencement of an  Option Term shall be determined in the manner provided in
Paragraph 4(c) below.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6.
USE OF THE PREMISES.

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

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

(b)
Impermissible Uses.

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

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

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

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

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

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

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

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

7.
INSURANCE.

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

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

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

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

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

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

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

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

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

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

8.
TAXES.

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

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

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

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

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

9.
COMMON AREA.

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

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

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

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

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

10.
CONDITION OF THE PREMISES AND PROPERTY.

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

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

11.
REPAIRS. MAINTENANCE AND REPLACEMENTS.

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

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

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

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

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

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

12.
ALTERATIONS AND COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS.

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

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

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

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

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

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

13.
UTILITIES.

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

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

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

14.
ADVERTISING AND SIGNS.

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

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

15.
ASSIGNMENT AND SUBLETTING.

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

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

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

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

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

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

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

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

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

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

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

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

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

16.
ACCESS TO THE PREMISES.

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

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

17.
EMINENT DOMAIN.

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

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

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

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

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

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

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

18.
DAMAGE OR DESTRUCTION.

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

(b)
Lessor Option to Terminate.

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

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

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

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

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

19.
HOLD HARMLESS.

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

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

20.
DEFAULT AND REMEDIES.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

24.
SUBORDINATION AND ATTORNMENT.

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

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

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

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

26.
SURRENDER AND HOLDING OVER.

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

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

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

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

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

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

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

32.
GENERAL PROVISIONS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lease
Summary

Exhibit A     Diagram of Premises

Exhibit B-1     Diagram of the Property

Exhibit B-2     Legal Description of the Property

# 

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

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

|                                            | 
|------------------------------------------- | 
|"LESSOR"                                    | 
|                                            | 
|JULIET B. HOOKER, KATHERINE B               | 
|CONGDON AND WILLIAM C. BURKETT,             | 
|Co-Trustees of the William Andrew Burkett   | 
|Trust dated March 13, 1985, as to an        | 
|undivided one half interest, and JULIET B   | 
|HOOKER, KATHERINE B. CONGDON and            | 
|WILLIAM C. BURKETT, Co-trustees             | 
|of the Juliet J. Burkett Testamentary Trust | 
|dated March 13, 1981, as to an undivided    | 
|one-half interest (collectively doing       | 
|Business as Burkett Land Company)           | 
|                                            | 
|/s/ JULIET B. HOOKER                        | 
|Juliet B. Hooker, Co-Trustee                | 
|                                            | 
|/s/ KATHERINE B. COGDON                     | 
|Katherine B. Congdon, Co-Trustee            | 
|                                            | 
|/s/ WILLIAM C. BURKETT                      | 
|William C. Burkett, Co-Trustee              | 

# 





# 

# Exhibit A
 Diagram of the Premises

[Graphic
Omitted]

# Exhibit
B-1  Diagram of the Property

[Graphic
Omitted]

# Exhibit B-2
- Legal Description of the Property

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

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

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

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