CHANGE IN CONTROL SEVERANCE AGREEMENT


         THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is entered
into this _____ day of __________________, 2000 by and between Capital Bank (the
"Bank") and Franklin G. Shell (the "Executive").

                                    RECITALS

         WHEREAS,  the board of directors of the Bank (the  "Board")  recognizes
that the possibility of a Change in Control (as defined below) exists and that a
Change in Control can result in significant  distractions  of its key management
personnel because of the uncertainties inherent in a Change in Control;

         WHEREAS,  the Board has determined  that it is in the best interests of
the Bank to ensure the Executive's  dedication and efforts on behalf of the Bank
in the event of a Change in Control;

         WHEREAS,  the  Bank  desires  to enter  into  this  Agreement  with the
Executive to provide the  Executive  with  certain  payments and benefits in the
event that the Executive's  employment with the Bank is terminated in connection
with a Change in Control; and

         WHEREAS,   the   Executive   acknowledges   that  these   benefits  are
consideration for his observing the non-competition and proprietary  information
provisions contained herein.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements  set  forth  herein,   the  legal  sufficiency  of  which  is  hereby
acknowledged, the parties agree as follows:

         1. Change of Control  Termination.  The Executive  shall be entitled to
receive  payments  and  benefits  pursuant  to this  Agreement  upon a Change in
Control  Termination (as defined below) of the  Executive's  employment with the
Bank.

         2.  Severance   Payments  and  Benefits.   Upon  a  Change  in  Control
Termination of the Executive's  employment with the Bank, the Executive shall be
entitled to receive all of the following:

                  (a) All  accrued  compensation  and any  pro-rata  bonuses the
Executive may have earned up to the date of termination;

                                       1

<PAGE>


                  (b) A severance  amount  equal to two (2) times the sum of (i)
the amount of the  Executive's  then  current  annual  base salary plus (ii) the
greater  of the  Executive's  most  recent  annual  bonus or the  average of the
Executive's two most recent annual bonuses.  The severance  amount shall be paid
in twenty-four (24) equal monthly  installments  without interest commencing one
month after the date of termination;

                  (c) Continued  participation  in all life  insurance,  health,
accidental  death and  dismemberment,  and  disability  plans and other  benefit
programs in which the Executive is entitled to participate  immediately prior to
the Change of Control  Termination  or, at the Executive's  option,  immediately
prior to the Change in Control for two (2) years after the date of  termination.
The Executive's  continued  participation in such plans and programs shall be at
no  greater  cost to the  Executive  than the cost the  Executive  bore for such
participation  immediately  prior to termination or, at the Executive's  option,
immediately  prior to the  Change  in  Control.  Alternatively,  the Bank  shall
arrange upon comparable  terms, and at no greater cost to the Executive than the
cost the Executive bore for such plans and programs prior to termination  or, at
the Executive's  option,  immediately prior to the Change in Control, to provide
the  Executive  with benefits at least  substantially  similar to those that the
Executive is entitled to receive under such plans and programs.

         3.       Definitions.
                  -----------
                  (a)      "Cause" shall mean either of the following:

                           (i)  The  willful  and   continued   failure  by  the
Executive to substantially  perform the Executive's  duties with the Bank (other
than  any  such  failure  resulting  from  the  Executive's  Disability)  for  a
significant period of time after a written demand for substantial performance is
delivered to the Executive by the Bank, which demand specifically identifies the
manner in which  the Bank  believes  that the  Executive  has not  substantially
performed the Executive's duties; or

                           (ii) The willful  engaging by the  Executive in gross
misconduct that is materially and demonstrably  injurious to the Bank. No act or
failure to act on the Executive's part shall be considered "willful" unless done
or omitted to be done by the  Executive in the absence of good faith and without
a  reasonable  belief that the  Executive's  action or failure to act was in the
best interests of the Bank.

                  (b) "Change in Control" shall mean any of the following:


                           (i) Any  "person"  (as such term is used in  Sections
13(d)(3) or 14(d)(2) of the  Securities  Exchange  Act of 1934,  as amended (the
"Act"))  acquiring  "beneficial  ownership"  (as such term is used in Rule 13d-3
under the Act),  directly or indirectly,  of securities of the Bank representing
fifty  percent  (50%) or more of the  combined  voting  power of the Bank's then
outstanding  voting  securities  (the "Voting  Power"),  but  excluding for this
purpose an

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<PAGE>
acquisition  by the Bank or an "affiliate"  (as defined in Rule 12b-2
under the Act) or by an employee benefit plan of the Bank or of an affiliate.

                           (ii) The  individuals who constitute the Board on the
effective date hereof (the "Incumbent Directors") cease to constitute at least a
majority of the Board.  Any director whose  nomination is approved by a majority
of the Incumbent Directors shall be considered an Incumbent Director;  provided,
however that no Director  whose  initial  assumption  of office is in connection
with an actual or threatened  election  contest  relating to the election of the
directors of the Bank shall be considered an Incumbent Director.

                           (iii)  The   shareholders   of  the  Bank  approve  a
reorganization, merger or consolidation following which the owners of the Voting
Power of the Bank  immediately  prior to the closing of such  transaction do not
beneficially own,  directly or indirectly,  more than 50% of the Voting Power of
the successor entity.

                           (iv) The  shareholders of the Bank approve a complete
liquidation or dissolution of the Bank, or a sale or other disposition of all or
substantially all of the assets of the Bank.

                  (c) "Change in Control  Termination"  shall mean a termination
in connection with a Change in Control, as follows:

                           (i) A  termination  by the  Bank  of the  Executive's
employment  during the period beginning ninety (90) days prior to and ending two
(2) years after a Change in Control for any reason other than Cause,  Disability
or death.

                           (ii)  A   termination   by  the   Executive   of  the
Executive's  employment  with the Bank  within  two (2) years  after a Change in
Control for "Good Reason".
                           (iii) The Executive's  voluntary  resignation  within
sixty (60) days after a Change in Control for any reason.

                  (d)  "Disability"  shall  mean  a  complete  inability  of the
Executive  substantially  to perform  his  employment  duties for the Bank for a
period of at least one hundred and eighty (180) consecutive days.

                  (e) "Good Reason" shall mean the occurrence  after a Change in
Control of any of the following:

                           (i) Without the Executive's  express written consent,
a material reduction in Executive's position or responsibilities relative to the
Executive's position or responsibilities immediately prior to such reduction;

                           (ii)     A reduction in the Executive's base salary;

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<PAGE>
                           (iii) The Bank's  requiring the Executive to relocate
his residence, or to relocate his principal business office to any place outside
a thirty (30) mile radius from Raleigh,  North  Carolina,  except for reasonably
required  travel on the Bank's  business  that is not  greater  than such travel
requirements prior to the Change in Control;

                           (iv) The Bank  failing  to  continue  in  effect  any
material  compensation,  welfare  or  benefit  plan in which  the  Executive  is
participating at the time of a Change in Control without substituting plans that
provide the Executive with substantially  similar or greater benefits,  the Bank
taking any action that adversely  affects the  Executive's  participation  in or
materially  reduces  the  Executive's  benefits  under any such plan or the Bank
ceasing to provide the Executive with any material fringe benefit enjoyed by the
Executive at the time of the Change in Control;

                           (v)  Any  purported  termination  of the  Executive's
employment for Cause or Disability without grounds therefor;

                           (vi) Any material breach by the Bank of any provision
of this Agreement; or

                           (vii) The failure of the Bank to obtain an  agreement
satisfactory to the Executive from any successor or assign of the Bank to assume
and agree to perform this Agreement.

         4. No Duty to Mitigate.
            --------------------
The  Executive  shall not be  required  to  mitigate  the amount of any  payment
provided for in this Agreement by seeking other employment or otherwise,  and no
such  payment  shall be offset or reduced by the amount of any  compensation  or
benefits provided to the Executive in any subsequent  employment.  The severance
pay and benefits  under this Agreement  shall be in lieu of any other  severance
pay to which the Executive may be entitled from the Bank.

         5.  Limitation on Payments.
             -----------------------
To the extent that any of the  payments  and  benefits  provided  for under this
Agreement or otherwise payable to the Executive constitute  "parachute payments"
within the meaning of Section  280G of the  Internal  Revenue  Code of 1986,  as
amended (the "Code"),  and but for this Section 5 would be subject to the excise
tax imposed by Section  4999 of the Code,  the Bank shall  reduce the  aggregate
amount of such  payments and benefits  such that the present  value  thereof (as
determined under the Code and the applicable regulations) is equal to 2.99 times
the Executive's "base amount" as defined in Section 280G(b)(3) of the Code.

         6. Covenant Not to Compete; Non-Solicitation.
            -----------------------------------------
                  (a)  The  Executive   acknowledges   that  by  virtue  of  the
Executive's  employment

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<PAGE>
with the Bank,  the Executive  shall have access to and control of  confidential
and proprietary  information  concerning the Bank's business and that the Bank's
business depends to a considerable extent on the individual skills, efforts, and
leadership of the  Executive.  Accordingly  and in  consideration  of the Bank's
commitments  to the Executive  under this  Agreement,  the  Executive  expressly
covenants and agrees that the Executive shall not,  without the prior consent of
the Bank:

                           (i) For one (1) year  following  a Change in  Control
Termination,  within the  geographical  areas set forth  below,  be employed (or
otherwise  engaged) in a management  capacity,  any other capacity providing the
same or  similar  services  that the  Executive  provided  to the  Bank,  or any
capacity  connected with the then primary banking activities of the Bank, by any
person or entity that  engages in the then  primary  banking  activities  of the
Bank;

                           (ii) For two (2) years  following a Change in Control
Termination,  on the Executive's own or another's behalf, whether as an officer,
director,  stockholder,  partner,  associate,  owner,  employee,  consultant  or
otherwise, directly or indirectly:

                                    (A) Within the geographical  areas set forth
below,  solicit or do business  that is the same,  similar to, or  otherwise  in
competition  with the  business  engaged in by the Bank from or with  persons or
entities who are  customers of the Bank,  who were  customers of the Bank at any
time during the last year of the  Executive's  employment  with the Bank,  or to
whom the Bank made  proposals  for  business at any time during the last year of
the Executive's employment with the Bank; or

                                    (B)  Offer   employment   to,  or  otherwise
solicit for  employment,  any  employee or other  person who was employed by the
Bank during the last year of the Executive's employment with the Bank.

                  (b) The  restrictions set forth in this Section 6 apply to the
following geographical areas:

                           (i) Lee County, North Carolina and Wake County, North
Carolina; and

                           (ii) Any city,  metropolitan area, or county in which
the Bank  maintains  an office  on the date of  termination  of the  Executive's
employment over which the Executive has had management responsibility.

                  (c) The Executive acknowledges that the covenants contained in
this  Section 6 are  reasonably  necessary  to protect the  legitimate  business
interests  of the Bank and are  reasonable  with  respect  to scope,  time,  and
territory and are described with sufficient  accuracy and definiteness to enable
him to understand the scope of the restrictions imposed on him.

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<PAGE>

         7.       Proprietary Information and Property.
                  ------------------------------------
                  (a) The  Executive  shall not, at any time during or following
employment  with  the  Bank,  disclose  or  use,  except  in the  course  of his
employment  with  the  Bank as may be  required  by  law,  any  confidential  or
proprietary  information  of the Bank received by the Executive  while  employed
hereunder,  whether such information is in the Executive's memory or embodied in
writing or other physical form.

                  (b)  Confidential  or  proprietary  information  shall include
information  which is not generally  available to the general public,  or Bank's
competitors,   or  ascertainable   through  common  sense  or  general  business
knowledge; including, but not limited to data, compilations,  methods, financial
data,  financial  plans,  business  plans,  products  plans,  lists of actual or
potential customers, marketing information regarding executives and employees.

                  (c) All records, files or other objects maintained by or under
the control,  custody or possession of the Bank or its agents in their  capacity
as agents  shall be and remain  the Bank's  property.  Upon  termination  of his
employment,  the Executive shall return to the Bank all property (including, but
not limited to, equipment,  records, files,  documents,  credit cards, and keys)
which the Executive  received in connection with his  employment.  At the Bank's
request, the Executive shall bring current all such records,  files or documents
before returning them.

                  (d) Upon notice of cessation of his employment  with the Bank,
the Executive shall fully cooperate with the Bank in winding up his pending work
and transferring his work to those individuals designated by the Bank.

                  (e) The terms and  conditions  of this Section 7 shall survive
expiration or termination  of this Agreement or Employee's  employment and shall
not be affected by any change or modification of this Agreement  unless specific
reference is made to this Section 7.

         8.       Successors and Assigns.
                  ----------------------
                  (a) This  Agreement  shall be binding  upon and shall inure to
the benefit of the Bank, its successors, and assigns, and the Bank shall require
any successor or assign to expressly  assume and agree to perform this Agreement
in the same  manner and to the same  extent  that the Bank would be  required to
perform it if no such succession or assignment had taken place.

                  (b) Neither this Agreement nor any right or interest hereunder
shall be assignable or  transferable  by the Executive  except by will or by the
laws of descent and distribution.

         9.  Modifications.  No  provision  of this  Agreement  may be modified,
waived or discharged unless such modification,  waiver or discharge is agreed to
in  writing  signed by the  Executive  and the Bank.  No waiver by either  party
hereto at any time of any breach by the other  party  hereto  of, or  compliance
with any  conditional  provision of this Agreement to be performed

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<PAGE>

by such  other  party,  shall be  deemed  a  waiver  of  similar  or  dissimilar
provisions or conditions of this Agreement at any prior or subsequent time.

         10. Entire Agreement.
             ----------------
No agreement or  representations,  oral or otherwise,  express or implied,  with
respect to the subject matter hereof have been made by either party that are not
expressly set forth in this Agreement.

         11. Governing Law.
             -------------
This  Agreement  shall be governed by and  construed  and enforced in accordance
with the laws of the State of North Carolina.

         12. Severability.
             -------------
The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability   of  any   provision   shall  not  affect  the   validity   or
enforceability of the other provisions hereof.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day and year first written above.

EXECUTIVE                                            CAPITAL BANK

________________________________    By:      _________________________________
Franklin G. Shell
                                    Title:   _________________________________



                                       7

<PAGE>

STATE OF NORTH CAROLINA
COUNTY OF WAKE


         THIS LEASE  AGREEMENT  (the  "Lease")  made and entered  into as of the
_____ day of  November,  1999,  by and  between  CRABTREE  PARK,  LLC, a Georgia
limited liability company,  hereinafter  called "Landlord";  and CAPITAL BANK, a
North Carolina banking corporation hereinafter called "Tenant":

                              W I T N E S S E T H:
                              - - - - - - - - - -

         In  consideration  of the mutual  covenants  and  agreements  contained
herein,  the parties hereto agree for themselves,  their successors and assigns,
as follows:

         1.       BASIC LEASE TERMS.
                  -----------------

         The following terms shall have the following meanings in this Lease:

         (a) Premises: Suite 100 containing approximately 17,577 rentable square
         feet of  office  space  on the  first  floor of the  Building,  as more
         particularly described on the floor plan attached hereto as Exhibit A.

         (b)  Building:  The  Capital  Bank  Corporate  Center,  located at 4505
         Creedmoor Road, Raleigh, North Carolina.

         (c) Common  Areas:  All areas of the Building  available for the common
         use or benefit of all  tenants  primarily  or to the public  generally,
         including  without  limitation,  parking areas,  driveways,  sidewalks,
         loading docks, the lobby, corridors, elevators, stairwells,  entrances,
         public  restrooms,  mechanical  rooms,  janitorial  closets,  telephone
         rooms,  mail rooms,  electrical  rooms,  and other similar areas of the
         Building   providing  for  building  systems,   and  any  other  common
         facilities furnished by Landlord from time to time.

         (d) Commencement  Date: May 1, 2000 (subject to adjustment  pursuant to
         Section 3 of this Lease).


         (e) Term;  Expiration  Date: The "Term" of this Lease shall be ten (10)
         years commencing as of the Commencement  Date and expiring on the tenth
         anniversary of the  Commencement  Date or the  Adjustment  Date, as the
         case may be (the "Expiration Date").

         (f)  Minimum  Rental.  During the first  twelve  months of the Term the
         annual  Minimum  Rental for the Branch  Bank  portion of the  Premises,
         which consists of

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<PAGE>

         approximately  3,000 rentable square feet, shall be $21.50 per rentable
         square foot,  starting with the Commencement  Date for such Branch Bank
         portion,  and the annual  Minimum  Rental for the Office portion of the
         Premises,  which consists of approximately 14,577 rentable square feet,
         shall be $17.25 per rentable square foot,
         starting with the Commencement  Date for such Office portion.  For each
         successive  twelve month period after the first twelve months following
         the  respective  Commencement  Dates the minimum annual rental for each
         such  portion  shall  increase  by the lower of three (3%)  percent per
         annum, or the annual Cost of Living Increase (the  "Additional  Rent").
         The Cost of Living  Increase  shall be  determined by  subtracting  the
         Minimum  annual  Rental from the product  obtained by  multiplying  the
         Minimum  annual  Rental by a fraction the  denominator  of which is the
         Revised  Consumer  Price  Index for All Urban  Consumers  - New  Series
         (1982-1984 = 100), Annual Averages and Changes, All Items, as published
         by the Bureau of Labor  Statistics,  U. S. Department of Labor, for the
         third month immediately  preceding the commencing of the Lease Term for
         the respective  portion,  and the numerator of which is the Price Index
         for the third month  immediately  preceding  the twelve month term just
         concluding.   Landlord   shall   notify   Tenant  in  writing,   giving
         calculations as to the amount of Additional Rent, which Additional Rent
         shall be payable at the same time as, and in  addition  to, the Minimum
         annual  Rental,  but  Minimum  annual  Rental  shall never be less than
         stated in this subparagraph.  If Landlord has not furnished Tenant with
         such  notification,  Tenant shall pay the Minimum  annual Rental at the
         rate it was  obligated  to pay  during  the  preceding  year until such
         notification  is received,  at which time Tenant shall no later than at
         the time the next rental  installment  is due pay any  accrued  Cost of
         Living Increase owed.

         (g) Operating Expense Stop: $5.00 per rentable square foot per year for
         that  portion of the Term during  calendar  year 2000,  and  thereafter
         based on Actual  Operating  Expenses for each twelve months of the term
         commencing  January 1, 2001, such Actual Operating Expenses to be based
         on actual expenses incurred during that portion of the Term in the year
         2000 for the respective  portions of the Property grossed up to reflect
         95%  occupancy  of the Building and adjusted to reflect what they would
         have been had the Term been a full  twelve  months  in year  2000.  The
         components of Operating Expenses are those items described on Exhibit D
         attached  hereto and  incorporated  herein by this  reference  thereto.
         Tenant shall have the option of auditing  Landlord's  Operating Expense
         in accordance with the provisions set forth on Exhibit D.

         (h) Tenant's  Proportionate  Share: A fraction,  the numerator of which
         shall be the number of rentable square feet within the Premises and the
         denominator of which shall be the number of rentable square feet within
         the Building, currently estimated to be 41.97% (17,577/41,883).

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<PAGE>

         (i) Notice Addresses:


                       Landlord:          Crabtree Park, LLC
                                          c/o Tri Properties, Inc.
                                          4309 Emperor Boulevard, Suite 110
                                          Durham, North Carolina 27703

                       Tenant:            Capital Bank
                                          4400 Falls of Neuse Road
                                          Raleigh, North Carolina 27609
                                          Attn:  James A. Beck
                                          Fax:  919-645-6401

                       With a copy to:    Stephen T. Parascandola, Esq.
                                          Smith Anderson Blount Dorsett Mitchell
                                          & Jernigan
                                          Post Office Box 2611
                                          Raleigh, North Carolina 27602-2611

            (j) Security Deposit:  NONE.


         (k) Broker(s):  Tri Properties, Inc. and Thomas Commercial.


         (l) Parking.
             -------
         Tenant  shall  have  the  right to use its  Proportionate  Share of the
remaining  (after  deducting the 14 reserved to Tenant) 140  unreserved  parking
spaces on the Premises in the surface parking lot adjacent to the Building which
constitutes a portion of the Common Areas.  In addition  Tenant may designate up
to ten (10)  reserved  parking  spaces  immediately  in front of the Branch Bank
portion of the Premises.  Landlord agrees to provide four (4) reserved spaces at
the rear of the back parking lot for Capital Bank  vehicles,  the exact location
to be mutually agreed upon.

         2.  DESCRIPTION OF PREMISES.
             -----------------------
         Landlord  hereby leases to Tenant,  and Tenant hereby accepts and rents
from Landlord, the Premises within the Building;  together with the nonexclusive
right to use the Common  Areas.  The rentable area of the Premises is determined
in accordance with the standards set forth in ANSI Z65.1-1996, as promulgated by
the Building Owners and Managers Association ("BOMA Standard"). In the event the
Tenant  leases  space on the second floor of the  Building,  that portion of the
rentable area of the Premises  shall be determined by  multiplying  the rentable
area of the Premises by a "core factor" equal to twelve percent (12.0%).

         3.  TERM; COMMENCEMENT DATE; DELIVERY OF PREMISES.
             ---------------------------------------------
         (a) Term. Unless otherwise adjusted as herein below provided,  the Term
shall commence on the  Commencement  Date and expire on the Expiration  Date. In

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<PAGE>

the  event  the  Commencement  Date is a day  other  than the  first  day of the
calendar  month,  the Term shall be extended and shall expire on that date which
is ten (10) full  years  from the first day of the  first  full  calendar  month
immediately  following the Commencement  Date (the "Adjustment  Date").  As used
herein, the term "Lease Year" shall mean each consecutive twelve-month period of
the Term,  beginning  with the  Commencement  Date (as same may be  adjusted  as
hereinbelow  provided) or any anniversary  thereof;  provided,  however,  in the
event the  Commencement  Date is a day other than the first day of the  calendar
month, "Lease Year One" shall be that period commencing on the Commencement Date
and  continuing  until the first  anniversary  of the  Adjustment  Date and each
succeeding  Lease  Year  shall be a  twelve-month  period  beginning  with  each
subsequent anniversary of the Adjustment Date.

      (b) Commencement  Date.  Notwithstanding  anything contained herein to the
contrary,  the Commencement Date as to the Office portion,  and the Commencement
Date as to the Branch Bank portion of the Premises  respectively shall be deemed
to be the earlier of: (a) the date Tenant,  or any person  occupying any portion
of the Office  portion or the Branch Bank portion of the Premises  with Tenant's
permission,  commences business  operations from the Premises,  or (b) the first
(1st) business day following the date of Landlord's  delivery of the Premises to
Tenant  upfitted  in  substantial  accordance  with the  Plans  (as  hereinafter
defined) or the date on which  Landlord  would have  delivered  the  Premises to
Tenant  upfitted  in  substantial  accordance  with  the  Plans  but for  delays
attributable  to or  caused  by  Tenant or  Tenant's  Invitees  (as  hereinafter
defined);  such  Tenant  caused  delays  including  without  limitation,  delays
attributable  to  Tenant's  failure  timely to provide  the Plans and any delays
actually  resulting from change orders requested by Tenant,  providing  Landlord
shall give notice to Tenant that such change orders will actually  cause delays.
Landlord  shall act in good  faith  and use  diligent  efforts  to  deliver  the
Premises  upfitted  in  accordance  with  the  Plans  (including  receipt  of  a
certificate  of  occupancy)  to Tenant on or  before  June 1, 2000 (the  "Target
Date").  Notwithstanding  anything contained herein to the contrary, in no event
shall Landlord's completion of the Tenant Improvements be dependent upon, or the
Commencement  Date delayed because of, the installation of any special equipment
or improvements to the Premises to be supplied and installed by Tenant.  However
Landlord  will allow  Tenant  access to that  portion of the  Premises  it first
intends to occupy four weeks prior to the Commencement  Date for installation of
its furniture, vault, ATM machine and other equipment,  fixtures and to wire and
cable its computer and phone system  throughout  the Premises,  but Tenant shall
during such  installation use reasonable  efforts to avoid  interfering with any
construction on behalf of Landlord that is continuing.

Delays as used in this Lease shall  include  Tenant  delays as set forth  above,
those  resulting  from causes  encompassed  within the meaning of the term force
majeure, delays encountered by Landlord, despite reasonable and diligent efforts
to do so, in obtaining  necessary  permits for Landlord  work from  governmental
authorities, including but not limited to the City of Raleigh and the Department
of Transportation.

If Landlord fails to deliver the Premises upfitted in accordance with the Plans,
including a certificate of occupancy,  on or before August 1, 2000, as such date
may be or is extended by Delays,  but in no event later than  September 1, 2000,
Tenant may at any time  within  ten  business

                                       4
<PAGE>

days after  August 1, 2000 if not  extended by Delays,  or  September 1, 2000 if
extended,  (but not  thereafter)  by written  notice to Landlord  terminate this
Lease, and if so terminated Tenant shall have no further liability  hereunder to
Landlord.

         (c)  Delivery  of  Premises.  Landlord  shall  be  responsible  for the
construction  of the building shell and the  completion of "Landlord's  Work" as
more  particularly  described  on Exhibit  "C"  attached  hereto.  In  addition,
Landlord will supervise the design, construction and installation of the initial
improvements in the Premises (the "Tenant  Improvements") in accordance with the
Plans  and the  following  terms  and  conditions.  Landlord's  engineer  and/or
Tenant's  architect  shall,  at  Tenant's  sole cost and expense (as part of the
Tenant Improvement  Allowance (as hereinafter  defined)),  prepare the plans for
the  design,  construction  and  installation  of the Tenant  Improvements  (the
"Plans") which shall be materially  consistent with the preliminary  space plans
prepared by Tenant and  approved by Landlord.  The final Plans,  as reviewed and
approved by Landlord and Tenant, such approval not to be unreasonably  withheld,
shall be attached hereto as Exhibit "C-1."

         Landlord  shall  deliver the Premises to Tenant upon  completion of the
construction  of the Building in accordance with Landlord's Work and substantial
completion of the Tenant  Improvements  in  accordance  with the Plans using new
materials  except where Landlord and Tenant  mutually  agree,  such  substantial
completion to be certified by Landlord's  engineer or architect  inspecting  the
work and to include  receipt of a certificate of occupancy  permitting  Tenant's
beneficial occupancy of the Premises. "Substantial Completion" shall include the
completion  of all items of work that  cannot be  completed  while  Tenant is in
possession  of  the  Premises  without  materially  inconveniencing  Tenant.  If
Landlord for any reason whatsoever cannot deliver  possession of the Premises to
Tenant in  accordance  with the terms  hereof on or before  the  Target  Date as
hereinabove  specified,  this  Lease  shall  not be void or  voidable  nor shall
Landlord be liable to Tenant for any loss or damages resulting therefrom; but in
that event, except to the extent that any such delay is directly attributable to
Tenant or its agents,  employees,  contractors  or  subcontractors  (hereinafter
collectively referred to as "Tenant's Invitees"), the Commencement Date shall be
adjusted to be the date when  Landlord  does in fact deliver  possession  of the
Premises to Tenant in accordance with the terms hereof.

         Landlord shall contribute up to a maximum of $23.84 per rentable square
foot of the Premises (the "Tenant Improvement Allowance"), or $419,117.00 toward
only the following costs: (i) any cost of installing the Tenant  Improvements on
an "as  completed"  basis which is  performed in  accordance  with the Plans and
related to the work to be done for the purpose of  preparing  the  Premises  for
Tenant's  occupancy and use, (ii) the cost of preparing the Plans,  (iii) design
costs for  architectural,  mechanical,  plumbing and electrical design, and (iv)
construction  documents and permits;  provided,  however,  in no event shall the
Tenant  Improvement  Allowance be used for any costs  associated  with  Tenant's
personal property,  equipment,  trade fixtures or other items of a non-permanent
nature installed in the Premises,  including without  limitation,  telephone and
data cable  lines.  In the event that either  prior to the  commencement  of the
installation  of the Tenant  Improvements or at any time during or following the
installation  of  the  Tenant  Improvements,   the  reasonable,   necessary  and
pre-approved cost [which shall be conclusively  established by Tenant's approval
of the Contract for such Improvements and any

                                       5
<PAGE>

changes  orders  thereto]  of  the  Tenant   Improvements   exceeds  the  Tenant
Improvement  Allowance or Tenant requests any change to the aforementioned Plans
which  has  resulted  or  might  result  in an  increase  in  the  cost  of  the
installation  of such Tenant  Improvements  so that the cost  exceeds the Tenant
Improvement  Allowance,  then Tenant shall promptly deliver the necessary funds,
to the extent  pre-approved by Tenant, to defray such excess cost to Landlord no
later than  fifteen (15) days after  Landlord  demands  same,  such demand to be
accompanied by a corresponding  certificate of completion by Tenant's  architect
for the  specific  change  order.  Notwithstanding  the  foregoing,  any  change
order(s) requested by Tenant which will result in an increase in the cost of the
construction and installation of the Tenant  Improvements  shall be agreed to in
advance by Landlord and Tenant, and Tenant shall be obligated to pay Landlord an
additional construction management fee relative to such change order(s) equal to
four  percent (4%) of any  increase in the "hard cost" of the  construction  and
installation  of the Tenant  Improvements.  Any savings or unused portion of the
Tenant Improvement  Allowance after the Tenant  Improvements are completed shall
be retained by Landlord.

         4. RENTAL.
            ------
         During the Term,  Tenant shall pay to Landlord,  in care of  Landlord's
agent,  Tri  Properties,  Inc. at the notice  address set forth in Section  1(i)
herein, without notice, demand,  reduction (except as may be applicable pursuant
to the paragraphs of this Lease entitled "Damage or Destruction of Premises" and
"Eminent  Domain"),  setoff or any defense, a total rental (the "Annual Rental")
consisting of the sum total of the following:

         (a) Minimum Rental.

         Beginning  with  the  Commencement  Date  and  continuing  through  the
Expiration Date or earlier  termination of this Lease,  Tenant shall pay Minimum
Rental  in  accordance  with the  schedule  set forth in  Section  1(f) in equal
monthly  installments  each in advance on or before the first day of each month.
If the Commencement Date is a date other than the first day of a calendar month,
the Minimum  Rental  shall be prorated  daily from such date to the first day of
the next calendar month and paid on or before the Commencement Date.

         (b) Additional Rental. [Intentionally Deleted]

         (c) Operating and Maintenance Expenses.


         Tenant shall pay Tenant's  Proportionate Share (as set forth in Section
1(h)) of the  reasonable  costs and expenses  paid or incurred by Landlord  each
calendar year in the operation,  repair and  maintenance of the Building and the
Common  Areas (the  "Operating  Expenses")  to the extent such costs  exceed the
Operating Expense Stop set forth in Section 1(g). For purposes hereof, Operating
Expenses is defined on Exhibit D. Landlord  shall use good faith efforts to keep
the  Operating  Expenses  in  line  with  costs  for  other  similarly  situated
first-class buildings in the Raleigh/Durham market.

         Notwithstanding the foregoing, if in any year the Building is less than
ninety-five  percent (95%) occupied,  the variable portion of Operating Expenses
shall be adjusted to reflect the level

                                       6
<PAGE>
of such Operating  Expenses which would reasonably be expected to be incurred by
Landlord  if  the   Building   was  one   hundred   percent   (100%)   occupied.
Notwithstanding  anything  set  forth  herein,  in  no  event  shall  Landlord's
collection of Operating Expenses result in a profit to Landlord.

         (d) Payment of Operating Expenses.

         Tenant  shall  pay  to  Landlord   each  month,   along  with  Tenant's
installments of Minimum Rental (and Additional  Rental, if applicable) an amount
(the   "Tenant   Contribution")   equal  to   one-twelfth   (1/12)  of  Tenant's
Proportionate  Share of the Operating Expenses as hereinabove  described for any
calendar year  (including  any applicable  partial  calendar year) to the extent
such costs exceed the  Operating  Expense Stop, as estimated by Landlord (in its
reasonable discretion).  Landlord will make reasonable efforts to provide Tenant
with Landlord's estimate of Tenant's Contribution for the upcoming calendar year
on or before December 15 of each calendar year during the Term hereof.  Not more
than once during any calendar year,  Landlord may in good faith revise  Tenant's
Proportionate  Share of the Operating  Expenses and upon  Tenant's  receipt of a
revised  statement,  Tenant  shall pay  Operating  Expenses on the basis of such
Statement.  If Landlord fails to notify Tenant of the revised amount of Tenant's
Contribution   by  such  date,   Tenant  shall   continue  to  pay  the  monthly
installments,  if any, last payable by Tenant until notified by Landlord of such
new  estimated  amount.  No later than May l of each  calendar year of the Term,
Landlord  shall deliver to Tenant a written  statement  setting forth the actual
amount of Tenant's  Contribution for the preceding  calendar year.  Tenant shall
pay the total amount of any balance due shown on such  statement  within  thirty
(30) days  after  Tenant's  receipt  thereof.  In the event  such  annual  costs
decrease for any such year, Landlord shall reimburse Tenant for any overage paid
and the  monthly  rental  installments  for the next  period  shall  be  reduced
accordingly.  For the  calendar  year in which  this Lease  commences,  Tenant's
Contribution shall be prorated from the Commencement Date through December 31 of
such year.  Further,  Tenant  shall be  responsible  for the payment of Tenant's
Contribution  for the calendar year in which this Lease  expires,  prorated from
January 1  thereof  through  the  Expiration  Date.  Upon the  Expiration  Date,
Landlord may require  Tenant to pay any unpaid  estimated  amount  within thirty
(30) days after the  Expiration  Date,  which estimate shall be made by Landlord
based upon actual and estimated costs for such year.

         (e) Documentary Tax.

         In the event that any documentary stamp tax, sales tax or any other tax
or similar  charge  (exclusive of any income tax payable by Landlord as a result
hereof)  becomes  applicable to the rental,  leasing or letting of the Premises,
whether local, state or federal, and is required to be paid due to the execution
hereof or otherwise  with  respect to this Lease or the payments due  hereunder,
the cost thereof  shall be borne by Tenant and shall be paid  promptly and prior
to same becoming past due. Tenant shall provide Landlord with copies of all paid
receipts respecting such tax or charge promptly after payment of same.

                                       7
<PAGE>
         (f) Late Payment.

         If more than  twice  during any  consecutive  twelve  month  period any
monthly  installment of Minimum Rental,  Additional Rental (if any) or any other
sum due and payable  pursuant to this Lease remains due and unpaid five (5) days
after said amount becomes due,  Tenant shall pay as additional  rent hereunder a
late payment  charge equal to Five Hundred and No/100  Dollars  ($500.00) on the
unpaid  rent or other  payment.  Landlord  agrees no more than twice  during any
consecutive  twelve month period to provide  Tenant written notice of failure to
receive Rental due hereunder within ten (10) days after the date it becomes due.
All unpaid  rent and other sums of  whatever  nature  owed by Tenant to Landlord
under this Lease  shall bear  interest  from the tenth  (10th) day after the due
date  thereof  until paid at the lesser of two percent  (2%) per annum above the
"prime  rate" as  published  in The Wall Street  Journal  from time to time (the
"Prime Rate") or the maximum interest rate per annum allowed by law.  Acceptance
by  Landlord of any payment  from Tenant  hereunder  in an amount less than that
which is currently due shall in no way affect Landlord's rights under this Lease
and shall in no way constitute an accord and satisfaction.

         5. ALTERATIONS AND IMPROVEMENTS BY TENANT.
            --------------------------------------

         Tenant shall make no structural changes to the Premises or the Building
(or to the  mechanical  or building  systems of the  Building) and shall make no
changes of any kind  respecting  the Premises or the Building  which are visible
from the exterior of the Premises  without  Landlord's  prior  written  consent,
which consent shall not be unreasonably withheld, conditioned or delayed. Except
for minor interior  cosmetic  alterations,  any other  nonstructural  changes or
other alterations,  additions,  or improvements to the Premises shall be made by
or on behalf of Tenant only with the prior  written  consent of Landlord,  which
consent  shall  not  be  unreasonably  withheld  or  delayed.  All  alterations,
additions or improvements,  including without limitation all partitions,  walls,
railings,  carpeting,  floor and wall coverings and other  fixtures  (excluding,
however,  Tenant's trade fixtures as described in the paragraph  entitled "Trade
Fixtures  and  Equipment"  below) made by, for,  or at the  direction  of Tenant
shall, when made,  become the property of Landlord,  at Landlord's sole election
and shall,  unless  otherwise  specified by Landlord remain upon the Premises at
the expiration or earlier termination of this Lease.

         Notwithstanding   anything  contained  herein  to  the  contrary,   all
alterations and  improvements  undertaken by Tenant shall be consistent with the
then-existing  quality,  color scheme  (where  appropriate),  general  aesthetic
appearance and tenor of the balance of the Building and, in any event,  Landlord
may withhold its consent to any proposed  alteration  or  improvement  by Tenant
unless  Tenant agrees to remove said  improvement  at the end of the Term and/or
restore  the  Premises  to the  condition  in  which  it  existed  prior  to the
undertaking of the proposed alteration or improvement.  Further, all alterations
and  improvements  to the  Premises,  including  without  limitation  the Tenant
Improvements, whether undertaken by Tenant or Landlord shall be subject to a fee
(the "Construction  Management Fee"), save and except any cosmetic work or minor
repairs performed by Tenant providing  Landlord neither needs to nor is involved
in such  work  or  repairs.  Tenant  agrees  to pay  Landlord  the  Construction
Management  Fee as follows:  Five percent (5%) of the total cost of planning and
constructing any alterations and improvements if such construction  costs exceed
Ten Thousand and No/100 Dollars ($10,000.00).

                                       8
<PAGE>

         6. USE OF PREMISES.
            ---------------

         (a) Tenant shall use the Premises only for general office  purposes and
retail banking and other financial  services,  but for no other purposes without
Landlord's consent, which consent shall not be unreasonably withheld or delayed.
Landlord  agrees not to lease any portion of the  Premises to a thrift,  bank or
credit union.  Except for conditions  which existed prior to the Commencement of
the Term, Tenant shall comply with all laws, ordinances,  orders, regulations or
zoning  classifications of any lawful  governmental  authority,  agency or other
public or private  regulatory  authority  (including  insurance  underwriters or
rating bureaus) having  jurisdiction over the Premises.  Tenant shall not do any
act or follow any practice relating to the Premises,  the Building or the Common
Areas  which  shall  constitute  a  nuisance  or  detract  in any way  from  the
reputation  of the  Building as a real estate  development  comparable  to other
comparable  buildings in the Raleigh/Durham  market taking into account rent and
other relevant factors. Tenant's duties in this regard shall include allowing no
noxious or offensive odors,  fumes,  gases, smoke, dust, steam or vapors, or any
loud or  disturbing  noise  or  vibrations  to  originate  in or emit  from  the
Premises. In addition,  Tenant shall not conduct a sale of any personal property
on or about the Premises,  the Building or in the Common Areas without the prior
written consent of Landlord.

         (b) Without  limiting the  generality of (a) above,  and excepting only
office supplies and cleaning materials used by Tenant in its ordinary day to day
business  operations (but not held for sale,  storage or distribution)  and then
only to the extent  used,  stored,  transported  and  disposed  of  strictly  in
accordance   with  all   applicable   laws,   regulations   and   manufacturer's
recommendations,  the  Premises  shall not be used for the  treatment,  storage,
transportation  to or  from,  use or  disposal  of toxic  or  hazardous  wastes,
materials, or substances, or any other substance that is prohibited,  limited or
regulated by any governmental or  quasi-governmental  authority or that, even if
not so  regulated,  could or does  pose a hazard  to  health  and  safety of the
occupants  of the  Building or  surrounding  property  (collectively  "Hazardous
Substances").  Landlord and Tenant shall be liable for, and shall  indemnify and
hold the other  harmless  from,  all  costs,  damages  and  expenses  (including
reasonable  attorneys'  fees)  incurred  in  connection  with the use,  storage,
discharge or disposal of any  Hazardous  Substances  by such other party or such
other party's Invitees.

         (c) Tenant  shall  exercise  due care in its use and  occupancy  of the
Premises  and shall not commit or allow waste to be  committed on any portion of
the Premises; and at the expiration or earlier termination of this Lease, Tenant
shall deliver the Premises to Landlord in the same condition in which it existed
as of the Commencement Date, ordinary wear and tear, approved alterations,  fire
or other casualty and acts of God alone excepted.

         (d) Tenant's use and occupancy of the Premises shall include the use in
common  with  others  entitled  thereto  of  the  Common  Areas  and  all  other
improvements  provided by Landlord for the common use of the  Building  tenants,
and any other  common  facility  as may be  designated  from time to time by the
Landlord, subject, however, to the terms and conditions of this Lease and to the
reasonable  rules and  regulations  for use therefor as prescribed  from time to
time by the Landlord.  Tenant,  its  employees,  agents,  customers and invitees
shall have the nonexclusive use (in common with other benefiting tenants) to use
the common areas for purposes intended and the non-exclusive use of the adjacent
surface parking areas in accordance  with Section 1(l) herein.

                                       9

<PAGE>
Tenant shall not at any time  unreasonably  interfere with the use of the common
areas by Landlord,  another tenant or any other person entitled to use the same.
Landlord  reserves  the  right,  from time to time,  to alter any of the  common
areas, to exercise control and management of the same, and to establish, modify,
change and enforce  such  reasonable  rules and  regulations  as Landlord in its
reasonable  discretion  may deem desirable for the management of the Building or
the common areas.

         (e) Tenant shall save Landlord  harmless from any claims,  liabilities,
penalties,  fines,  costs,  expenses  or damages  resulting  from the failure of
Tenant to comply with the provisions of this  paragraph 6. This  indemnification
shall survive the termination or expiration of this Lease.

         7. SERVICES BY LANDLORD.
            --------------------

         Landlord  shall  cause to be  furnished  to the  Premises  (subject  to
reimbursement  as part of the  Operating  Expenses) in common with other tenants
during  Standard  Hours  of  Operation,   Monday  through  Friday  and  Saturday
(excluding  holidays),  the following  services:  janitorial  services (once per
working day after normal  weekday  working  hours as provided for in Exhibit B);
water for drinking, kitchen, lavatory and toilet purposes; operatorless elevator
service;  electricity  for  general  office  space and  banking  use  (including
fluorescent  lighting  replacements to building standard  fixtures only);  trash
removal in accordance with city schedules; prompt removal of snow and ice in the
parking  lot and  walkways  when and if weather  requires,  and  heating and air
conditioning  for  reasonably  comfortable  use and  occupancy  of the  Premises
similar to other Class A buildings  in the area,  providing  heating and cooling
conforming to any governmental  regulation prescribing limitations thereon shall
be deemed to comply with this  service.  All  additional  costs  resulting  from
Tenant's  extraordinary usage of heating,  air conditioning or electricity shall
be paid by Tenant,  but Tenant shall not install  equipment with unusual demands
for any of the foregoing without Landlord's prior written consent which Landlord
may withhold if it determines that in its reasonable  opinion such equipment may
not be safely used in the  Premises or that  electrical  service is not adequate
therefor.  Notwithstanding  anything contained herein to the contrary,  Landlord
reserves the right to contract with any third party  provider of such  utilities
to provide such services to the Premises and the Building in the most economical
manner and Tenant  shall not  contract  with any other third  party  provider to
supply such utilities to the Premises without  Landlord's prior written consent.
So long as Landlord is not negligent in performing its obligations hereunder and
otherwise  acts  reasonably  and in good faith,  there shall be no  abatement or
reduction  of  rent  by  reason  of any  of the  foregoing  services  not  being
continuously provided to Tenant.

         Landlord  agrees to provide  heating and air  conditioning  after-hours
(i.e.,  hours  before or after the  Standard  Hours of  Operation)  at  Tenant's
request after  reasonable  notice and if the area to be served is zoned for this
purpose. The cost of after-hours service of heating or air conditioning shall be
additional rent payable monthly by Tenant at $25.00 per hour.

                                       10
<PAGE>

         As used herein,  "Standard Hours of Operation"  shall mean and refer to
those  hours of  operation  at the  Building,  which are 7:30 a.m.  to 6:30 p.m.
Monday  through  Friday and 8:00 a.m.  through  1:00 p.m.  on  Saturday,  except
holidays.  Holidays  shall mean and refer to each of the following  days (on the
day set aside for observance):  New Year's Day, Memorial Day,  Independence Day,
Labor  Day,  Thanksgiving  Day,  and  Christmas  Day,  provided,  however,  that
notwithstanding  anything  else  to the  contrary  set  forth  herein,  Landlord
acknowledges  and agrees that "Standard Hours of Operation" shall always include
any days on which it is common  banking  industry  practice  to remain  open for
business  or which  Tenant is  required by  applicable  law and/or  governmental
authorities having jurisdiction to remain open for business.

         Except  where   resulting   from   Landlord's   negligence  or  willful
misconduct,  Landlord  shall not be liable to Tenant  for any  damage  caused to
Tenant and its property due to the Building or any part or appurtenance  thereof
being improperly constructed or being or becoming out of repair, or arising from
the leaking of a pipe, facility or system for any utility. Tenant shall promptly
report to Landlord any  defective  condition  in or about the Premises  actually
known to Tenant, and the failure to so report results in other damage that could
have reasonably been avoided, then Tenant shall be liable for the same.

         8.  TAXES ON LEASE AND TENANT'S PROPERTY.
             -------------------------------------

         (a) Tenant shall pay any taxes,  documentary  stamps or  assessments of
any nature which may be imposed or assessed upon this Lease,  Tenant's occupancy
of the Premises or Tenant's trade  fixtures,  equipment,  machinery,  inventory,
merchandise or other personal  property  located on the Premises and owned by or
in the custody of Tenant as promptly as all such taxes or assessments may become
due and payable without any delinquency.

         (b)  Landlord  shall  pay,  subject  to  reimbursement  from  Tenant as
provided  in the  paragraph  entitled  "Rental"  of this  Lease,  all ad valorem
property  taxes which are now or  hereafter  assessed  upon the Building and the
Premises, except as otherwise expressly provided in this Lease.

         9. INSURANCE AND INDEMNITY.
            -----------------------

         (a) Fire and Extended Coverage Insurance.  Landlord throughout the term
of this Lease shall  maintain  and pay for fire and  casualty  special form "all
risk"  insurance,   with  extended  coverage  (including  boiler  and  machinery
coverage),  covering the Building equal to at least ninety five percent (95%) of
the replacement cost thereof.  Tenant shall not do or cause to be done or permit
on the Premises  anything  deemed extra  hazardous on account of fire and Tenant
shall not use the Premises, the Common Areas or the Building in any manner which
will cause an increase in the premium  rate for any  insurance  in effect on the
Building or a part thereof.  If,  because of anything  done,  caused to be done,
permitted  or omitted by Tenant or Tenant's  Invitees,  the premium rate for any
kind of insurance in effect on the Building or any part thereof shall be raised,
Tenant shall pay  Landlord on demand the amount of any such  increase in premium
which  Landlord  shall pay for such  insurance and if Landlord shall demand that
Tenant  remedy the  condition  which  caused any such  increase in an  insurance
premium  rate,  Tenant  shall

                                       11
<PAGE>
remedy such  condition  within five (5) days after
receipt of such demand.  Tenant shall maintain and pay for all fire and extended
coverage  insurance on its contents in the Premises,  including  trade fixtures,
equipment, machinery,  merchandise or other personal property belonging to or in
the custody of Tenant. Landlord shall have no liability to Tenant for any direct
or  indirect  loss of earnings  or other  expense due to any  casualty or cause,
including,  but not  limited  to,  vandalism  and  theft,  and Tenant may insure
against the same if Tenant elects to do so.  Throughout the term Landlord agrees
to carry a flood  insurance  policy for the Building and to cover damages to the
Building  and/or such of Tenant's  contents in the Building as Tenant has listed
on a schedule delivered to Landlord at the commencement of the Term, which shall
be conclusive as to such covered  contents  unless Tenant  updates such schedule
every two years. Tenant and Landlord shall first furnish to each other copies of
insurance policies or certificates of insurance evidencing the required coverage
prior to the Commencement Date and thereafter prior to each policy renewal date.

         (b)  Liability  Insurance.  At all times during the term of this Lease,
Tenant  shall,  at its sole  cost and  expense,  keep in force  adequate  public
liability  insurance under the terms of a commercial  general  liability  policy
(occurrence  coverage)  in the amount of not less than Three  Million and No/100
Dollars  ($3,000,000.00)  single  limit with such  company(ies)  licensed  to do
business  in  North  Carolina  and as  shall  from  time to  time be  reasonably
acceptable  to  Landlord  (and to any lender  having a mortgage  interest in the
Premises) and naming  Landlord and  Landlord's  agent as an  additional  insured
(and, if requested by Landlord from time to time, naming Landlord's mortgagee as
an additional  insured).  In the event Tenant  employs any contractor to perform
any  work  in  the  Premises,  Tenant  shall  provide  Landlord  with  insurance
certificates naming Landlord and such other parties as Landlord may designate as
additional  insureds  under  policies  of builders  risk and  general  liability
insurance and shall also provide Landlord with evidence of satisfactory  workers
compensation coverage in accordance with applicable statutory requirements.  All
policies  of  insurance  required  to be  maintained  by  Tenant  shall  be with
companies  rated  A-X or better in the most  current  issue of Best's  Insurance
Reports and shall have a deductible of $25,000.00 or less.  Such insurance shall
include, without limitation,  personal injury and contractual liability coverage
for the  performance  by Tenant of the  indemnity  agreements  set forth in this
Lease. Tenant shall first furnish to Landlord copies of policies or certificates
of insurance evidencing the required coverage prior to the Commencement Date and
thereafter  prior to each policy renewal date.  All policies  required of Tenant
hereunder shall contain a provision whereby the insurer is not allowed to cancel
or change materially the coverage without first giving thirty (30) days' written
notice to Landlord.

         (c)  Indemnity.  Except in those cases caused by Landlord's or Tenant's
negligence or willful  misconduct,  Landlord or Tenant shall  indemnify and save
the other harmless against any and all claims, suits, demands,  actions,  fines,
damages, and liabilities,  and all costs and expenses thereof (including without
limitation  reasonable attorneys' fees) attributable to the other party's use or
occupancy  of the  Premises,  or  otherwise  arising  out of injury  to  persons
(including  death) or property  occurring in, on or about, or arising out of the
Premises or other areas in the  Building  if caused or  occasioned  wholly or in
part by any act or omission of the other  party or the other  party's  Invitees,
except to the extent caused by the gross negligence or willful misconduct of the
other party.  The  non-prevailing  party shall also pay all costs,  expenses and
reasonable  attorneys'

                                       12
<PAGE>
fees that may be  incurred  by the  prevailing  party in
enforcing  the  agreements  of this  Lease,  whether  incurred  as a  result  of
litigation or otherwise.  Each party shall give the other party immediate notice
of any such happening causing injury to persons or property.

         10. LANDLORD'S COVENANT TO REPAIR AND REPLACE.
             -----------------------------------------

         (a)  During  the Term,  Landlord  shall be  responsible  for  necessary
repairs or replacements to the Building, including without limitation, the roof,
parking lot, and central  plumbing and electrical  systems serving the Building,
except for  repairs or  replacements  to any  Tenant  Improvements  or any trade
fixtures or equipment required or requested by Tenant, or otherwise necessitated
by the negligence, misconduct, acts or omissions of Tenant or Tenant's Invitees,
which shall be made at Tenant's  sole cost and expense,  unless such amounts are
paid to Landlord  pursuant to an insurance  policy.  Landlord shall maintain the
Building in a manner which is comparable with other comparable  buildings in the
Raleigh/Durham  market, taking into account rent and other relevant factors, and
in compliance with applicable laws, regulations,  ordinances and codes; however,
any non-compliance shall not materially impair Tenant's use and enjoyment of the
Premises or  constitute  a threat or danger to the health or safety of Tenant or
Tenant's Invitees.  Landlord's repairs and replacements shall be made as soon as
reasonably  possible  using due diligence and  reasonable  efforts,  taking into
account in each instance all circumstances surrounding the repair or replacement
including  without  limitation,  the materiality of the repair or replacement to
Tenant's use and operation of its business  within the Premises and the relation
thereof to the enjoyment of same,  such period not to exceed ten (10) days after
receiving  written  notice  from  Tenant of the need for  repairs or such longer
period of time as is reasonably  necessary  under the  circumstances  so long as
Landlord is diligently pursuing the completion of same; provided, however, in no
event shall such period of time exceed twenty (20) days (subject to extension by
Delays) after receipt of written notice from Tenant.  If Landlord cannot,  using
due diligence,  complete its repairs within the time period herein specified and
such  failure  to  repair  has a  material  adverse  impact on  Tenant's  use or
occupancy  of  the  Premises,   then  (unless  the  need  for  such  repairs  or
replacements is the result of the negligence, misconduct or acts or omissions of
Tenant or Tenant's Invitees,  in which event Tenant shall not be entitled to any
remedy),  such  failure  to  repair  shall be deemed  to be a  Landlord  default
hereunder.  If the need for such  repairs or  replacements  is the result of the
negligence,  misconduct or acts or omissions of Tenant or Tenant's Invitees, and
the expense of such repairs or  replacements  are not fully  covered and paid by
Landlord's insurance, then Tenant shall pay Landlord the full amount of expenses
not  covered.  Landlord's  duty to  repair  or  replace  as  prescribed  in this
paragraph  shall be  Tenant's  sole  remedy  and  shall be in lieu of all  other
warranties or guaranties of Landlord, express or implied.

         (b) Landlord shall not be liable for any failure to make any repairs or
to perform any maintenance  required of Landlord hereunder unless Landlord fails
to undertake  promptly and diligently  pursue such repairs or maintenance  after
written  notice  from  Tenant  setting  forth  the need for  such  repair(s)  or
replacement(s) in reasonable detail has been received by Landlord. Except as set
forth in the  paragraph  of this  Lease,  entitled  "Damage  or  Destruction  of
Premises",  there shall be no abatement of rent.  There shall be no liability of
Landlord by reason of any  reasonable  injury to or  interference  with Tenant's
business  arising from the making of any

                                       13
<PAGE>

repairs,  replacements,  alterations or
improvements  to any portion of the  Building or the  Premises,  or to fixtures,
appurtenances   and  equipment  therein  except  to  the  extent  of  Landlord's
negligence  or  misconduct.  Except for  Landlord's  default as set forth above,
Tenant  waives the right to make repairs at  Landlord's  expense  under any law,
statute or ordinance now or hereafter in effect.

         11. PROPERTY OF TENANT.
             ------------------

         All property  placed on the Premises by, at the  direction  of, or with
the  consent of Tenant or Tenant's  Invitees,  shall be at the risk of Tenant or
the owner thereof and Landlord  shall not be liable for any loss of or damage to
said property  resulting from any cause  whatsoever  except to the extent of any
loss or  damage  caused by the  negligence  or  misconduct  of  Landlord  or its
employees,  contractors or agents, provided same is not covered by the insurance
Tenant is required to maintain under the terms of this Lease.

         12. TRADE FIXTURES AND EQUIPMENT.
             ----------------------------

         Prior to  installation,  Tenant shall furnish to Landlord notice of all
trade fixtures and equipment which it intends to install within the Premises and
the installation of same shall be subject to Landlord's  consent.  So long as no
Event of Default has occurred and is continuing  hereunder,  any trade  fixtures
and equipment  installed in the Premises at Tenant's  expense and  identified by
Tenant in notice to Landlord shall remain Tenant's  personal property and Tenant
shall have the right at any time during the Term to remove  such trade  fixtures
and equipment.  Upon removal of any trade  fixtures and equipment,  Tenant shall
immediately restore the Premises to substantially the same condition in which it
existed  as of the  Commencement  Date,  ordinary  wear and tear and acts of God
alone excepted. Any trade fixtures not removed by Tenant at the expiration or an
earlier termination of the Lease shall, at Landlord's sole election,  either (i)
become the property of Landlord,  in which event  Landlord  shall be entitled to
handle  and  dispose  of same in any  manner  Landlord  deems  fit  without  any
liability or obligation to Tenant or any other third party with respect thereto,
or (ii) be subject to  Landlord's  removing  such property from the Premises and
storing same, all at Tenant's  expense and without any recourse against Landlord
with respect  thereto.  Without  limiting the generality of the  foregoing,  the
following property shall in no event be deemed to be "trade fixtures" and Tenant
shall not remove any such  property from the Premises  under any  circumstances,
regardless of whether installed by Landlord or Tenant: (a) any air conditioning,
air ventilating or heating fixtures or equipment;  (b) any lighting  fixtures or
equipment;  (c) any  carpeting  or  other  permanent  floor  coverings;  (d) any
paneling or other wall coverings;  (e) plumbing  fixtures and equipment;  or (f)
permanent  shelving.  Tenant,  at  Tenant's  sole  cost,  will have the right to
install an ATM kiosk, vault and safe at a location acceptable to Landlord.  Upon
the expiration or  termination of the Lease,  Landlord will require the vault to
be removed and Tenant shall  restore any damages to the Premises  occasioned  by
such removal.  All other Tenant  fixtures,  except for the ATM machine and other
banking equipment, will remain part of the Premises.

                                       14
<PAGE>

         13. DAMAGE OR DESTRUCTION OF PREMISES.
             ----------------------------------

         If the  Premises  are  damaged by fire or other  casualty,  but are not
rendered  untenantable  for  Tenant's  business,  either  in  whole  or in part,
Landlord shall cause such damage to be repaired without  unreasonable  delay and
the Annual  Rental shall not abate.  If by reason of such  casualty the Premises
are rendered  untenantable  for Tenant's  business,  either in whole or in part,
Landlord  shall  cause the  damage to the  physical  structure  of the  Building
(excluding any tenant  improvements  or  alterations  therein) to be repaired or
replaced  without  unreasonable  delay,  and, in the interim,  the Annual Rental
shall be  proportionately  reduced  as to such  portion  of the  Premises  as is
rendered untenantable.  Any such abatement of rent shall not, however, create an
extension of the Term.  Provided,  however,  if by reason of such casualty,  the
Premises are rendered  untenantable in some material portion,  and Landlord,  in
its reasonable estimation, notice of which is given to Tenant within thirty (30)
days of the date of the casualty, determines that the amount of time required to
repair the damage using due  diligence  is in excess of one hundred  eighty (180
days)(as measured from the issuance of the applicable building permits necessary
for the  reconstruction of the Building with such period to be extended by Force
Majeure),  then  either  party shall have the right to  terminate  this Lease by
giving written  notice of termination  within thirty (30) days after the date of
casualty,  and the Annual Rental shall (i) abate as of the date of such casualty
in proportion to the part of the Premises  rendered  untenantable and (ii) abate
entirely  as  of  the  effective   date  of  the   termination  of  this  Lease.
Notwithstanding  the  foregoing,  in the event the  casualty  giving  rise to an
election  to  terminate  is  caused  by the  negligence,  misconduct  or acts or
omissions  of  Tenant  or  Tenant's  Invitees,  Tenant  shall  have no  right to
terminate this Lease. Notwithstanding the other provisions of this paragraph, in
the event there should be a casualty loss to the Premises  during the last Lease
Year of the Term,  Landlord may, at its option,  terminate  this Lease by giving
written  notice to Tenant within thirty (30) days after the date of the casualty
and the Annual  Rental shall abate as of the date of such  notice.  Tenant shall
give  Landlord  prompt  notice  of any fire or other  casualty  in the  Premises
actually known to Tenant.  Notwithstanding anything contained in this Section to
the  contrary,  Landlord  shall only be  obligated  to restore the Premises to a
building  standard  condition unless Tenant makes available to Landlord proceeds
from  Tenant's  insurance  sufficient  to repair and restore the Premises to the
condition  in which it existed  immediately  prior to such  casualty,  including
those items in excess of building standard.

         14. GOVERNMENTAL ORDERS.
             -------------------

         Except as hereinbelow  set forth  regarding  compliance of the physical
structure of the Building with applicable governmental  regulations,  and except
for any defects,  violations or conditions  existing  prior to the  Commencement
Date,  Tenant  agrees,  at  its  own  expense,   to  comply  promptly  with  all
requirements of any legally  constituted  public authority that may be in effect
from time to time made  necessary  by reason of Tenant's use or occupancy of the
Premises.  Landlord  agrees to comply  promptly  with any such  requirements  if
pre-existing,  or not made  necessary  by reason of Tenant's  use or  occupancy.
Except  as  otherwise  set  forth  herein,  it is  agreed  that:  (a)  Tenant is
exclusively  responsible for all compliance with all requirements of any legally
constituted public authority in the event  non-compliance  relates to the design
of the  interior  of the  Premises  pursuant  to the  Plans or  Tenant's  use of
Premises  and (b) in the  event of

                                       15
<PAGE>

any  non-compliance  for which  Landlord is  responsible,  Landlord shall not be
deemed in breach of this Lease if such non-compliance does not materially impair
Tenant's use of, or  operations  from,  the Premises or threaten or endanger the
health or safety of Tenant or Tenant's Invitees.

         15. MUTUAL WAIVER OF SUBROGATION.
             ----------------------------

         For the purpose of waiver of subrogation,  the parties mutually release
and waive unto the other all rights to claim damages,  costs or expenses for any
injury to property caused by a casualty or any other matter whatsoever in, on or
about the Premises if the amount of such  damage,  cost or expense has been paid
to such  damaged  party under the terms of any policy of insurance or would have
been  paid if the  injured  party  had  carried  the  insurance  required  of it
hereunder.  All  insurance  policies  carried  with  respect to this  Lease,  if
permitted under  applicable  law, shall contain a provision  whereby the insurer
waives,  prior to loss,  all rights of subrogation  against  either  Landlord or
Tenant.

         16. SIGNS AND ADVERTISING.
             ---------------------

         (a) Landlord shall install,  at Tenant's sole cost and expense,  tenant
identification signage in accordance with Landlord's approved building standards
at or near the suite  entrance to the Premises and in the  directory  located in
the lobby of the Building.

         (b) In order to provide architectural control for the Building,  Tenant
shall not install any exterior signs,  marquees,  billboards,  outside  lighting
fixtures  and/or other  decorations on the Building,  the Premises or the Common
Areas,  except  for  banners  allowed  by the City  (but for no  longer  than so
allowed).  Landlord  shall  have the  right  to  remove  any such  sign or other
decoration  restore fully the Building,  the Premises or the Common Areas at the
cost and the  expense  of  Tenant  if any  such  exterior  work is done  without
Landlord's  prior written  approval,  which  approval  will not be  unreasonably
withheld,  conditioned or delayed. Tenant shall not permit, allow or cause to be
used in, on or about the Premises any sound  production  devices,  mechanical or
moving display devices, bright lights, or other advertising media, the effect of
which would be visible or audible from the exterior of the Premises.

         (c)  Notwithstanding  the foregoing,  Tenant at Tenant's expense,  will
have the right to install a minimum of three (3) internally illuminated exterior
building  signs  substantially  similar  to the  specifications  on  Exhibit  E1
conforming to City of Raleigh codes and regulations, and one backlit sign on the
ATM machine.  The cost of production,  installation and maintenance of the signs
will  be  solely  Tenant's.  Tenant  will  provide,  at  Tenant's  cost,  ground
directional  signage  to direct  bank  customers  to the drive  through  and ATM
facility.  Landlord  agrees  that  Tenant can have up to the  maximum  amount of
signage allowed by the City of Raleigh.

         (d)  Landlord   shall  provide  an  exterior   buildings   ground  sign
substantially  similar to Exhibit E2 (which Exhibit shall be added to this Lease
within thirty days of execution by both parties upon Landlord's approval, not to
be unreasonably  withheld) which shall  principally  identify  Tenant's name and
logo, and also have identification for at least two other tenants. Tenant's name
and logo shall be at least twice as large as such other tenants' names and logos
on

                                       16
<PAGE>
such signage.  All costs  associated with the production and  installation of
the  exterior  ground  sign  will  be at  Landlord's  expense.  Tenant  will  be
responsible  for the cost of its lettering to go on the ground sign,  the design
of which  shall be  furnished  by Tenant  with  Landlord's  approval,  not to be
unreasonably withheld. Maintenance of the sign will be an Operating Expense.

         17. LANDLORD'S RIGHT OF ENTRY.
             -------------------------

         Landlord,  and those persons  authorized by it, shall have the right to
enter the Premises at all reasonable  times and upon  reasonable  notice for the
purposes of making repairs, making connections,  installing utilities, providing
services to the Premises or for any other tenant,  making inspections or showing
the same to prospective  purchasers,  lenders or prospective  tenants during the
last twelve months of this Lease term, as well as at any time without  notice in
the event of emergency  involving  possible  injury to property or persons in or
around the Premises or the Building.

         18.  Intentionally deleted.

         19. EMINENT DOMAIN.
             --------------

         If any substantial  portion of the Premises is taken under the power of
eminent domain (including any conveyance made in lieu thereof) or if such taking
shall materially impair the normal operation of Tenant's  business,  then either
party shall have the right to terminate  this Lease by giving  written notice of
such  termination  within  thirty (30) days after such taking.  If neither party
elects to terminate  this Lease,  Landlord shall repair and restore the Premises
to the  best  possible  tenantable  condition  (but  only to the  extent  of any
condemnation proceedings made available to Landlord) and the Annual Rental shall
be  proportionately  and  equitably  reduced as of the date of the  taking.  All
compensation  awarded for any taking (or the  proceeds of a private sale in lieu
thereof) shall be the property of Landlord unless such award is for compensation
for damages to the Tenant's  interest in the Premises [which interest may not be
deemed to include  any value to the  unexpired  portion  of the Term;  provided,
however,  Landlord  shall not have any  interest in any  separate  award made to
Tenant for loss of business,  moving  expense,  tenancy  interest other than the
unexpired  portion of the Term,  or the taking of  Tenant's  trade  fixtures  or
equipment  if a separate  award for such  items is made to  Tenant.  In no event
shall  Tenant be  entitled  to any  compensation  for the loss of its  leasehold
estate.

         20. EVENTS OF DEFAULT AND REMEDIES.
             ------------------------------

         (a) Upon the occurrence of any one or more of the following events (the
"Events of Default,"  any one an "Event of  Default"),  Landlord  shall have the
right to exercise any rights or remedies  available in this Lease,  at law or in
equity. Events of Default shall be:

                  (i)  Tenant's  failure to pay any rental or other sum of money
         payable  hereunder  within  five (5) days  after  receipt  of notice of
         delinquency,  provided  Landlord  shall  not be  required  to give such
         notice more than twice in any consecutive twelve (12) month period;

                                       17
<PAGE>

                  (ii)  Tenant's  failure  to  perform  any other of the  terms,
         covenants or conditions  contained in this Lease if not remedied within
         thirty (30) days after receipt of written  notice  thereof,  or if such
         default cannot be remedied  within such period,  Tenant does not within
         thirty (30) days after written notice thereof commence such act or acts
         as shall be  necessary  to remedy the default and shall not  thereafter
         diligently  prosecute  such cure and  complete  such act or acts within
         ninety (90) days after written notice thereof:

                  (iii) Tenant shall become  bankrupt or insolvent,  or file any
         debtor  proceedings,  or file  pursuant  to any  statute a petition  in
         bankruptcy or insolvency or for reorganization,  or file a petition for
         the appointment of a receiver or trustee for all or  substantially  all
         of Tenant's assets and such petition or appointment shall not have been
         set aside  within  sixty  (60) days from the date of such  petition  or
         appointment,  or if  Tenant  makes an  assignment  for the  benefit  of
         creditors, or petitions for or enters into an arrangement; or

                  (iv) A default by Tenant under any other lease  heretofore  or
         hereafter made by Tenant for any other space in the Building.

         (b) In  addition  to its  other  remedies,  Landlord,  upon an Event of
Default by Tenant,  shall have the immediate  right,  after any applicable grace
period  expressed  herein,  to terminate and cancel this Lease and/or  terminate
Tenant's  right of  possession  and if  authorized by court order to reenter and
remove all persons and properties  from the Premises.  If Landlord  reenters the
Premises,  it may  either  terminate  this Lease or,  from time to time  without
terminating  this Lease,  terminate  Tenant's  right of possession and make such
alterations and repairs as may be necessary or appropriate to relet the Premises
and relet  the  Premises  upon  such  terms and  conditions  as  Landlord  deems
commercially  reasonable  without any  responsibility on Landlord  whatsoever to
account to Tenant for any surplus rents collected.  No retaking of possession of
the Premises by Landlord  shall be deemed as an election to terminate this Lease
unless a written  notice of such intention is given by Landlord to Tenant at the
time of reentry;  but,  notwithstanding  any such reentry or  reletting  without
termination,  Landlord may at any time  thereafter  elect to terminate  for such
previous default.  In the event of an elected  termination by Landlord,  whether
before or after reentry, Landlord may recover from Tenant damages, including the
costs of  recovering  the  Premises  and any costs  incurred  in  reletting  the
Premises, and Tenant shall remain liable to Landlord for the total Annual Rental
as would have been  payable by Tenant  hereunder  for the  remainder of the term
less  the  rentals  actually  received  from any  reletting  or,  at  Landlord's
election,  less the reasonable rental value of the Premises for the remainder of
the term.  In  determining  the Annual  Rental  which would be payable by Tenant
subsequent  to default,  except with respect to Minimum  Rental  (which shall be
calculated in accordance  with Section 1(g) hereof),  the Annual Rental for each
Lease Year of the unexpired  term shall be equal to the Annual Rental payable by
Tenant for the last Lease Year  prior to the  default.  If any rent owing  under
this  Lease is  collected  by or  through  an  attorney,  Tenant  agrees  to pay
Landlord's reasonable attorneys' fees to the extent allowed by applicable law.

                                       18
<PAGE>

         21.  SUBORDINATION.
              -------------

         This Lease is subject and subordinate to any and all mortgages or deeds
of trust currently existing on the property of which the Premises is a part, and
this clause shall be self-operative  without any further instrument necessary to
effect such  subordination;  however,  if requested  by  Landlord,  Tenant shall
promptly  execute  and  deliver  to  Landlord  any  such   certificate(s)  in  a
commercially  reasonable form as Landlord may reasonably  request evidencing the
subordination  of this Lease to, or the  assignment  of this Lease as additional
security  for, such  mortgages or deeds of trust;  provided,  further,  Landlord
shall  use  reasonable  efforts  to  obtain  a  non-disturbance  agreement  in a
commercially  reasonable  form from any such  mortgagee,  trustee or beneficiary
currently  having an interest in all or any portion of the Premises.  Subject to
the condition  precedent  that Landlord  provide  Tenant with a  non-disturbance
agreement  in a  commercially  reasonable  form in  favor  of  Tenant  from  any
mortgagee,  trustee or beneficiary,  this Lease shall be subject and subordinate
to any  mortgage or deed of trust which may  hereafter  encumber the property of
which the  Premises  is a part.  Tenant's  obligations  under this  Lease  shall
continue in full force and effect  notwithstanding  any such default proceedings
under a mortgage or deed of trust and shall attorn to the mortgagee,  trustee or
beneficiary of such mortgage or deed of trust,  and their successors or assigns,
and to the transferee under any foreclosure or default proceedings. Tenant will,
upon request by Landlord, execute and deliver to Landlord or to any other person
designated  by  Landlord,  any  instrument  or  instruments  in  a  commercially
reasonable form required to give effect to the provisions of this paragraph.

         22. ASSIGNMENT AND SUBLETTING.
             -------------------------

         Tenant  shall not assign,  sublet,  mortgage,  pledge or encumber  this
Lease,  the  Premises,  or any interest in the whole or in any portion  thereof,
directly or  indirectly,  without the prior written  consent of Landlord,  which
consent  shall not be  unreasonably  withheld  or  delayed.  In the event of any
assignment,  sublease, mortgage, pledge or encumbrance, Tenant shall: (i) remain
primarily  liable for the  performance of all terms of this Lease,  (ii) pay all
reasonable  costs  incurred  by  Landlord in  connection  with such  assignment,
sublease or mortgage,  including without limitation,  reasonable attorneys' fees
and a $500.00  processing  fee, (iii) and, after deducting  reasonable  expenses
actually  incurred to pay leasing  commissions,  tenant  improvements  and other
costs  incurred in subleasing the space,  pay to Landlord  one-half (1/2) of any
rental or any fees or charges  received by Tenant in excess of the Annual Rental
payable to Landlord  hereunder as further  rental  under this Lease.  Landlord's
consent to one  assignment  or sublease  will not waive the  requirement  of its
consent to any  subsequent  assignment  or  sublease  as  required  herein.  Any
attempted  assignment  or  sublease  by  Tenant  in  violation  of the terms and
conditions of this numbered  paragraph 22 shall be null and void. Upon notice to
Landlord  of a proposed  sublease  or  assignment  of all or any  portion of the
Premises (the "Proposed Space"),  Landlord shall have the option, within fifteen
(15) days after its receipt of such notice, to terminate this Lease with respect
to the Proposed Space, whereupon the parties hereto shall have no further rights
or liabilities with respect to the Proposed Space except as otherwise  expressly
set forth herein.

         In the event of a proposed  assignment  of this Lease or  subletting of
all or a part of the Premises,  Tenant shall submit to Landlord, in writing, (i)
the  name  of  the  proposed  assignee  or

                                       19
<PAGE>

sublessee,  (ii) current financial statements available to Tenant disclosing the
financial  condition of the proposed assignee or subtenant,  (iii) the nature of
the business of the proposed assignee or sublessee,  and its proposed use of the
Premises  (any  assignment or subletting  being subject to  restrictions  on use
contained in this Lease,  the  violation  of which by the  proposed  assignee or
sublessee  shall  constitute  absolute  grounds  for  Landlord's  denial  of the
requested assignment or subletting, such grounds not being the exclusive grounds
for denial under clause  (iii)) and (iv) the proposed  commencement  date of the
assignment or  subletting,  together  with a copy of the proposed  assignment or
sublease.  Within  thirty (30) days after its receipt of such  notice,  Landlord
shall either  approve or  disapprove  such  proposed  assignment  or sublease in
writing.  Tenant shall promptly deliver a copy of the fully executed  assignment
or sublease to Landlord upon its receipt of same.

         Notwithstanding the foregoing, Tenant will not require Landlord consent
nor pay any  additional  rent or fees: (a) to sublease a portion of its space to
an insurance,  securities,  commercial  leasing,  investment banking company, or
other financial  services  company,  provided each sublease does not exceed more
than 500  usable  square  feet,  or (b) to assign  this  Lease in the event of a
merger or other change of control  event where the proposed  assignee is engaged
in the same or similar business and is at least as creditworthy as Tenant, or is
under common corporate control with Tenant.

         Notwithstanding anything in this Lease to the contrary, unless approved
by Landlord,  Tenant  further  agrees that any  assignment or sublease  shall be
subject  to the  following  additional  limitations:  (i) in no event may Tenant
assign  this Lease or sublet all or any  portion of the  Premises to an existing
Tenant of the Building or its subtenant or assignee;  (ii) in no event shall the
proposed  subtenant or assignee be a person or entity with whom  Landlord or its
agent is negotiating  and to or from whom Landlord,  or its agent,  has given or
received any written or oral proposal within the past six (6) months regarding a
lease of space in the  Building;  and (iii) Tenant shall not publicly  advertise
the rate for which  Tenant is  willing to sublet  the  Premises;  and all public
advertisements of the assignment of the Lease or sublet of the Premises,  or any
portion thereof,  shall be subject to prior written  approval by Landlord,  such
approval not to be unreasonably  withheld or delayed.  Said public advertisement
shall  include,  but not be limited to, the placement or display of any signs or
lettering  on the exterior of the Premises or on the glass or any window or door
of the  Premises or in the  interior of the  Premises if it is visible  from the
exterior.

         23. LANDLORD DEFAULT.
             ----------------

         In the event of any default by Landlord  under this Lease,  Tenant will
give Landlord  written notice  specifying such default with  particularity,  and
Landlord  shall  thereupon have ten business (10) days (or such longer period as
may  reasonably  be required in the exercise of due  diligence) in which to cure
any such default.  Unless and until  Landlord fails to so cure any default after
such  notice,  Tenant  shall  not have any  remedy  or cause of action by reason
thereof.  All obligations of Landlord  hereunder will be construed as covenants,
not  conditions.  Notwithstanding  any  other  provisions  of this  Lease to the
contrary, Tenant shall look solely to Landlord's equity in the Building, and not
to any other or separate  business or  non-business

                                       20
<PAGE>

assets of Landlord, or any partner,  shareholder,  officers or representative of
Landlord,  for the satisfaction of any claim brought by Tenant against Landlord,
and if Landlord  shall fail to perform any  covenant,  term or condition of this
Lease  upon  Landlord's  part  to be  performed,  and as a  consequence  of such
default,  Tenant shall recover a money judgment against Landlord,  such judgment
shall be  satisfied  only:  (i) out of the proceeds of sale  received  upon levy
against  Landlord's  equity  in the  Building,  and/or  (ii) to the  extent  not
encumbered by a secured creditor,  out of the rents or other incomes  receivable
by Landlord  from the  Building,  and/or  (iii) by  withholding  rent against an
unsatisfied  court judgment that Tenant has obtained  against the Landlord which
judgment is not on appeal, provided that all rental payments in dispute shall be
paid to a mutually  acceptable  escrow  agent  while such  approval  is pending.
Further,  in the event the owner of Landlord's  interest in this Lease is at any
time a partnership,  joint venture or unincorporated association,  Tenant agrees
that  the   members  or  partners  of  such   partnership,   joint   venture  or
unincorporated  association  shall not be personally or  individually  liable or
responsible for the performance of any of Landlord's obligations hereunder.

         24. TRANSFER OF LANDLORD'S INTEREST.
             -------------------------------

         If  Landlord  shall  sell,  assign or  transfer  all or any part of its
interest  in the  Building or in this Lease to a  successor  in  interest  which
expressly  assumes the  obligations of Landlord  hereunder,  then Landlord shall
thereupon be released or discharged  from all future  covenants and  obligations
hereunder,  and Tenant  shall look  solely to such  successor  in  interest  for
performance of all of Landlord's  subsequent  obligations.  Tenant's obligations
under this Lease shall in no manner be affected by Landlord's sale,  assignment,
or transfer of all or any part of such interest(s) of Landlord, and Tenant shall
thereafter  attorn and look solely to such successor in interest as the Landlord
hereunder.

         25. COVENANT OF QUIET ENJOYMENT.
             ---------------------------

         Landlord  represents  that it has full right and authority to lease the
Premises and Tenant shall peacefully and quietly hold and enjoy the Premises for
the full Term hereof so long as no Event of Default occurs hereunder.

         26. ESTOPPEL CERTIFICATES.
             ---------------------

         Within ten (10) days after  receipt  of a request  by  Landlord  or any
Landlord mortgagee, Tenant shall deliver a written estoppel certificate, in form
supplied by or acceptable to Landlord or the Landlord mortgagee,  certifying any
facts  that  are  then  true  with  respect  to this  Lease,  including  without
limitation that this Lease is in full force and effect, that no Event of Default
exists on the part of Landlord or Tenant,  that  Tenant is in  possession,  that
Tenant has commenced the payment of rent,  and that Tenant claims no defenses or
offsets with respect to payment of rentals  under this Lease.  Likewise,  within
ten (10) days  after a request  by Tenant,  Landlord  shall  deliver to Tenant a
similar estoppel certificate covering such matters as are reasonably required by
Tenant.

                                       21

<PAGE>

         27. PROTECTION AGAINST LIENS.
             ------------------------

         Tenant  shall do all  things  necessary  to  prevent  the filing of any
mechanics', materialmen's or other types of liens whatsoever, against all or any
part of the Premises by reason of any claims made by, against,  through or under
Tenant.  If any such lien is filed  against the  Premises,  Tenant  shall either
cause the same to be  discharged  of record within twenty (20) days after filing
or, if Tenant in its  discretion  and in good  faith  determines  that such lien
should be  contested,  it shall  furnish  such  security as may be  necessary to
prevent any foreclosure  proceedings against the Premises during the pendency of
such  contest.  If Tenant  shall fail to  discharge  such lien  within said time
period or fail to furnish such security,  then Landlord may at its election,  in
addition to any other right or remedy  available  to it,  discharge  the lien by
paying the amount  claimed to be due or by  procuring  the  discharge  by giving
security or in such other  manner as may be allowed by law. If Landlord  acts to
discharge or secure the lien then Tenant shall  immediately  reimburse  Landlord
for all sums paid and all costs and expenses  (including  reasonable  attorneys'
fees)  incurred by Landlord  involving  such lien  together with interest on the
total  expenses and costs at an interest  rate equal to the Prime Rate plus five
percent (5%).

         28.  MEMORANDUM OF LEASE.
              -------------------

         If requested by Tenant,  Landlord shall execute a recordable Memorandum
or Short Form Lease, prepared at Tenant's expense,  specifying the exact term of
this Lease and such other terms as the parties shall mutually determine.

         29. FORCE MAJEURE.
             -------------

         In the event Landlord or Tenant shall be delayed, hindered or prevented
from the  performance of any act required  hereunder,  by reason of governmental
restrictions,  scarcity  of labor or  materials,  strikes,  fire,  or any  other
reasons  beyond its  reasonable  control,  the  performance of such act shall be
excused for the period of delay,  and the period for performance of any such act
shall be extended as necessary to complete  performance  after the delay period.
However,  the  provisions  of this  paragraph  shall in no way be  applicable to
Tenant's  obligations  to pay Annual  Rental or any other sums,  monies,  costs,
charges or expenses required by this Lease.

         30. REMEDIES CUMULATIVE - NONWAIVER.
             -------------------------------

         Unless  otherwise  specified  in this  Lease,  no remedy of Landlord or
Tenant  shall be  considered  exclusive of any other  remedy,  but each shall be
distinct,  separate and cumulative  with other available  remedies.  Each remedy
available  under this Lease or at law or in equity may be  exercised by Landlord
or Tenant from time to time as often as the need may arise. No course of dealing
between  Landlord  and Tenant or any delay or  omission of Landlord or Tenant in
exercising  any right arising from the other  party's  default shall impair such
right or be construed to be a waiver of a default.

                                       22
<PAGE>
         31. HOLDING OVER.
             ------------

         If Tenant  remains in  possession  of the  Premises or any part thereof
after  the  expiration  of  the  Term,   whether  with  or  without   Landlord's
acquiescence, Tenant shall be deemed only a tenant at will and there shall be no
renewal  of this  Lease  without a  written  agreement  signed  by both  parties
specifying such renewal.  The "monthly" rental payable by Tenant during any such
tenancy at will period shall be one hundred fifty percent  (150%) of the monthly
installments  of Annual Rental payable  during the final Lease Year  immediately
preceding  such  expiration.  Tenant  shall also  remain  liable for any and all
damages,  direct and  consequential,  suffered  by  Landlord  as a result of any
holdover without Landlord's unequivocal written acquiescence.

         32. NOTICES.
             -------

         Any notice  allowed or  required  by this Lease shall be deemed to have
been  sufficiently  served if the same  shall be in  writing  and  placed in the
United  States mail,  via  certified  mail or registered  mail,  return  receipt
requested,  with proper postage prepaid or delivered by a nationally  recognized
overnight  courier and  addressed  to the  appropriate  party at the address set
forth in Section 1(i) hereof.

         The  addresses of Landlord  and Tenant and the party,  if any, to whose
attention  a notice or copy of same  shall be  directed  may be changed or added
from time to time by either party giving  notice to the other in the  prescribed
manner.

         33.  LEASING COMMISSION.
              ------------------

         Landlord and Tenant  represent  and warrant each to the other that they
have not dealt with any broker(s) or any other person  claiming any  entitlement
to any commission in connection with this  transaction  except the Broker(s) set
forth in Section 1(k) hereof.  Tenant  agrees to indemnify and save Landlord and
Landlord's  agent, Tri Properties Inc., and Tenant's agent,  Thomas  Commercial,
harmless  from  and  against  any and all  claims,  suits,  liabilities,  costs,
judgments and expenses,  including  reasonable  attorneys' fees, for any leasing
commissions or other  commissions,  fees,  charges or payments resulting from or
arising out of their respective actions in connection with this Lease.  Landlord
agrees to  indemnify  and save  Tenant  harmless  from and  against  any and all
claims, suits, liabilities,  costs, judgments and expenses, including reasonable
attorneys' fees, for any leasing commissions or other commissions, fees, charges
or payments resulting from or arising out of its actions in connection with this
Lease.  Landlord agrees to be responsible for the leasing  commission due Broker
pursuant to a separate written  agreement  between  Landlord and Broker,  and to
hold Tenant harmless respecting same.

         34. MISCELLANEOUS.
             -------------

         (a) Rules and Regulations.

         Landlord shall have the right from time to time to prescribe reasonable
rules and  regulations  (the "Rules and  Regulations")  for  Tenant's use of the
Premises and the Building.  A copy of Landlord's  current Rules and  Regulations
respecting  the  Premises  and the  Building is attached  hereto as Exhibit "B".
Tenant  shall  abide by and  actively  enforce  on all  Tenant's

                                       23
<PAGE>

Invitees such regulations  including without  limitation rules governing parking
of vehicles in designated areas and during designated times.

         (b) Evidence of Authority.

         If requested  by  Landlord,  Tenant  shall  furnish  appropriate  legal
documentation evidencing the valid existence and good standing of Tenant and the
authority of any parties signing this Lease to act for Tenant.

         (c) Nature and Extent of Agreement.

         This Lease,  together with all exhibits  hereto,  contains the complete
agreement of the parties concerning the subject matter, and there are no oral or
written understandings,  representations, or agreements pertaining thereto which
have not been incorporated  herein.  This Lease creates only the relationship of
landlord and tenant  between the parties,  and nothing  herein shall impose upon
either party any powers,  obligations or restrictions not expressed herein. This
Lease  shall be  construed  and  governed  by the laws of the state in which the
Premises are located.

         (d) Binding Effect.

         This Lease shall be binding  upon and shall inure to the benefit of the
parties hereto and their respective  heirs,  successors and assigns.  This Lease
shall not be binding on Landlord  until  executed by an authorized  signatory of
Landlord and  delivered to Tenant.  No amendment or  modification  to this Lease
shall be binding  upon  Landlord  unless same is in writing  and  executed by an
authorized signatory of Landlord.

         (e) Captions and Headings.

         The  captions  and  headings  in this  Lease  are for  convenience  and
reference only, and they shall in no way be held to explain, modify, or construe
the meaning of the terms of this Lease.

         (f) Lease Review.

         The submission of this Lease to Tenant for review does not constitute a
reservation of or option for the Premises, and this Lease shall become effective
as a contract only upon execution and delivery by Landlord and Tenant.

         (g) Prevailing Party.

         If either  Landlord or Tenant  places in the hands of an  attorney  the
enforcement of this Lease or any portion thereof, for the collection of any rent
due or to become due  hereunder,  or recovery of the possession of the Premises,
or file suit upon same, the  non-prevailing  (or defaulting) party shall pay the
other party reasonable attorney's fees and court costs.

                                       24
<PAGE>

         (h) Representations and Warranties.

         The  person  or  persons  executing  this  Lease on  behalf  of  Tenant
represent,  covenant and warrant to Landlord as of the date Tenant  executes and
delivers this Lease that: (a) Tenant is duly  constituted,  in good standing and
qualified to do business in the State of North Carolina, (b) Tenant has paid all
corporate  taxes (if  applicable),  (c)  Tenant  will  file when due all  forms,
reports,  fees and other documents necessary to comply with applicable laws, and
(d) the signatories  signing on behalf of Tenant have the requisite authority to
bind Tenant  pursuant to Tenant's  organizational  documents  (i.e.  partnership
agreement,  operating  agreement or bylaws) or a certified  copy of a resolution
from Tenant authorizing same.

         The  person or  persons  executing  this  Lease on  behalf of  Landlord
represent,  covenant and warrant to Tenant as of the date Landlord  executes and
delivers this Lease that: (a) Landlord is duly constituted, in good standing and
qualified to do business in the State of North  Carolina;  (b) Landlord has paid
all business  taxes;  (c) Landlord  will file when due all forms,  reports,  and
other documents and pay all fees necessary to comply with  applicable  laws, and
(d) the signatories  signing on behalf of Landlord have the requisite  authority
to bind Landlord pursuant to Landlord's organizational documents, or a certified
copy of a resolution from Landlord authorizing same.

         (i) Building Access.

         There shall be open access to the  Building  during  Standard  Hours of
Operation.  At all other times,  access to the Building  may be  restricted,  at
Landlord's  election,  by use of a card  access  system  at an  entrance  to the
Building.  Landlord  shall furnish Tenant at no cost up to four (4) access cards
per 1,000 rentable square feet occupied by Tenant (as of the Commencement  Date)
for entering the  Building.  Additional  cards and  replacement  cards (for lost
access cards) shall be made  available to Tenant at a charge equal to $20.00 per
card upon Landlord's receipt of an order signed by Tenant, and Landlord reserves
the right to increase  the charge if  necessary  to cover its costs of obtaining
and  processing  such  additional or  replacement  cards.  Tenant shall promptly
provide  Landlord with written notice of any lost or stolen access cards for the
Building.  Landlord  shall  replace all  defective or worn access cards  without
charge.  All cards shall remain the property of Landlord.  No  additional  locks
shall be allowed on any exterior door of the Premises without Landlord's written
permission  and locks on any interior door shall be permitted only to the extent
such  locks  are  permissible  under  applicable  laws  and  relevant  insurance
requirements. Upon termination of this Lease, Tenant shall surrender to Landlord
all access  cards and keys  related to the  Premises,  and give to Landlord  the
combination  of all locks for sages,  safe cabinets and vault doors,  if any, to
remain in the  Premises  and in the event Tenant fails to return all such access
cards to Landlord at the end of the Term,  Tenant shall pay Landlord  $20.00 for
each such access card not returned to Landlord.

         Landlord agrees that Tenant may control all cards  providing  access to
the  first  floor  space if  Tenant  provides  all  maintenance  and  janitorial
services,  but as to any area  where  Landlord  is to  provide  maintenance  and
janitorial services, Landlord must be provided access to such area(s).

                                       25

<PAGE>

         35. OPTIONS TO EXTEND.
             ------------------
         As set forth on Addendum No. 3 which is attached hereto.


         36. RIGHT OF FIRST  OFFER.
             ----------------------
         If during the first four (4) years of the Term space becomes  available
("Available  Space") in the  Building to lease and Landlord be willing and ready
to lease such  Available  Space,  Landlord  shall  give  Tenant  written  notice
thereof, and of the terms on which Landlord is willing to lease the same. Tenant
shall have ten (10) business days following the date Tenant  receives the notice
within  which to agree to lease the  Additional  Space on the terms set forth in
Landlord's  notice.  Unless  Landlord  otherwise  agrees Tenant may not elect to
lease less than all the Available Space  described in the Notice,  and if Tenant
does not deliver to Landlord  within the  aforesaid  ten  business  day period a
written  agreement  to lease the  Available  Space on the exact  terms  offered,
Landlord  shall have no further  obligation to Tenant with respect to such Space
under this Section.  Landlord shall have no obligation to give Tenant a Right of
First Offer for any space with respect to which tenants  existing as of the date
of this Lease have a right to lease.

         37. SEVERABILITY.
             ------------

         If any term or  provision of this Lease or the  application  thereof to
any person or circumstance  shall, to any extent,  be invalid or  unenforceable,
the  remainder of this Lease,  or the  application  of such term or provision to
persons or  circumstances  other  than  those as to which it is held  invalid or
unenforceable,  shall not be affected  thereby,  and each term and  provision of
this Lease shall be valid and  enforced to the fullest  extent  permitted by law
notwithstanding the invalidity of any other term or provision hereof.

         38. REVIEW OF DOCUMENTS.
             -------------------

         If, following the execution of this Lease, either party hereto requests
that the other party execute any document or instrument that is other than (i) a
document or instrument  the form of which is attached  hereto as an exhibit,  or
(ii) a document  that  solely sets forth  facts or  circumstances  that are then
existing and reasonably ascertainable by the requested party with respect to the
Lease,  then the party making such request shall be  responsible  for paying the
out-of-pocket costs and expenses,  including without limitation,  the attorneys'
fees,  incurred by the requested  party in  connection  with the review (and, if
applicable,  the  negotiations)  related to such  document(s) or  instrument(s),
regardless of whether such  document(s) or  instrument(s) is (are) ever executed
by the requested  party. In the event the requesting  party is Tenant,  all such
costs and  expenses  incurred  by  Landlord  in  connection  with its review and
negotiation  of any such  document(s)  or  instrument(s)  shall be  deemed to be
additional  rental due  hereunder  and shall be payable by Tenant  promptly upon
demand.

                                       26

<PAGE>

         39.  LEASE CONDITIONAL ON RECEIPT OF APPLICABLE REGULATORY
              -----------------------------------------------------
              APPROVALS.
              ---------
         Notwithstanding  any other  provision  contained  in this  Lease to the
contrary,  this Lease is subject to Tenant obtaining  approval at this site from
all applicable  regulatory  authorities,  including the North  Carolina  Banking
Commission  and the FDIC.  Tenant agrees to diligently and  continuously  pursue
obtaining such approvals.  If approval by all such regulatory authorities is not
obtained  within  ninety (90) days from Lease  execution,  Tenant shall have the
option  within the next  succeeding  ten days by written  notice to  Landlord to
cancel  this  Lease.  At such  time as the  required  regulatory  approvals  are
obtained Tenant shall give Landlord prompt written notice thereof.

         40. COMMISSIONER OF BANKS PROVISION.
             --------------------------------

         Notwithstanding  any other  provisions  contained in this Lease, in the
event the Tenant is closed or taken over by the North Carolina  Commissioner  of
Banks, or other bank supervisory authority, the Landlord may terminate the Lease
only with the concurrence of the Commissioner of Banks or other bank supervisory
authority, and any such authority shall in any event have the election either to
continue or to terminate  the Lease.  Provided,  that in the event this Lease is
terminated,  the maximum  claim of Landlord for damages or indemnity  for injury
resulting  from the rejection or  abandonment of the unexpired term of the Lease
shall in no event be in an amount  exceeding  the rent  reserved  by the  Lease,
without acceleration,  for the year next succeeding the date of the surrender of
the premises to the Landlord, or the date of re-entry of the Landlord, whichever
first occurs,  whether  before or after the closing of the bank,  plus an amount
equal to the unpaid rent accrued, without acceleration up to such date.

         41. LANDLORD'S WORK.
             ----------------

         Within thirty (30) days after Lease Execution,  Landlord, at Landlord's
expense will deliver detailed exterior building  construction  drawings and site
plan outlining the work to be completed by Landlord (the "Landlord's Work"), for
Tenant's  review and written  approval.  Notwithstanding  any other provision in
this  Lease  to the  contrary,  if  Tenant  and  Landlord  cannot  agree  on the
Landlord's Work to be completed,  or if any regulatory  authority  prohibits the
installation  of a driveway  from Glenwood  Avenue to the Building,  as shown on
Exhibit F,  Tenant,  at Tenant's  option,  can cancel this Lease within five (5)
days after failure to agree on Landlord's  Work or learning the driveway will be
prohibited, by written notice and Tenant shall have no further obligations under
this Lease.

         42. PROPERTY ADDRESS.
             -----------------

         Landlord agrees to cooperate with and assist Tenant in Tenant's efforts
to obtain from the City of Raleigh an address for the  Premises  showing them to
be on Glenwood Avenue.

                      [SIGNATURES BEGIN ON FOLLOWING PAGE]

         IN WITNESS  WHEREOF,  the  parties  have  caused  this Lease to be duly
executed  and sealed  pursuant  to  authority  duly given as of the day and year
first above written.

                                       27

<PAGE>

         "LANDLORD"

                           CRABTREE PARK, LLC                         (SEAL)

                           By: THE SBJ GROWTH, L.P., a Georgia limited
                           partnership, d/b/a in North Carolina as The
                           SBJ Growth Limited Partnership, Its
                           Managing Member

                           By:      Northside
                                    Distribution Trust
                                    #1,      Northside
                                    Distribution Trust
                                    #2,      Northside
                                    Distribution Trust
                                    #3, and  Northside
                                    Distribution Trust
                                    #4,  being  all of
                                    the        general
                                    partners   of  The
                                    SBJ Growth, L.P.

                           By:      _____________________________     (SEAL)
                                    Elliott Cohen, not individually,
                                    but solely as Trustee of the
                                    aforesaid four Trusts

                           Date:    _____________________________


                           "TENANT"

[CORPORATE SEAL]           CAPITAL BANK

ATTEST                                By:      ______________________________
                                      Name:    ______________________________
____________________                  Title:   ______________________________
__________ Secretary
                                      Date:    ______________________________


<PAGE>

                                   EXHIBIT "A"

                                   FLOOR PLAN


                             [GRAPHIC - FLOOR PLAN]



<PAGE>

                                   EXHIBIT "B"

                              RULES AND REGULATIONS


         The following rules and  regulations  have been adopted by the Landlord
for the care, protection and benefit of the Building and for the general comfort
and welfare of the tenants:

         1. The sidewalks,  entrances, halls, passages,  elevators and stairways
shall not be  obstructed by the Tenant or used by him for any other purpose than
for ingress and egress.

         2.  Toilet  rooms and other water  apparatus  shall not be used for any
purpose other than those for which they are constructed.

         3. The Tenant shall not do anything in the  Premises,  or bring or keep
anything therein, which shall in any way conflict with any law, ordinance,  rule
or regulation affecting the occupancy and use of the Premises,  which are or may
hereafter be enacted or promulgated  by any public  authority or by the Board of
Fire Underwriters.

         4. In order to insure proper use and care of the Premises,  neither the
Tenant nor agent nor employee of the Tenant shall:

         (a) Allow any furniture,  packages or articles of any kind to remain in
corridors  except  for short  periods  incidental  to  moving  same in or out of
Building or to cleaning or rearranging occupancy of leased space.

         (b) Maintain or utilize bicycles or other vehicles in the Building.

         (c) Mark or defile elevators,  toilet rooms, walls,  windows,  doors or
any part of the Building.

         (d)      Keep animals or birds on the Premises.

         (e)  Deposit  waste  paper,  dirt or  other  substances  in  corridors,
stairways,  elevators, toilets, restrooms, or any other part of the Building not
leased to him.

         (f) Drill holes,  drive nails or screws into walls,  floors,  doors, or
partitions  or  otherwise  unless  written  consent is first  obtained  from the
Landlord.  However,  Tenant  will be  allowed to hang or attach  pictures,  wall
hangings,  blackboards  and similar items  providing  that the method of hanging
does not permanently damage the walls, and holes created are patched, or covered
on removal.

         (g) Operate any machinery  within the Building except  customary office
and banking equipment, including dictaphones, calculators, electric typewriters,
and the like.  Special  equipment or machinery  not commonly used or operated by
banks may be operated only with the prior written consent of the Landlord.

<PAGE>
         (h) Tamper or  interfere in any way with  windows,  doors,  locks,  air
conditioning controls, heating, lighting, electric or plumbing fixtures.

         (i) Leave Premises unoccupied without locking all doors,  extinguishing
lights and turning off all water outlets.

         (j) Install or operate  vending  machines  of any kind in the  Premises
without  written  consent of Landlord,  which consent shall not be  unreasonably
withheld, conditioned or delayed.

         5. The Landlord shall have the right to prohibit any advertising by the
Tenant which, in its opinion,  tends to damage the reputation of the Building or
its  desirability,  and upon  written  notice from  Landlord,  the Tenant  shall
discontinue any such advertising.

         6. The Tenant will reimburse the Landlord for the cost of repairing any
damage to the  Premises or other parts of the  Building  caused by the Tenant or
the agents or employees of the Tenant, including replacing any glass broken.

         7. The Landlord shall furnish a reasonable  number of door keys for the
needs of the Tenant,  which shall be surrendered on expiration of the Lease. The
Tenant shall not alter the locks or effect any substitution without notification
to the Landlord, and as to areas where Landlord is to provide maintenance and/or
janitorial  services if there is an  alteration  or  substitution  Tenant  shall
provide  access for such  purposes or Landlord  shall be relieved of any further
obligation to provide such services.

         8. The Tenant  shall not  install in the  Premises  any metal  safes or
permit any  concentration  of excessive  weight in any portion  thereof  without
first having obtained the written permission of Landlord.

         9. The Landlord  reserves  the right at all times to exclude  newsboys,
loiterers,  vendors,  solicitors and peddlers,  from the Building and to require
registration,  satisfactory  identification  and  credentials  from all  persons
seeking access to any part of the Building  outside of ordinary  business hours.
Ordinary  business  hours shall mean Monday  through  Friday,  7:30 a.m. to 6:30
p.m.,  and 8:00 a.m. to 1:00 p.m. on  Saturday,  except on legal  holidays.  The
Landlord  will  exercise its best  judgment in the execution of such control but
shall not be held liable for the granting or refusal of such access.  Except for
Tenant's  Customers or Invitees,  the Landlord reserves the right to exclude the
general public from the Building  after ordinary  business hours and on weekends
and holidays.

         10. The attaching of wires to the outside of the Building is absolutely
prohibited,  and no wires shall be run or  installed in any part of the Building
without the Landlord's permission and direction.

         11. Requests for services of janitors or other Building  employees must
be made to the Landlord.  Agents or employees of Landlord  shall not perform any
work or do  anything  outside  of their  regular  duties  unless  under  special
instructions from Landlord.
<PAGE>

         12. Signs or any other  tenant  identification  shall be in  accordance
with building  standard  signage.  No signs of any nature shall be placed in the
windows so as to be visible  from the  exterior of the  Building.  All signs not
approved in writing by the Landlord shall be subject to removal without notice.

         13. Any  improvements or alterations to the Premises by Tenant shall be
approved in advance by the  Landlord and all such work,  if  approved,  shall be
done at the Tenant's sole expense under the supervision of the Landlord.

         14.  Tenant shall have a  non-exclusive  right to use all driveways and
parking areas designated for Tenant and Tenant's employees,  if deemed necessary
by Landlord.

         15. If additional  drapes or window  decorations are desired by Tenant,
they shall be approved by Landlord and  installed at the Tenant's  expense under
the direction of the Landlord.  Lining on drapes visible from the exterior shall
be of a color approved by Landlord.

         16.  The  possession  of  weapons,  including  concealed  handguns,  is
strictly forbidden on the Premises.

         17. No smoking shall be permitted within any portion of the Building.

         18 . The  Landlord  shall have the right to make such other and further
reasonable  rules and regulations as, in the judgment of the Landlord,  may from
time to time be necessary for the safety,  care and cleanliness of the Premises,
the Building or adjacent areas,  and for the  preservation of good order therein
effective  five (5) days  after all  tenants  have  been  given  written  notice
thereof.


<PAGE>



                                   EXHIBIT "C"

                                 LANDLORD'S WORK



         On or before the  Commencement  Date,  Landlord  agrees to complete the
following improvements: (To Be Added).



<PAGE>




                                  EXHIBIT "C-1"

                                      PLANS

                                [To Be Attached]


<PAGE>



                                   EXHIBIT "D"

                       OPERATING EXPENSES - RIGHT TO AUDIT

                  The term  "Operating  Expense"  as used herein  shall  include
actual costs of  operation,  repair and  maintenance  as determined by generally
accepted  accounting  principles and shall include by way of  illustration,  but
without  limitation:  ad valorem real and personal  property  taxes,  reasonable
legal or  consulting  fees  incurred in  contesting or attempting to reduce such
taxes,   hazard  and  liability  insurance   premiums,   utilities,   heat,  air
conditioning,  janitorial services,  labor, materials,  supplies,  equipment and
tools,  permits,  licenses,  inspection fees,  management fees equal to, but not
exceeding 4% of gross rents,  reasonable  amortization  of capital  improvements
which will improve the efficiency of operating,  managing,  or  maintaining  the
building or which will reduce the operating expenses,  and Common Area Expenses.
Common Area Expenses shall be defined as those expenses  incurred in maintaining
the Common  Areas of the  building,  including,  but not limited to, the parking
areas, sidewalks, landscaping, common hallways and stairwells, exterior lighting
and  security  costs,  roofs,  storage  facilities  and trash  receptacles.  The
following expenses are excluded from Operating  Expenses:  any payments (such as
salaries or fees) to Landlord's  executive  personnel;  costs for items that, by
generally accepted  accounting  principles,  should be capitalized (such as HVAC
replacement),  unless those costs  actually  reduce  Operating  Expenses and are
amortized  over the  reasonable  life of the  capital  item in  accordance  with
generally accepted  accounting  principles and the yearly  amortization does not
exceed the actual cost reduction for the relevant year;  depreciation (unless it
is  related to an  allowable  capital  item) or  interest;  taxes on  Landlord's
business (such as income,  excess  profits,  franchise,  capital stock,  estate,
inheritance);  leasing  commissions;  legal  fees;  costs to  correct  design or
construction  defects in existence prior to the Commencement Date; expenses paid
directly by a tenant for any reason (such as excessive  utility use);  costs for
improving  any  tenant's  space;  greater  than five  percent  (5%)  increase in
management fees or employees'  salaries or benefits or both; any repair or other
work necessitated by condemnation, fire, or other casualty; services or benefits
or both provided to some tenants but not to Tenant;  and any costs,  fines,  and
the like due to Landlord's violation of any governmental rule or authority.


                  If Tenant  disputes  the amount of  Operating  Expenses as set
forth in the  statement  from the  Landlord  within  forty-five  (45) days after
receipt  thereof,  and providing  Tenant is not then in default under this Lease
beyond applicable cure periods,  Tenant shall have the right upon written notice
to have Landlord's books and records relating to Operating Expenses audited by a
qualified  professional  selected  by Tenant or by Tenant  itself at  Landlord's
place of  business  and in such a manner  as not to  interfere  with  Landlord's
business.  If after such audit,  Tenant  still  disputes the amount of operating
expenses,  a  certification  as to the proper amount shall be made by Landlord's
independent   certified   public   accountant  in  consultation   with  Tenant's
professional,  which certification shall be final and conclusive.  If such audit
reveals that Operating  Expenses were overstated by five percent (5%) or more in
the calendar year audited,  Landlord shall  reimburse  Tenant for its reasonable
costs in doing the audit, and if such audit reveals that Operating Expenses were
overstated by any amount at all,  Landlord shall,  within thirty (30) days after
the  certification,  pay to Tenant the amount of any overstatement  which it had
collected  from


<PAGE>

Tenant.  However,  if such  certification  does not  show  that
Landlord had made such an overstatement  then Tenant shall pay both the costs of
its  professional  as well as the reasonable  charges of Landlord's  independent
certified public accountant engaged to determine the correct amount of operating
expenses.  If the certification shows that Landlord has undercharged Tenant then
Tenant  shall  within  thirty  (30)  days  pay to  Landlord  the  amount  of any
undercharge.



<PAGE>

                                 ADDENDUM NO. 1


Landlord agrees to substantially complete the renovations to the exterior of the
Building,  including a driveway  cutoff to Glenwood  Avenue,  prior to the Lease
Commencement Date.

Landlord agrees to fully complete such renovations  within  forty-five (45) days
of Lease Commencement Date as set forth in Section 3(b).



<PAGE>
                              LEASE ADDENDUM NO. 2

                          WORK LETTER FOR TENANT UPFIT


         1.  TENANT   IMPROVEMENTS.   Tenant  shall   prepare  the  space  plans
(collectively  hereinafter  referred  to as the "Space  Plans")  relating to the
initial tenant  improvements to be constructed  within the Premises (the "Tenant
Improvements"), which Space Plans shall be prepared by Tenant's architect and/or
engineer and shall be in a condition suitable for approval. Tenant shall deliver
the Space  Plans to  Landlord  for its review and  approval on or before one (1)
month  after the lease  execution  by both  parties,  Landlord's  approval  with
respect to the Space Plans not to be unreasonably withheld or delayed, and in no
event later than five (5) days.  Upon such  Landlord  approval,  the Space Plans
shall be attached as Exhibit A to this Lease and made a part hereof  (said Space
Plans to be replaced  with the final Plans upon  completion  of same by Tenant).
Tenant  shall   prepare  the  final   architectural   drawings  for  the  Tenant
Improvements (hereinafter referred to as the "Plans") within four (4) weeks from
Final  Space  Plan  Approval,  and  such  Plans  will be used in  obtaining  all
applicable  building  permits  and  for  pricing  the  Project  for  the  Tenant
Improvements.  Landlord  shall  deliver  to Tenant  three (3) weeks  from  Final
Architectural  Plans, the construction  budget for the Tenant  Improvements (the
"Construction Budget").  Tenant shall have seven (7) business days following its
receipt  of the  Construction  Budget  to  notify  Landlord  in  writing  of any
objections thereto and Tenant's failure to object within said seven (7) business
day  period  shall be deemed  Tenant's  approval  of the  proposed  Construction
Budget.  Any reasonable  delays in finalizing the Construction  Budget resulting
from Tenant's  objection  thereto shall be deemed  "Tenant  delays" for purposes
hereof.

         Any and all other  tenant  improvements  and  tenant  upfit of any type
whatsoever, and all plans and specifications relating thereto, shall require the
prior  approval  of the  Landlord  which  approval  shall take into  account the
quality and first-class character of the Building,  but shall not be withheld or
delayed.

         Landlord's  Agent will supervise the  construction  and installation of
the Tenant  Improvements in a good and workmanlike manner and in accordance with
the Plans.  Provided  Tenant is not in default  hereunder  beyond any applicable
notice  and  cure  period,  Landlord  agrees  to bear  the  cost  of the  Tenant
Improvements  on an "as  completed"  basis up to a maximum of  Twenty-Three  and
84/100 Dollars ($23.84) (the "Tenant Allowance") per rentable square foot of the
Premises for the  construction  of Tenant  Improvements,  including all fees and
charges relating to Tenant's preparation of all Plans hereunder.  Any reasonable
and  pre-approved  costs for the  Tenant  Improvements  in excess of the  Tenant
Allowance shall be paid by Tenant (except to the extent due to Building  defects
or Landlord's  negligence or misconduct)  within fifteen (15) days after receipt
of Landlord's invoice for completed work.

         In connection with the upfitting of the Premises,  Tenant agrees to pay
Landlord a  construction  management fee equal to four percent (4%) of the total
"hard cost" of constructing the Tenant Improvements to the extent such cost is a
change order after the approved Construction Budget.

<PAGE>

         Except as herein provided,  no part of the Tenant Improvements shall be
of such a nature that they will require changes outside the Building, except for
the constructing of the exterior teller line. No part of the Tenant Improvements
shall  adversely  affect the  legality of use or  occupancy  of the  Building or
result in increased costs of fire insurance for the Building. Landlord agrees to
assign to Tenant (to the extent  transferable) its interest in any warranties or
guaranties issued in connection with the construction of Tenant  Improvements to
the extent Tenant is responsible for the repair or replacement of same. Landlord
shall use  commercially  reasonable  efforts to obtain  customary  warranties or
guaranties, and will assign all of those which are assignable to Tenant.

         Tenant  and its  design  firm will  have  access  to the  Premises  and
Building during  construction of all Tenant Improvements and other tenant upfit,
and have the right to inspect the same.

         2.   TENANT'S   ACCEPTANCE   AND   MAINTENANCE   OF  PREMISES;   UP-FIT
IMPROVEMENTS.  Tenant  shall have  thirty  (30) days from its  occupancy  of the
Premises to notify  Landlord  of any patent  construction  defects,  after which
Tenant  represents  to the Landlord  that Tenant has examined and  inspected the
same,  finds the Premises to be as represented by the Landlord and  satisfactory
for Tenant's intended use, and evidences Tenant's  acceptance "where is" and "as
is," except for latent defects in the  construction  of the Building  (excluding
any improvements installed or constructed by Tenant or its agents) identified by
Tenant within one (1) year(s) after the  Commencement  Date.  Landlord  makes no
representation  or warranty as to the condition or  suitability of the Premises.
Tenant  shall  maintain  (and so deliver at the end of the Lease) each and every
part of the Premises  (excluding  exterior  drives,  walks and parking areas and
common areas in the Building to be maintained by Landlord) in as good repair and
condition  as  received,  and shall make at Tenant's  sole cost and expense such
replacements,  restorations,  renewals or repairs,  in quality equivalent to the
original work replaced,  as may be reasonably  required to so maintain the same,
excepting  only ordinary wear and tear and other matters for which Tenant is not
responsible  hereunder.  Tenant,  however,  shall make no structural or exterior
alterations of the Premises without Landlord's prior written consent,  not to be
unreasonably withheld or delayed, and any work performed by Tenant shall be done
in a good and  workmanlike  manner,  and so as not to  unreasonably  disturb  or
inconvenience   other  tenants  in  the  Building.   With  respect  to  interior
alterations (other than minor,  nonstructural  alterations of a cosmetic nature)
to be  undertaken  during the term of this Lease,  subject to the prior  written
approval of Landlord  which  shall not be  unreasonably  withheld or delayed and
provided Tenant is not in default  hereunder  beyond any applicable cure period,
Tenant may make interior alterations required for Tenant's business,  including,
without limitation,  the reconfiguration of partition walls within the Premises.
Tenant  shall not at any time permit any work to be  performed  on the  Premises
except by duly licensed contractors or artisans, each of whom must carry general
public liability insurance,  and copies of certificates evidencing same shall be
furnished Landlord. At no time may Tenant do any work that results in a claim of
lien  against  Landlord.  Provided  that  Landlord has  originally  approved the
alteration  or  improvement,  and unless  removal is required  by Landlord  when
Landlord's approval of a proposed Tenant alteration or improvement is originally
made Tenant shall not be required to remove such an  alteration  or  improvement
from the  Premises.  If removal is required,  Tenant shall remove the


<PAGE>

specified alteration or improvement at Tenant's sole cost and expense,  ordinary
wear and tear only excepted.  All alterations and  improvements to the Premises,
whether  undertaken  by Tenant or Landlord,  other than the Tenant  Improvements
(which are subject to a separate  construction  management  fee as  described in
Section 1  herein),  shall be  subject  to a fee (the  "Construction  Management
Fee"). Tenant agrees to pay Landlord the Construction Management Fee as follows:

         (a)      five   percent   (5%)  of  the  total  cost  of  planning  and
                  constructing   any  alterations   and   improvements  if  such
                  construction  costs  exceed Ten  Thousand  and No/100  Dollars
                  ($10,000.00); and



<PAGE>
                                  ADDENDUM NO.3
                                       TO
                                 LEASE AGREEMENT

                           OPTION TO EXTEND LEASE TERM


         1. Lease. "Lease" shall mean the Lease dated the day of November, 1999,
to which this Addendum is attached  between  CRABTREE PARK, LLC ("Landlord") and
CAPITAL BANK ("Tenant").

         2.  Initial  Lease Term.  For the purposes of this  Addendum,  "Initial
Lease Term" shall mean the Lease Term as defined in the Lease.

         3. Option to Extend.  Provided,  both at the time Tenant gives Landlord
written  notice of its intention to exercise its rights under this  Section,  as
hereinafter provided, and at the time the Initial Lease Term expires, that there
is no outstanding Default by Tenant, and that Tenant (or an approved assignee or
sublessee)  is  occupying  the  Premises,  then Tenant  shall have the right and
option to extend the initial Lease Term (the "Renewal Options") for the "Renewal
Lease Terms" as hereinafter defined. Tenant shall exercise said option by giving
Landlord  written  notice at least two hundred  seventy  (270) days prior to the
expiration  of the  Initial  Lease  Term,  and  the  First  Renewal  Lease  Term
respectively.  If such notice shall not be so given by Tenant to Landlord  prior
to said two hundred  seventy  (270) day period,  such right and option to extend
this Lease shall  thereupon  cease and terminate.  If Tenant shall exercise said
option as aforesaid,  the respective rights,  duties and obligations of Landlord
and Tenant shall,  during the Renewal Lease Terms,  be governed by the terms and
conditions of the Lease. Notice to extend once given shall be irrevocable.

         4. First Renewal Lease Term.  "First Renewal Lease Term" shall mean the
period  commencing  upon the  expiration  of the Initial Lease Term and expiring
five (5) years thereafter subject to earlier termination upon any termination of
this Lease pursuant to the terms of this Lease.

         5. Lease Term. The "Lease Term",  as used in the Lease,  shall mean the
Initial Lease Term and, if the Renewal Options are exercised,  the Renewal Lease
Terms, but if only the Option for the First Renewal Lease Term is exercised then
the Initial Lease Term and the First Renewal Lease Term.

         6. Base Rent for the First Renewal Lease Term. If Tenant  exercises the
Renewal Option for the First Renewal Lease Term, the Base Rent shall be adjusted
upward  for the First  Renewal  Lease Term in the same  proportion  by which the
Consumer Price Index for all Urban Wage Earners and Clerical  Workers (U.S. city
average) (the "Index"),  for the month  immediately prior to the commencement of
the  First  Renewal  Lease  Term,  has  increased  over the  Index for the month
immediately prior to the Rent  Commencement  Date, as defined in the Lease. Said
adjusted  rent  shall be the Base Rent for the first  year of the First  Renewal
Lease Term and the  adjustment  set forth in Section 1(f) shall be made for each
successive  year of the First
<PAGE>

Renewal  Lease  Term.  In the  event  that the  United  States  Bureau  of Labor
Statistics  shall  discontinue  the  issuance  of the  Index,  then  the  rental
adjustment provided for herein shall be made on the basis of changes in the most
comparable and recognized cost of living index then issued and available,  which
is published by the United States Government.

         7. Second  Renewal  Lease Term.  If Tenant has exercised the Option for
the  First  Renewal  Lease  Term,  and  the  same  conditions  exist  as  were a
pre-requisite  for exercise of that  Option,  then Tenant may by giving the same
notice elect to extend the Term for one  additional  five (5) year  period.  The
Rental  during the Second  Renewal  Lease Term shall be the Fair  Market  Rental
Rate.  The term "Fair Market  Rental Rate" shall mean the market rental rate for
the time period  such  determination  is being made for office  space in class A
office  buildings  in the  metropolitan  Raleigh  area  ("AREA")  of  comparable
condition for space of equivalent  quality,  size, utility,  and location.  Such
determination shall take into account all relevant factors,  including,  without
limitation,  the following matters: the credit standing of Tenant; the length of
the term;  expense stops;  with regard to extension  options only, the fact that
Landlord will  experience no vacancy  period and that Tenant will not suffer the
costs  and  business  interruption   associated  with  moving  its  offices  and
negotiating a new lease;  construction  allowances and other tenant  concessions
that would be  available  to tenants  comparable  to Tenant in the AREA (such as
moving expense  allowance,  free rent periods,  lease  assumptions and take-over
provisions,  if any,  but  specifically  excluding  the  value  of  improvements
installed in the Premises at Tenant's  cost),  and whether  adjustments are then
being made in  determining  the rental rates for  expansions and renewals in the
AREA  because of  concessions  being  offered by Landlord to Tenant (or the lack
thereof for the Space (defined  below) for the extended Term in questions).  For
purposes  of such  calculation,  it will be assumed  that  Landlord  is paying a
representative  of Tenant a brokerage  commission in connection with leasing the
Space in question or  extension  Term in  questions,  based on the then  current
market rates.

                  Determination.  Landlord shall deliver to Tenant notice of the
Fair Market Rental Rate (the "FMR Note") for the space in question (the "Space")
or the  extended  Term in question  within 30 days after  Tenant  exercises  the
option  giving rise for the need to determine  the Fair Market  Rental Rate.  If
Tenant  disagrees  with  Landlord's  assessment  of the Fair Market  Rental Rate
specified in a FMR Notice,  then it shall so notify  Landlord in writing  within
ten business  days after  delivery of such FMR Notice;  otherwise,  the rate set
forth in such notice  shall be the Fair Market  Rental  Rate.  If Tenant  timely
delivers to Landlord written notice that it disagrees with Landlord's assessment
of the Fair Market  Rental Rate,  then Landlord and Tenant shall meet to attempt
to determine  the Fair market  Rental Rate. If Tenant and Landlord are unable to
agree on such Fair  Market  Rental Rate within ten  business  days after  Tenant
notifies Landlord of its disagreement with Landlord's  assessment thereof,  then
Landlord and Tenant shall each appoint an independent real estate appraiser with
at least five years'  commercial  real estate  appraisal  experience in the AREA
market.  The two appraisers shall then, within ten days after their designation,
select an  independent  third  appraiser  with like  qualifications.  If the two
appraisers  are  unable  to agree on the third  appraiser  within  such  ten-day
period,  either  Landlord or Tenant,  by giving five days prior  written  notice
thereof to the other, may apply to the then presiding Clerk of Superior Court of
Wake County for  selection  of a third  appraiser  who meets the  qualifications
stated  above.  Within  20  business  days  after  the  selection  of the  third
appraiser,  a majority of the appraisers  shall determine the Fair Market Rental
Rate.  If a majority of the  appraisers  is unable

<PAGE>

to  agree  upon  the Fair  Market  Rental  Rate by such  time,  the two  closest
appraisals  shall be  averaged  and the average  will be the Fair Market  Rental
Rate.  Tenant and  Landlord  shall each bear the  entire  cost of the  appraiser
selected by it and shall share equally the cost of the third appraiser.

         8.  Termination  of Renewal  Option on  Transfer  by  Tenant.  In those
situations  where  Landlord  consent to an  Assignment or Subletting is required
hereunder,  Landlord may condition  such consent so that the Renewal Option will
automatically terminate.


<PAGE>


                                 ADDENDUM NO. 4

This lease is  subject to Cotton  Incorporated  executing  a Lease  Cancellation
Agreement for this space not later than December 31, 1999,  and the Cotton space
will be vacated no later than February 15, 2000.



<PAGE>





                             OFFICE LEASE AGREEMENT





                                 BY AND BETWEEN


                               CRABTREE PARK, LLC
                                  (AS LANDLORD)


                                       AND


                                  CAPITAL BANK
                                   (AS TENANT)




<PAGE>


                                TABLE OF CONTENTS

Section Nos.                                                                Page


         1.       BASIC LEASE TERMS...........................................1
                  -----------------
         2.       DESCRIPTION OF PREMISES.....................................3
                  -----------------------
         3.       TERM; COMMENCEMENT DATE; DELIVERY OF PREMISES...............3
                  ---------------------------------------------
         4.       RENTAL......................................................6
                  ------
         5.       ALTERATIONS AND IMPROVEMENTS BY TENANT......................8
                  --------------------------------------
         6.       USE OF PREMISES.............................................9
                  ---------------
         7.       SERVICES BY LANDLORD.......................................10
                  --------------------
         8.       TAXES ON LEASE AND TENANT'S PROPERTY.......................11
                  ------------------------------------
         9.       INSURANCE AND INDEMNITY....................................11
                  -----------------------
         10.      LANDLORD'S COVENANT TO REPAIR AND REPLACE..................13
                  -----------------------------------------
         11.      PROPERTY OF TENANT.........................................14
                  ------------------
         12.      TRADE FIXTURES AND EQUIPMENT...............................14
                  ----------------------------
         13.      DAMAGE OR DESTRUCTION OF PREMISES..........................15
                  ---------------------------------
         14.      GOVERNMENTAL ORDERS........................................15
                  -------------------
         15.      MUTUAL WAIVER OF SUBROGATION...............................16
                  ----------------------------
         16.      SIGNS AND ADVERTISING......................................16
                  ---------------------
         17.      LANDLORD'S RIGHT OF ENTRY..................................17
                  -------------------------
         19.      EMINENT DOMAIN.............................................17
                  --------------
         20.      EVENTS OF DEFAULT AND REMEDIES.............................17
                  ------------------------------
         21.      SUBORDINATION..............................................19
                  -------------
         22.      ASSIGNMENT AND SUBLETTING..................................19
                  -------------------------
         23.      LANDLORD DEFAULT...........................................20
                  ----------------
         24.      TRANSFER OF LANDLORD'S INTEREST............................21
                  -------------------------------
         25.      COVENANT OF QUIET ENJOYMENT................................21
                  ---------------------------
         26.      ESTOPPEL CERTIFICATES......................................21
                  ---------------------
         27.      PROTECTION AGAINST LIENS...................................22
                  ------------------------
         28.      MEMORANDUM OF LEASE........................................22
                  -------------------
         29.      FORCE MAJEURE..............................................22
                  -------------
         30.      REMEDIES CUMULATIVE -- NONWAIVER...........................22
                  --------------------------------
         31.      HOLDING OVER...............................................23
                  ------------
         32.      NOTICES....................................................23
                  -------
         33.      LEASING COMMISSION.........................................23
                  ------------------
         34.      MISCELLANEOUS..............................................23
                  -------------
         35.      OPTIONS TO EXTEND..........................................26
                  -----------------
         36.      RIGHT OF FIRST OFFER.......................................26
                  --------------------
         37.      SEVERABILITY.............................................. 26
                  ------------
         38.      REVIEW OF DOCUMENTS......................................  26
                  -------------------
         39.      CONDITIONAL ON REGULATORY APPROVAL.........................26
                  ----------------------------------
         40.      COMMISSIONER OF BANKS PROVISION............................27
                  -------------------------------
         41.      LANDLORD'S WORK........................................... 27
                  ---------------
         42.      PROPERTY ADDRESS...........................................27
                  ----------------
<PAGE>


                                   EXHIBIT 13

                          Annual Report to Shareholders