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Securities and Exchange Commission
Washington, D.C. 20549

Form 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 33-67254


Commercial Bankshares, Inc.
_____________________________________________________________________

(Exact name of registrant as specified in its charter)


Florida 65-0050176
_______________________________ ___________________________________

(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)


1550 S.W. 57th Avenue, Miami, Florida 33144
___________________________________________ ___________

(Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code (305) 267-1200
______________

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered

None None
_____________________ ___________________________________________


Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.08 per share
______________________________________

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
___ ___

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ ].

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes X No
___ ___

As of March 11, 2003, 4,574,687 shares of the common voting stock were issued
and outstanding, with an aggregate market value of $138 million, based on the
closing price on the NASDAQ market.

Documents Incorporated by Reference

1. Certain portions of the Annual Report to Shareholders of Commercial
Bankshares, Inc., for fiscal year ended December 31, 2002 are incorporated
by reference into Part I and Part II.

2. Certain portions of the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held on April 24, 2003 are incorporated by reference
into Part III.





Table of Contents

Description Page No.
___________ ________


Part I
Item 1. Business................................................1
Item 2. Properties..............................................7
Item 3. Legal Proceedings.......................................7
Item 4. Submission of Matters to a Vote of Security Holders.....7

Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.....................................8
Item 6. Selected Financial Data.................................8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................8
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.............................................8
Item 8. Financial Statements and Supplementary Data.............8
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure..................8

Part III
Item 10. Directors and Executive Officers of the Registrant......8
Item 11. Executive Compensation..................................8
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters..........8
Item 13. Certain Relationships and Related Transactions..........9

Part IV
Item 14. Controls and Procedures.................................9
Item 15. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.............................................9

Signatures...........................................................11

Certifications.......................................................12

Exhibit 10.16 Standard Office Business Lease .......................14

Exhibit 13.1 2002 Annual Report to Stockholders of Commercial
Bankshares, Inc. ......... ...........................53

Exhibit 21.1 Subsidiaries of Commercial Bankshares, Inc. ..........54

Exhibit 23.1 Consent of Independent Certified Public Accountants...55

Exhibit 99.1 Certification of Chief Executive Officer Pursuant
to 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002 ........56

Exhibit 99.1 Certification of Chief Financial Officer Pursuant
to 18 U.S.C. Section 1350, As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002 ........57







PART I


Item 1. Business.


Commercial Bankshares, Inc.

Commercial Bankshares, Inc., (the "Company"), a Florida corporation
organized in 1988, is a bank holding company registered under the Bank Holding
Company Act of 1956 ("BHCA"), as amended, whose wholly-owned subsidiary and
principal asset is the Commercial Bank of Florida, (the "Bank"). The Company,
through its ownership of the Bank, is engaged in a commercial banking business,
and its primary source of earnings is derived from income generated by its
ownership and operation of the Bank. Unless the context otherwise requires,
references herein to the Company include the Company and its wholly-owned
subsidiary, the Bank, on a consolidated basis.


The Company is a legal entity separate and distinct from the Bank, and
there are various legal limitations on the ability of the Bank to finance or
otherwise supply funds to the Company. In particular, under federal banking
law, the Bank may not declare a dividend that exceeds undivided profits. In
addition, the approval of the Federal Reserve Bank of Atlanta ("Atlanta FRB")
and the Florida Department of Banking and Finance is required if the total
amount of all dividends declared in any calendar year exceeds the Bank's net
profits, as defined, for that year combined with its retained net profits for
the preceding two years. The Atlanta FRB also has the authority to limit
further the payment of dividends by the Bank under certain circumstances. In
addition, federal banking laws prohibit or restrict the Bank from extending
credit to the Company under certain circumstances.


Commercial Bank of Florida

The Bank is a Florida chartered banking corporation originally chartered
in February, 1979. It operated as Sunset Commercial Bank until its acquisition
by the Company in 1988, at which time its name was changed to Commercial Bank
of Florida. The Bank engages in commercial banking and related businesses from
its fourteen banking facilities: its main office and nine other offices located
in Miami-Dade County, Florida, and four offices in Broward County, Florida.


The Bank is operated as a network of community bank branches. The
Bank primarily focuses on providing personalized banking services to small
businesses and individuals within the market areas where its banking offices
are located. Management believes that this local market strategy,
accompanied by the strategic placement of Bank personnel within market
areas where they have served customers for many years, enables the Bank
to attract and retain low cost core deposits, which provide substantially
all of the Bank's funding requirements.


Deposit products include certificates of deposit, individual retirement
accounts ("IRAs") and other time deposits, checking and other demand deposit
accounts, NOW accounts, savings accounts, and money market accounts. The
transaction accounts and time certificates are tailored to the principal market
areas at rates competitive to those in the area. All deposit accounts are
insured by the Federal Deposit Insurance Corporation ("FDIC") up to the maximum
limits permitted by law. The Bank solicits these accounts from small
businesses, professional firms, and households located throughout its primary
market area.


The Bank also offers ATM cards with access to local, state, and national
networks, safe deposit boxes, wire transfers, direct deposit of payroll and
social security payments, and automatic drafts for various accounts. The Bank
presently does not provide fiduciary or appraisal services.


The Bank conducts commercial and consumer banking business, which
primarily consists of attracting deposits from the areas served by its banking
offices and using those deposits, together with funds derived from other
sources, to originate a variety of commercial, consumer, and real estate loans
(including commercial loans collateralized by real estate).

The Company considers the general business of retail banking to be its
only operating segment.

As is the case with banking institutions generally, the Bank's operations
are materially and significantly influenced by general economic conditions and
by related monetary and fiscal policies of financial institution regulatory
agencies, including the Federal Reserve Board ("FRB"), the FDIC, and the State
of Florida. Deposit flows and the cost of funds are influenced by interest
rates on competing investments and general market rates of interest. Lending
activities are affected by the demand for financing of real estate and other
types of loans, which in turn is affected by the interest rates at which such
financing may be offered and other factors affecting local demand and
availability of funds. The Bank faces strong competition in the attraction of
deposits (its primary source of lendable funds) and in the origination of real
estate loans.


Employees


At December 31, 2002, the Company and the Bank together employed 186
employees, of whom four are part-time. None of these employees is covered by
a collective bargaining agreement. The Company believes that its employee
relations are good.


Market Information


The Bank's fourteen banking offices are located in Miami-Dade and Broward
counties, which comprise the Bank's primary market area. Management believes
that the Bank's principal markets are: (i) the established and expanding
commercial market within the primary market area, and (ii) the moderate and the
affluent residential market within the primary market area. Management also
believes that the most profitable banking relationships are characterized by
high deposit balances with a low frequency of transactions. Moreover,
management believes that a community bank with local management is well
positioned to establish these relationships with the smaller commercial
customers and households. Management believes that the Bank is well positioned
to take advantage of its market segment.


Competition


Competition in the banking and financial services industry is intense.
In its primary market areas, the Bank competes with other commercial banks,
savings institutions, credit unions, finance companies, mutual funds, insurance
companies, and brokerage and investment banking firms operating locally and
elsewhere. Most of these competitors have substantially greater resources and
lending limits than the Bank and may offer certain services, such as trust
services, that the Bank does not provide at this time. In addition many of the
Company's non-bank competitors are not subject to the same extensive federal
regulations that govern the Bank and the Company. The profitability of the
Company depends upon the Bank's ability to compete in its market areas.


Available Information


A copy of the Company's Annual Report on Form 10-K along with copies of
the Company's other periodic reports required to be filed with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, are available free of charge (absent exhibits) from the Company upon
written request to Barbara E. Reed, Commercial Bankshares, Inc. 1550 Southwest
57th Avenue Miami, Florida 33144. Copies of such reports are not available
via the Company's website pending an update of such website but copies of the
Company's periodic reports are available via the Internet on the Commission's
website at www.sec.gov.


SUPERVISION AND REGULATION


Bank holding companies and banks are extensively regulated under both
federal and state law. These laws and regulations are intended to protect
depositors, not stockholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change
in the applicable law or regulation may have a material effect on the business
and prospects of the Company and the Bank.



Bank Holding Company Regulation


As a bank holding company registered under the BHCA, the Company is
subject to the regulation and supervision of the FRB. The Company is required
to file with the FRB annual reports and other information regarding its
business operations and those of its subsidiaries. Under the BHCA, the
Company's activities and those of its subsidiaries are limited to banking,
managing or controlling banks, furnishing services to or performing services
for its subsidiaries, or engaging in any other activity which the FRB
determines to be so closely related to banking or managing or controlling banks
as to be properly incident thereto.


The BHCA requires, among other things, the prior approval of the FRB in
any case where a bank holding company proposes to (i) acquire all or
substantially all of the assets of any other bank, (ii) acquire direct or
indirect ownership or control of more than 5% of the outstanding voting stock
of any bank (unless it owns a majority of such bank's voting shares), or (iii)
merge or consolidate with any other bank holding company. The FRB will not
approve any acquisition, merger, or consolidation that would have a
substantially anti-competitive effect, unless the anti-competitive impact of
the proposed transaction is clearly outweighed by a greater public interest
in meeting the convenience and needs of the community to be served. The FRB
also considers capital adequacy and other financial and managerial resources
and future prospects of the companies and the banks concerned, together with
the convenience and needs of the community to be served, when reviewing
acquisitions or mergers.


Additionally, the BHCA prohibits a bank holding company, with certain
limited exceptions, from (i) acquiring or retaining direct or indirect
ownership or control of more than 5% of the outstanding voting stock of any
company which is not a bank or bank holding company, or (ii) engaging directly
or indirectly in activities other than those of banking, managing, or
controlling banks, or performing services for its subsidiaries, unless such
non-banking business is determined by the FRB to be so closely related to
banking or managing or controlling banks as to be properly incident thereto.
In making such determinations, the FRB is required to weigh the expected
benefits to the public, such as greater convenience, increased competition,
or gains in efficiency, against the possible adverse effects, such as under-
concentration of resources, decreased or unfair competition, conflicts of
interest, or unsound banking practices.


There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory
policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the
depository institution becomes in danger of default or in default. Under a
policy of the FRB with respect to bank holding company operations, a bank
holding company is required to serve as a source of financial strength to its
subsidiary depository institutions and to commit resources to support such
institutions in circumstances where it might not do so absent such policy.
The FRB also has the authority under the BHCA to require a bank holding company
to terminate any activity or to relinquish control of a nonbank subsidiary
(other than a nonbank subsidiary of a bank) upon the FRB's determination that
such activity or control constitutes a serious risk to the financial soundness
and stability of any bank subsidiary of the bank holding company.


Capital Adequacy Guidelines for Bank Holding Companies


The Company is subject to certain FRB risk-based capital guidelines for
bank holding companies. The risk-based capital guidelines are designed to make
regulatory capital requirements more sensitive to differences in risk profile
among banks and bank holding companies, to account for off-balance sheet
exposure, and to minimize disincentives for holding liquid assets. Under these
guidelines, assets and off-balance sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and off-balance
sheet items.


The minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities, such as standby letters of credit) is
8%. At least 4% of the total capital is required to be "Tier I Capital,"
which consists of common stockholders' equity, noncumulative perpetual
preferred stock, and a limited amount of cumulative perpetual preferred stock,
less certain goodwill items and the unrealized holding gain/loss on available
for sale securities. The remainder ("Tier II Capital") may consist of (i) the
allowance for loan losses of up to 1.25% of risk-weighted risk assets, (ii)
45% of unrealized holding gain on available for sale equity securities, (iii)
excess of qualifying perpetual preferred stock, (iv) hybrid capital
instruments, (v) perpetual debt, (vi) mandatory convertible securities,
and (vii) subordinated debt and intermediate-term preferred stock up to 50%
of Tier I capital. Total capital is the sum of Tier I and Tier II capital
less reciprocal holdings of other banking organizations' capital instruments,
investments in unconsolidated subsidiaries, and any other deductions as
determined by the FRB (determined on a case by case basis or as a matter of
policy after formal rule-making).


Bank holding company assets are given risk-weights of 0%, 20%, 50% and
100%. In addition, certain off-balance sheet items are given similar credit
conversion factors to convert them to asset-equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets.


The Company's management believes that the risk-weighting of assets under
current FRB guidelines does not and will not have a material impact on the
Company's operations or on the operations of the Bank. As of December 31,
2002 and 2001, the Company's total risk-based capital ratios were 14.62% and
13.54%, respectively. In addition to the risk-based capital guidelines, the
FRB has adopted a minimum Tier I capital (leverage) ratio, under which a bank
holding company must maintain a minimum level of Tier I capital to total
consolidated assets of at least 3% in the case of a bank holding company that
has the highest regulatory examination rating and is not contemplating
significant growth or expansion. All other bank holding companies are
expected to maintain a leverage ratio of at least 100 to 200 basis points
above the stated minimum. Federal Reserve Board requirements also provide
that bank holding companies experiencing internal growth or making acquisitions
will be expected to maintain strong capital positions substantially above
regulatory minimums without significant reliance on intangible assets. The
Federal Reserve Board may continue to consider a "tangible Tier 1 leverage
ratio" (deducting all intangibles) in evaluating proposals for expansion or
new activities. As of December 31, 2002 and 2001, the Company's leverage
ratios were 7.66% and 8.24%, respectively.


Interstate Banking and Branching Legislation


The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic limitation. In addition, beginning June 1, 1997,
the IBBEA authorizes a bank to merge with a bank in another state as long as
neither of the states has opted out of interstate branching between the date
of enactment of the IBBEA and May 31, 1997. The IBBEA further provides that
states may enact laws permitting interstate bank merger transactions prior to
June 1, 1997. Florida law permits bank holding companies, regardless of what
region they are located in, to acquire Florida banking organizations, provided
that the home state of the acquiring company has enacted reciprocal legislation.


Under IBBEA, a bank may establish and operate a de novo branch in a state
in which the bank does not maintain a branch if that state expressly permits de
novo branching. Once a bank has established branches in a state through an
interstate merger transaction, the bank may establish and acquire additional
branches at any location in the state where any bank involved in the interstate
merger transaction could have established or acquired branches under applicable
federal or state law. A bank that has established a branch in a state through
de novo branching may establish and acquire additional branches in such state
in the same manner and to the same extent as a bank having a branch in such
state as a result of an interstate merger. If a state opts out of interstate
branching within the specified time period (Florida has not), no bank in any
other state may establish a branch in the opting-out state, either through an
acquisition or de novo.


Bank Regulation

The Bank is a state-chartered banking corporation and is subject to the
supervision of and regular examination by the FRB and the Florida Department
of Banking and Finance, as well as to the supervision of the FDIC.


The operations of the Bank are subject to state and federal statutes
applicable to banks which are members of the Federal Reserve System and to the
regulations of the FRB, the FDIC, and the State of Florida. Such statutes and
regulations relate to required reserves against deposits, investments, loans,
mergers and consolidations, issuance of securities, payment of dividends,
establishment of branches, and other aspects of the Bank's operations. Various
consumer laws and regulations also affect the operations of the Bank, including
state usury laws, laws relating to fiduciaries, consumer credit and equal
credit, and fair credit reporting. Under the provisions of the Federal Reserve
Act, the Bank is subject to certain restrictions on any extensions of credit to
the Company or, with certain exceptions, to other affiliates, on investments in
the stock or other securities of national banks, and on the taking of such
stock or securities as collateral. These regulations and restrictions may
limit the Company's ability to obtain funds from the Bank for its cash needs,
including funds for acquisitions and the payment of dividends, interest, and
operating expenses.


The FDIC insures the deposits of the Bank to the current maximum allowed
by law. As an institution whose deposits are insured by the Bank Insurance
Fund ("BIF") and Savings Association Insurance Fund ("SAIF") of the FDIC, the
Bank also is subject to insurance assessments imposed and set by the FDIC from
time to time. The FDIC is further authorized to impose one or more special
assessments in any amount deemed necessary to enable repayment of amounts
borrowed by the FDIC from the Treasury Department. The actual assessments to
be paid into the BIF and the SAIF are based on the institution's assessment
risk classification, which is whether the institution is considered "well
capitalized", "adequately capitalized", or "under-capitalized", as those
terms have been defined in applicable federal regulations, and whether the
institution is considered by its supervising agency to be financially sound
or to have supervisory concerns.



Gramm-Leach-Bliley Act


The Gramm-Leach-Bliley Act (the "Act") was signed into law in November
1999 to remove depression-era barriers that separate banking, securities and
insurance functions. The Act allows full affiliation between banks and
securities firms by permitting the creation of financial holding companies
designed to engage in a range of financial activities, including securities
underwriting and merchant banking. The Act also repeals the SAIF special
reserve; modernizes the Federal Home Loan Bank System; provides for less
frequent Community Reinvestment Act ("CRA") compliance examinations for
community banks with $250 million or less in assets, and gives customers the
right to prevent banks from sharing information with third parties, such as
telemarketers. The Act prohibits unitary savings and loan holding companies
formed after May 4, 1999 from engaging in nonfinancial activities, and also
prohibits purchase of unitary thrift holding companies by commercial firms.
The Act contains requirements for the protection of consumer's financial
privacy ("Regulation P"). The Bank has identified obligations, developed
a privacy policy and provided disclosure of the policy to customers. The
Bank is in full compliance with Regulation P.


Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")


Among other things, the FDICIA provides the federal bank regulatory
agencies with broad powers to take prompt corrective action to resolve
problems of insured depository institutions. The extent of those powers
depends upon whether the institution in question is "well capitalized",
"adequately capitalized", "undercapitalized", "significantly undercapitalized",
or "critically undercapitalized." A depository institution's capital tier will
depend upon where its capital levels compare to various established capital
measures and certain other factors, as established by regulation. As of
December 31, 2001, the Bank met the definition of a "well capitalized"
institution.


The FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
"undercapitalized". "Undercapitalized" depository institutions are subject to
growth limitations and are required to submit a capital restoration plan. If a
depository institution fails to submit an acceptable plan, it is treated as if
it is "significantly undercapitalized". "Significantly undercapitalized"
depository institutions may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to become
"adequately capitalized", requirements to reduce total assets, and cessation
of receipt of deposits from correspondent banks. "Critically undercapitalized"
institutions are subject to the appointment of a receiver or conservator.


The FDICIA further requires an increase in the frequency of "full-scope,
on-site" examinations and expands audit requirements. In addition, federal
bank regulatory agencies are required to review and prescribe uniform
accounting standards that are at least as stringent as Generally Accepted
Accounting Principles.


Pursuant to the FDICIA, the FRB and the other federal bank regulatory
agencies adopted real estate lending guidelines pursuant to which each insured
depository institution is required to adopt and maintain written real estate
lending policies in conformity with the prescribed guidelines. Under these
guidelines, each institution is expected to set loan-to-value ratios not
exceeding the supervisory limits set forth in the guidelines. A loan-to-value
ratio is generally defined as the total loan amount divided by the appraised
value of the property at the time the loan is originated. The guidelines also
require that the institution's real estate policy require proper loan
documentation and that it establish prudent underwriting standards.


The FDICIA also contains the Truth in Savings Act. The purpose of the
Truth in Savings Act is to require the clear and uniform disclosure of the
rates of interest which are payable on deposit accounts by depository
institutions and the fees that are assessable against deposit accounts, so
that consumers can make a meaningful comparison between the competing claims
of financial institutions with regard to deposit accounts and products.


The FDICIA also amended the prior law with respect to the acceptance of
brokered deposits by insured depository institutions to permit only a "well
capitalized" depository institution to accept brokered deposits without prior
regulatory approval. Under implementing regulations, "well capitalized" banks
may accept brokered deposits with a waiver from the FDIC (subject to certain
restrictions on payments of rates), while "undercapitalized" banks may not
accept brokered deposits. The regulations contemplate that the definitions of
"well capitalized", "adequately capitalized", and "undercapitalized" will be
the same as the definitions adopted by the agencies to implement the prompt
corrective action provisions of the FDICIA (as described above).

The Bank became subject to the provisions of FDICIA relating to internal
controls effective January 1, 2001. These provisions are required for banks
over $500 million in assets and require that the Bank document and test its
internal control structure and report on it on an annual basis. As of December
31, 2002, the Bank had complied with all applicable sections of the regulation
and will report as required in the first quarter of 2003.


Payment of Dividends


The Bank is subject to legal limitations on the frequency and amount of
dividends paid to the Company. The FRB or the FDIC may restrict the ability of
a bank to pay dividends if such payments would constitute an unsafe or unsound
banking practice. These regulations and restrictions may limit the Company's
ability to obtain funds from the Bank for its cash needs, including funds for
acquisitions and the payment of dividends, interest, and operating expenses.

In addition, Florida law places certain restrictions on the declaration of
dividends from state-chartered banks to their holding companies. Pursuant to
Section 658.37 of the Florida Banking Code, the Board of Directors of a state-
chartered bank, after charging off bad debts, depreciation, and other worthless
assets, if any, and making provisions for reasonably anticipated future losses
on loans and other assets, may quarterly, semi-annually, or annually declare a
dividend of up to the aggregate of net profits of that period, combined with
the bank's retained net profits for the preceding two years and, with the
approval of the Florida Department of Banking and Finance, declare a dividend
from retained net profits which accrued prior to the preceding two years.
Before declaring such dividends, 20% of the net profits for the preceding
period as is covered by the dividend must be transferred to the surplus fund
of the bank until this fund becomes equal to the amount of the bank's common
stock then issued and outstanding. A state-chartered bank may not declare any
dividend if (i) its net income from the current year combined with the retained
net income for the preceding two years is a loss, or (ii) the payment of such
dividend would cause the capital account of the bank to fall below the minimum
amount required by law, regulation, order, or any written agreement with the
Florida Department of Banking and Finance or a federal regulatory agency.


Depositor Preference Statute


Legislation has been enacted providing that deposits and certain claims
for administrative expenses and employee compensation against an insured
depository institution would be afforded a priority over other general
unsecured claims against such an institution, including federal funds and
letters of credit, in the "liquidation or other resolution" of such an
institution by any receiver.



Monetary Policy And Economic Control


The commercial banking business in which the Bank engages is affected not
only by general economic conditions but also by the monetary policies of the
FRB. Changes in the discount rate on member bank borrowing, availability of
borrowing at the "discount window," open market operations, the imposition of
changes in reserve requirements against member banks' deposits and assets of
foreign branches, and the imposition of and changes in reserve requirements
against certain borrowings by banks and their affiliates are some of the
instruments of monetary policy available to the FRB. These monetary policies
are used in varying combinations to influence overall growth and distributions
of bank loans, investments, and deposits, and this use may affect interest
rates charged on loans or paid on deposits. The monetary policies of the FRB
have had a significant effect on the operating results of commercial banks and
are expected to do so in the future. The monetary policies of these agencies
are influenced by various factors, including inflation, unemployment, and
short-term and long-term changes in the international trade balance and in the
fiscal policies of the United States Government. Future monetary policies and
the effect of such policies on the future business and earnings of the Company
and the Bank cannot be predicted.


Item 2. Properties.


The Company occupies offices in a building located at 1550 S.W. 57th
Avenue, Miami, Florida. This building also serves as the Bank's main office.
Both the building and the 81,400 square foot parcel of commercial property on
which it is situated are owned by the Bank. The Bank's and the Company's
offices occupy the entire 24,228 square foot building. Management believes
that this location provides sufficient parking for its customers as well as
visibility from S.W. 57th Avenue, a major thoroughfare.


The Bank owns ten of its fourteen full-service branches and leases the
remaining four offices, all of which branches are located in Miami-Dade County
or Broward County, Florida. Additional information relating to the Company's
lease commitments is set forth in Note 4 on page 27 in the 2002 Annual Report
and is incorporated herein by reference. The condition of all properties is
considered good. In the opinion of management, owned properties are adequately
covered by insurance.


Item 3. Legal Proceedings.


The Company and the Bank are periodically parties to or otherwise involved
in legal proceedings arising in the normal course of business, such as claims
to enforce liens, claims involving the making and servicing of real property
loans, and other issues incident to the Bank's business. Management does not
believe that there is any pending or threatened proceeding against the Company
or the Bank which, if determined adversely, would have a material effect on the
business, results of operations, or financial position of the Company or the
Bank.


Item 4. Submission of Matters to a Vote of Security Holders.


Not applicable.





PART II


Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.


Information required to be reported under this item is set forth on pages
13, 14, and 15 of the 2002 Annual Report to Shareholders and is incorporated
herein by reference.


Item 6. Selected Financial Data.


Information required to be reported under this item is set forth on pages
2 and 3 of the 2002 Annual Report to Shareholders and is incorporated herein by
reference.


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.


Information required to be reported under this item is set forth on pages
4 through 17 of the 2002 Annual Report to Shareholders and is incorporated
herein by reference.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.


Information required to be reported under this item is set forth on
pages 15 through 16 of the 2002 Annual Report to Shareholders under the
section entitled "Asset/Liability Management and Interest Rate Risk", and is
incorporated herein by reference.


Item 8. Financial Statements and Supplementary Data.


The information required to be reported under this item is set forth
on pages 18 through 38 of the 2002 Annual Report to Shareholders and is
incorporated herein by reference.


Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.


Not applicable.





PART III


Item 10. Directors and Executive Officers of the Registrant.


Information required to be reported under this item is set forth on pages
2 and 4 of the Commercial Bankshares, Inc. Proxy Statement and is incorporated
herein by reference.


Item 11. Executive Compensation.


Information required to be reported under this item is set forth on pages
7 through 9 of the Commercial Bankshares, Inc. Proxy Statement and is
incorporated herein by reference.


Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.


Information required to be reported under this item is set forth on
pages 4 through 7 of the Commercial Bankshares, Inc. Proxy Statement and is
incorporated herein by reference.


Item 13. Certain Relationships and Related Transactions.


Information required to be reported under this item is set forth on page
4 of the Commercial Bankshares, Inc. Proxy Statement and is incorporated herein
by reference.





PART IV

Item 14. Controls and Procedures.

The Company's Chief Executive Officer and Chief Financial Officer have
concluded, based on their evaluation within ninety days prior to the filing
date of this report, that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company
in reports filed or submitted by it under the Securities Exchange Act of 1934,
as amended, is recorded, processed, summarized and reported within the time
periods specified in the Commission's rules. The Company's controls and
procedures are designed to ensure that information required to be disclosed
is accumulated and communicated to management, including the principal
executive and financial officers, as appropriate, to allow timely decisions
regarding required disclosure. It should be noted that the design of any
system of controls is based in part upon certain assumptions, and there can
be no assurance that any design will succeed in achieving its stated goals.

There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect these
controls subsequent to their evaluation, nor any corrective actions with
regard to significant deficiencies and material weaknesses.

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.


(a) Exhibits

3.1 Articles of Incorporation, as amended, of the Company. Incorporated
by reference to Exhibit 3.1 of the Company's Registration Statement
on Form SB-2 as filed with the Securities and Exchange Commission,
No. 33-67254, effective October 5, 1993 ("Registration Statement").

3.2 By-Laws, as amended, of the Company. Incorporated by reference to
Exhibit 3.2 of the Registration Statement.

10.1 Standard Office Building Lease between Swire Brickell One, Inc.,
d/b/a "Courvoisier Center" (Landlord) and Commercial Bank of Florida
(Tenant), dated December 21, 1990. Incorporated by reference to
Exhibit 10.2 of the Registration Statement.

10.2 Form of Indemnification Agreement. Incorporated by reference to
Exhibit 10.4 of the Registration Statement.

10.3 Employment Agreement between Commercial Bankshares, Inc., Commercial
Bank of Florida, and Joseph W. Armaly, dated March 18, 1994 and
amended and restated on December 18, 1998. Incorporated by
reference to Exhibit 10.3 that accompanies the 1998 Annual Report
on Form 10-K.

10.4 Employment Agreement between Commercial Bankshares, Inc., Commercial
Bank of Florida, and Jack J. Partagas, dated March 18, 1994 and
amended and restated on December 18, 1998. Incorporated by
reference to Exhibit 10.4 that accompanies the 1998 Annual Report
on Form 10-K.

10.5 Employment Agreement between Commercial Bank of Florida and Barbara
Reed, dated February 5, 1997. Incorporated by reference to
Exhibit 10.5 that accompanies the 1996 Annual Report on Form 10-K..

10.6 Employment Agreement between Commercial Bank of Florida and Bruce
Steinberger, dated December 18, 1998. Incorporated by reference to
Exhibit 10.6 that accompanies the 1998 Annual Report on Form 10-K..

10.7 Commercial Bankshares, Inc., 1994 Outside Director Stock Option
Plan, effective as of March 18, 1994. Incorporated by reference to
Exhibit 10.7 that accompanies the 1993 Annual Report on Form 10-KSB.

10.8 Commercial Bankshares, Inc., 1994 Performance Stock Option Plan,
adopted March 18, 1994, effective April 1, 1994. Incorporated by
reference to Exhibit 10.8 that accompanies the 1993 Annual Report
on Form 10-KSB.

10.10 Standard Office Building Lease, dated December 10, 1996, between
Promenade of Coral Springs, Inc. (Landlord) and Commercial Bank of
Florida (Tenant). Incorporated by reference to Exhibit 10.12 that
accompanies the 1997 Annual Report on Form 10-K.

10.11 Commercial Bankshares, Inc., Amendment to 1994 Outside Director
Stock Option Plan, dated January 15, 1999. Incorporated by
reference to Exhibit 10.13 that accompanies the 1998 Annual Report
on Form 10-K.

10.12 Commercial Bankshares, Inc., Amendment to 1994 Performance Stock
Option Plan dated January 15, 1999. Incorporated by reference to
Exhibit 10.14 that accompanies the 1998 Annual Report on Form 10-K.

10.13 Commercial Bankshares, Inc., Amendment to Standard Office Building
Lease between Swire Brickell One, Inc., d/b/a "Courvoisier Center"
(Landlord) and Commercial Bank of Florida (Tenant), dated December
21, 2000. Incorporated by reference to Exhibit 10.14 that
accompanies the 2000 Annual Report on Form 10-K.

10.14 Agreement to provide data processing and back office services
between Electronic Data Systems and Commercial Bank of Florida,
dated, December 7, 1999. Incorporated by reference to Exhibit
10.15 that accompanies the 2000 Annual Report on Form 10-K.

10.15 Commercial Bankshares, Inc., Standard Office Building Lease between
Hallandale Place, Ltd., c/o Investment Management Associates, Inc.
(Landlord) and Commercial Bank of Florida (Tenant), dated January
25, 2002. Incorporated by reference to Exhibit 10.15 that
accompanies the 2001 Annual Report on Form 10-K.

10.16 Commercial Bankshares, Inc., Standard Office Building Lease between
HFJ, LLC, as beneficiary of the KLS Flamingo Land Trust (Landlord)
and Commercial Bank of Florida (Tenant), dated 10/30/2002 (filed
herewith).

11.1 Computation of Earnings per Common and Common Equivalent Share.
Information required to be reported under this exhibit is set forth
on page 31 of the 2002 Annual Report to Shareholders and is
incorporated herein by reference.

13.1 2002 Annual Report to Shareholders of Commercial Bankshares, Inc. *

21.1 Subsidiaries of the Company (filed herewith).

23.1 Consent of PricewaterhouseCoopers LLP (filed herewith).

99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley act of 2002.

99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley act of 2002.


(b) No reports on Form 8-K have been filed during the last quarter of
the period covered by this report.

* Except for those portions of the Annual Report which are
expressly incorporated by reference in this Form 10-K, the Annual
Report is furnished for the information of the Securities and
Exchange Commission only and is not to be deemed "filed" as part
of such Form 10-K.





SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

COMMERCIAL BANKSHARES, INC.



By:/s/ Joseph W. Armaly
____________________

Joseph W. Armaly
Chairman of the Board and Chief Executive Officer
March 17, 2003


By:/s/ Barbara E. Reed
___________________

Barbara E. Reed
Senior Vice President and Chief Financial Officer
March 17, 2003



Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


Signature Title Date

By:/s/ Joseph W. Armaly Chairman of the Board March 17, 2003
_____________________ and Chief Executive Officer
(Principal Executive Officer)
Joseph W. Armaly

By:/s/ Jack J. Partagas President, March 17, 2003
____________________ Chief Operating Officer,
and Director
Jack J. Partagas

By:/s/ Barbara E. Reed Senior Vice President March 17, 2003
___________________ and Chief Financial Officer

Barbara E. Reed



By:/s/ Robert Namoff Director March 17, 2003
_________________

Robert Namoff


By:/s/ Sherman Simon Director March 17, 2003
_________________

Sherman Simon


By:/s/ Martin Yelen Director March 17, 2003
________________

Martin Yelen






CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-
OXLEY ACT OF 2002

I, Joseph W. Armaly, certify that:


1. I have reviewed this annual report on Form 10-K of Commercial
Bankshares, Inc;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiary, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date.

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent function):

a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.


Dated: March 17, 2003 COMMERCIAL BANKSHARES, INC.


/s/ Joseph W. Armaly
Joseph W. Armaly
Chief Executive Officer



CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANES-
OXLEY ACT OF 2002

I, Barbara E. Reed, certify that:

1. I have reviewed this annual report on Form 10-K of Commercial
Bankshares, Inc;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or to state a material fact necessary in
order to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the
period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiary, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date.

5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent function):

a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

Dated: March 17, 2003 COMMERCIAL BANKSHARES, INC.


/s/ Barbara E. Reed
Barbara E. Reed
Chief Financial Officer











Exhibit 10.16


SHOPPING CENTER LEASE


Shopping Center: Flamingo Pines Shopping Center


Landlord: HFJ, LLC, as beneficiary of the KLS Flamingo Land Trust

Tenant: Commercial Bank of Florida, Inc.

INDEX TO LEASE

TITLE PAGE
_____ ____

ARTICLE 1 DEFINITIONS AND CERTAIN BASIC PROVISIONS.............1
ARTICLE 2 GRANTING CLAUSE......................................2
ARTICLE 3 DELIVERY OF PREMISES.................................2
ARTICLE 4 RENT.................................................2
ARTICLE 5 INTENTIONALLY OMITTED................................3
ARTICLE 6 TENANT'S RESPONSIBILITY FOR TAXES, OTHER REAL ESTATE
CHARGES AND INSURANCE EXPENSES.......................3
ARTICLE 7 COMMON AREA..........................................4
ARTICLE 8 MERCHANTS' ASSOCIATION OR PROMOTIONAL FUND...........6
ARTICLE 9 USE AND CARE OF DEMISED PREMISES.....................6
ARTICLE 10 MAINTENANCE AND REPAIR OF DEMISED PREMISES...........8
ARTICLE 11 ALTERATIONS..........................................8
ARTICLE 12 LANDLORD'S RIGHT OF ACCESS...........................9
ARTICLE 13 SIGNS; STORE FRONTS..................................9
ARTICLE 14 UTILITIES...........................................10
ARTICLE 15 INSURANCE COVERAGES.................................10
ARTICLE 16 WAIVER OF LIABILITY; MUTUAL WAIVER OF SUBROGATION...11
ARTICLE 17 DAMAGES BY CASUALTY.................................11
ARTICLE 18 EMINENT DOMAIN......................................12
ARTICLE 19 ASSIGNMENT AND SUBLETTING...........................13
ARTICLE 20 SUBORDINATION; ATTORNMENT; ESTOPPELS................14
ARTICLE 21 DIRECTION OF TENANT'S ENERGIES......................15
ARTICLE 22 DEFAULT BY TENANT AND REMEDIES......................15
ARTICLE 23 LANDLORD'S CONTRACTUAL SECURITY INTEREST............18
ARTICLE 24 HOLDING OVER........................................19
ARTICLE 25 NOTICES.............................................19
ARTICLE 26 COMMISSIONS; ADVICE FROM AGENT......................20
ARTICLE 27 REGULATIONS; INDEMNIFICATION........................20
ARTICLE 28 HAZARDOUS MATERIALS.................................21
ARTICLE 29 MISCELLANEOUS.......................................23


EXHIBITS
________

EXHIBIT A DESCRIPTION OF SHOPPING CENTER
EXHIBIT B CONSTRUCTION: TENANT ACCEPTANCE OF SPACE "AS IS"
EXHIBIT C SHORT FORM OF LEASE

SCHEDULES
_________

SCHEDULE "A " LIST OF ASBESTOS-CONTAINING MATERIALS



SHOPPING CENTER LEASE

ARTICLE 1

DEFINITIONS AND CERTAIN BASIC PROVISIONS

1.1 The following list sets out certain defined terms and certain
financial and other information pertaining to this lease;

(a) "Landlord": HFJ, LLC, as beneficiary of the KLS Flamingo Land
Trust
(b) Landlord's address: c/o GE Capital Realty Group, Inc., Two Bent
Tree Tower, 16479 Dallas Parkway, Suite 400, Addison, Texas 75001, Attention:
Asset Management and Legal Department.
(c) "Tenant": Commercial Bank of Florida, Inc.
(d) Tenant's address: 1550 S.W. 57th Street, Miami, FL 33144
(e) Tenant's trade name: Commercial Bank of Florida
(f) Tenant's Guarantor (if applicable, attach Guaranty as an exhibit):
None
(g) "Agent": Trammell Crow Company
(h) "Cooperating Agent": None
(i) "Shopping Center": Landlord's property located in the City of
Pembroke Pines, Broward County, Florida, which property is described or shown
on Exhibit "A" attached to this lease. With regard to Exhibit "A," the parties
agree that the exhibit is attached solely for the purpose of locating the
Shopping Center and the Demised Premises within the Shopping Center and that no
representation, warranty, or covenant is to be implied by any other information
shown on the exhibit (i.e., any information as to buildings, tenants or
prospective tenants, etc. is subject to change at any time).
(j) "Demised Premises": a store unit in the Shopping Center
containing approximately 4,000 square feet in area (measured by calculating
lengths and widths to the exterior of outside walls and to the center of
interior walls), being known as Suite #176 and being described or shown on
Exhibit "A" attached to this lease.
(k) "Commencement Date": January 1, 2003
(l) Lease Term: Commencing on the Commencement Date and continuing for
10 years after the Commencement Date.
(m) Minimum guaranteed rental:


Annual Minimum Monthly Minimum
Lease Period Guaranteed Rental Guaranteed Rental
January 1,2003 - December 31,2003 $ 87,999.96 $ 7,333.33
January 1,2004 - December 31,2004 $ 91,080.00 $ 7,590.00
January 1,2005 - December 31,2005 $ 94,280.04 $ 7,856.67
January 1,2006 - December 31,2006 $ 97,599.96 $ 8,133.33
January 1,2007 - December 31,2007 $101,000.04 $ 8,416.67
January 1,2008 - December 31,2008 $104,520.00 $ 8,710.00
January 1,2009 - December 31,2009 $108,200.04 $ 9,016.67
January 1,2010 - December 31,2010 $111,963.96 $ 9,330.33
January 1,2011 - December 31,2011 $115,920.00 $ 9,660.00
January 1,2012 - December 31,2012 $119,960.04 $ 9,996.67

(n) Percentage rental rate: None
(o) Common area maintenance charge: An initial charge of $750.00 per
month, payable in advance.
(p) Prepaid rental: None
(q) Security deposit: None
(r) Permitted use: To be used solely for the operation of a retail
bank, and for no other uses or purposes.


1.2 The following chart is provided as an estimate of Tenant's initial
monthly payment broken down into its components. This chart, however, does not
supersede the specific provisions contained elsewhere in this lease.

Initial Minimum Guaranteed Rental
(Sections 1.1(m) and 4.1) $ 7,333.33

Initial Common Area Maintenance Charge
(Sections 1.1(0) and 7.4) $750.00

Initial Escrow Payment for Taxes and
Other Real Estate Charges
(Article 6) $ 1,006.67

Initial Escrow Payment for Insurance
(Article 6) $ 73.33

Initial Payment for Merchants'
Association Dues or Promotional Fund
(Article 8) $ -0-

Initial Payment for Sales or Excise Tax
(Article 4) $ 549.78

Total Initial Monthly Payment $ 9,712.78


ARTICLE 2

GRANTING CLAUSE

2.1 Landlord leases the Demised Premises to Tenant, and Tenant leases the
Demised Premises from Landlord, upon the terms and conditions set forth in
this lease.

ARTICLE 3

DELIVERY OF PREMISES

3.1 Except to the extent modified by Landlord's express assumption of
construction obligations, if any, in an exhibit attached to this lease, the
Demised Premises is being leased "AS IS," with Tenant accepting all defects,
if any; and Landlord makes no warranty of any kind, express or implied, with
respect to the Demised Premises (without limitation, Landlord makes no warranty
as the habitability, fitness or suitability of the Demised Premises for a
particular purpose nor as to the absence of any toxic or otherwise hazardous
substances). This Section 3.1 is subject to any contrary requirements under
applicable law; however, in this regard Tenant acknowledges that it has been
given the opportunity to inspect the Demised Premises and to have qualified
experts inspect the Demised Premises prior to the execution of this lease.

3.2 If this lease is executed before the Demised Premises become vacant, or
if any present tenant or occupant of the Demised Premises holds over and
Landlord cannot acquire possession of the Demised Premises prior to the
Commencement Date of this lease, as above defined, Landlord shall not be deemed
to be in default under this lease; and in such event Tenant agrees to accept
possession of the Demised Premises at such time as Landlord is able to tender
the same. If Landlord utilizes the provisions of this Section, Landlord will
waive the payment of rent and other charges covering any period prior to tender
of possession of the Demised Premises to Tenant.


ARTICLE 4

RENT

4.1 The term "lease Period" shall mean any period of one (1) year commencing
on the Commencement Date of this lease or any anniversary of such date.

4.2 Rental shall accrue from the Commencement Date, and shall be payable to
Landlord, at Landlord's address.

4.3 Tenant shall pay to Landlord minimum guaranteed rental in monthly
installments in the amounts specified in Section 1.1 (m) and Section 4.1 of
this lease. The first such monthly installment shall be due and payable on or
before the Commencement Date, and subsequent installments shall be due and
payable on or before the first day of each succeeding calendar month during the
lease 'term; provided that if the Commencement Date is a date other than the
first day of a calendar month, there shall be due and payable on or before such
date as minimum guaranteed rental for the balance of such calendar month a sum
equal to that proportion of the rent specified for the first full calendar
month as herein provided, which the number of days from the Commencement Date
to the end of the calendar month during which the Commencement Date shall fall
bears to the total number of days in such month.

4.4 Intentionally Deleted.

4.5 Intentionally Deleted.

4.6 Intentionally Deleted.

4.7 It is understood that the minimum guaranteed rental is payable on or
before the first day of each calendar month (in accordance with Section 4.2
above), without offset or deduction of any nature. In the event any rental is
not received within ten (10) days after its due date for any reason whatsoever,
or if any rental payment is by check which is returned for insufficient funds,
then in addition to the past due amount Tenant shall pay to Landlord one of
the following (the choice to be at the sole option of Landlord unless one of
the choices is improper under applicable law, in which event the other
alternative will automatically be deemed to have been selected): (a) a late
charge in an amount equal to five percent (5%) of the rental then due, in
order to compensate Landlord for its administrative and other overhead
expenses; or (b) interest on the rental then due at the maximum contractual
rate which could legally be charged in the event of a loan of such rental to
Tenant (but in no event to exceed 1-1/2% per month), such interest to accrue
continuously on any unpaid balance due to Landlord by Tenant during the
period commencing with the rental due date and terminating with the date on
which Tenant makes full payment of all amounts owing to Landlord at the time
of said payment. Any such late charge or interest payment shall be payable as
additional rental under this lease, shall not be considered as deduction from
percentage rental, and shall be payable immediately on demand.

4.8 If Tenant fails in two (2) consecutive months to make rental payments
within ten (10) days after due, Landlord, in order to reduce its administrative
costs, may require, by giving written notice to Tenant (and in addition to any
late charge or interest accruing pursuant to Section 4.7 above, as well as any
other rights and remedies accruing pursuant to Article 22 or Article 23 below,
or any other provision of this lease or at law), that minimum guaranteed
rentals are to be paid quarterly in advance instead of monthly, and that all
future rental payments are to be made on or before the due date by cash,
cashier's check, or money order and that the delivery of Tenant's personal or
corporate check will no longer constitute a payment of rental as provided in
this lease. Any acceptance of a monthly rental payment or of a personal or
corporate check thereafter by Landlord shall not be construed as a subsequent
waiver of said rights.

4.9 Tenant shall pay when due any and all sales or excise taxes levied,
imposed or assessed by the United States of America, the State of Florida,
or any political subdivision thereof or other taxing authority upon the
minimum guaranteed rental, additional rent and all other sums payable
hereunder.

ARTICLE 5

INTENTIONALLY DELETED

ARTICLE 6

TENANT'S RESPONSIBILITY FOR TAXES, OTHER REAL ESTATE CHARGES AND INSURANCE
EXPENSES

6.1 Tenant shall be liable for all taxes levied against personal property
and trade fixtures placed by Tenant in the Demised Premises. If any such taxes
are levied against Landlord or Landlord's property and if Landlord elects to
pay the same or if the assessed value of Landlord's property is increased by
inclusion of personal property and trade fixtures placed by Tenant in the
Demised Premises and Landlord elects to pay the taxes based on such increase,
Tenant shall pay to Landlord upon demand that part of such taxes for which
Tenant is primarily liable hereunder.

6.2 Tenant shall also be liable for "Tenant's proportionate share" (as
defined below) of all "real estate charges" (as defined below) and "insurance
expenses" (as defined below) related to the Shopping Center or Landlord's
ownership of the Shopping Center. Tenant's obligations under this Section 6.2
shall be prorated during any partial year (Le., the first year and the last
year of the lease term). "Tenant's proportionate share" shall be a fraction,
the numerator of which is the total floor area (all of which is deemed
"leasable") in the Demised Premises and the denominator of which is the total
leasable floor area of all buildings in the Shopping Center at the time when
the respective charge was incurred, excluding, however, areas for which any
such real estate charges or insurance expenses, or both, are paid by a party
or parties other than Landlord. "Real estate charges" shall include ad valorem
taxes, general and special assessments, parking surcharges, any tax or excise
on rents, any tax or charge for governmental services (such as street
maintenance or fire protection) which are attributable to the transfer or
transaction directly or indirectly represented by this lease, by any sublease
or assignment hereunder or by other leases in the Shopping Center or by any
document to which Tenant is a party creating or transferring (or reflecting
the creation or transfer) of any interest or an estate in the Demised Premises
and any tax or charge which replaces any of such above-described "real estate
charges"; provided, however, that "real estate charges" shall not be deemed to
include any franchise, estate, inheritance or general income tax. Real estate
charges shall also include any fees, expenses or costs (including attorney's
fees, expert fees and the like) incurred by Landlord in protesting or
contesting any assessments levied, tax valuation, or tax rate. "Insurance
expenses" shall include all premiums and other expenses incurred by Landlord
for liability insurance, fire and extended coverage property insurance (plus
whatever endorsements or special coverages which Landlord, in Landlord's sole
discretion, may consider appropriate) business interruption, and rent loss,
earthquake and any other insurance policy which may be carried by Landlord
insuring the Demised Premises, the Common Area, the Shopping Center, or any
improvements.

6.3 Landlord and Tenant shall attempt to obtain separate assessments for
Tenant's obligations pursuant to Section 6.1 and, with respect to Section 6.2,
for such of the "real estate charges" as are readily susceptible of separate
assessment. To the extent of a separate assessment, Tenant agrees to pay such
assessment before it becomes delinquent and to keep the Demised Premises free
from any lien or attachment; moreover, as to all periods of time during the
lease term, this covenant of Tenant shall survive the termination of the lease.
With regard to the calendar year during which the lease term expires, Landlord
at its option either may bill Tenant when the charges become payable or may
charge the Tenant an estimate of Tenant's pro rata share of whichever charges
have been paid directly by Tenant (based upon information available for the
current year plus, if current year information is not adequate in itself,
information relating to the immediately preceding year).

6.4 As such time as Landlord has reason to believe that at some time within
the immediately succeeding twelve (12) month period Tenant will owe Landlord
any amounts pursuant to one or more of the preceding sections of this Article
6, Landlord may direct that Tenant prepay monthly a pro rata portion of the
prospective future payment (Le., the prospective future payment divided by the
number of months before the prospective future payment will be due). Tenant
agrees that any such prepayment directed by Landlord shall be due and payable
monthly on the same day that minimum guaranteed rental is due.

6.5 In the event that any payment due from Tenant to Landlord is not
received within ten (10) days after its due date for any reason whatsoever,
or if any such payment is by check which is returned for insufficient funds,
then in addition to the amount then due Tenant shall pay to Landlord interest
on the amount then due at the maximum contractual rate which could legally be
charged in the event of a loan of such amount to Tenant (but in no event to
exceed 1-1/2% per month), such interest to accrue continuously on any unpaid
balance until paid.

ARTICLE 7

COMMON AREA

7.1 The term "Common Area" is defined for all purposes of this lease as
that part of the Shopping Center intended for the common use of all tenants,
including among other facilities (as such may be applicable to the Shopping
Center), parking areas, private streets and alleys, landscaping, curbs,
loading areas, sidewalks, malls and promenades (enclosed or otherwise),
lighting facilities, drinking fountains, meeting rooms, public toilets, and
the like, but excluding (i) space in buildings (now or hereafter existing)
designated for rental for commercial purposes, as the same may exist from
time to time; (ii) streets and alleys maintained by a public authority; (iii)
areas within the Shopping Center which may from time to time not be owned by
Landlord (unless subject to a cross-access agreement benefiting the area
which includes the Demised Premises); and (iv) areas leased to a single-
purpose user (such as a bank or a fast-food restaurant) where access is
restricted. In addition, although the roof(s) of the building(s) in the
Shopping Center are not literally part of the Common Area, they will be deemed
to be so included for purposes of (i) Landlord's ability to prescribe rules
and regulations regarding same, and (ii) their inclusion for purposes of common
area maintenance reimbursements. Landlord reserves the right to change from
time to time the dimensions and location of the Common Area, as well as the
dimensions, identities, locations and types of any buildings, signs or other
improvements in the Shopping Center. For example, and without limiting the
generality of the immediately preceding sentence, Landlord may from time to
time substitute for any parking area other areas reasonably accessible to the
tenants of the Shopping Center, which areas may be elevated, surface or
underground.

7.2 Tenant, and its employees and customers, and when duly authorized
pursuant to the provisions of this lease, its subtenants, licensees and
concessionaires, shall have the nonexclusive right to use the Common Area
(excluding roofs of buildings in the Shopping Center) as constituted from time
to tirpe, such use to be in common with Landlord, other tenants in the Shopping
Center and other persons permitted by the Landlord to use the same, and subject
to rights of governmental authorities, easements, other restrictions of record,
and such reasonable rules and regulations governing use as Landlord may from
time to time prescribe. For example, and without limiting the generality of
Landlord's ability to establish rules and regulations governing all aspects
of the Common Area, Tenant agrees as follows:

Landlord may from time to time designate specific areas within the
Shopping Center or in reasonable proximity thereto in which automobiles owned
by Tenant, its employees, subtenants, licensees, and concessionaires shall
be parked; and in this regard, Tenant shall furnish to Landlord upon request a
complete list of license numbers of all automobiles operated by Tenant, its
employees, its subtenants, its licensees or its concessionaires, or their
employees; and Tenant agrees that if any automobile or other vehicle owned by
Tenant or any of its employees, its subtenants, its licensees or its
concessionaires, or their employees, shall at any time be parked in any part
of the Shopping Center other than the specified areas designated for employee
parking, Tenant shall pay to Landlord as additional rent upon demand an amount
equal to the daily rate or charge for such parking as established by Landlord
from time to time for each day, or part thereof, that such automobile or other
vehicle is so parked.

(b) Tenant shall not solicit business within the Common Area nor take
any action which would interfere with the rights of other persons to use the
Common Area.

(c) Landlord may temporarily close any part of the Common Area for
such periods of time as may be necessary to make repairs or alterations or
to prevent the public from obtaining prescriptive rights.

(d) With regard to the roof(s) of the building(s) in the Shopping
Center, use of the roof(s) is reserved to Landlord, or with regard to any
tenant demonstrating to Landlord's satisfaction a need to use same, to such
tenant after receiving prior written consent from Landlord.

(e) Landlord shall have the right to utilize the Common Area for
promotions, exhibits, carnival type shows, rides, outdoor shows, displays,
food facilities, landscaping, and other uses, which in Landlord's sole
judgment tends to attract customers or benefit tenants.

7.3 Landlord shall be responsible for the operation, management and
maintenance of the Common Area, the manner of maintenance and the
expenditures therefor to be in the sole discretion of Landlord, but to be
generally in keeping with similar shopping centers within the same
geographical area as the Shopping Center. Landlord shall be the sole
determinant of the type and amount of security services to be provided, if
any. Landlord shall not be liable to Tenant, and Tenant hereby waives any
claim against Landlord for (i) any unauthorized or criminal entry of third
parties into the Demised Premises or Shopping Center, (ii) any damage to
persons or property, or (iii) any loss of property in and about the Demised
Premises or Shopping Center from any unauthorized or criminal acts of third
parties, regardless of any action, inaction, failure, breakdown or
insufficiency of security.

7.4 In addition to the rentals and other charges prescribed in this lease,
Tenant shall pay to Landlord Tenant's proportionate share of the cost of
operation and maintenance of the Common Area which may be incurred by Landlord
in its discretion, including, among other costs, those for lighting, painting,
cleaning, policing, inspecting, repairing, replacing, and, if there is an
enclosed mall or promenade in the Shopping Center, heating and cooling;
Tenant's proportionate share of capital expenditures and expenses incurred
by Landlord to increase the operating efficiency of the Shopping Center or to
cause the Common Area to comply with applicable Regulations (as such term is
defined in Section 27.1), it being agreed that the cost of such capital
expenditures and installation shall be amortized over the reasonable life of
the capital expenditure, with the reasonable life and amortization schedule
being determined in accordance with generally accepted accounting principles
consistently applied; a reasonable portion of whatever management fee Landlord
pays to the manager of the Shopping Center; a reasonable allowance for
Landlord's overhead costs and the cost of any insurance for which Landlord is
not reimbursed pursuant to Section 6.2, but specifically excluding all expenses
paid or reimbursed pursuant to Article 6. In addition, although the roof(s) of
the buildings(s) in the Shopping Center are not literally part of the Common
Area, Landlord and Tenant agree that roof maintenance, repair and replacement
shall be included as a common area maintenance item to the extent not
specifically allocated to Tenant under this lease nor to another tenant
pursuant to its lease. With regard to capital expenditures other than the
capital expenditures contemplated by the first sentence of this Section, (i)
the original investment in capital improvements, i.e., upon the initial
construction of the Shopping Center, shall not be included, and (ii)
improvements and replacements, to the extent capitalized on Landlord's records,
shall be included only to the extent of a reasonable depreciation or
amortization (including interest accruals commensurate with Landlord's interest
costs). The proportionate share to be paid by Tenant of the cost of operation
and maintenance of the Common Area shall be computed on the ratio that the
total floor area (all of which is deemed "leasable") of the Demised Premises
bears to the total leasable floor area of all buildings within Shopping Center
(excluding, however, areas owned or maintained by a party or parties other
than Landlord); provided that in no event shall such share be less than the
amount specified in Section 1.1 (o) above. Landlord reserves the right to
make arrangements with fee owners of the Shopping Center, anchor tenants (i.e.,
those occupying at least 20,000 contiguous square feet of floor area) and
ground and out parcel lessees (for purposes hereof, collectively "Key
Occupants") regarding the payment of all or any element (or portion thereof)
of the aforesaid Common Area costs. In such instance, said costs shall be
reduced by the contribution of such Key Occupants and prior to calculating
Tenant's proportionate share, and in determining the denominator of the
equation relative thereto, Landlord may deduct the aggregate gross leasable
floor area of the Key Occupant(s) who have made such special arrangements
with the Landlord and/or are paying such element on a basis other than a
proportionate share from the total gross leasable floor area of the Shopping
Center. If this lease should commence on a date other than the first day of
a calendar year or terminate on a date other than the last day of a calendar
year, Tenant's reimbursement obligations under this Section 7.4 shall be
prorated based upon Landlord's expenses for the entire calendar year. Tenant
shall make such payment to Landlord on demand, at intervals not more
frequent than monthly. Landlord may, at its option, make monthly or other
periodic charges based upon the estimated annual cost of operation and
maintenance of the Common Area, payable in advance but subject to adjustment
after the end of the year on the basis of the actual cost for such year.
Landlord has the right to establish as a reserve, such amounts as Landlord
deems reasonable for the maintenance, repair and restoration of the roof and
parking of the Shopping Center. In the event that any payment due from Tenant
to Landlord is not received within ten (10) days after its due date for any
reason whatsoever, or if any such payment is by check which is returned for
insufficient funds, then, in addition to the amount then due, Tenant shall
pay to Landlord interest on the amount then due at the maximum contractual
rate which could legally be charged in the event of a loan of such amount to
Tenant (but in no event to exceed 1-1/2% per month), such interest to accrue
continuously on any unpaid balance until paid. Any delay or failure of
Landlord in delivering any estimate or statement described in this section
7.4 or in computing or billing Tenant's proportionate share of the foregoing
costs shall not constitute a waiver of Landlord's right to require an
increase in rent as provided herein or in any way impair the continuing
obligations of Tenant under this Section.

ARTICLE 8

MERCHANTS' ASSOCIATION OR PROMOTIONAL FUND

8.1 In the event that Landlord shall organize a merchants' association
composed of tenants in the Shopping Center, Tenant agrees that it will join
and maintain membership in such association, will pay such dues and assessments
as may be fixed and determined from time to time by the association and will
comply with such other bylaws, rules and regulations as may be adopted from
time to time by the association.

8.2 In the event that Landlord shall establish a promotional fund to pay
for advertising and other marketing activities of the Shopping Center (as may
be directed by Landlord from time to time), Tenant shall pay whatever sums,
mutually agreed upon between Tenant and Landlord, which are reasonably
designated as Tenant's proportionate contribution to the promotional fund.

ARTICLE 9

USE AND CARE OF DEMISED PREMISES

9.1 Tenant shall commence business operations in the Demised Premises on
or immediately after the Commencement Date and shall continuously and
uninterruptedly operate its business in an efficient, high class and
reputable manner so as to produce the maximum amount of sales from the
Demised Premises. Tenant shall not at any time leave the Demised Premises
vacant, but shall in good faith continuously throughout the term of this
lease conduct and carry on in the entire Demised Premises the type of
business for which the Demised Premises is leased. Tenant shall, except
during reasonable periods for repairing, cleaning and decorating, keep the
Demised Premises open to the public for business with adequate personnel in
attendance on all Banking business days, as designated by the State and
Federal Bank Regulatory agencies, except to the extent Tenant may be
prohibited from being open for business by applicable law, ordinance or
governmental regulation.

9.2 The Demised Premises may be used only for the purpose or purposes
specified in Section 1.1(r) above, and only under the trade name specified in
Section 1.1(e) above (or, if Section 1.1 (e) is not filled in, any trade name
approved in advance by Landlord), and for no other purpose and under no other
trade name, it being understood and acknowledged that Landlord has entered
into this lease in large part because it believes that such use and trade name
will benefit the Shopping Center as a whole. Nothing contained in this lease
shall be deemed to give Tenant an express or implied exclusive use in the
Shopping Center.

9.3 Tenant shall not, without Landlord's prior written consent, keep
anything within the Demised Premises or use the Demised Premises for any
purpose which creates a risk of toxic or otherwise hazardous substances or
which increases the insurance premium cost or invalidates any insurance
policy carried on the Demised Premises or other parts of the Shopping Center.
All property kept, stored or maintained within the Demised Premises by
Tenant shall be at Tenant's sole risk. Tenant shall use and occupy the
Demised Premises in accordance with all applicable federal, state and local
Regulations (as defined herein). Tenant hereby agrees that all operations or
activities upon, or any use or occupancy of the Demised Premises, or any
portion thereof, by Tenant, its assignees, subtenants, and their respective
agents, servants, employees, representatives and contractors (collectively,
"Tenant Affiliates"), throughout the term of this lease, shall be in all
respects in compliance with all laws then governing or in any way relating
to the generation, handling, manufacturing, treatment, storage, use,
transportation, release, spillage, leakage, dumping, discharge or disposal
of any Hazardous Material. As used herein, the term "Hazardous Material"
means any hazardous or toxic substance, material or waste which is or
becomes regulated by any local governmental authority, the state in which
the Shopping Center is located or the United States Government, including,
without limitation, any material or substance which is (i) defined or listed
as a "hazardous waste," "extremely hazardous waste," "restricted hazardous
waste," "hazardous substance" or "hazardous material" under any applicable
law, (ii) petroleum or petroleum products, or (iii) asbestos in any form.
Tenant agrees to indemnify, defend and hold Landlord and Landlord's parent,
affiliated or subsidiary companies, and its and their officers, directors,
shareholders, partners, agents and employees (collectively, "Landlord
Affiliates") harmless from any and all claims, actions, administrative
proceedings (including informal proceedings), judgments, damages, punitive
damages, penalties, fines, costs, liabilities, interest or losses, including
reasonable attorneys' fees and expenses, consultant fees, and expert fees,
together with all other costs and expenses of any kind or nature that arise
during or after the Term of this lease, directly or indirectly, from or in
connection with the presence, suspected presence, release or suspected
release of any Hazardous Material in or into the air, soil, surface water
or groundwater at, on, about, under or within the Demised Premises or the
Shopping Center or any portion of either by Tenant or Tenant Affiliates or
from or in connection with the failure of Tenant or Tenant Affiliates to
comply with any laws or other requirements regarding protection of the
environment, public health or safety. In the event any investigation or
monitoring of site conditions or any clean-up, containment, restoration,
removal or other remedial work (collectively, the "Remedial Work") is
required under any applicable law, by any judicial order, or by any
governmental entity as the result of operations or activities upon, or any
use or occupancy of any portion of the Premises by Tenant or Tenant
Affiliates, then at Landlord's option either Tenant shall perform or cause
to be performed the Remedial Work in compliance with such law or Landlord
may cause such Remedial Work to be performed and Tenant shall reimburse
Landlord within ten (10) days of demand therefor. All Remedial Work performed
by Tenant shall be performed by one or more contractors, selected by Tenant
and approved in advance in writing by Landlord, and under the supervision of a
consulting engineer selected by Tenant and approved in advance in writing by
Landlord. All costs and expenses of such Remedial Work shall be paid by
Tenant, including, without limitation, the charges of such contractor(s),
the consulting engineer, and Landlord's reasonable attorneys' fees and costs
incurred in connection with monitoring or review of such Remedial Work. The
covenants and agreements of Tenant set forth in this Section 9.3 shall
survive the expiration or earlier termination of this lease.

9.4 Intentionally Deleted.

9.5 Tenant shall not permit any objectionable noises or odors to
emanate from the Demised Premises; nor place or permit any radio, television,
loudspeaker or amplifier on the roof or outside the Demised Premises or where
the same can be seen or heard from outside the building; nor place any antenna,
equipment, awning or other projection on the exterior of the Demised Premises;
nor take any other action which would constitute a nuisance or would disturb
or endanger other tenants of the Shopping Center or unreasonably interfere
with their use of their respective premises; nor permit any unlawful or
immoral practice to be carried on or committed on the Demised Premises; nor
do anything which would tend to injure the reputation of the Shopping Center..

9.6 Tenant shall take good care of the Demised Premises and keep the
same free from waste at all times. Tenant shall not overload the floors in the
Demised Premises, nor deface or injure the Demised Premises. Tenant shall keep
the Demised Premises and sidewalks, service-ways and loading areas adjacent to
the Demised Premises neat, clean and free from dirt, rubbish, ice or snow at
all time. Tenant shall store all trash and garbage within the Demised Premises
or in a trash dumpster or similar container approved by Landlord as to type,
location and screening; and Tenant shall arrange for the regular pick-up of
such trash and garbage at Tenant's expense (unless Landlord finds its necessary
to furnish such a service, in which event Tenant shall be charged an equitable
portion of the total of the charges to all tenants using the service).
Receiving and delivery of goods and merchandise and removal of garbage and
trash shall be made only in the manner and areas prescribed by Landlord.
Tenant shall not operate an incinerator or burn trash or garbage within the
Shopping Center.

9.7 Tenant shall maintain all display windows in a neat, attractive
condition, and shall keep all display windows, exterior electric signs and
exterior lighting under any canopy in front of the Demised Premises lighted
from dusk until 11:00 p.m., every day, including Sundays and holidays (or any
other hours established by Landlord for the Shopping Center).

9.8 Tenant shall include the address and identity of its business
activities in the Demised Premises in all advertisements made by Tenant in
which the address and identity of any similar local business activity of
Tenant is mentioned.

9.9 Tenant shall procure at its sole expense any permits and licenses
required for the transaction of business in the Demised Premises and otherwise
comply with all applicable Regulations. In addition, if the nature of Tenant's
business makes it advisable for Tenant to take any extra precautions (for
example, in the case of a business which is affected by so-called "dramshop"
laws, Tenant's compliance with all "dramshop" educational programs and
procedures), Tenant shall take all such extra precautions. At Landlord's
request, Tenant shall deliver to Landlord copies of all such permits and
licenses and proof of Tenant's compliance with all such Regulations and extra
precautions.

ARTICLE 10

MAINTENANCE AND REPAIR OF DEMISED PREMISES

10.1 Landlord shall keep the foundation, the exterior walls (except
plate glass; windows, doors and other exterior openings; window and door
frames, molding, closure devices, locks and hardware; special store fronts;
lighting, heating, air conditioning, plumbing and other electrical, mechanical
and electromotive installation, equipment and fixtures; signs, placards,
decorations or other advertising media of any type; and interior painting or
other treatment of exterior walls) and roof (subject to the second sentence in
Section 7.4 above) of the Demised Premises in good repair. Landlord, however,
shall not be required to make any repairs occasioned by the act or negligence
of Tenant, its agents, contractors, employees, subtenants, invitees, customers,
licensees and concessionaires (including, but not limited to, roof leaks
resulting from Tenant's installation of air conditioning equipment or any other
roof penetration or placement); and the provisions of the previous sentence are
expressly recognized to be subject to the provisions of Article 17 and Article
18 of this lease. In the event that the Demised Premises should become in need
of repairs required to be made by Landlord hereunder, Tenant shall give
immediate written notice thereof to Landlord and Landlord shall have a
reasonable time after receipt by Landlord of such written notice in which to
make such repairs. Landlord shall not be liable to Tenant for any interruption
of Tenant's business or inconvenience caused due to any work performed in the
Demised Premises or in the Shopping Center pursuant to Landlord's rights and
obligations under the lease, so long as the work is performed without gross
negligence or willful misconduct.

10.2 Tenant shall keep the Demised Premises in good, clean and
habitable condition and shall at its sole cost and expense keep the Demised
Premises free of insects, rodents, vermin and other pests and make all needed
repairs and replacements, including replacement of cracked or broken glass,
except for repairs and replacements required to be made by Landlord under the
provisions of Section 10.1, Article 17 and Article 18. Without limiting the
coverage of the previous sentence, it is understood that Tenant's
responsibilities therein include the repair and replacement in accordance with
all applicable Regulations of all lighting, heating, air conditioning, plumbing
and other electrical, mechanical and electromotive installation, equipment and
fixtures and also include all utility repairs in ducts, conduits, pipes and
wiring, and any sewer stoppage located in, under and above the Demised
Premises, regardless of when or how the defect or other cause for repair
or replacement occurred or became apparent. If any repairs required to be
made by Tenant hereunder are not made within ten (10) days after written
notice delivered to Tenant by Landlord, Landlord may at its option make
such repairs without liability to Tenant for any loss or damage which may
result to its stock or business by reason of such repairs and Tenant shall
pay to Landlord upon demand, as additional rental hereunder, the cost of
such repairs plus interest at the maximum contractual rate which could
legally be charged in the event of a loan of such payment to Tenant (but
in no event to exceed 1-1/2% per month), such interest to accrue
continuously from the date of payment by Landlord until repayment by Tenant.
At the expiration of this lease, Tenant shall surrender the Demised Premises
in good condition, excepting reasonable wear and tear and losses required
to be restored by Landlord in Section 10.1, Article 17 and Article 18 of
this lease.

ARTICLE 11

ALTERATIONS

11.1 Tenant shall not make any alterations, additions or improvements
to the Demised Premises without the prior written consent of Landlord, except
for the installation of unattached, movable trade fixtures which may be
installed without drilling, cutting or otherwise defacing the Demised Premises.
Without limiting the generality of the immediately preceding sentence, any
installation or replacement of Tenant's heating or air conditioning equipment
must be effected strictly in accordance with Landlord's instructions, the Clean
Air Act, the Occupational Safety and Health Act, and all other applicable
Regulations. All alterations, additions, improvements and fixtures (including,
without limitation, all floor coverings and all heating and air conditioning
equipment but excluding Tenant's unattached, readily moveable furniture and
office equipment) which may be made or installed by either party upon the
Demised Premises shall remain upon and be surrendered with the Demised Premises
and become the property of Landlord at the termination of this lease, unless
Landlord requests their removal, in which event Tenant shall remove the same
and restore the Demised Premises to its original condition at Tenant's expense.

11.2 All construction work done by Tenant within the Demised Premises
shall be performed in a good and workmanlike manner with new materials of
first-class quality, lien-free and in compliance with all governmental
requirements and Regulations, and in such manner as to cause a minimum of
interference with other construction in progress and with the transaction of
business in the Shopping Center. Tenant agrees to indemnify Landlord and hold
Landlord harmless against any loss, liability or damage resulting from such
work, and Tenant shall, if requested by Landlord, furnish a bond or other
security satisfactory to Landlord against any such loss, liability or damage..

11.3 Prior to the commencement of any construction work within the
Demised Premises, Landlord may require Tenant's contractor(s) and
subcontractors to execute and deliver to Landlord waivers and releases of
any and all claims against Landlord and liens against Landlord's interest in
the Shopping Center. In addition, Landlord may require that Tenant's
contractor(s) obtain and provide to Landlord a payment bond in compliance
with Florida Statutes Section 713.23 and naming Landlord as an obligee (the
"Bond"). The delivery of the waivers and releases of lien and the Bond within
the time period set forth above shall be a condition precedent to Tenant's
ability to enter on and begin its construction work at the Demised Premises
and, if applicable, to any reimbursement from Landlord for its construction
work.

11.4 Nothing contained in this lease shall be construed as constituting
the consent or request of Landlord, express or implied, to or for the
performance by any contractor, subcontractor, laborer, materialman or vendor of
any labor or services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or to the Demised
Premises or any part thereof. All materialmen, contractors, subcontractors,
artisans, mechanics, laborers and any other persons now or hereafter furnishing
any labor, services, materials, supplies or equipment to Tenant with respect to
any portion of the Demised Premises are hereby charged with notice that they
must look exclusively to Tenant to obtain payment for same. Tenant any and
subtenants shall have no power to do any act or make and contract which may
create or be the foundation of any lien, mortgage or other encumbrance upon the
reversionary or other estate of Landlord, or any interest of Landlord in the
Demised Premises. NOTICE IS HEREBY GIVEN THAT LANDLORD IS NOT AND SHALL NOT BE
LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO
TENANT OR TO ANYONE HOLDING THE DEMISED PREMISES OR ANY PART THEREOF, AND THAT
NO CONSTRUCTION OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL
ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO THE DEMISED PREMISES OR
THE SHOPPING CENTER. Tenant shall deliver written notice of the provisions of
this Section 11.4 to all contractors performing work in the Demised Premises..


11.5 Tenant shall, within five (5) days after being requested to do so
by Landlord, execute, acknowledge and deliver to Landlord a short form of lease
in recordable form confirming that the terms of this lease expressly provide
that the interest of Landlord in the Demised Premises and the Shopping Center
shall not be subject to liens for improvements made by Tenant and such other
information as may be required by Chapter 713, Florida Statutes, to prevent the
interest of Landlord in the Demised Premises and the Shopping Center from being
subject to liens for improvements made by Tenant. The short form of lease shall
be in a form acceptable to Landlord and may at Landlord's option be the form
attached hereto as Exhibit "C" and made a part hereof.

11.6 Use of the roof above the Demised Premises is reserved to Landlord;
however, Landlord agrees that it will not use the roof above the Demised
Premises for signage or other advertising displays without Tenant's consent.
Landlord also reserves the use of the exterior rear and side walls, and the
right to install, maintain, use, repair, and replace the pipes, ducts, conduits
and wires leading into or running through the Demised Premises.

ARTICLE 12

LANDLORD'S RIGHT OF ACCESS

12.1 Landlord shall have the right to enter upon the Demised Premises
with Tenant's representative at all reasonable hours and with no less than
forty-eight (48) hours notice to Tenant (except in the event of an emergency
in which case no prior notice shall be required) for the purpose of inspecting
the same, or of making repairs to the Demised Premises, or of making repairs,
alterations or additions to adjacent premises, or of showing the Demised
Premises to prospective purchasers, tenants or lenders.

12.2 Tenant will permit Landlord to place and maintain "For Rent" or
"For lease" signs on the Demised Premises during the last one hundred eighty
(180) days of the lease term, it being understood that such signs shall in no
way affect Tenant's obligations pursuant to Section 9.4, Section 13.1 or any
other provision of this lease.

12.3 Use of the roof above the Demised Premises is reserved to Landlord;
however, Landlord agrees that it will not use the roof above the Demised
Premises for signage or other advertising displays without Tenant's consent.
Landlord also reserves the use of the exterior rear and side walls, and the
right to install, maintain, use, repair, and replace the pipes, ducts, conduits
and wires leading into or running through the Demised Premises.

ARTICLE 13

SIGNS; STORE FRONTS

13.1 Tenant shall not, without Landlord's prior written consent (a)
make any changes to the store front, or (b) install any exterior lighting,
decorations, walls, awnings, canopies or the like, or (c) erect or install
any signs, window or door lettering, placards, decorations or advertising
media of any type which can be viewed from the exterior of the Demised
Premises, excepting only dignified displays of customary type for its display
windows. All signs, lettering, placards, decorations and advertising media
(including, without limitation, the sign required by Section 13.2 below)
shall conform in all respects to the sign criteria established by Landlord
for the Shopping Center from time to time in the exercise of its sole
discretion, and shall be subject to Landlord's requirements as to
construction, method of attachment, size, shape, height, lighting, color
and general appearance. All signs shall be kept in good condition and in
proper operating order at all times.

13.2 Subject to the restrictions of Section 13.1 above, Tenant agrees
to install and maintain a first-class sign on the front of the Demised Premises
during the term of this lease.

13.3 Tenant shall have no right to affix its name to any pylon or free-
standing sign in the Shopping Center, except as specifically provided in this
lease.

ARTICLE 14

UTILITIES

14.1 Landlord agrees to cause to be provided to the Shopping Center the
necessary mains, conduits and other facilities necessary to supply water, gas
(if deemed appropriate by Landlord), electricity, telephone service and sewage
service to the building in which the Demised Premises are located.

14.2 Tenant shall promptly pay all charges for electricity, water, gas,
telephone service, sewage service and other utilities furnished to the Demised
Premises. Landlord may, if it so elects, furnish one or more utility services
to Tenant, and in such event Tenant shall purchase the use of such services as
are tendered by Landlord, and shall pay on demand as additional rental the
rates established therefore by Landlord, which shall not exceed the rates which
would be charged for the same services if furnished directly by the local
public utility companies. Landlord may at any time discontinue furnishing any
such service without obligation to Tenant other than to connect the Demised
Premises to the public utility, if any, furnishing such service.

14.3 Landlord shall not be liable for any interruption whatsoever in
utility services not furnished by Landlord, nor for interruptions in utility
services furnished by Landlord which are due to fire, accident, strike, acts
of God or other causes beyond the reasonable control of Landlord or which are
necessary or useful in connection with making any alterations, repairs or
improvements.

14.4 Tenant shall not install any equipment which exceeds or overloads
the capacity of the utility facilities serving the Demised Premises.

ARTICLE 15

INSURANCE COVERAGES

15.1 Landlord shall procure and maintain throughout the term of this
lease a policy or policies of insurance, at its sole cost and expense (but
subject to Article 6 above), causing the Shopping Center to be insured under
standard fire and extended coverage insurance (excluding hurricane and storm
insurance unless readily obtainable at commercially reasonable rates) and
liability insurance (plus whatever endorsements or special coverages Landlord,
in its sole discretion, may consider appropriate), to the extent necessary to
comply with Landlord's obligations pursuant to other provisions of this lease.


15.2 Tenant agrees to carry during the Term, Worker's Compensation
Insurance, Employer's Liability Insurance, Commercial General Liability
Insurance on the Demised Premises, and, if Tenant uses vehicles, owned and
non-owned, in any way to carry out business on or about the Shopping Center,
Tenant shall maintain Motor Vehicle Liability Insurance. Tenant shall carry
Employer's Liability Insurance which shall be for limits of not less than
$100,000 for Bodily Injury per accident and each disease, per employee, and
a total combined limit for Bodily Injury in amounts not less than $100,000 per
accident and $500,000 per each disease. The Commercial General Liability
Insurance shall be for limits of not less than $2,000,000 Combined Single
Limit for Personal Injury including Bodily Injury and Death or Property Damage
Liability and containing a Contractual Liability endorsement. Tenant agrees to
name Landlord and, if Landlord requests, Landlord's mortgagee as additional
insured(s) on Tenant's Commercial General Liability Insurance. The Motor
Vehicle Liability Insurance shall be for limits of not less than $1,000,000
combined single limit for Bodily Injury and Property Damage. All insurance of
whatever type shall be with companies having an AM. Best's Key Rating Guide
rating of A-VII or better or such other comparable publication if Best's is no
longer published. In addition, the insurance carrier shall be licensed to do
business in the state where the Shopping Center is located. All policies shall
contain a provision that Landlord and Tenant will be given a minimum of thirty
(30) days written notice by registered mail by the insurance company prior to
cancellation, termination or change in insurance. Tenant also agrees to carry
"All Risk" Insurance (as understood in the insurance industry) including
sprinkler leakage coverage for the full replacement value covering all
Tenant's goods and merchandise, trade fixtures, furniture, signs, decorations,
furnishings, wall covering, floor covering, draperies, equipment, and all other
items and personal property of Tenant located on or within the Demised
Premises. Replacement value is understood to mean the cost to replace
without deduction for depreciation. A deductible of not more than $1,000
will be permitted for "All Risk" Insurance. Whenever, in Landlord's
reasonable judgment, good business practice or change in conditions indicate
a need for additional or different types of insurance, Tenant shall upon
request obtain the insurance at its own expense. Tenant shall provide
Landlord with copies of the insurance policies or certificates evidencing
that the insurance is in full force and effect and indicating the terms of
the insurance. Tenant further agrees to obtain certificates of insurance
evidencing Commercial General Liability Insurance, including Completed
Operations, Motor Vehicle Liability Insurance and Worker's Compensation
Insurance and Employer's Liability Insurance from any contractor or
subcontractor engaged for repairs or maintenance during the Term. Tenant
shall be responsible for the maintenance of the plate glass in or on the
Demised Premises and shall carry at its expense during the Term hereof
Plate Glass Insurance with a deductible of not more than $250. If Tenant should
fail to comply with the foregoing requirement relating to insurance, Landlord
may obtain such insurance and Tenant shall pay to Landlord on demand as
additional rental hereunder the premium cost thereof plus interest at the
maximum contractual rate (but in no event to exceed 1-1/2% per month) from
the date of payment by Landlord until repaid by Tenant.

ARTICLE 16

WAIVER OF LIABILITY; MUTUAL WAIVER OF SUBROGATION

16.1 Landlord and Landlord's agents and employees shall not be liable
to Tenant, nor to Tenant's employees, agents or visitors, nor to any other
person whomsoever, for any injury to person or damage to property caused by
the Demised Premises or other portions of the Shopping Center becoming out of
repair or by defect or failure of any structural element of the Demised
Premises or of any equipment, pipes or wiring, or broken glass, or by the
backing up of drains, or by gas, water, stream, electricity, or oil leaking,
escaping or flowing into the Demised Premises (except where due to Landlord's
willful failure to make repairs required to be made by Landlord hereunder,
after the expiration of a reasonable time after written notice to Landlord of
the need for such repairs), nor shall Landlord be liable to Tenant, nor to
Tenant's employees, agents or visitors, nor to any other person whomsoever,
for any loss or damage that may be occasioned by or through the acts or
omissions of other tenants of the Shopping Center or of any other persons
whomsoever, excepting only duly authorized employees and agents of Landlord.
Landlord shall not be held responsible in any way on account of any
construction, repair or reconstruction (including widening) of any private or
public roadways, walkways or utility lines.

16.2 Landlord shall not be liable to Tenant or to Tenant's employees,
agents, contractors, invitees, customers, subcontractors, licensees, and
concessionaires, or to any other person whomsoever, for any injury to person
or damage to property on or about the Demised Premises or the Common Area
caused by the negligence or misconduct of Tenant, its employees, agents,
contractors, invitees, customers, subtenants, licensees or concessionaires,
or of any other person entering the Shopping Center under express or implied
invitation of Tenant (with the exception of customers in the Common Area), or
arising out of the use of the Demised Premises by Tenant and the conduct of
its business therein, or arising out of any breach or default by Tenant in the
performance of its obligations under this lease; and Tenant hereby agrees to
indemnify Landlord and hold Landlord harmless from any loss, expense or claims
arising out of such damage or injury. Furthermore, Tenant agrees to indemnify
Landlord and hold Landlord harmless from and against any and all liability,
claims, demands, causes of action of any kind and nature arising or growing out
of or in any way connected with Tenant's use, occupancy, management or control
of the Demised Premises and Tenant's operations or activities in the Shopping
Center.

16.3 Landlord and Tenant each hereby release the other from any and all
liability or responsibility to the other, or to any other party claiming
through or under them by way of subrogation or otherwise, for any loss or
damage to property caused by a casualty which is insurable under standard fire
and extended coverage insurance; provided, however, that this mutual waiver
shall be applicable only with respect to a loss or damage occurring during the
time when property insurance policies, which are readily available in the
marketplace, contain a clause or permit an endorsement to the effect that any
such release shall not adversely affect or impair the policy or the right of
the insured party to receive proceeds under the policy; provided, further, that
this release shall not be applicable to the portion of any damage which is not
reimbursed by the damaged party's insurer because of the "deductible" in the
damaged party's insurance coverage. The release specified in this Section 16.3
is cumulative with any releases or exculpations which may be contained in other
provisions of this lease.

ARTICLE 17

DAMAGES BY CASUALTY

17.1 Tenant shall give immediate written notice to the Landlord of any
damage caused to the Demised Premises by fire or other casualty.

17.2 In the event that the Demised Premises shall be damaged or
destroyed by fire or other casualty insurable under standard fire and extended
coverage insurance and Landlord does not elect to terminate this lease as
hereinafter provided, Landlord shall proceed with reasonable diligence and at
its sole cost and expense to rebuild and repair the Demised Premises. In the
event (a) the building in which the Demised Premises are located is destroyed
or substantially damaged by a casualty not covered by Landlord's insurance, or
(b) such building is destroyed or rendered untenantable to an extent in excess
of fifty percent (50%) of the first floor area by a casualty covered by
Landlord's insurance, or (c) the holder of a mortgage, deed of trust or other
lien on such building at the time of the casualty elects, pursuant to such
mortgage, deed of trust or other lien, to require the use of all or part of
Landlord's insurance proceeds in satisfaction of all or part of the
indebtedness secured by the mortgage, deed of trust or other lien, then
Landlord may elect either to terminate this lease or to proceed to rebuild and
repair the Demised Premises. Landlord shall give written notice to Tenant of
such election within sixty (60) days after the occurrence of such casualty and,
if it elects to rebuild and repair, shall proceed to do so with reasonable
diligence and at its sole cost and expense.

17.3 Landlord's obligation to rebuild and repair under this Article 17
shall in any event be limited to restoring one of the following (as may be
applicable): (a) if this lease does not include an attached exhibit describing
Landlord's initial construction responsibility ("Landlord's Work"), restoring
the Demised Premises to substantially the condition in which the same existed
prior to such casualty, exclusive of any alterations, additions, improvements,
fixtures and equipment installed by Tenant; or (b) restoring Landlord's Work,
as described in the applicable exhibit attached to this lease (if such an
exhibit is attached), to substantially the same condition in which the same
existed prior to the casualty. Tenant agrees that promptly after completion of
such work by Landlord, Tenant will proceed with reasonable diligence and at
Tenant's sole cost and expense to restore, repair and replace all alterations,
additions, improvements, fixtures, signs and equipment installed by Tenant,
or, if an exhibit describing Tenant's Work is attached hereto, all items of
Tenant's Work as described in such exhibit, as the case may be.

17.4 Tenant agrees that during any period of reconstruction or repair of
the Demised Premises, it will continue the operation of its business within the
Demised Premises to the extent practicable. During the period from the
occurrence of the casualty until Landlord's repairs are completed, the minimum
guaranteed rental shall be reduced to such extent as may be fair and reasonable
under the circumstances; however, there shall be no abatement of the percentage
rental and other charges provided for herein.

ARTICLE 18

EMINENT DOMAIN

18.1 If more than thirty percent (30%) of the floor area of the Demised
Premises should be taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or by
private purchase in lieu thereof, this lease shall terminate and the rent shall
be abated during the unexpired portion of this lease, effective on the date
physical possession is taken by the condemning authority.

18.2 If less than thirty percent (30%) of the floor area of the Demised
Premises should be taken as aforesaid, this lease shall not terminate; however,
the minimum guaranteed rental (but not percentage rental) payable hereunder
during the unexpired portion of this lease shall be reduced in proportion to
the area taken, effective on the date physical possession is taken by the
condemning authority. Following such partial taking, Landlord shall make all
necessary repairs or alterations to the remaining premises or, if an exhibit
describing Landlord's Work is attached to this lease, all necessary repairs
within the scope of Landlord's Work as described in such exhibit, as the case
may be, required to make the remaining portions of the Demised Premises an
architectural whole, but in no event shall Landlord be required to expend an
amount greater than the award actually received by Landlord in connection with
such taking.

18.3 If any part of the Common Area should be taken as aforesaid, this
lease shall not terminate, nor shall the rent payable hereunder be reduced,
except that either Landlord or Tenant may terminate this lease if the area of
the Common Area remaining following such taking plus any additional parking
area provided by Landlord in reasonable proximity to the Shopping Center shall
be less than seventy percent (70%) of the area of the Common Area immediately
prior to the taking. Any election to terminate this lease in accordance with
this provision shall be evidenced by written notice of termination delivered to
the other party within thirty (30) days after the date physical possession is
taken by the condemning authority.

18.4 All compensation awarded for any taking (or the proceeds of private
sale in lieu thereof) of the Demised Premises or Common Area shall be the
property of Landlord, and Tenant hereby assigns its interest in any such award
to Landlord; provided, however, Landlord shall have no interest in any award
made to Tenant for Tenant's moving and relocation expenses or for the loss of
Tenant's fixtures and other tangible personal property if a separate award for
such items is made to Tenant as long as such separate award does not reduce the
amount of the award that would otherwise be awarded to Landlord.

18.5 Notwithstanding anything to the contrary, Landlord may terminate
the lease with no further liability to Tenant if (i) 50% or more of the gross
leasable area of the Shopping Center is taken or (ii) if following any taking
Landlord's mortgagee elects to require Landlord to apply all or a portion of
such award to the outstanding indebtedness.

ARTICLE 19

ASSIGNMENT AND SUBLETTING

19.1 Tenant shall not assign or in any manner transfer this lease or
any estate or interest therein, or sublet the Demised Premises or any part
thereof, or grant any license, concession or other right of occupancy of any
portion of the Demised Premises without the prior written consent of Landlord.
Landlord agrees that it will not withhold consent in a wholly unreasonable
and arbitrary manner (as further explained in Section 28.4 of this lease);
however, in determining whether or not to grant its consent, Landlord shall
be entitled to take into consideration factors such as Landlord's desired
tenant mix, the reputation and net worth of the proposed transferee, and the
then current market conditions (including market rentals). In addition,
Landlord shall also be entitled to charge Tenant a reasonable fee for
processing Tenant's request. Consent by Landlord to one or more assignments
or sublettings shall not operate as a waiver of Landlord's rights as to any
subsequent assignments and sublettings. In all events, Landlord can refuse
to consent to an assignment or sublease if there shall exist any uncured
default of Tenant or, a matter which will become a default with the passage
of time.

19.2 If Tenant is a corporation, partnership or other entity and if
at any time during the term of this lease the person or persons who own a
majority of either the outstanding voting rights or the outstanding ownership
interests of Tenant at the time of the execution of this lease cease to own a
majority of such voting rights or ownership interests (except as a result of
transfers by devise or descent), the loss of a majority of such voting rights
or ownership interests shall be deemed an assignment of this lease by Tenant
and, therefore, subject in all respects to the provisions of Section 19.1
above. The previous sentence shall not apply, however, if at the time of the
execution of this lease, Tenant is a corporation and the outstanding voting
shares of capital stock of Tenant are listed on a recognized security exchange
or over-the-counter market.

19.3 Notwithstanding anything to the contrary contained herein, and
without prejudice to Landlord's right to require a written assumption from
each assignee, any person or entity to whom this lease is assigned including,
without limitation, assignees pursuant to the provisions of the Bankruptcy
Code, 11 U.S.C. Paragraph 101 et seq. (the "Bankruptcy Code") shall
automatically be deemed, by acceptance of such assignment or sublease or
by taking actual or constructive possession of the Demised Premises, to
have assumed all obligations of Tenant arising under this lease effective
as of the earlier of the date of such assignment or sublease or the date
on which the assignee or sublessee obtains possession of the Demised
Premises. In the event this lease is assigned to any person or entity
pursuant to the provisions of the Bankruptcy Code, any and all monies or
other consideration payable or otherwise to be delivered in connection with
such assignment shall be paid or delivered to Landlord and shall remain the
exclusive property of Landlord and not constitute the property of Tenant or
Tenant's estate within the meaning of the Bankruptcy Code. All such money or
other consideration not paid or delivered to Landlord shall be held in trust
for the benefit of Landlord and shall be promptly paid or delivered to
Landlord.

19.4 Notwithstanding any assignment or subletting, Tenant and any
guarantor of Tenant's obligations under this lease shall at all times remain
fully responsible and liable for the payment of the rent herein specified and
for compliance with all of its other obligations under this lease (even if
future assignments and sublettings occur subsequent to the assignment or
subletting by Tenant, and regardless of whether or not Tenant's approval has
been obtained for such future assignments and sublettings). Moreover, in the
event that the rental due and payable by a sublessee (or a combination of the
rental payable under such sublease plus any bonus or other consideration
therefore or incident thereto) exceeds the rental payable under this lease, or
if with respect to a permitted assignment, permitted license or other transfer
by Tenant permitted by Landlord, the consideration payable to Tenant by the
assignee, licensee or other transferee exceeds the rental payable under this
lease, then Tenant shall be bound and obligated to pay Landlord all such excess
rental and other excess consideration within ten (10) days following receipt
thereof by Tenant from such sublessee, assignee, licensee or other transferee,
as the case may be. Finally, in the event of an assignment or subletting, it
is understood and agreed that all rentals paid to Tenant by an assignee or
sublessee shall be received by Tenant in trust for Landlord, to be forwarded
immediately to Landlord without offset or reduction of any kind; and upon
election by Landlord such rentals shall be paid directly to Landlord as
specified in Section 4.2 of this lease (to be applied as a credit and offset
to Tenant's rental obligation).

19.5 Tenant shall not mortgage, pledge or otherwise encumber its
interest in this lease or in the Demised Premises.

19.6 In the event of the transfer and assignment by Landlord of its
interest in this lease and in the building containing the Demised Premises,
Landlord shall thereby be released from any further obligations hereunder,
and Tenant agrees to look solely to such successor in interest of the Landlord
for performance of such obligations. Any security given by Tenant to secure
performance of Tenant's obligations hereunder may be assigned and transferred
by Landlord to such successor in interest and Landlord shall thereby be
discharged of any further obligation relating thereto.

19.7 Notwithstanding anything to the contrary contained herein, Landlord
shall have the option, in its sole discretion, in the event of any proposed
subletting or assignment, to terminate this lease, or in the case of a proposed
subletting of less than the entire Demised Premises, to recapture the portion
of the Demised Premises to be sublet, as of the date the subletting or
assignment is to be effective. The option shall be exercised by Landlord
giving Tenant written notice within sixty (60) days following Landlord's
receipt of Tenant's written notice as required above. If this lease shall
be terminated with respect to the entire Demised Premises, the Term shall end
on the date stated in Tenant's notice as the effective date of the sublease
or assignment as if that date had been originally fixed in this lease for
the expiration of the Term. If Landlord recaptures only a portion of the
Demised Premises, the minimum guaranteed rental during the unexpired Term
shall abate, proportionately, based on the minimum guaranteed rental due
as of the date immediately prior to such recapture and percentage rent
shall be calculated using the adjusted minimum guaranteed rental.

ARTICLE 20

SUBORDINATION; ATTORNMENT; ESTOPPELS

20.1 Tenant accepts this lease subject and subordinate to any mortgage,
deed of trust or other lien presently existing or hereafter placed upon the
Shopping Center or any portion of the Shopping Center which includes the
Demised Premises, and to any renewals and extensions thereof. Tenant agrees
that any mortgagee shall have the right at any time to subordinate its
mortgage, deed of trust or other lien to this lease; provided, however,
notwithstanding that this lease may be (or is made to be) superior to a
mortgage, deed of trust or other lien, the mortgagee shall not be liable
for prepaid rentals, security deposits and claims accruing during or with
respect to Landlord's ownership, any amendment or modification made to this
lease without its prior written consent or any offsets or claims against
Landlord; further provided that the provisions of a mortgage, deed of trust
or other lien relative to the right of the mortgagee with respect to
proceeds arising from an eminent domain taking (including a voluntary
conveyance by Landlord) and provisions relative to proceeds arising from
insurance payable by reason of damage to or destruction of the Demised
Premises shall be prior and superior to any contrary provisions contained
in this instrument with respect to the payment or usage thereof. Landlord
is hereby irrevocably vested with full power and authority to subordinate
this lease to any mortgage, deed of trust or other lien hereafter placed
upon the Demised Premises or the Shopping Center as a whole, and Tenant
agrees upon demand to execute such further instruments subordinating this
lease as Landlord may request. If the holder of any mortgage, indenture or
deed of trust or similar instrument (each a "Mortgagee") succeeds to
Landlord's interest in the Demised Premises, Tenant shall, upon request
of any such Mortgagee, automatically become the tenant of and attorn to
and recognize such Mortgagee as the Landlord under this lease and will pay
to it all rents and other amounts payable by Tenant under this lease, in
accordance with the applicable terms of this lease. Notwithstanding that
the foregoing provisions of this Section are self-operative, upon request
of Landlord or any Mortgagee, Tenant shall execute and deliver to Landlord
and to such Mortgagee a subordination and attornment agreement in recordable
form confirming the foregoing and otherwise in form and substance acceptable
to Landlord and such Mortgagee.

20.2 Tenant may not exercise any remedies for default by Landlord
hereunder unless and until Landlord and the holder(s) of any indebtedness
secured by mortgage, deed of trust or other lien shall have received written
notice of such default and a reasonable time (not less than 90 days) shall
thereafter have elapsed without the default having been cured.

20.3 Tenant agrees that it will from time to time upon request by
Landlord execute and deliver to Landlord a written statement addressed to
Landlord (and to a party[ies] designated by Landlord), which statement shall
identify Tenant and this lease, shall certify that this lease is unmodified
and in full force and effect (or if there have been modifications, that the
same is in full force and effect as so modified), shall confirm that Landlord
is not in default as to any obligations of Landlord under this lease (of if
Landlord is in default, specifying any default), shall confirm Tenant's
agreements contained above in this Article 20, and shall contain such other
information or confirmations as Landlord may reasonably require. Landlord is
hereby irrevocably appointed and authorized as the agent and attorney-in-fact
of Tenant to execute and deliver any such written statement on Tenant's behalf
if Tenant fails to do so within seven (7) days after the delivery of a written
request from Landlord to Tenant.


ARTICLE 21

DIRECTION OF TENANT'S ENERGIES

21.1 Tenant acknowledges that Tenant's monetary contribution to Landlord
(in the form of rentals) and Tenant's general contribution to commerce within
the Shopping Center (also important in Landlord's determination to execute this
lease with Tenant) will be substantially reduced if, during the term of this
lease, either Tenant or any person, firm or corporation, directly or indirectly
controlling, controlled by or under common control with Tenant shall directly
or indirectly operate, manage, conduct or have any interest in any
establishment within commercial proximity of the Shopping Center.
Accordingly, Tenant agrees that if during the term of this lease, either
Tenant or any person, firm or corporation, directly or indirectly controlling,
controlled by or under common control with Tenant (and also, in the event
Tenant is a corporation, if any officer or director thereof or shareholder
owning more than ten percent (10%) of the outstanding stock thereof, or
parent, subsidiary or related or affiliated corporation) either directly
or indirectly commences operation of any store selling or otherwise sells
or offers for sale any merchandise or services of the type to be sold by
Tenant in the Demised Premises as provided in Section 1.1 (r) hereof or
similar or related items, or in any manner competes with the business
provided herein to be conducted by Tenant at the Demised Premises, within
a straightline radius of one (1) mile of the Shopping Center, which Tenant
acknowledges is a reasonable area for the purpose of this provision, then
in such event, the rental payable by Tenant hereunder shall be adjusted as
follows:

(a) thereafter the minimum guaranteed rental shall be one hundred
ten percent (110%) of the amount stipulated in Section 1.1 (m) and
Section 4.1 of this lease.

The above adjustment in rental reflects the estimate of the parties as
to the damages which Landlord would be likely to incur by reason of the
diversion of business and customer traffic from the Demised Premises and
Shopping Center to such other store within such radius, as a proximate result
of the establishment of such other store. This provision shall not apply to
any existing store presently being operated by Tenant as of the date hereof,
provided there is no increase in the size, merchandise mix or trade name of
such commercial establishment. Finally, Tenant agrees that Landlord may waive,
for any reason whatsoever, all rights granted to Landlord pursuant to this
Section 21.1 and may sever this Section from the remainder of this lease
(thereby keeping the remainder of this lease unmodified and in full force and
effect).

ARTICLE 22

DEFAULT BY TENANT AND REMEDIES

22.1 The following events shall be deemed to be events of default by
Tenant under this lease:

(a) Tenant shall fail to pay any installment of rental or any
other obligation under this lease involving the payment of money and
such failure shall continue for a period of ten (10) days after such
payment shall become due and payable.

(b) Tenant shall fail to comply with any provision of this lease,
other than as described in subsection (a) above, and either shall not
cure such failure within fifteen (15) days after written notice thereof
to Tenant, or shall cure that particular failure but shall again fail
to comply with the same provision of the lease within three (3) months
after Landlord's written notice.

(c) Tenant or any guarantor of Tenant's obligations under this
lease shall become insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors.

(d) Tenant or any guarantor of Tenant's obligations under this
lease shall file a petition under any section or chapter of the federal
Bankruptcy Code, as amended, or under any similar law or statue of the
United States or any state thereof; or Tenant or any guarantor of
Tenant's obligations under this lease shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant or any guarantor of
Tenant's obligations under this lease thereunder.

(e) A receiver or Trustee shall be appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or
any guarantor of Tenant's obligations under this lease.

(f) Tenant shall desert or vacate or shall commence to desert or
vacate the Demised Premises or any substantial portion of the Demised
Premises or at any time prior to the last month of the lease term shall
remove or attempt to remove, without the prior written consent of
Landlord, all or a substantial amount of Tenant's goods, wares,
equipment, fixtures, furniture, or other personal property.

(g) Tenant shall do or permit to be done anything which creates
a lien upon the Demised Premises or upon all or any part of the Shopping
Center.

(h) Any transfer of a substantial portion of the assets of Tenant,
or any incurrence of a material obligation by Tenant, unless such
transfer or obligation is undertaken or incurred in the ordinary course
of Tenant's business or in good faith for equivalent consideration, or
with Landlord's consent.

(i) The default of any guarantors of Tenant's obligations hereunder
under any guaranty of this lease, or the attempted repudiation or
revocation of any such guaranty.

22.2 Upon the occurrence of any such event of default, Landlord shall
have the option to pursue anyone or more of the following remedies:

(a) Without any further notice or demand whatsoever, Tenant shall
be obligated to reimburse Landlord for the damages suffered by Landlord
as a result of the event of default, plus interest on such amount at the
maximum contractual rate which could legally be charged in the event of
a loan of such amount to Tenant (but in no event to exceed 1-1/2% per
month); and Landlord may pursue a monetary recovery from Tenant. In this
regard, and without limiting the generality of the immediately preceding
sentence, it is agreed that if Tenant fails to install a sign on the
front of the Demised Premises on or promptly after the Commencement Date
of this lease, or if Tenant fails to open for business as required in
this lease or, having opened for business, subsequently deserts or
vacates the Demised Premises or otherwise ceases to conduct business in
the Demised Premises as required in this lease, then Landlord at its
option may seek monetary recovery for the loss of Tenant's anticipated
contribution to commerce within the Shopping Center; moreover, Landlord
and Tenant further agree that inasmuch as the exact amount of damages
would be difficult to determine, liquidated damages will be due monthly
(i) in an amount equal to fifteen percent (15%) of the minimum
guaranteed rental payable for that month (Le., Tenant will pay minimum
guaranteed rental equal to 115% of the amount specified in Section 1.1
(m) and Section 4.1 of this lease) if Tenant opens for business but
fails to install a sign and (ii) in an amount equal to twenty-five
percent (25%) of the monthly guaranteed rental payable for the month
if Tenant fails to open for business as required in this lease or,
having opened for business, subsequently deserts or vacates the Demised
Premises or otherwise ceases to conduct business in the Demised Premises
as required by this lease (including, but not limited to, failing to
comply with the requirements of Section 9.1 of this lease).

(b) Without any further notice or demand whatsoever, Landlord may
take anyone or more of the actions permissible at law to insure
performance by Tenant of Tenant's covenants and obligations under this
lease. In this regard, and without limiting the generality of the
immediately preceding sentence, it is agreed that if Tenant fails to
open for business as required in this lease or, having opened for
business, deserts or vacates the Demised Premises, Landlord may enter
upon and take possession of such premises in order to protect them from
deterioration and continue to demand from Tenant the monthly rentals
and other charges provided in this lease, without any obligation to
relet; however, if Landlord does, at its sole discretion, elect to relet
the Demised Premises, such action by Landlord shall not be deemed as an
acceptance of Tenant's surrender of the Demised Premises unless Landlord
expressly notifies Tenant of such acceptance in writing pursuant to this
subsection (b), Tenant hereby acknowledging that Landlord shall
otherwise be reletting as Tenant's agent and Tenant furthermore hereby
agreeing to pay to Landlord on demand any deficiency that may arise
between the monthly rentals and other charges provided in this lease
and that actually collected by Landlord. It is further agreed in this
regard that in the event of any default described in subsection (b) of
Section 22.1 of this lease, Landlord shall have the right to enter upon
the Demised Premises by force if necessary without being liable for
prosecution or any claim for damages therefor, and do whatever Tenant
is obligated to do under the terms of this lease; and Tenant agrees to
reimburse Landlord on demand for any expenses which Landlord may incur
in thus effecting compliance with Tenant's obligations under this lease,
and Tenant further agrees that Landlord shall not be liable for any
damages resulting to the Tenant from such action. Finally, it is agreed
that in the event of any default described in subsection (g) of Section
22.1 of this lease, Landlord may pay or bond around such lien, whether
or not contested by Tenant; and in such event Tenant agrees to
reimburse Landlord on demand for all costs and expenses incurred in
connection with any such action, with Tenant further agreeing that
Landlord shall in no event be liable for any damages or claims
resulting from such action.

(c) Accelerate and declare the entire remaining unpaid minimum
guaranteed rental and additional rent for the balance of the term of
this lease to be immediately due and payable.

(d) Landlord may terminate this lease by written notice to Tenant,
in which event Tenant shall immediately surrender the Demised Premises
to Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy which Landlord may have for possession or
arrearages in rent (including any late charge or interest which may have
accrued pursuant to Section 4.7 of this lease), enter upon and take
possession of the Demised Premises and expel or remove Tenant and any
other person who may be occupying said premises or any part thereof,
without being liable for prosecution or any claim for damages therefor.
Tenant hereby waives any statutory requirement of prior written notice
for filing eviction or damage suits for nonpayment of rent. In addition,
Tenant agrees to pay to Landlord on demand the amount of all loss and
damage which Landlord may suffer by reason of any termination effected
pursuant to this subsection (c), said loss and damage to be determined
by either of the following alternative measures of damages:

(i) Until Landlord is able, through reasonable efforts, the
nature of which efforts shall be at the sole discretion of Landlord,
to relet the Demised Premises under terms satisfactory to Landlord in
its sole discretion, Tenant shall pay to Landlord on or before the
first day of each calendar month the monthly rentals and other
charges provided in this lease. If and after the Demised Premises
have been relet by Landlord, Tenant shall pay to Landlord on the
twentieth (20th) day of each calendar month the difference between
the monthly rentals and other charges provided in this lease for
such calendar month and that actually collected by Landlord for
such month. If it is necessary for Landlord to bring suit in order
to collect any deficiency, Landlord shall have a right to allow
such deficiencies to accumulate and to bring an action on several
or all of the accrued deficiencies at one time. Any such suit
shall not prejudice in any way the right of Landlord to bring
a similar action for any subsequent deficiency or deficiencies.
Any amount collected by Landlord from subsequent tenants for any
calendar month in excess of the monthly rentals and other charges
provided in this lease, shall be credited to Tenant in reduction
of Tenant's liability for any calendar month for which the amount
collected by Landlord will be less than the monthly rentals and
other charges provided in this lease; but Tenant shall have no
right to such excess other than the above-described credit.

(ii) When Landlord desires, Landlord may demand a final
settlement. Upon demand for a final settlement, Landlord shall have
a right to, and Tenant hereby agrees to pay, the difference between
the total of all monthly rentals and other charges provided in this
lease for the remainder of the term and the reasonable rental value
of the Demised Premises for such period, such difference to be
discounted to present value at a rate equal to the rate of interest
which is allowed by law in the state where the Shopping Center in
located when the parties to a contract have not agreed on any
particular rate of interest (or, in the absence of such law, at the
rate of six percent per annum).

If Landlord elects to exercise the remedy prescribed in subsection
22.2(b) above, this election shall in no way prejudice Landlord's right at any
time thereafter to cancel said election in favor of the remedy prescribed in
subsection 22.2(d) above, provided that at the time of such cancellation Tenant
is still in default. Similarly, if Landlord elects to compute damages in the
manner prescribed by subsection 22.2(d)(i) above, this election shall in no way
prejudice Landlord's right at any time thereafter to demand a final settlement
in accordance with subsection 22.2(d)(ii) above. Pursuit of any of the above
remedies shall not preclude pursuit of any other remedies prescribed in other
sections of this lease and any other remedies provided by law. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon an event
of default shall not be deemed or construed to constitute a waiver of such
default.

(e) All other remedies available at law or in equity.

22.3 It is expressly agreed that in determining "the monthly rentals
and other charges provided in this lease," as that term is used throughout
subsections 22.2(c)(i) and 22.2(c)(ii) above, there shall be added to the
minimum guaranteed rental (as specified in Sections 1.1 (m) and 4.1 of this
lease) a sum equal to the charges for maintenance of the Common Area (as
specified in Sections 1.1 (o) and 7.4 of this lease), the payments for taxes,
charges and insurance (as specified in Article 6 of this lease) plus one
twenty-fourth (1/24) of the total of all percentage rentals required to be
paid by Tenant (pursuant to Section 4.4 of this lease) because of gross sales
during the two (2) full calendar years immediately preceding the date Landlord
initiated action pursuant to said subsections (or, if two full calendar years
have not then elapsed, to the corresponding fraction of all percentage rentals
required to be paid because of gross sales during the period commencing with
the Commencement Date of this lease and concluding with the date on which
Landlord initiated such action).

22.4 It is further agreed that, in addition to payments required
pursuant to subsections 22.2(b) and 22.2(c) above, Tenant shall compensate
Landlord for all expenses incurred by Landlord in repossession (including,
among other expenses, any increase in insurance premiums caused by the
vacancy of the Demised Premises), all expenses incurred by Landlord in
reletting (including, among other expenses, repairs, remodeling,
replacements, advertisements and brokerage fees), all concessions granted
to a new tenant upon reletting (including, among other concessions,
renewal options), all losses incurred by Landlord as a direct or indirect
result of Tenant's default (including, among other losses, any adverse
reaction by Landlord's mortgagee or by other tenants or potential tenants
of the Shopping Center) and a reasonable allowance for Landlord's
administrative efforts, salaries and overhead attributable directly or
indirectly to Tenant's default and Landlord's pursuing the rights and
remedies provided herein and under applicable law.

22.5 Landlord may restrain or enjoin any breach or threatened breach of
any covenant, duty or obligation of Tenant herein contained without the
necessity of proving the inadequacy of any legal remedy or irreparable harm.
The remedies of Landlord hereunder or otherwise available at law or in equity
shall be deemed cumulative and not exclusive of each other.

22.6 If on account of any breach or default by Tenant in its obligations
hereunder, Landlord shall employ an attorney to present, enforce or defend any
of Landlord's rights or remedies hereunder, Tenant agrees to pay any reasonable
attorneys' fees incurred by Landlord in such connection.

22.7 Intentionally Deleted.

22.8 Tenant acknowledges its obligation to deposit with Landlord the sum
stated in Section 1.1 (q) above, to be held by Landlord without interest as
security for the performance by Tenant of Tenant's covenants and obligations
under this lease. Tenant agrees that such deposit may be commingled with
Landlord's other funds and is not an advance payment of rental or a measure of
Landlord's damages in case of default by Tenant. Upon the occurrence of any
event of default by Tenant, Landlord may, from time to time, without prejudice
to any other remedy provided herein or provided by law, use such fund to the
extent necessary to make good any arrears of rentals and any other damage,
injury, expense or liability caused to Landlord by such vent of default, and
Tenant shall pay to Landlord on demand the amount so applied in order to
restore the security deposit to its original amount. If Tenant is not then in
default hereunder, any remaining balance of such deposit shall be returned by
Landlord to Tenant upon termination of this lease (subject to the provisions
of Section 19.6 above).

22.9 In the event of any default described in subsection (d) of Section
22.1 of this lease, any assumption and assignment must conform with the
requirements of the Bankruptcy Code which provides, in part, that the Landlord
must be provided with adequate assurances (i) of the source of rent and other
consideration due under this lease; (ii) that the financial condition and
operating performance of any proposed assignee and its guarantors, if any,
shall be similar to the financial condition and operating, performance of
Tenant and its guarantors, if any, as of the date of execution of this lease;
(iii) that any percentage rent due under this lease will not decline
substantially; (iv) that any assumption or assignment is subject to all of the
provisions of this lease (including, but not limited to, restrictions as to
use) and will not breach any such provision contained in any other lease,
financing agreement or other agreement relating to the Shopping Center; and
(v) that any assumption or assignment will not disrupt any tenant mix or
balance in the Shopping Center.

(a) In order to provide Landlord with the assurances contemplated
by the Bankruptcy Code, Tenant must fulfill the following obligations, in
addition to any other reasonable obligations that Landlord may require.
Before any assumption of this lease is effective: (i) all defaults under
subsection (a) of Section 22.1 of this lease must be cured within ten (10)
days after the date of assumption; (ii) all other defaults under Section
22.1 of this lease other than under subsection (d) of Section 22.1 must be
cured within fifteen (15) days after the date of assumption; (iii) all
actual monetary losses incurred by Landlord (including, but not limited
to, reasonable attorneys' fees) must be paid to Landlord within ten (10)
days after the date of assumption; and (iv) Landlord must receive within
ten (10) days after the date of assumption a security deposit in the
amount of six (6) months minimum guaranteed rental (using the minimum
guaranteed rent in effect for the first full month immediately following
the assumption) and an advance prepayment of minimum guaranteed rent in
the amount of three (3) months minimum guaranteed rent (using the
minimum guaranteed rent in effect for the first full month immediately
following the assumption), both sums to be held by Landlord in accordance
with Section 22.8 above and deemed to be rent under this lease for the
purposes of the Bankruptcy Code as amended and from time to time in
effect.

(b) In the event this lease is assumed in accordance with the
requirements of the Bankruptcy Code and this lease, and is subsequently
assigned, then, in addition to any other reasonable obligations that Landlord
may require and in order to provide Landlord with the assurances contemplated
by the Bankruptcy Code, Landlord shall be provided with (i) a financial
statement of the proposed assignee prepared in accordance with generally
accepted accounting principles consistently applied, though on a cash basis,
which reveals a net worth in an amount sufficient, in Landlord's reasonable
judgment, to assure the future performance by the proposed assignee of
Tenant's obligations under this lease; or (ii) a written guaranty by one or
more guarantors with financial ability sufficient to assure the future
performance of Tenant's obligations under this lease, such guaranty to be
in form and content satisfactory to Landlord and to cover the performance of
all of Tenant's obligations under this lease.

ARTICLE 23

LANDLORD'S CONTRACTUAL SECURITY INTEREST

23.1 In addition to the statutory Landlord's lien, Landlord shall have
at all times a valid security interest to secure payment of all rentals and
other sums of money becoming due hereunder from Tenant, and to secure payment
of any damages or loss which Landlord may suffer by reason of the breach by
Tenant of any covenant, agreement or condition contained herein, upon all
goods, wares, equipment, fixtures, furniture, improvements and other personal
property of Tenant presently, or which may hereafter be, situated on the
Demised Premises, and all proceeds therefrom, and such property shall not be
removed without the consent of landlord until all arrearages in rent as well
as any and all other sums of money then due to landlord or to become due to
landlord hereunder shall first have been paid and discharged and all the
covenants, agreements and conditions hereof have been fully complied with and
performed by Tenant. Upon the occurrence of an event of default by Tenant,
Landlord may, in addition to any other remedies provided herein, enter upon
the Demised Premises and take possession of any and all goods, wares,
equipment, fixtures, furniture, improvements and other personal property
of Tenant situated on the Demised Premises, without liability for trespass
or conversion, and sell the same at public or private sale, with or without
having such property at the sale, after giving Tenant reasonable notice of
the time and place of any public sale or of the time after which any private
sale is to be made, at which sale the landlord or its assigns may purchase
unless otherwise prohibited by law. Unless otherwise provided by law, and
without intending to exclude any other manner of giving Tenant reasonable
notice, the requirement of reasonable notice shall be met if such notice
is given in the manner prescribed in this lease at least five (5) days
before the time of sale. Any sale made pursuant to the provisions of
this Section shall be deemed to have been a public sale conducted in a
commercially reasonable manner if held in the Demised Premises or where
the property is located after the time, place and method of sale and a
general description of the types of property to be sold have been advertised
in a daily newspaper published in the county in which the property is located,
for five (5) consecutive days before the date of the sale. The proceeds from
any such disposition, less any and all expenses connected with the taking
of possession, holding and selling of the property (including reasonable
attorneys' fees and legal expenses), shall be applied as a credit against
the indebtedness secured by the security interest granted in this Section.
Any surplus shall be paid to Tenant or as otherwise required by law;
Tenant shall pay any deficiencies forthwith. Tenant hereby agrees that a
carbon, photographic or other reproduction of this lease shall be
sufficient to constitute a financing statement. Tenant nevertheless
agrees that upon request by landlord, Tenant will execute and deliver
to landlord a financing statement in form sufficient to perfect the
security interest of landlord in the aforementioned property and
proceeds thereof under the provision of the Uniform Commercial Code
(or corresponding state statutes) in force in the state in which the
property is located, as well as any other state the laws of which
landlord may at any time consider to be applicable; moreover, landlord
is hereby irrevocably vested with a power of attorney from Tenant to
execute any and all such financing statements on behalf of Tenant.

23.2 Notwithstanding Section 23.1, landlord agrees that it will
subordinate its security interest and landlord's lien to the security
interest of Tenant's supplier or institutional financial source for as
long as the rental account of Tenant under this lease is current (or is
brought current), provided that landlord approves the transaction as being
reasonably necessary to Tenant's operations at the Demised Premises, and
further provided that the subordination must be limited to a specified
transaction and specified items of the fixtures, equipment or inventory
involved in the transaction.

ARTICLE 24

HOLDING OVER

24.1 In the event Tenant remains in possession of the Demised Premises
after the expiration or earlier termination of this lease and without the
execution of a new lease, it shall be deemed to be occupying said premises as a
tenant at sufferance at a rental equal to the rental (including any percentage
rental) herein provided plus one hundred percent (100%) of such amount and
otherwise subject to all the conditions, provisions and obligations of this
lease insofar as the same are applicable to a tenancy at sufferance. Neither
any provision hereof nor acceptance by Landlord of rent after such expiration
or earlier termination shall be deemed a consent to a holdover hereunder or
result in a renewal of this lease or an extension of the Term. Notwithstanding
any provision to the contrary contained herein, (i) Landlord expressly reserves
the right to require Tenant to surrender possession of the Demised Premises
upon the expiration of the Term of this lease or upon the earlier termination
hereof, the right to reenter the Demised Premises, and the right to assert any
remedy at law or in equity to evict Tenant and collect damages in connection
with any such holding over, and (ii) Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all claims, demands, actions,
losses, damages, obligations, costs and expenses, including, without
limitation, attorneys' fees incurred or suffered by landlord by reason of
Tenant's failure to surrender the Demised Premises on the expiration or
earlier termination of this lease in accordance with the provisions of this
lease.

ARTICLE 25

NOTICES

25.1 Wherever any notice is required or permitted hereunder, such
notice shall be in writing. Any notice or document required or permitted to
be delivered hereunder shall be deemed to be delivered when actually received
by the designated addressee or, if earlier and regardless of whether actually
received or not, when deposited in the United States mail, postage prepaid,
certified mail, return receipt requested, addressed to the parties hereto at
the respective addresses set out in Section 1.1 above (or at landlord's option,
to Tenant at the Demised Premises), or at such other addresses as they have
theretofore specified by written notice.

25.2 If and when included within the term "Landlord" as used in this
instrument there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such notice
specifying some individual at some specific address for the receipt of notices
and payments to the Landlord; if and when included within the term "Tenant" as
used in this instrument there are more than one person, firm or corporation,
all shall jointly arrange among themselves for their joint execution of such
a notice specifying some individual at some specific address for the receipt
of notices and payment to Tenant. All parties included within the terms
"Landlord" and "Tenant," respectively, shall be bound by notice and payments
given in accordance with the provisions of this Article to the same effect as
if each had received such notice or payment. In addition, Tenant agrees that
actions by Landlord and notices to Tenant hereunder may be taken or given by
Landlord's attorney, property manager or other agent.

ARTICLE 26

COMMISSIONS; ADVICE FROM AGENT

26.1 Landlord shall pay to Trammell Crow Company, Agent (as set forth
in Section 1.1 (g) hereof), a commission for negotiating this lease, in
accordance with a separate agreement. Tenant and Landlord warrant that they
have had no dealings with any broker or agent in connection with this lease,
other than Trammell Crow Company, Agent, whose commission shall be paid as
hereinabove provided. Landlord and Tenant covenant to pay, hold harmless and
indemnify each other from and against any and all cost, expense or liability
for any compensation, commissions or charges claimed by any broker or agent
utilized by the indemnitor with respect to this lease or the negotiation
hereof.


26.2 Tenant hereby acknowledges that at or prior to the time of the
execution of this lease, Agent delivered to Tenant an agency disclosure
statement in compliance with applicable law, and Agent has advised Tenant by
this writing that Tenant should have an abstract covering the real estate
upon which the Shopping Center and the Demised Premises are located examined
by an attorney of Tenant's own selection or, at Tenant's option, that Tenant
should obtain a leasehold owner's policy of title insurance.

26.3 Tenant also acknowledges that Agent has advised Tenant that
because Agent has no expertise with respect to toxic or otherwise hazardous
substances, Tenant should, prior to executing this lease, have qualified
experts conduct proper inspections of the Demised Premises in order to
determine whether or not toxic or otherwise hazardous substances exist in,
under or around the Demised Premises.

ARTICLE 27

REGULATIONS; INDEMNIFICATION

27.1 Landlord and Tenant acknowledge that there are now in effect and
may hereafter be enacted or go into effect federal, state, county and municipal
laws, orders, rules, directives and regulations relating to or affecting the
Demised Premises or the Shopping Center, concerning the impact on the
environment of construction, land use, maintenance and operation of structures,
toxic or otherwise hazardous substances, and the conduct of business,
including, without limitation, the Americans With Disabilities Act of 1990,
the occupational Safety and Health Act, and the Clean Air Act and regulations
issued thereunder (all of the foregoing, as amended from time to time, being
herein called the "Regulations"). Tenant will not cause or permit to be caused,
any act or practice, by negligence, omission or otherwise, that would adversely
affect the environment or do anything or permit anything to be done that would
violate any of said Regulations. Moreover, Tenant shall have no claim against
Landlord by reason of any changes Landlord may make in the Shopping Center or
the Demised Premises pursuant to said Regulations or any charges imposed upon
Tenant, Tenant's customers or other invitees pursuant to same.

27.2 If, by reason of any Regulations, the payment to, or collection by,
Landlord of any rental or other charge (collectively referred to hereinafter as
"lease Payments") payable by Tenant to Landlord pursuant to the provisions of
this lease is in excess of the amount (the "Maximum Charge") permitted thereof
by the Regulations, then Tenant, during the period (the "Freeze Period") when
the Regulations shall be in force and effect shall not be required to pay, nor
shall Landlord be permitted to collect, any sum in excess of the Maximum
Charge. Upon the earlier of (i) the expiration of the Freeze Period, or (ii)
the issuance of a final order or judgment of a court of competent jurisdiction
declaring the Regulations to be invalid or not applicable to the provisions
of this lease, Tenant, to the extent not then proscribed by law, and
commencing with the first day of the month immediately following, shall pay
to Landlord as additional rental, in equal monthly installments during the
balance of the term of this lease, a sum equal to the cumulative difference
between the Maximum Charges and the lease Payments during the Freeze Period.
If any provisions of this Section, or the application thereof, shall to any
extent be declared to be invalid and unenforceable, the same shall not be
deemed to affect any of the other provisions of this section or of this
lease, all of which shall be deemed valid and enforceable to the fullest
extent permitted by law.

27.3 Tenant acknowledges that it will be wholly responsible for any
accommodations or alterations which need to be made to the Demised Premises
to accommodate disabled employees and customers of Tenant, including without
limitation, the requirements under the Americans with Disabilities Act. Any
alterations made to the Demised Premises in order to comply with either statute
must be made solely at Tenant's expense and in compliance with all terms and
requirements of the lease. Landlord agrees to make reasonable efforts to ensure
that the Common Area is in compliance with the applicable disability access
laws as of the date hereof. If a complaint is received by Landlord from either
a private or government complaint regarding disability access to the Common
Area of the Shopping Center, Landlord reserves the right to mediate, contest,
comply with or otherwise respond to such complaint as Landlord deems to be
reasonably prudent under the circumstances. If Landlord decides to make
alterations to the Common Area of the Shopping Center in response to any such
complaints or in response to legal requirements Landlord considers to be
applicable to the Common Area of the Shopping Center, the cost of such
alterations shall be included in the Common Area maintenance charge under the
lease. Landlord and Tenant agree that so long as the governmental entity or
entities charged with enforcing such statutes have not expressly required
Landlord to take specific action to effectuate compliance with such statutes,
Landlord shall be conclusively deemed to be in compliance with such statutes.
Tenant agrees to provide Landlord with written notice should Tenant become
aware of a violation of such statutes with respect to the Common Area. In the
event Landlord is required to take action to effectuate compliance with such
statutes, Landlord shall have a reasonable period of time to make the
improvements and alterations necessary to effectuate such compliance, which
period of time shall be extended by any time necessary to cause any necessary
improvements and alterations to be made.

27.4 Tenant shall indemnify, defend and hold harmless Landlord,
Landlord's asset manager, Landlord's subasset manager, Landlord's partners, any
subsidiary or affiliate of Landlord and the officers, directors, shareholders,
partners, employees, managers, independent contractors, attorneys and agents
of any of the foregoing (collectively, the "Indemnitees") from and against any
and all claims, demands, causes of action, judgments, costs and expenses, and
all losses and damages (including consequential and punitive damages) arising
from Tenant's use of the Demised Premises or from the conduct of its business
or from any activity, work, or other acts or things done, permitted or suffered
by Tenant in or about the Demised Premises, and shall further indemnify, defend
and hold harmless the Indemnitees from and against any and all claims arising
from any breach or default in the performance of any obligation on Tenant's
part to be performed under the terms of this lease, or arising from any act.
Omission or negligence or willful or criminal misconduct of Tenant, or any
officer, agent, employee, independent contractor, guest, or invitee thereof,
and from all costs, attorneys' fees and disbursements, and liabilities incurred
in the defense of any such claim or any action or proceeding which may be
brought against, out of or in any way related to this lease. Upon notice from
Landlord, Tenant shall defend any such claim, demand. Cause of action or suit
at Tenant's expense by counsel satisfactory to Landlord in its sole discretion.
As a material part of the consideration to Landlord for this lease, Tenant
hereby assumes all risk of damage to property or injury to persons in, upon or
about the Demised Premises from any cause, and Tenant hereby waives all claims
with respect thereto against Landlord. Tenant shall give immediate notice to
Landlord in case of casualty or accidents in the Demised Premises. The
provisions of this Article 27 shall survive the expiration or sooner
termination of this lease.

27.5 All personal property of Tenant, including goods, wares,
merchandise, inventory, trade fixtures and other personal property of Tenant,
shall be stored at the sole risk of Tenant. Landlord or its agents shall not
be liable for any loss or damage to persons or property resulting from fire.
Explosion, falling plaster, steam, gas, electricity, water or rain which may
leak from any part of the Shopping Center or from the pipes, appliances or
plumbing works therein or from the roof, street or subsurface or from any other
places resulting from dampness or any other cause whatsoever, or from the act
or negligence of any other tenant or any officer, agent, employee, contractor
or guest of any such tenant, except personal injury caused by or due to the
gross negligence or willful misconduct of Landlord. Landlord or its agents
shall not be liable for interference with the electrical service,
ventilation, or for any latent defect in the Demised Premises.

ARTICLE 28

HAZARDOUS MATERIALS

28.1 During the term of this lease, Tenant shall comply with all
Environmental laws and Environmental Permits (each as defined in Section 28.7
hereof) applicable to the operation or use of the Demised Premises, will cause
all other persons occupying or using the Demised Premises to comply with all
such Environmental Laws and Environmental Permits, will immediately payor cause
to be paid all costs and expenses incurred by reason of such compliance, and
will obtain and renew all Environmental Permits required for operation or use
of the Demised Premises.

28.2 Tenant shall not generate, use, treat, store, handle, release or
dispose of, or permit the generation, use, treatment, storage, handling,
release or disposal of Hazardous Materials (as defined in Section 28.7 hereof)
on the Demised Premises, or the Shopping Center, or transport or permit the
transportation of Hazardous Materials to or from the Demised Premises or the
Shopping Center except for limited quantities used or stored at the Demised
Premises and required in connection with the routine operation and maintenance
of the Demised Premises, and then only upon the written consent of Landlord
and in compliance with all applicable Environmental Laws and Environmental
Permits.

28.3 At any time and from time to time during the term of this lease,
Landlord may perform, at Tenant's sole cost and expense, an environmental site
assessment report concerning the Demised Premises, prepared by an environmental
consulting firm chosen by Landlord, indicating the presence or absence of
Hazardous Materials caused or permitted by Tenant and the potential cost of any
compliance, removal or remedial action in connection with any such Hazardous
Materials on the Demised Premises. Tenant shall grant and hereby grants to
Landlord and its agents access to the Demised Premises and specifically grants
Landlord an irrevocable non-exclusive license to undertake such an assessment;
and the cost of such assessment shall be immediately due and payable on demand.

28.4 Tenant will immediately advise Landlord in writing of any of the
following: (1) any pending or threatened Environmental Claim (as defined in
Section 28.7 hereof) against Tenant relating to the Demised Premises or the
Shopping Center; (2) any condition or occurrence on the Demised Premises or
the Shopping Center that (a) results in noncompliance by Tenant with any
applicable Environmental law, or (b) could reasonably be anticipated to form
the basis of an Environmental Claim against Tenant or Landlord or the Demised
Premises; (3) any condition or occurrence on the Demised Premises or any
property adjoining the Demised Premises that could reasonably be anticipated
to cause the Demised Premises to be subject to any restrictions on the
ownership, occupancy, use or transferability of the Demised Premises under
any Environmental law; and (4) the actual or anticipated taking of any removal
or remedial action by Tenant in response to the actual or alleged presence of
any Hazardous Material on the Demised Premises or the Shopping Center. All
such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and
Tenant's response thereto. In addition, Tenant will provide Landlord with
copies of all communications regarding the Demised Premises with any
government or governmental agency relating to Environmental laws, all such
communications with any person relating to Environmental Claims, and such
detailed reports of any such Environmental Claim as may reasonably be
requested by Landlord.

28.5 Tenant will not change or permit to be changed the present use of
the Demised Premises unless Tenant shall have notified Landlord thereof in
writing and Landlord shall have determined, in its sole and absolute
discretion, that such change will not result in the presence of Hazardous
Materials on the Demised Premises except for those described in Section
28.2 above.


28.6 (a) Tenant agrees to defend, indemnify and hold harmless the
Indemnitees (as defined in Section 21.1) from and against all obligations
(including removal and remedial actions), losses, claims, suits, judgments,
liabilities, penalties, damages (including consequential and punitive
damages), costs and expenses (including attorneys' and consultants' fees
and expenses) of any kind or nature whatsoever that may at any time be
incurred by, imposed on or asserted against such Indemnitees directly or
indirectly based on, or arising or resulting from (a) the actual or alleged
presence of Hazardous Materials on the Shopping Center which is caused or
permitted by Tenant and (b) any Environmental Claim relating in any way to
Tenant's operation or use of the Demised Premises (the "Hazardous Materials
Indemnified Matters"). The provisions of this Article 28 shall survive the
expiration or sooner termination of this lease.

(b) To the extent that the undertaking in the preceding paragraph
may be unenforceable because it is violative of any law or public policy,
Tenant will contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Hazardous
Materials Indemnified Matters incurred by the Indemnitees.

(c) All sums paid and costs incurred by Landlord with respect to
any Hazardous Materials Indemnified Matter shall bear interest at the lesser
of (i) eighteen (18%) percent per annum, or (ii) the maximum legal rate of
interest allowed by the state in which the Shopping Center is located, from
the date so paid or incurred until reimbursed by Tenant, and all such sums
and costs shall be immediately due and payable on demand.

28.7 (a) "Hazardous Materials" means (i) petroleum or petroleum
products, natural or synthetic gas, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, and radon gas; (ii)
any substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "contaminants" or "pollutants," or words of similar import,
under any applicable Environmental law; and (iii) any other substance
exposure which is regulated by any governmental authority; (b)
"Environmental law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now or hereafter
in effect and in each case as amended, and any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801 et seq.; the Clean Water Act, 33 U.S.C. Section 1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean
Air Act, 42 U.S.C. Section 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. Section 300f et seq.; the Atomic Energy Act, 42 U.S.C. Section 2011
et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136 ill et seq.; the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; (c) "Environmental Claims" means any and all
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation,
investigations, proceedings, consent orders or consent agreements relating
in any way to any Environmental law or any Environmental Permit, including
without limitation (i) any and all Environmental Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental law
and (ii) any and all Environmental Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment;
(d) "Environmental Permits" means all permits, approvals, identification
numbers, licenses and other authorizations required under any applicable
Environmental law.

ARTICLE 29

MISCELLANEOUS

29.1 Nothing in this lease shall be deemed or construed by the parties
hereto, nor by any third party, as creating the relationship of principal and
agent or of partnership or of joint venture between the parties hereto, it
being understood and agreed that neither the method of computation of rent,
nor any other provision contained herein, nor any acts of the parties hereto,
shall be deemed to create any relationship between the parties hereto other
than the relationship of Landlord and tenant.

29.2 Tenant shall not for any reason withhold or reduce Tenant's
required payments of rentals and other charges provided in this lease, it
being agreed that the obligations of Landlord under this lease are independent
of Tenant's obligations except as may be otherwise expressly provided. The
immediately preceding sentence shall not be deemed to deny Tenant the ability
of pursuing all rights granted it under this lease or at law; however, at the
direction of Landlord, Tenant's claims in this regard shall be litigated in
proceedings different from any litigation involving rental claims or other
claims by Landlord against Tenant (i.e., each party may proceed to a separate
judgment without consideration, counterclaim or offset as to the claims
asserted by the other party).

29.3 The liability of Landlord, Landlord's asset or subasset manager,
any agent of Landlord, or any of their respective partners, officers,
directors, shareholders, or employees to Tenant for or in respect of any
default by Landlord under the terms of this lease or in respect of any other
claim or cause of action shall be limited to the interest of Landlord in the
Shopping Center, and Tenant agrees to look solely to Landlord's interest in
the Shopping Center for the recovery and satisfaction of any judgment against
Landlord, any agent of Landlord, or any of their respective officers,
directors, shareholders, and employees. Any action based upon such liabilities
shall be commenced within six (6) months following the date of said assignment
of this lease by Landlord and no such action shall be brought thereafter. In
no event shall Landlord have any liability to Tenant for consequential damages
such as, but not limited to, lost profits.

29.4 In all circumstances under this lease where the prior consent of
one party (the "consenting party"), whether it be Landlord or Tenant, is
required before the other party (the "requesting party") is authorized to
take any particular type of action, such consent shall not be withheld in
a wholly unreasonable and arbitrary manner, unless otherwise permitted under
the terms hereof; however, the requesting party agrees that its exclusive
remedy if it believes that consent has been withheld improperly (including,
but not limited to, consent required from Landlord pursuant to Section 9.2 or
Section 19.1) shall be to institute litigation either for a declaratory
judgment or for a mandatory injunction requiring that such consent be given
(with the requesting party hereby waiving any claim for damages, attorneys'
fees or any other remedy unless the consenting party refuses to comply with
a court order or judgment requiring it to grant its consent).

29.5 Whenever a period of time is herein prescribed for action to be
taken by Landlord, Landlord shall not be liable or responsible for, and there
shall be excluded from the computation of any such period of time, any delays
due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the reasonable control of Landlord.

29.6 Intentionally Deleted.

29.7 From time to time during the term of this lease, Landlord may, by
written notice to Tenant, substitute for the Demised Premises other space that
has an area, finish-out and improvements at least equal to that of the Demised
Premises and is located in a comparable or more desirable position within the
Shopping Center, as mutually agreed upon by both Tenant and Landlord, and is
within similar proximity to the anchor tenant (the "Substitution Space").
Tenant may either accept possession of the Substitution Space in its "as is"
condition or require Landlord to alter the Substitution Space in the same
manner as the Demised Premises were altered or were to be altered. If Landlord
exercises its substitution right, Landlord shall reimburse Tenant for Tenant's
reasonable out-of-pocket expenses for moving Tenant's furniture, equipment,
vault, safe deposit boxes, supplies and telephone equipment from the Demised
Premises to the Substitution Space.

29.8 If any provision of this lease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this lease shall not be affected thereby.

29.9 If this lease is in fact a sublease, Tenant accepts this lease
subject to all of the terms and conditions of the underlying lease under which
Landlord holds the Shopping Center as lessee. Tenant covenants that it will
do no act or thing which would constitute a violation by Landlord of its
obligation under such underlying lease; provided, however, that Tenant's
agreement in this regard is premised on Landlord's assurances to the effect
that the terms of this lease do not violate such underlying lease.

29.10 The laws of the State of Florida shall govern the interpretation,
validity, performance and enforcement of this lease. Venue for any action under
this lease shall be the county in which rentals are due pursuant to Section 4.2
and Section 1.1 of this lease.

29.11 The captions used herein are for convenience only and do not limit
or amplify the provisions hereof.

29.12 Whenever herein the singular number is used, the same shall
include the plural, and words of any gender shall include each other
gender.

29.13 All covenants and obligations contained within this lease shall
bind and inure to the benefit of Landlord, its successors and assigns, and
shall be binding upon Tenant, its permitted successors and assigns.

29.14 This lease contains the entire agreement between the parties, and
no rights are created in favor of either party other than as specified or
expressly contemplated in this lease. No brochure, rendering, information or
correspondence shall be deemed to be a part of this agreement unless
specifically incorporated herein by reference. In addition, no agreement shall
be effective to change, modify or terminate this lease in whole or in part
unless such is in writing and duly signed by the party against whom enforcement
of such change, modification or termination is sought.

29.15 LANDLORD AND TENANT HEREBY ACKNOWLEDGED THAT THEY ARE NOT RELYING
UPON ANY BROCHURE, RENDERING, INFORMATION, REPRESENTATION OR PROMISE OF THE
OTHER, OR OF THE AGENT OR COOPERATING AGENT, EXCEPT AS MAY BE EXPRESSLY SET
FORTH IN THIS LEASE.


29.16 No waiver of any of the terms, covenants, provisions, conditions,
rules and regulations imposed by this lease, and no waiver of any legal or
equitable relief or remedy, shall be implied by the failure of Landlord to
assert any rights, declare any forfeiture, or for any other reason. No waiver
of any of the terms, provisions, covenants, conditions, rules and regulations
shall be valid unless it shall be in writing signed by Landlord. No waiver by
Landlord or forgiveness of performance by Landlord for one or more tenants
shall constitute a waiver or forgiveness of performance in respect to Tenant.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval under this lease shall not be deemed to render unnecessary
the obtaining of Landlord's consent to or approval of any subsequent act of
Tenant. No act or thing done by Landlord or Landlord's agents during the term
of this lease shall be deemed a termination of this lease or an acceptance of
a surrender of the Demised Premises, unless in writing signed by Landlord.
The delivery of the keys to any employee or agent of Landlord shall not operate
as a termination of the lease or a surrender of the Demised Premises. The
acceptance of any rent by Landlord following a breach of this lease by Tenant
shall not constitute a waiver by Landlord of such breach or any other breach
unless such waiver is expressly stated in a writing signed by Landlord.
Landlord is entitled to accept, receive and cash or deposit any payment
made by Tenant for any reason or purpose or in any amount whatsoever, and
apply the same at Landlord's option to any obligation of Tenant and the
same shall not constitute payment of any amount owed except that to which
Landlord as applied the same. No endorsement or statement on any check or
letter of Tenant shall be deemed an accord and satisfaction or otherwise
recognized for any purpose whatsoever. The acceptance of any such check
or payment shall be without prejudice to Landlord's right to recover any
and all amounts owed by Tenant hereunder and Landlord's right to pursue
any other available remedy.

29.17 Tenant shall deliver and surrender to Landlord possession of the
Demised Premises (including all of Tenant's permanent work upon and to the
Demised Premises, all replacements and all fixtures permanently attached to
the Demised Premises) immediately upon the expiration of the Term or the
termination of this lease in as good condition and repair as the same were
on the delivery date (loss by any insured casualty and ordinary wear and tear
only excepted) and deliver the keys at the office of Landlord or Landlord's
agent; provided, however, that upon Landlord's request made at least thirty
(30) days prior to the end of the Term, or the date Tenant is otherwise
required to vacate the Demised Premises, Tenant shall remove all fixtures and
equipment affixed to the Demised Premises by Tenant, and repair and restore
the Demised Premises to their condition on the delivery date (loss by any
insured casualty and ordinary wear and tear only excepted), at Tenant's sole
expense. The removal shall be performed prior to the earlier of the end of
the Term or the date Tenant is required to vacate the Demised Premises.

29.18 Tenant shall not record this lease. Without the prior written
consent of Landlord, Tenant shall not record any memorandum of this lease,
short form or other reference to this lease.

29.19 The submission of this lease for examination does not constitute
a reservation of or option for the Demised Premises or any other space in the
Shopping Center, and shall not vest any right in Tenant. This lease shall
become effective as a lease only upon its execution and delivery by the parties.

29.20 LANDLORD AND TENANT HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS
OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THE DEMISED
PREMISES (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS
LEASE OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS LEASE WAS FRAUDULENTLY
INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT
FOR LANDLORD TO ENTER AND ACCEPT THIS LEASE.

29.21 Tenant acknowledges that it has reviewed the regulations enacted
by the Occupational Safety and Health Administration ("OSHA"), as set forth
in Sections 1910.1001 and 1926.1101 of Title 29 of the Code of Federal
Regulations (the "OSHA Regulations") and agrees that in addition to its other
obligations hereunder, Tenant shall comply with such regulations. Tenant
acknowledges that it has been notified of the presence of asbestos-containing
materials ("ACM") and materials designated by OSHA as presumed asbestos-
containing materials ("PACM") located in the Demised Premises. According to
Landlord's current records, without further inquiry, the materials set forth
on Schedule A attached hereto have been identified as ACM. In addition, the
following materials, if located in properties constructed prior to 1981, must,
in accordance with the OSHA Regulations, be treated as PACM: any thermal
system insulation and surfacing material that is sprayed on, troweled on, or
applied in some other manner, as well as any resilient flooring material
installed in 1980 or earlier. Upon written request by Tenant, Landlord shall
provide Tenant with copies of any information pertaining to ACM or PACM in
Landlord's files.

29.22 Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of that exceed Federal
and State guidelines have been found in buildings in Florida. Additional
information regarding and testing may be obtained from your county public
health unit.

29.23 This lease consists of twenty-nine Articles and Exhibits "A"
through "C." With the exception of Article 7, in the event any provision of
an exhibit or other attached page shall be inconsistent with a provision in
the body of the lease, the provision as set forth in the exhibit shall be
deemed to control.

29.24 In connection with Tenant's execution of this Lease, Tenant
agrees to execute an agreement confirming its acceptance of the Demised
Premises and such other terms as may be required by Landlord in Landlord's
sole discretion.

[REMAINDER OF PAGE IS LEFT INTENTIONALLY BLANK.]







EXECUTED as of the latest date accompanying a signature by Landlord or
Tenant below.

WITNESS: LANDLORD:

HFJ, LLC, as beneficiary of the KLS
FLAMINGO LAND TRUST

_________________________ By: _______________________________
Name: _____________________________
_________________________ Title: ____________________________
Date of Signature: ________________

WITNESS: TENANT:
COMMERCIAL BANK OF FLORIDA, INC.,
a Florida corporation

_________________________ By: _______________________________
Name: _____________________________
_________________________ Title: ____________________________
Date of Signature: ________________
Taxpayer Identification No.: _______










EXHIBIT "A"
DESCRIPTION OF SHOPPING CENTER




SITE PLAN















EXHIBIT "B"

CONSTRUCTION: TENANT ACCEPTANCE OF SPACE "AS IS"

ARTICLE I. GENERAL

Tenant hereby accepts the Demised Premises "as is" and "ready for occupancy."
Prior to any modification of the existing premises, Tenant shall adhere to
the following:


ARTICLE II. PRE-CONSTRUCTION OBLIGATIONS

A. Plans, diagrams, schedules and other data relating to work to be
performed by Tenant must be furnished by Tenant to Landlord complete,
sufficient to obtain a building permit, and ready for Landlord's
consideration and final approval within fifteen (15) days after
execution of this lease (or at such other time as may be specified by
this exhibit). Without limiting the generality of the immediately
preceding sentence, Tenant's submissions must include a floor plan, a
reflected ceiling plan, a plumbing plan, elevations of walls and a
fixture plan. All drawings shall be at scale of either 1/8" or 1/4".
Tenant shall reimburse Landlord for any loss or extra cost which may
result to Landlord by reason of failure on the part of Tenant to
submit any such plans, diagrams, schedules, specifications and/or
other data within said period of time.

B. Tenant shall secure Landlord's written approval of all designs, plans,
specifications, materials, contractors and contracts for work to be
performed by Tenant before beginning the work (including following
whatever "work letter" instructions, if any, which Landlord may
deliver to Tenant in connection with the work), and shall secure all
necessary licenses and permits to be used in performing the work.
Tenant's finished work shall be subject to Landlord's approval and
acceptance.

C. The insurance requirements under Article 15 of the lease and the
indemnity requirements under Article 16 of the lease shall apply
during the construction contemplated in this exhibit, and Tenant
shall provide evidence of appropriate insurance coverage prior to
beginning any of Tenant's work. Tenant shall provide Landlord with
evidence of insurance covering both Tenant and Tenant's contractor
against damage to their personal property, as well as against third-
party liability and workers' compensation claims arising out of
all construction and associated activities. All policies of insurance
shall be subject to Landlord's prior approval and shall be endorsed
showing Landlord as an additional named insured (or if permitted by
Landlord, may provide a waiver of subrogation against Landlord).

ARTICLE III. DESCRIPTION OF TENANT'S WORK

A. Signs: Tenant shall pay for all signs and the installation thereof,
including the electrical hook-up, subject to the provisions of Section
13.1 of this lease.

B. Utilities: All meters or other measuring devices in connection with
utility services shall be provided by Tenant. All service deposits
shall be made by Tenant at Tenant's expense.

C. All work undertaken by Tenant shall be Tenant's expense and shall not
damage the building or any part thereof. Any roof penetration shall be
performed by Landlord's roofer or, at Landlord's option, by a bonded
roofer approved in advance by Landlord. The work shall be begun only
after Landlord has given consent, which consent shall in part be
conditioned upon Tenant's plans, to include materials acceptable to
Landlord, in order to prevent injury to the roof and to spread the
weight of the equipment being installed. Tenant shall also be
responsible for obtaining and paying for professional inspections of
any structural work (including, without limitation, any roof work or
concrete work).

D. All work undertaken by Tenant shall be awarded to Landlord's
contractor unless, before any construction begins, Tenant chooses
and receives Landlord's written approval for another contractor
to complete Tenant's work.

INITIALED: _________________

LANDLORD: __________________

TENANT: ____________________






EXHIBIT C

SHORT FORM OF LEASE

Prepared by and when recorded,
return to:
______________________
______________________
______________________


SHORT TERM LEASE TO PROVIDE
NOTICE THAT THE INTEREST OF LANDLORD IS NOT SUBJECT
TO LIENS FOR IMPROVEMENTS MADE BY TENANT

__________________________________("Landlord") has entered into a lease (the
"lease") made as of __________, 20____ with _________________________
("Tenant"), for certain premises (the "Premises") known as Suite No. _____ in
the project located on the land in _____________ County, Florida and more
particularly described in Exhibit A attached hereto and made a part hereof
(which land, together with associated buildings and improvements commonly
known as the _______________, are herein collectively called the "Complex").

The [anticipated] Commencement Date of the term of the lease is
_____________. The [anticipated] expiration date of the initial term of the
lease is _____________.

In accordance with Section 713.10, Florida Statutes, Landlord and Tenant
hereby provide notice that the terms of the lease expressly provide that the
interest of Landlord in the Complex, including but not limited to the Premises,
shall not be subject to liens for improvements made by or on behalf of Tenant.

At any time hereafter and in the exercise of the sole discretion of
Landlord, Landlord may terminate and release this Short Form lease by filing
in the public records of _____________ County, Florida a document executed by
Landlord purporting to do the same, without any joinder or consent by Tenant
required. This Short Form lease, and any release or termination of the same,
shall not affect the lease and the rights and obligations of the parties
thereunder. As used herein, "Landlord" means the named Landlord or its
successors or assigns.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Short Form lease
effective as of ______________,2O____.


WITNESSES: LANDLORD:

____________________________
a(n) _______________________

By: ________________________
a(n) ___________________

____________________________ By: ___________________
Print Name:________________ Name: _________________
Title: ________________

____________________________
Print Name:________________ Address: ___________________
___________________



WITNESSES: TENANT:

____________________________
a(n) _______________________

By: ________________________
a(n) ___________________

____________________________ By: ___________________
Print Name:________________ Name: _________________
Title: ________________

____________________________
Print Name:________________ Address: ___________________
___________________






STATE OF ___________ )
)
COUNTY OF ___________ )

The foregoing instrument was acknowledged before me this ____ day of ______,
20___, By ____________________, as ____________________ of __________________,
a _____________________, and ____________________ of ________________________,
a _____________________, on behalf of said ________________________ and
____________. He/She [check one:] ______ is personally known to me,
_________________ has produced ______________________ as identification.


____________________________________
Notary Public, State of ____________
Name Printed: ______________________
My Commission Expires: _____________
Commission No. _____________________


STATE OF ___________ )
)
COUNTY OF ___________ )


The foregoing instrument was acknowledged before me this ______ day of
____________, 20___, by ________________________, as ____________________ of
____________________________________, a _____________________ and ____________
of _________________________, a ________________________, on behalf of said
___________________________ and ____________________________. He/She [check
one:] ___________________ is personally known to me, _______________ has
produced ____________________ as identification.


____________________________________
Notary Public, State of ____________
Name Printed: ______________________
My Commission Expires: _____________
Commission No. _____________________







SCHEDULE "A"

LIST OF ASBESTOS-CONTAINING MATERIALS











Exhibit 13.1

2002 Annual Report to Shareholders of Commercial Bankshares, Inc.





Page 1 Letter to Shareholders


Page 2 Summary Consolidated Financial Information


Page 4 Management's Discussion and Analysis


Page 18 Report of Independent Certified Public Accountants

______________________________________________________________________________

Corporate Profile
______________________________________________________________________________

Commercial Bankshares, Inc. is a bank holding company whose subsidiary,
Commercial Bank of Florida, operates fourteen branches in two of Florida's
fastest growing counties: Miami-Dade and Broward. Since its inception in
1988, the Company has grown to $699 million in assets through acquisitions
and internal growth. Lead by seasoned South Florida bankers, the Company
is committed to extending its personalized "hometown" banking services to
other communities in the South Florida area.
_______________________________________________________________________________



Page 19 Consolidated Financial Statements


Page 23 Notes to Consolidated Financial Statements


Page 39 Directors and Officers of the Company and Subsidiary Bank


Page 40 Subsidiary Bank Locations










To Our Shareholders

It gives me great pleasure to present you with the Company's results for
2002. The year was marked with outstanding achievements for our Company.
Most notable among these achievements are record 2002 earnings and
extraordinary internal deposit growth. Other achievements include
increased dividends, growth in asset size, excellent asset quality and
continued enhancement to the value of our franchise.

Net income rose to a record $9.12 million, a 30% increase over 2001 earnings
of $7.02 million. Diluted earnings per share were $1.92 for 2002, as compared
to $1.51 for 2001, after adjustment for a 5-for-4 stock split announced in the
fourth quarter of 2002 and effective January 3, 2003. Return on average assets
closed the year at 1.46% and return on average equity was 16.87%. These
outstanding financial results, during an otherwise difficult year for the
economy and equity markets, once again emphasize the strength and depth of our
Company.

Earnings for the fourth quarter of 2002 were a record $2.46 million, a 35%
increase over earnings for the same period in 2001 of $1.82 million. Diluted
earnings per share were $0.51 for the fourth quarter of 2002, as compared to
$0.39 for the same period in 2001, after adjustment for the above-mentioned
stock split. Fourth quarter earnings represent a 1.42% return on average
assets and a 16.99% return on average equity.

Internal deposit growth was outstanding, with total deposits reaching $581
million at December 31, 2002. This was an increase of 25% from the prior year
closing balance of $463 million. Total assets increased 23% to close the year
at $699 million, as compared to $569 million one year ago. We have absorbed
this exceptional deposit growth without adding additional overhead, thus
improving the value of our franchise. We will continue to target growth in
deposits in the best and most cost effective manner based on current market
conditions and competition.

The Company's cash dividends declared during 2002 rose to a record $.73 per
share, an 11% increase over 2001 cash dividends declared of $.66 per share.
Dividends have increased steadily and significantly since 1995, when dividends
were $.06 per share. The Company's strong earnings and solid capital position
support the increased dividends to our shareholders.

During 2002, management faced the challenge of attracting new high-quality
loans at levels that will not compromise future earnings. Intense rate
competition in the lending area slowed the portfolio growth, as refinancing
run-off matched new growth in the portfolio. To that end, the loan portfolio
balance remained level with the prior year. Asset quality remained strong,
with no non-performing loans as of December 31, 2002.

As we begin a new year, allow me to reconfirm the commitment that the Board of
Directors and I have to you, our shareholders and customers. We will work
diligently and with the utmost of integrity to ensure that our decisions are in
the best interest of the Company. We look forward to the challenges ahead and
to guiding your Company to continued success.

As always, I sincerely welcome your calls and letters.

Joseph W. Armaly
Chairman of the Board and
Chief Executive Officer





Selected Five Year Data
(In Thousands, Except Per Share Data)
As of or For the Years Ended December 31,
2002 2001 2000 1999 1998
____ ____ ____ ____ ____
Income Statement Data:
Interest income $ 36,253 $ 37,262 $ 35,502 $ 30,210 $ 28,140
Interest expense 11,658 16,366 16,113 11,947 11,478
Net interest income 24,595 20,896 19,389 18,263 16,662
Provision for loan losses 170 875 435 930 230
Net interest income after
provision for loan losses 24,425 20,021 18,954 17,333 16,432
Non-interest income 3,255 3,495 2,828 3,621 2,668
Non-interest expense 14,550 13,667 12,751 13,413 12,207
Income before income taxes 13,130 9,849 9,031 7,541 6,893
Income tax expense 4,014 2,832 2,716 2,085 2,033
Net income $ 9,116 $ 7,017 $ 6,315 $ 5,456 $ 4,860


Per Share Data:
Basic earnings per share $ 2.01 $ 1.55 $ 1.38 $ 1.14 $ 1.01
Diluted earnings per share $ 1.92 $ 1.51 $ 1.35 $ 1.11 $ 0.98
Book value at year end $ 12.84 $ 11.08 $ 9.99 $ 8.98 $ 9.36
Cash dividends declared per
common share $ 0.73 $ 0.66 $ 0.59 $ 0.47 $ 0.37


Balance Sheet Data:
Cash and cash equivalents $ 60,533 $ 68,200 $ 35,015 $ 39,085 $ 35,233
Investment securities
available for sale 182,831 111,138 143,487 125,236 119,072
Investment securities
held to maturity 88,307 24,664 37,215 43,392 57,430
Loans, net 345,766 346,251 285,641 244,016 199,277
Total assets 698,524 568,928 522,524 475,170 432,345
Deposits 581,226 462,506 422,923 388,447 350,415
Borrowed funds 53,705 53,436 51,166 40,794 33,978
Stockholders' equity 58,605 50,125 45,055 42,781 44,737






Selected Financial Ratios
As of or For the Years Ended December 31,
2002 2001 2000 1999 1998
____ ____ ____ ____ ____

Return on average assets 1.46% 1.28% 1.28% 1.20% 1.16%
Return on average equity 16.87% 14.61% 15.43% 12.35% 11.14%
Net yield on average
interest-earning assets (1) 4.38% 4.28% 4.48% 4.61% 4.56%
Allowance for loan losses
to total loans 1.35% 1.32% 1.31% 1.32% 1.20%
Allowance for loan losses
as a percentage of
non-accrual loans n/a 557% n/a 375% 459%
Asset quality ratio
(non-performing loans and
other real estate owned
to total assets) 0% 0.15% 0% 0.18% 0.12%
Average interest-earning
assets to average
interest-bearing liabilities 125% 126% 125% 127% 128%
Non-interest expense to
average total assets 2.33% 2.49% 2.59% 2.94% 2.92%
Net interest income to
non-interest expense 169% 153% 152% 136% 137%
Risk-based capital ratios:
Tier I capital 13.15% 12.03% 12.82% 14.88% 16.19%
Total capital 14.62% 13.54% 14.30% 16.34% 17.70%
Leverage ratio (2) 7.66% 8.24% 8.17% 9.23% 9.52%
Equity to total assets 8.39% 8.81% 8.62% 9.00% 10.35%


(1) Represents net interest income on a fully tax-equivalent basis as a
percentage of average interest-earning assets.
(2) The leverage ratio is defined as the ratio of Tier I capital to total
assets.











Corporate and Earnings Overview

Commercial Bankshares, Inc. (the Company), a Florida corporation organized in
1988, is a bank holding company whose wholly-owned subsidiary and principal
asset is the Commercial Bank of Florida (the Bank). The Company, through its
ownership of the Bank, is engaged in a commercial banking business. Its
primary source of earnings is derived from income generated by its ownership
and operation of the Bank. The Bank is a Florida chartered banking corporation
with fourteen branch locations throughout Miami-Dade and Broward counties in
South Florida. The Bank primarily focuses on providing personalized banking
services to businesses and individuals within the market areas where its
banking offices are located.

The Company reported 2002 net income of $9.12 million, a 30% increase over 2001
net income of $7.02 million. Net income for 2000 was $6.31 million. The
increase in 2002 net income is due to increases in net interest income of $4.0
million, a decrease in provision for loan losses of $705,000, partially offset
by a decrease in security gains of $207,000, a decrease in non-interest fee
income of $33,000, an increase in non-interest expense of $883,000 and an
increase to the provision for income taxes of $1.2 million. Basic and diluted
earnings per common share were $2.01 and $1.92, respectively, in 2002, compared
to $1.55 and $1.51, respectively, in 2001. Basic and diluted weighted average
shares outstanding were 4.54 million and 4.75 million, respectively, in 2002,
and 4.52 million and 4.66 million, respectively, in 2001. Weighted average
shares exclude treasury stock, which totaled 443,820 shares and 441,335 shares
at December 31, 2002 and 2001, respectively.

Return on average assets and return on average equity were 1.46% and 16.87%,
respectively, for 2002, and 1.28% and 14.61%, respectively, for 2001. Average
assets increased $77 million, or 14%, in 2002. Book value per common share
increased 16% to $12.84 at December 31, 2002 from $11.08 at December 31, 2001
due to current year undistributed profits and other comprehensive income.
Capital ratios continued to exceed all regulatory requirements, with a leverage
ratio of 7.66% in 2002, as compared to 8.24% in 2001. Dividends declared per
common share increased 11% to $.73 in 2002, from $.66 in 2001.


EARNINGS ANALYSIS

Net Interest Income

Net interest income is the single most significant component of the Company's
earnings. Net interest income is comprised of interest income and loan-related
fees, less interest expense. Net interest income is affected by numerous
factors, including the level, pricing, mix and maturity of earning assets and
interest-bearing liabilities, as well as interest rate fluctuations. For
purposes of this discussion, net interest income has been adjusted to a fully
tax-equivalent basis, which restates tax-exempt income to an amount that would
yield the same after-tax income had the income been subject to income taxes.

Net interest income for 2002 was $25.7 million, an increase of 17% over 2001
net interest income of $22.0 million. In 2001, net interest income grew 8%
from $20.3 million in 2000. The increase in net interest income in 2002 is
attributable to an increase in average earning assets of $74 million. The net
interest margin was 4.38% in 2002, as compared to 4.28% in 2001 and 4.48% in
2000. The increase of 10 basis points in 2002 is attributable to the low
interest rate environment during 2002. In 2001, during a rapid drop in the
Prime rate, the Bank's assets repriced more quickly than its liabilities, such
as loan refinancings and faster prepayments on investments. During the low
rate environment in 2002, the Bank's liabilities, such as certificates of
deposit, repriced more quickly than its assets, resulting in an increase to
the net interest margin.




The following table presents the Company's average balances, interest earned or
paid and average interest rates earned or paid for each of the years ended
December 31, 2002, 2001 and 2000.


AVERAGE BALANCES AND INTEREST RATES
(Dollars in Thousands)

2002 2001 2000
______________________ _____________________ ______________________
Interest Interest Interest
Average Income/ Avg Average Income/ Avg Average Income/ Avg
Balance Expense Rate Balance Expense Rate Balance Expense Rate
_______ _______ ____ _______ _______ ____ _______ _______ ____

Interest-earning assets:
Loans (1)
$350,592 $25,109 7.16% $327,771 $26,976 8.23% $266,266 $23,463 8.81%
Investments,
taxable 145,554 7,975 5.48% 104,165 6,620 6.36% 129,025 8,828 6.84%
Investments,
non-taxable (2)
49,491 3,575 7.22% 51,980 3,713 7.15% 44,612 3,278 7.35%
Federal funds 41,443 688 1.66% 28,858 1,011 3.50% 13,386 852 6.36%
________ _______ _____ ________ ______ _____ ________ ______ _____
Total interest-
earning assets
587,080 37,347 6.36% 512,774 38,320 7.47% 453,289 36,421 8.03%
________ _______ _____ ________ ______ _____ ________ ______ _____
Non-interest-
earning assets:
Cash and due
from banks 24,407 21,734 20,405
Other assets 14,140 14,399 18,432
________ ________ ________
Total non-interest-
earning assets
38,547 36,133 38,837
________ ________ ________
Total assets$625,627 $548,907 $492,126
======== ======== ========

Interest-bearing
liabilities:
Interest-bearing
checking $ 68,975 417 0.60% $ 60,558 564 0.93% $ 56,888 596 1.05%
Money market 57,806 1,065 1.84% 46,221 1,396 3.02% 41,774 1,396 3.34%
Savings 26,841 277 1.03% 23,345 408 1.75% 22,936 445 1.94%
Time 259,210 8,911 3.44% 223,348 12,075 5.41% 194,253 11,041 5.68%
Borrowed
funds 55,644 988 1.77% 52,234 1,923 3.68% 45,429 2,635 5.80%
________ _______ _____ ________ ______ _____ ________ ______ _____
Total interest-bearing
liabilities 468,476 11,658 2.49% 405,706 16,366 4.03% 361,280 16,113 4.46%
________ _______ _____ ________ ______ _____ ________ ______ _____

Non-interest-bearing
liabilities:
Non-interest-bearing
deposits 98,421 91,533 86,545
Other liabilities
4,694 3,653 3,376
________ ________ ________
Total non-interest-bearing
liabilities 103,115 95,186 89,921
________ ________ ________

Stockholders'
equity 54,036 48,015 40,925
________ ________ ________
Total liabilities
& stockholders'
equity $625,627 $548,907 $492,126
======== ======== ========

Net interest income
and net yield on
average earning
assets (3) 25,689 4.38% 21,954 4.28% 20,308 4.48%

Less tax-equivalent
adjustment included
above (1,094) (1,058) (919)
_______ _______ _______
Net interest
income $24,595 $20,896 $19,389
======= ======= =======

(1) For purposes of this analysis, non-accruing loans were included in the
computation of average balances.
(2) On a fully tax-equivalent basis using a 34% rate for Federal income tax
purposes, reduced by the non-deductible portion of interest expense.
(3) The net yield on average earning assets is net interest income divided by
average interest-earning assets.





The net yield is affected by changes in the mix, volume and interest rates of
the various categories of interest-earning assets and interest-bearing
liabilities. The following table presents the effect of changes in average
balance and rate on interest income, interest expense and net interest income
for the periods indicated.

RATE/VOLUME ANALYSIS OF NET INTEREST INCOME
(ON A FULLY TAXABLE EQUIVALENT BASIS)
(In Thousands)

2002 Compared to 2001 2001 Compared to 2000
______________________ ______________________

Volume Rate Change Volume Rate Change
______ ____ ______ ______ ____ ______
Interest earned on:
Loans (1) $1,878 ($3,745)($1,867) $5,421 ($1,908) $3,513
Investments, taxable 2,630 (1,275) 1,355 (1,701) (507) (2,208)
Investments, non-taxable(2) (177) 39 (138) 540 (105) 435
Federal funds 441 (764) (323) 985 (826) 159
______ ______ ______ ______ ______ ______
Total interest income 4,772 (5,745) (973) 5,245 (3,346) 1,899
______ ______ ______ ______ ______ ______

Interest paid on:
Interest bearing checking 78 (225) (147) 38 (70) (32)
Money market 350 (681) (331) 149 (149) -
Savings 61 (192) (131) 8 (45) (37)
Time 1,939 (5,103) (3,164) 1,654 (620) 1,034
Borrowed funds 126 (1,061) (935) 395 (1,107) (712)
______ ______ ______ ______ ______ ______
Total interest expense 2,554 (7,262) (4,708) 2,244 (1,991) 253
______ ______ ______ ______ ______ ______
Change in net interest income $2,218 $1,517 $3,735 $3,001 ($1,355) $1,646
====== ====== ====== ====== ====== ======

(1) For the purposes of this analysis, non-accruing loans were included in the
computation of average balances.
(2) On a fully tax-equivalent basis using a 34% rate for Federal income tax
purposes, reduced by the non-deductible portion of interest expense.



Non-interest Income

Non-interest income for 2002 was $3.26 million, compared to $3.50 million in
2001 and $2.83 million in 2000. These figures include non-recurring gains
(losses) on sales of securities of $33,000, $240,000 and ($108,000) for 2002,
2001 and 2000, respectively. Excluding non-recurring items, non-interest
income for 2002 remained level with the prior year.


Non-interest Expense

Non-interest expense for 2002 was $14.6 million compared to $13.7 million in
2001 and $12.8 million in 2000. The 7% increase during 2002 is attributable
to increased staff, data processing, insurance and donation expense. Staff
expense increased $784,000, or 9%, due to regular salary increases and higher
medical insurance premiums, which increased 24% from the prior year. Data
processing expense increased $97,000, or 10%, due to an increase in the number
of accounts processed. Insurance expense increased $89,000, or 34%, due to a
significant increase in premiums and donations increased $64,000. These
increases were partially offset by a decrease in goodwill amortization, which
is no longer required.

The following table summarizes the various categories of non-interest expense
for the years ended December 31, 2002, 2001 and 2000.


NON-INTEREST EXPENSE
(In Thousands)

2002 2001 2000
____ ____ ____

Salaries and employee benefits $ 9,137 $ 8,353 $ 7,572
Occupancy 1,256 1,260 1,195
Data processing 1,116 1,019 898
Furniture and equipment 745 737 844
Insurance 354 265 219
Stationery and supplies 255 268 260
Professional fees 250 284 227
Telephone 239 231 235
Administrative service charges 238 230 187
Security 153 159 136
Donations 115 51 39
Armored carrier and courier 115 113 111
State fees and assessments 106 98 89
FDIC insurance 79 78 77
Postage 58 59 62
Dues and subscriptions 56 58 56
Advertising 46 20 125
Amortization of goodwill - 163 199
Other expenses 232 221 220
_______ _______ _______

Total non-interest expense $14,550 $13,667 $12,751
_______ _______ _______

Taxes

For the years ended December 31, 2002, 2001 and 2000, the Company recorded an
income tax expense of approximately $4.01 million, $2.83 million and $2.72
million, respectively. Accordingly, the Company's effective tax rates were
31%, 30% and 30% for 2002, 2001 and 2000, respectively. The determination of
effective rates reflects items which are not reported for income tax purposes,
primarily tax-exempt interest income.



FINANCIAL CONDITION ANALYSIS

Investment Securities

The Company's investment securities portfolio of $271 million at December 31,
2002, consisted of securities available for sale of $183 million, which are
carried at fair value, and securities held to maturity of $88 million, which
are carried at amortized cost. This compares to investment securities of $136
million at December 31, 2001, which consisted of securities available for sale
of $111 million, and securities held to maturity of $25 million. The increase
of $135 million in the investment portfolio was a direct result of significant
deposit growth which exceeded loan demand during 2002. The ratio of available
for sale investments to total investments decreased to 67% in 2002 from 82% in
2001, as the Company chose to designate certain securities as long term
investments.

The portfolio of securities available for sale at December 31, 2002 had a net
unrealized gain of $4.7 million, net of taxes, as compared to a net unrealized
gain of $2.7 million, net of taxes, at December 31, 2001.


The following table presents the Company's investment portfolio as of December
31, 2002, 2001 and 2000.

INVESTMENT PORTFOLIO SCHEDULE
(In Thousands)

At December 31,
2002 2001 2000
____ ____ ____

Investment securities available for sale (at fair value):
U.S. Treasury $ 39,950 $ - $ -
U.S. Government Agencies 99,015 70,652 109,846
Municipal 38,967 35,641 29,091
Other 4,899 4,845 4,550
________ ________ ________
Total investment securities
available for sale $182,831 $111,138 $143,487
======== ======== ========

Investment securities held to maturity (at amortized cost):
U.S. Government Agencies $ 80,388 $ 9,308 $ 17,000
Municipal 7,919 15,356 20,215
________ ________ ________
Total investment securities
held to maturity $ 88,307 $ 24,664 $ 37,215
======== ======== ========

Mortgage-backed securities, included in U.S.
Government Agencies $ 40,026 $ 61,276 $ 66,428
======== ======== ========




The maturities and weighted average yields of investment securities, excluding
corporate stock, as of December 31, 2002 and 2001, are set forth below. The
weighted average interest yields are calculated by dividing the sum of the
individual security yield weights by the total book value of the securities.
Expected maturities may differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties.


INVESTMENT SECURITIES MATURITIES & YIELDS
(Dollars in Thousands)


At December 31, 2002, Maturing
__________________________________________________________

1 Year 1 Year to 5 Years to After
or Less 5 Years 10 Years 10 Years
Amount Yield Amount Yield Amount Yield Amount Yield
______ _____ ______ _____ ______ _____ ______ _____

Maturity Distributions Available for Sale (1):
U.S. Treasury
$39,950 1.29% $ - - $ - - $ - -
U.S. Government Agencies
- - 12,713 5.36% 11,144 6.14% 75,158 5.70%
Municipal (2)
101 5.18% 1,620 5.93% 10,037 4.60% 27,209 4.82%
_______ _______ _______ ________

$40,051 $14,333 $21,181 $102,367
======= ======= ======= ========

Maturity Distributions Held to Maturity
U.S. Government Agencies
$ 122 5.29% $ - - $ 1,685 6.20%$ 78,581 6.06%
Municipal (2)
1,621 4.73% 4,697 5.68% 1,601 5.38% - -
_______ _______ _______ ________

$ 1,743 $ 4,697 $ 3,286 $ 78,581
======= ======= ======= ========



At December 31, 2001, Maturing
_________________________________________________________

1 Year 1 Year to 5 Years to After
or Less 5 Years 10 Years 10 Years
Amount Yield Amount Yield Amount Yield Amount Yield
______ _____ ______ _____ ______ _____ ______ _____

Maturity Distributions Available for Sale (1):
U.S. Government Agencies
$ - - $ 7,762 5.41% $13,314 5.85%$ 49,576 6.46%
Municipal (2)
- - 1,386 8.55 6,954 6.59% 27,301 6.86%
_______ _______ _______ ________

$ - $ 9,148 $20,268 $ 76,877
======= ======= ======= ========

Maturity Distributions Held to Maturity
U.S. Government Agencies
$ - - $ 306 5.26% $ 2,740 6.28%$ 6,261 6.17%
Municipal (2)
- - 10,139 8.32% 5,218 8.23% - -
_______ _______ _______ ________

$ - $10,445 $ 7,958 $ 6,261
======= ======= ======= ========




(1) As investment securities available for sale are to be held for indefinite
periods of time and are not intended to be held to maturity, contractual
maturity may differ from actual disposal.
(2) On a fully tax-equivalent basis using a 34% federal income tax rate,
reduced by the non-deductible portion of interest expense.




Loans

At December 31, 2002, the balance of the loan portfolio was $351 million, as
compared to the December 31, 2001 loan balance of $352 million. Loan growth
was flat, as new loans replaced run off due to refinancings. Average net
loans were $345 million in 2002, compared to $323 million in 2001. The
loan-to-deposit ratio was 60% at December 31, 2002. Asset quality continued
to be solid, with no non-performing assets at December 31, 2002. Loans are
made to businesses and individuals in the local market area. The composition
of the portfolio is presented in the following table:


LOAN PORTFOLIO ANALYSIS
(Dollars in Thousands)

December 31,
_______________________________________________________________________

2002 2001 2000 1999 1998
___________ ___________ ___________ ___________ ___________

Amount % Amount % Amount % Amount % Amount %
______ ___ ______ ___ ______ ___ ______ ___ ______ ___

Commercial & financial
$ 52,519 15.0% $ 52,376 14.9% $ 49,635 17.1% $ 46,147 18.6% $ 34,415 17.0%
Real estate mortgages (1)
267,560 76.2% 267,230 76.0% 210,861 72.7% 176,500 71.3% 148,564 73.6%
Installment and other loans
31,018 8.8% 32,002 9.1% 29,440 10.2% 24,989 10.1% 18,984 9.4%
________ _____ ________ _____ ________ _____ ________ _____ ________ _____

Total loans
351,097 100% 351,608 100% 289,936 100% 247,636 100% 201,963 100%
==== ==== ==== ==== ====

Less:
Allowance for loan losses
(4,751) (4,642) (3,806) (3,279) (2,430)
Deferred loan fees
(580) (715) (489) (341) (256)
________ ________ ________ ________ ________

Total loans, net
$345,766 $346,251 $285,641 $244,016 $199,277
======== ======== ======== ======== ========


(1) Real estate mortgages consist primarily of commercial real estate loans.



The following tables present the maturities of loans (excluding installment
loans) outstanding at December 31, 2002, 2001 and 2000, and an analysis of
sensitivities of loans due after one year.


LOAN MATURITY SCHEDULE
_______________________________________________

(In Thousands)
Due After
Due in 1 1 Year But Due After
Year or Less Before 5 Years 5 Years Total
____________ ______________ _________ _____

At December 31, 2002
Commercial and financial $ 33,767 $ 18,000 $ 752 $ 52,519
Real estate mortgage 17,307 102,720 147,533 267,560

At December 31, 2001
Commercial and financial $ 35,251 $ 15,105 $ 2,020 $ 52,376
Real estate mortgage 21,632 79,406 166,192 267,230

At December 31, 2000
Commercial and financial $ 32,401 $ 14,832 $ 2,402 $ 49,635
Real estate mortgage 12,733 74,569 123,559 210,861




LOANS DUE AFTER ONE YEAR
(In Thousands)
__________________________________

December 31,
__________________________________

2002 2001 2000
____ ____ ____
Type of Interest Rate:
Fixed $ 29,671 $ 40,866 $ 46,778
Floating 239,334 221,857 168,584
________ ________ ________

Total $269,005 $262,723 $215,362
======== ======== ========



Allowance for Loan Losses

The balance in the allowance for loan losses at December 31, 2002, was $4.75
million, or 1.35% of total loans. This is an increase of $109,000 from the
December 31, 2001 allowance balance of $4.64 million, or 1.32% of total loans.
The increase in the allowance is the result of charges to the provision for
loan losses during 2002 of $170,000, less net charge-offs of $61,000. The
charge to the provision for 2001 was $875,000, less net charge-offs of $39,000.
The allowance was increased in order to maintain a level deemed sufficient to
absorb losses in the loan portfolio. The Company reviews the allowance on a
monthly basis and determines its adequacy from analysis of estimates of the
risks associated with specific loans and the loan portfolio, present economic
conditions and peer comparisons.

Non-performing assets were $0 at December 31, 2002, compared to $834,000 at
December 31, 2001. Total non-performing assets to total assets, were 0% and
..15% at December 31, 2002 and 2001, respectively. With regard to classified
loans, management is not aware of any trends or uncertainties which are
expected to have a material impact on future operating results, liquidity,
or capital resources, or of any information which would cause serious doubt
as to the ability of such borrowers to repay. Although management uses the
best information available to make determinations with respect to the
allowance, future adjustments may be necessary if economic conditions
differ substantially from the assumptions used or adverse developments
arise with respect to the Company's non-performing loans. There were
no properties held in other real estate owned at December 31, 2002 or
2001.



The following table presents an analysis of the Company's allowance for loan
losses for the last five years.

ALLOWANCE FOR LOAN LOSSES ANALYSIS
(Dollars in Thousands)
At December 31,
_____________________________________________

2002 2001 2000 1999 1998
____ ____ ____ ____ ____

Average net loans outstanding
during the period $345,230 $323,118 $262,358 $222,326 $180,815
======== ======== ======== ======== ========
Total net loans at period end $345,766 $346,251 $285,641 $244,016 $199,277
======== ======== ======== ======== ========
Beginning balance of allowance
for loans losses $ 4,642 $ 3,806 $ 3,279 $ 2,430 $ 2,247
________ ________ ________ ________ ________

Loans charged-off:
Commercial and financial 59 67 - 7 5
Real estate mortgage - - - - 84
Installment and other 8 15 22 133 28
________ ________ ________ ________ ________

Total loans charged-off 67 82 22 140 117
________ ________ ________ ________ ________


Recoveries of loans previously charged-off:
Commercial and financial - 28 25 37 53
Real estate mortgage 2 - - - 5
Installment and other 4 15 89 22 12
________ ________ ________ ________ ________

Total recoveries 6 43 114 59 70
________ ________ ________ ________ ________

Net loans charged-off (recovered)
61 39 (92) 81 47
________ ________ ________ ________ ________
Provision for loan losses 170 875 435 930 230
________ ________ ________ ________ ________

Balance at period end
$ 4,751 $ 4,642 $ 3,806 $ 3,279 $ 2,430
======== ======== ======= ======== ========

Net charge-offs (recoveries) during the year
to average net loans 0.02% 0.01% (0.04%) 0.04% 0.03%
======== ======== ======= ======== ========

Allowance as a percentage of
non-performing loans n/a 557% n/a 375% 459%
======== ======== ======= ======== ========




The following table presents a summary of the Company's non-performing assets
for the last five years.

NON-PERFORMING ASSETS
(Dollars in Thousands)

At December 31,
__________________________________________

2002 2001 2000 1999 1998
____ ____ ____ ____ ____

Non-accrual loans:
Commercial and financial $ - $823 $ - $ - $529
Real estate mortgage - - - 874 -
Installment and other - 11 - - -
____ ____ ____ ____ ____

Total non-accrual loans - 834 - 874 529
____ ____ ____ ____ ____

Total non-performing loans - 834 - 874 529
Other real estate owned - - - - -
____ ____ ____ ____ ____

Total non-performing assets $ - $834 $ - $874 $529
==== ==== ==== ==== ====

Total non-performing assets
to total assets 0% .15% 0% .18% .12%
==== ==== ==== ==== ====




The following table presents the breakdown of the allowance for loan losses
by loan category for the periods indicated. Management believes that the
allowance can be allocated by category only on an approximate basis.
During 2001, in conjunction with the implementation of the Federal
Financial Institutions Examination Council's "Policy Statement on Allowance
for Loan and Lease Losses Methodologies and Documentation for Banks and
Savings Institutions", and the Securities and Exchange Commission's SAB No.
102, "Selected Loan Loss Allowance Methodology and Documentation Issues",
the Company reviewed and revised its policies and procedures regarding
the methodology used to calculate its allowance for loan losses. The
revised documentation resulted in a change in the allocation of the
allowance to the various loan categories, thus reducing the unallocated
allowance in comparison to previous years. The allocation of an allowance
to each category is not necessarily indicative of future losses and does
not restrict the use of the allowance to absorb losses in any other
category. The allowance represents a reserve for probable losses existing
in the loan portfolio.



ALLOWANCES FOR LOAN LOSSES BY CATEGORY
(Dollars in Thousands)


At December 31,
________________________________________________________________

2002 2001 2000 1999 1998
____________ ____________ ____________ ____________ ____________
% of % of % of % of % of
Loans Loans Loans Loans Loans
In In In In In
Category Category Category Category Category
To To To To To
Total Total Total Total Total
Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans
______ _____ ______ _____ ______ _____ ______ _____ ______ _____

Commercial & financial
$ 565 15.0% $1,088 14.9% $ 83 17.1% $ 93 18.6% $ 140 17.0%
Real estate mortgages (1)
3,028 76.2% 2,763 76.0% 262 72.7% 280 71.3% 357 73.6%
Installment & other loans
683 8.8% 714 9.1% 92 10.2% 29 10.1% 20 9.4%
Unallocated
475 - 77 - 3,369 - 2,877 - 1,913 -
______ ____ ______ ____ ______ ____ ______ ____ ______ ____

Total allowance for loan loss
$4,751 100% $4,642 100% $3,806 100% $3,279 100% $2,430 100%
====== ==== ====== ==== ====== ==== ====== ==== ====== ====



(1) Real estate mortgages consist primarily of commercial real estate mortgage
loans.



Deposits

The Company's deposit base is its primary funding source. Management believes
that substantially all of the Company's depositors are residents in its primary
market area. The Company does not have a concentration of deposits from any
one source, the loss of which would have a material adverse effect on the
business of the Company.

Average total deposits increased $66 million, or 15%, to $511 million in 2002,
while average borrowed funds (repurchase agreements) increased by $3.4 million,
or 7%, to $56 million. The largest increase by category of average deposits was
certificates of deposit, which grew $36 million, or 16%. Average demand
deposits grew $6.9 million, or 8%. Deposit growth was internally generated
during 2002 at the Company's fourteen branches in Miami-Dade and Broward
counties.


The following table presents the average balances and average weighted rates
for the Company's categories of deposits for the years ended December 31,
2002, 2001 and 2000.

AVERAGE DEPOSIT BALANCES & WEIGHTED AVERAGE RATES
(Dollars in Thousands)

Years Ended December 31,
_______________________________________________________________________

2002 2001 2000
______________________ ______________________ _______________________

% of % of % of
Average Avg Total Average Avg Total Average Avg Total
Balance Rate Deps Balance Rate Deps Balance Rate Deps
________ ____ ______ ________ ____ ______ ________ ____ ______
Demand $ 98,421 - 19.3% $ 91,533 - 20.6% $ 86,545 - 21.5%
Interest-bearing
checking 68,975 0.60% 13.5% 60,558 0.93% 13.6% 56,888 1.05% 14.1%
Money market 57,806 1.84% 11.3% 46,221 3.02% 10.4% 41,774 3.34% 10.4%
Savings 26,841 1.03% 5.2% 23,345 1.75% 5.2% 22,936 1.94% 5.7%
Time 259,210 3.44% 50.7% 223,348 5.41% 50.2% 194,253 5.68% 48.3%
________ _____ ________ _____ ________ _____

Total $511,253 2.09% 100% $445,005 3.25% 100% $402,396 3.35% 100%
======== ===== ===== ======== ===== ===== ======== ===== =====

The following table presents the maturity of certificates of deposit over
$100,000 as of December 31, 2002:

MATURITY SCHEDULE
CERTIFICATES OF DEPOSIT >$100,000
(Dollars in Thousands)


Balance Percent
_______ _______

Less than 3 months $ 36,693 24.9%
3 to 6 months 16,227 11.0%
6 to 12 months 41,882 28.4%
More than 12 months 52,542 35.7%
________ _______

Total $147,344 100.00%
======== =======

Short Term Borrowings

The following table presents a summary of the Company's short term borrowings
at December 31, 2002, 2001 and 2000:


SHORT-TERM BORROWINGS
(Dollars in Thousands)

Years Ended December 31,
2002 2001 2000

Securities sold under agreements
to repurchase at year-end
$53,705 $53,436 $51,166

Weighted average rate of securities sold under
agreements to repurchase at year-end
1.49% 1.72% 6.00%

Average amount of securities sold under agreements
to repurchase during the fiscal year
$55,644 $52,234 $45,429

Weighted average rate of securities sold under
agreements to repurchase during the year
1.77% 3.68% 5.80%

Maximum amount of securities sold under agreements to
repurchase at any month-end during the fiscal year
$64,585 $62,534 $52,319



Capital

Shareholders' equity increased $8.5 million in 2002 to $58.6 million.
Shareholders' equity was increased by $9.1 million from net income, by $700,000
from the issuance of common stock resulting from the exercise of options and
by $2.0 million, net of tax, from other comprehensive income relating to
unrealized holding gains on available-for-sale securities. Shareholders'
equity was reduced by $3.3 million for dividends declared on common stock and
$64,000 for the purchase of treasury stock. For the year ended December 31,
2002, the return on average equity was 16.87%, compared to 14.61% for the year
ended December 31, 2001.

At year-end 2002 and 2001, there were 5,006,670 (including 443,820 shares of
treasury stock) and 4,963,675 (including 441,335 shares of treasury stock)
shares of common stock outstanding, respectively. Shares outstanding have
been adjusted for all periods presented for a 5-for-4 stock split which was
effective on January 3, 2003. There were 185 shareholders of record as of
December 31, 2002, and the Company believes that it has approximately 600
additional beneficial shareholders.

During 2002, the Company declared cash dividends of $0.73 per common share,
an 11% increase over 2001 cash dividends of $0.66 per common share. Cash
dividends declared totaled $3.3 million and $3.0 million in 2002 and 2001,
respectively. Dividends declared but not yet paid amounted to $867,000 and
$758,000 at December 31, 2002 and 2001, respectively.


The Company's common stock trades on the NASDAQ Stock Market under the symbol
CLBK. High and low prices for the years ended December 31, 2002 and 2001, by
quarter, are as follows:


RECENT COMMON STOCK PRICES


2002 2001
_________________ _________________

High Low High Low
____ ___ ____ ___

First quarter $20.08 $19.01 $19.13 $17.00
Second quarter 23.92 19.60 22.00 18.50
Third quarter 23.40 20.48 24.30 20.35
Fourth quarter 27.90 21.61 25.10 19.55



Continued growth and profitability of the Company are dependent upon
maintenance of adequate levels of capital. The capital adequacy of the
Company is determined based on the level of capital as well as asset quality,
liquidity and earnings history. At December 31, 2002, the Company and the
Bank were rated "well capitalized" by their regulatory agency. It is
management's goal to maintain its "well capitalized" category for regulatory
capital.

Regulatory capital guidelines divide capital into two tiers. Tier 1 capital
consists of shareholders' equity less goodwill plus the unrealized gain/loss on
available-for-sale securities. Tier 2 capital consists of Tier 1 capital plus
the allowance for loan losses and 45% of unrealized gain on available-for-sale
equity securities. In addition to Tier 1 and Tier 2 capital ratio
requirements, regulatory capital guidelines set forth certain leverage
capital requirements. This ratio is computed by dividing Tier 1 capital by
unadjusted total assets. The Company's leverage ratio at December 31, 2002,
was 7.66%, compared to 8.24% at year-end 2001, and compared to the regulatory
guideline of 5% for "well capitalized" institutions.


The following table presents the regulatory capital levels and ratios of the
Company at December 31, 2002, 2001 and 2000.

REGULATORY CAPITAL

December 31,
___________________________

(Dollars in Thousands)

2002 2001 2000
____ ____ ____

Tier I Capital:
Stockholders' equity less intangible assets (1) $ 53,636 $ 47,185 $ 42,919

Tier II Capital:
Allowance for loan loss 4,751 4,642 3,806
45% of unrealized gain on available for sale
equity securities 1,275 1,266 1,132
________ ________ ________

Total Capital $ 59,662 $ 53,093 $ 47,857
======== ======== ========
Risk-adjusted assets $407,985 $392,185 $334,653
======== ======== ========

Risk-based capital ratios (2)
Tier 1 Capital 13.15% 12.03% 12.82%
Total Capital 14.62% 13.54% 14.30%
Leverage Ratio 7.66% 8.24% 8.17%

(1) Adjusted for the unrealized holding gain/loss on securities available for
sale and goodwill. The Company's principal source of capital is generated
through earnings and issuance of stock.
(2) The regulatory minimum risk-based ratios are: Tier I Capital 4%; Total
Capital 8%. The regulatory minimum Leverage Ratio is 3%.




Equity Compensation Plan Information

The following table sets forth information regarding our compensation plans
(including individual compensation arrangements) under which shares of our
Common Stock are authorized for issuance as of December 31, 2002:


Number of
Securities
Remaining
Number Available for
of Securities Weighted Future Issuance
to be Average under Equity
Issued upon Exercise Compensation Plans
Exercise of Price of [Excluding Securities
Outstanding Outstanding Reflected
Plan Category Options (a) Options in Column (a)]
_____________ ___________ _______ ______________

Equity compensation plans
approved by security holders 605,641 (1) $14.33 261,660

Equity compensation plans not
approved by security holders - - -

(1) Represents options to purchase 337,976 shares of Common Stock which have
previously been granted and which remain outstanding under our 1994
Performance Stock Option Plan and options to purchase 267,665 shares
of Common Stock which have previously been granted and which remain
outstanding under our 1994 Outside Director Stock Option Plan. The 1994
Performance Stock Option Plan and the 1994 Outside Director Stock Option
Plan initially had 652,690 and 348,814, respectively, shares of Common
Stock reserved for issuance.



Liquidity

The objective of liquidity management is to maintain cash flow requirements to
meet immediate and ongoing future needs for loan demand, deposit withdrawals,
maturing liabilities, and expenses. In evaluating actual and anticipated
needs, management seeks to obtain funds at the most economical cost.
Management believes that the level of liquidity is sufficient to meet future
funding requirements.

For banks, liquidity represents the ability to meet both loan commitments and
withdrawals of deposited funds. Funds to meet these needs can be obtained by
converting liquid assets to cash or by attracting new deposits or other
sources of funding. Many factors affect a bank's ability to meet liquidity
needs. The Bank's principal sources of funds are deposits, repurchase
agreements, payments on loans, paydowns, maturities and sales of investments
and capital contributions by the Company. As additional sources of funds, the
Bank has credit availability with the Federal Home Loan Bank amounting to
$104.1 million, and Federal Funds purchased lines available at correspondent
banks amounting to $22.5 million.

The Bank's primary use of funds is to originate loans and purchase investment
securities. In 2002, 2001 and 2000, the net change in loans was a decrease
of $315,000, and increases of $61.5 million and $42.1 million, respectively,
and the Bank purchased $272.0 million, $45.1 million and $28.7 million of
investment securities. Funding came primarily from increases in deposits
of $118.7 million, $39.6 million and $34.5 million in 2002, 2001 and 2000,
respectively, and increases in securities sold under agreements to repurchase
of $269,000 in 2002, $2.3 million in 2001 and $10.4 million in 2000, and in
proceeds from maturities and sales of investment securities of $140.0 million,
$91.7 million and $22.0 million in 2002, 2001 and 2000, respectively.


Asset/Liability Management and Interest Rate Risk

Changes in interest rates can substantially impact the Company's long-term
profitability and current income. An important part of management's efforts
to maintain long-term profitability is the management of interest rate risk.
The goal is to maximize net interest income within acceptable levels of
interest rate risk and liquidity. Interest rate exposure is managed by
monitoring the relationship between interest-earning assets and interest-
bearing liabilities, focusing on the size, maturity or repricing date, rate
of return and degree of risk. The Bank's Asset/Liability Management Committee
oversees the interest rate risk management and reviews the Bank's
asset/liability structure on a quarterly basis.

The Bank uses interest rate sensitivity, or GAP analysis to monitor the amount
and timing of balances exposed to changes in interest rates. The GAP analysis
is not relied upon solely to determine future reactions to interest rate
changes because it is presented at one point in time and could change
significantly from day-to-day. Other methods such as simulation analysis
are utilized in evaluating the Bank's interest rate risk position. The table
presented below shows the Bank's GAP analysis at December 31, 2002.


INTEREST RATE SENSITIVITY ANALYSIS
(Dollars in Thousands)

Term to Repricing
_______________________________________________

Over 1 Year
90 Days 91-181 182-365 & Non-rate
or Less Days Days Sensitive Total
_______ ____ ____ _________ _____


Interest-earning assets:
Federal funds sold $ 29,425 $ - $ - $ - $ 29,425
Investment securities 97,105 26,933 51,707 92,532 268,277
Gross loans (excluding
non-accrual) 87,769 22,909 52,170 188,249 351,097
________ ________ ________ ________ ________

Total interest-earning assets $214,299 $ 49,842 $103,877 $280,781 $648,799
======== ======== ======== ======== ========

Interest-bearing liabilities:
Interest-bearing checking $ - $ 20,495 $ 20,495 $ 40,988 $ 81,978
Money-market - 15,524 15,524 31,048 62,096
Savings - - - 28,633 28,633
Time 74,205 45,462 67,020 122,814 309,501
Borrowed funds 56,223 - - - 56,223
________ ________ ________ ________ ________

Total interest-bearing
liabilities $130,428 $ 81,481 $103,039 $223,483 $538,431
======== ======== ======== ======== ========
Interest sensitivity gap $ 83,871($ 31,639) $ 838 $ 57,298 $110,368
======== ======== ======== ======== ========
Cumulative gap $ 83,871 $ 52,232 $ 53,070 $110,368
======== ======== ======== ========

Cumulative ratio of
interest-earnings assets to
interest-bearing liabilities 164% 125% 117% 120%
======== ======== ======== ========
Cumulative gap as a
percentage of total
interest-earning assets 12.9% 8.1% 8.2% 17.0%
======== ======== ======== ========

Management assumptions reflect the Bank's estimate of the anticipated repricing
sensitivity of non-maturity deposit products. Savings have been allocated to
the "over 1 year" category, and interest-bearing checking and money market, 25%
to the "91-181 days" category, 25% to the "182-365 days" category, and 50% to
the "over 1 year" category.

The Bank uses simulation analysis to quantify the effects of various immediate
parallel shifts in interest rates on net interest income over the next 12
month period. Such a "rate shock" analysis requires key assumptions which
are inherently uncertain, such as deposit sensitivity, cash flows from
investments and loans, reinvestment options, management's capital plans,
market conditions and the timing, magnitude and frequency of interest rate
changes. As a result, the simulation is only a best-estimate and cannot
accurately predict the impact of future interest rate changes on net income.
As of December 31, 2002, the Bank's simulation analysis projects an increase
to net interest income of 1.64%, assuming an immediate parallel shift downward
in interest rates by 200 basis points. If rates rise by 200 basis points, the
simulation analysis projects net interest income would decrease by 1.51%.
These projected levels are within the Company's policy limits.


Critical Accounting Policies

The Company's financial condition and results of operations are sensitive to
accounting measurements and estimates of matters that are inherently
uncertain. When applying accounting policies in areas that are subjective
in nature, management must use its best judgment to arrive at the carrying
value of certain assets. The most critical accounting policy applied by
the Company is that related to the valuation of the loan portfolio.

A variety of estimates impact carrying value of the loan portfolio, including
the calculation of the allowance for loan losses, valuation of underlying
collateral, the timing of loan charge-offs and placing loans on non-accrual
status and the amount and amortization of loan fees and deferred origination
cost.

The allowance for loan losses is management's most difficult and subjective
judgment. The allowance is established and maintained at a level that
management believes is adequate to cover losses resulting from the inability
of borrowers to make required payment on loans. Estimates for loan losses are
arrived at by analyzing risks associated with specific loans and the loan
portfolio, current trends in delinquencies and charge-offs, the views of the
Bank's regulators, changes in the size and composition of the loan portfolio
and peer comparisons. The analysis also requires consideration of the economic
climate and direction, change in lending rates, political conditions,
legislation impacting the banking industry and economic conditions specific
to South Florida. Because the calculation of the allowance for loan losses
relies on management's estimates and judgments relating to inherently uncertain
events, accrual results may differ from management's estimates.

The allowance for loan losses is also discussed on page 10 of the Annual Report
and in Note 3 to the consolidated financial statements. The Company's
significant accounting policies are discussed in Note 1 to the consolidated
financial statements.


Fourth Quarter Results

Net income for the fourth quarter, 2002 was $2.46 million, a 35% increase over
fourth quarter 2001 net income of $1.82 million. Diluted Earnings Per Share
increased to $.51 per common share in the fourth quarter 2002 as compared to
$0.39 per common share in the fourth quarter of 2001. Fourth quarter 2002
earnings represent a 1.42% annualized return on average assets and a 16.99%
annualized return on average equity. Tax-equivalent net interest income for
the fourth quarter of 2002 was $6.65 million, a 14% increase over fourth
quarter 2001 net interest income of $5.81 million. The fourth quarter 2002
tax-equivalent net interest yield was 4.08%, a 29 basis point decrease from
the fourth quarter 2001 yield of 4.37%.

The provision for loan losses was $0 for the fourth quarter of 2002, as
compared to $450,000 for the same period in 2001. The allowance for loan
losses, at $4.75 million, or 1.35% of total loans at December 31 2002, is at
a level the Company has deemed to be sufficient to absorb losses in the
portfolio. The Company reviews the allowance on a monthly basis and
determines its adequacy from analysis of estimates of the risks associated
with specific loans and the loan portfolio, present economic conditions and
peer comparisons.


Forward-Looking Statements

This Annual Report to Stockholders (in particular, the sections entitled "To
Our Shareholders" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the discussion of business) may
contain forward-looking statements (within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended), representing the Company's
expectations and beliefs concerning future events. The actual results of the
Company could differ materially from those indicated by the forward-looking
statements because of various risks and uncertainties, including, without
limitation, the Company's effective and timely initiation and development of
new client relationships, the maintenance of existing client relationships and
programs, the recruitment and retention of qualified personnel, changes in
competition, the adequacy of cash flows from operations and available financing
to fund capital needs and future growth, changes in governmental rules and
regulations applicable to the Company and other risks in the Company's filings
with the Securities and Exchange Commission. The Company cautions that its
discussion of these matters is further qualified, as these risks and
uncertainties are beyond the ability of the Company to control. In many cases,
the Company cannot predict the risks and uncertainties that could cause actual
results to differ materially from those indicated in the forward-looking
statements.



Report of Independent Certified Public Accountants


To the Board of Directors and Stockholders of
Commercial Bankshares, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, comprehensive income, changes in
stockholders' equity and cash flows present fairly, in all material respects,
the financial position of Commercial Bankshares, Inc. and its subsidiary at
December 31, 2002 and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2002 in
conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.






Miami, Florida
January 15, 2003




COMMERCIAL BANKSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001
(Dollars in Thousands, Except Share Data)

2002 2001
________ ________
Assets:
Cash and due from banks $ 31,108 $ 21,420
Federal funds sold 29,425 46,780
________ ________

Total cash and cash equivalents 60,533 68,200

Investment securities available for sale, at fair value
(cost of $175,597 in 2002 and $107,126 in 2001) 182,831 111,138
Investment securities held to maturity, at cost
(aggregate fair value of $90,019 in 2002 and
$25,332 in 2001) 88,307 24,664
Loans, net 345,766 346,251
Premises and equipment, net 12,591 12,554
Accrued interest receivable 4,328 2,790
Goodwill, net 253 253
Other assets 3,915 3,078
________ ________

Total assets $698,524 $568,928
======== ========

Liabilities and stockholders' equity:
Deposits:
Demand $ 99,018 $ 94,453
Interest-bearing checking 81,978 65,630
Money market 62,096 51,958
Savings 28,633 24,896
Time 309,501 225,569
________ ________

Total deposits 581,226 462,506

Securities sold under agreements to repurchase 53,705 53,436
Accrued interest payable 624 633
Accounts payable and accrued liabilities 4,364 2,228
________ ________

Total liabilities 639,919 518,803
________ ________

Commitments and contingencies (Notes 4,11 and 15)

Stockholders' equity:
Common stock, $.08 par value, 6,250,000 authorized
shares, 5,006,670 issued (4,963,675 in 2001) 401 316
Additional paid-in capital 44,653 44,041
Retained earnings 15,603 9,786
Accumulated other comprehensive income 4,716 2,686
Treasury stock, 443,820 shares (441,335 shares
in 2001), at cost (6,768) (6,704)
________ ________

Total stockholders' equity 58,605 50,125
________ ________

Total liabilities and stockholders' equity $698,524 $568,928
======== ========


The accompanying notes are an integral part of
these consolidated financial statements.






COMMERCIAL BANKSHARES, INC.,
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
for the years ended December 31, 2002, 2001 and 2000
(Dollars in Thousands, Except Share Data)

2002 2001 2000
____ ____ ____
Interest income:
Interest and fees on loans $25,109 $26,976 $23,463
Interest on investment securities
Taxable 7,975 6,620 8,828
Tax exempt 2,481 2,655 2,359
Interest on federal funds sold 688 1,011 852
_______ _______ _______

Total interest income 36,253 37,262 35,502
_______ _______ _______

Interest expense:
Interest on deposits 10,670 14,443 13,478
Interest on securities sold under
agreements to repurchase 988 1,923 2,635
_______ _______ _______

Total interest expense 11,658 16,366 16,113
_______ _______ _______

Net interest income 24,595 20,896 19,389
Provision for loan losses 170 875 435
_______ _______ _______

Net interest income after provision
for loan losses 24,425 20,021 18,954
_______ _______ _______

Non-interest income:
Service charges on deposit accounts 2,657 2,659 2,383
Other fees and service charges 565 596 553
Security gains(losses), net 33 240 (108)
_______ _______ _______

Total non-interest income 3,255 3,495 2,828
_______ _______ _______

Non-interest expense:
Salaries and employee benefits 9,137 8,353 7,572
Occupancy 1,256 1,260 1,195
Data processing 1,116 1,019 898
Furniture and equipment 745 737 844
Insurance 354 265 219
Stationery and supplies 255 268 260
Professional fees 250 284 227
Telephone 239 231 235
Amortization of goodwill - 163 199
Other 1,198 1,087 1,102
_______ _______ _______

Total non-interest expense 14,550 13,667 12,751
_______ _______ _______

Income before income taxes 13,130 9,849 9,031
Provision for income taxes 4,014 2,832 2,716
_______ _______ _______

Net income $ 9,116 $ 7,017 $ 6,315
======= ======= =======

Earnings per common and common equivalent share:
Basic $ 2.01 $ 1.55 $ 1.38
Diluted $ 1.92 $ 1.51 $ 1.35

Weighted average number of shares and common
equivalent shares:
Basic 4,541,716 4,518,571 4,577,960
Diluted 4,752,627 4,655,014 4,684,794



The accompanying notes are an integral part of
these consolidated financial statements.




COMMERCIAL BANKSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the years ended December 31, 2002, 2001 and 2000
(In Thousands)


2002 2001 2000
____ ____ ____

Net income $ 9,116 $7,017 $6,315
_______ ______ ______

Other comprehensive income, net of tax:
Unrealized holding gain arising during period 2,051 1,017 3,507
Reclassification adjustments for (gains)losses
realized in net income (21) (165) 68
Cumulative effect of a change in accounting
principle for reclassification of securities
upon adoption of FAS133 - 114 -
_______ ______ ______

Other comprehensive income 2,030 966 3,575
_______ ______ ______

Comprehensive income $11,146 $7,983 $9,890
======= ====== ======







CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the years ended December 31, 2002, 2001 and 2000
(Dollars in Thousands, Except Share Data)

Issued Accumulated
Shares Additional Other Total
of Paid- Comp. Stock-
Common Common in Retained Income Treasury holders'
Stock Stock Capital Earnings (Loss) Stock Equity
_________ ____ _______ _______ ________ _______ _______

Balance at
January 1, 2000 3,931,375 $313 $43,738 $ 2,111 ($1,855)($1,526) $42,781
Exercise of stock options 14,928 1 128 - - - 129
Purchase of treasury stock - - - - - (5,046) (5,046)
Unrealized holding gain - - - - 3,575 - 3,575
Dividends-common stock
$0.59 per share - - - (2,699) - - (2,699)
Net income - - - 6,315 - - 6,315
_________ ____ _______ _______ ______ ______ ______
Balance at
December 31, 2000 3,946,303 314 43,866 5,727 1,720 (6,572) 45,055
Exercise of stock options 16,137 2 175 - - - 177
Purchase of treasury stock - - - - - (132) (132)
Unrealized holding gain - - - - 966 - 966
Dividends - common stock
$0.66 per share - - (2,958) - - (2,958)
Net income - - - 7,017 - - 7,017
_________ ____ _______ _______ ______ ______ ______
Balance at
December 31, 2001 3,962,440 316 44,041 9,786 2,686 (6,704) 50,125
Exercise of stock options 42,995 3 697 - - - 700
Purchase of treasury stock - - - - - (64) (64)
Unrealized holding gain - - - - 2,030 - 2,030
Dividends-common stock
$0.73 per share - - - (3,299) - - (3,299)
Five-for-four
stock split 1,001,235 82 (85) - - - (3)
Net income - - - 9,116 - - 9,116
_________ ____ _______ _______ ______ _______ _______

Balance at
December 31, 2002 5,006,670 $401 $44,653 $15,603 $4,716 ($6,768) $58,605
========= ==== ======= ======= ====== ======= =======



The accompanying notes are an integral part of
these consolidated financial statements.




COMMERCIAL BANKSHARES, INC.,
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 2002, 2001 and 2000
(In Thousands)

2002 2001 2000
____ ____ ____

Cash flows from operating activities:
Net Income $ 9,116 $ 7,017 $ 6,315
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 170 875 435
Depreciation, amortization, and accretion, net 520 911 1,151
Gain on disposal of premises and equipment, net (1) - (8)
(Gain) loss on sale of investment securities, net (33) (240) 108
Change in accrued interest receivable (1,538) 1,211 (719)
Change in other assets (837) 758 2,119
Change in accounts payable and accrued liabilities 920 (910) (2,132)
Change in accrued interest payable (9) (237) 238
_______ _______ _______

Net cash provided by operating activities 8,308 9,385 7,507
_______ _______ _______

Cash flows from investing activities:
Proceeds from maturities of investment
securities held to maturity 40,617 7,285 6,172
Proceeds from maturities of investment
securities available for sale 92,176 84,169 7,946
Proceeds from sales of investment securities
available for sale 7,196 242 7,881
Purchases of investment securities
held to maturity (105,509) - -
Purchases of investment securities
available for sale (166,490) (45,119) (28,659)
Net change in loans 315 (61,485) (42,060)
Purchases of premises and equipment (628) (270) (355)
Proceeds from disposal of premises and equipment 1 - 239
_______ _______ _______

Net cash used in investing activities (132,322) (15,178) (48,836)
_______ _______ _______

Cash flows from financing activities:
Net change in demand, savings, interest-bearing
checking, money market, and time deposit accounts 118,720 39,583 34,476
Net change in securities sold under
agreements to repurchase 269 2,270 10,372
Dividends paid (3,190) (2,920) (2,672)
Proceeds from exercise of stock options 612 177 129
Purchase of treasury stock (64) (132) (5,046)
_______ _______ _______

Net cash provided by financing activities 116,347 38,978 37,259
_______ _______ _______

(Decrease) increase in cash and cash equivalents (7,667) 33,185 (4,070)
Cash and cash equivalents at beginning of year 68,200 35,015 39,085
_______ _______ _______

Cash and cash equivalents at end of year $60,533 $68,200 $35,015
======= ======= =======

Supplemental disclosures:
Interest paid
(net of amounts credited to deposit accounts) $ 1,331 $ 2,945 $ 2,724
======= ======= =======
Income taxes paid $ 4,128 $ 2,960 $ 2,832
======= ======= =======


The accompanying notes are an integral part of
these consolidated financial statements.



COMMERCIAL BANKSHARES, INC., AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. Summary of Significant Accounting Policies

Commercial Bankshares, Inc. (the Company), a bank holding company, was
incorporated on April 26, 1988, to acquire its wholly owned banking subsidiary,
Commercial Bank of Florida (the Bank). The Bank is a Florida chartered banking
corporation, which engages in commercial banking and related businesses from
its fourteen facilities located in Miami-Dade County and Broward County,
Florida.

The accounting policies and reporting practices of the Company and its
subsidiary conform to predominant practices in the banking industry and are
based on accounting principles generally accepted in the United States of
America. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Such estimates include, among others, the allowance for
loan losses and investment securities. Actual results could differ from those
estimates. The following is a description of the significant accounting
policies.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its subsidiary after elimination of all intercompany accounts and transactions.

Cash and Cash Equivalents

Cash equivalents include amounts due from banks and federal funds sold. The
Bank is required to maintain average reserve balances with the Federal Reserve
Bank. The amounts of those reserve balances at December 31, 2002 and 2001,
were approximately $10.3 million and $7.2 million, respectively.

Investment Securities

The Company classifies its investment securities as follows:

Held to maturity: Investment securities that management has the intent and
the Company has the ability at the time of purchase to hold until maturity
are classified as held to maturity. Securities in this category are carried
at amortized cost adjusted for accretion of discounts and amortization of
premiums using the constant yield method over the estimated life of the
securities. If a security has a decline in fair value below its amortized
cost that is other than temporary, then the security will be written down to
its new cost basis by recording a loss in the consolidated statement of income.

Available for sale: Investment securities to be held for indefinite periods of
time and not intended to be held to maturity are classified as available for
sale. Assets included in this category are those that management intends to
use as part of its asset/liability management strategy and that may be sold
in response to changes in interest rates, and other factors related to
interest rate and resultant prepayment risk changes. Securities available
for sale are recorded at fair value. Unrealized holding gains and losses
on securities available for sale, net of tax, are included as accumulated
other comprehensive income in the consolidated balance sheets until these
gains or losses are realized. The cost of investment securities sold is
determined by the specific identification method. If a security has a
decline in fair value that is other than temporary, then the security will
be written down to its fair value by recording a loss in the consolidated
statement of income.

Loans

Loans are reported at their principal outstanding balance net of the allowance
for loan losses and deferred loan fees. Interest income is recognized when
income is earned, using the effective interest method. Loan origination fees
and certain direct loan origination costs are deferred and the net amounts are
amortized as adjustments to interest income.

Allowance for Loan Losses

The adequacy of the allowance for loan losses is periodically evaluated by the
Company in order to maintain the allowance at a level that is sufficient to
absorb probable loan losses. Management's evaluation of the adequacy of the
allowance is based on a review of the risks inherent in the loan portfolio,
including adverse circumstances that may affect the ability of the borrower to
repay interest and/or principal, the estimated value of collateral, and an
analysis of the levels and trends of delinquencies, charge-offs, and the risk
ratings of the various loan categories. Such factors as the level and trend
of interest rates and the condition of the national and local economies are
also considered.



The allowance for loan losses is established through charges to earnings in the
form of a provision for loan losses. Increases and decreases in the allowance
resulting from changes in the measurement of the impaired loans are included in
the provision for loan losses. Loans continue to be classified as impaired
unless they are brought fully current and the collection of scheduled interest
and principal is considered probable. When a loan or portion of a loan is
determined to be uncollectible, the portion deemed uncollectible is charged
against the allowance, and subsequent recoveries, if any, are credited to the
allowance.

Income Recognition on Impaired and Nonaccrual Loans

Loans, including impaired loans, are generally classified as nonaccrual if
they are past due as to maturity or payment of principal or interest for a
period of more than 90 days, unless such loans are well collateralized and
in the process of collection. If a loan or portion of a loan is classified
as doubtful or is partially charged off, the loan is classified as nonaccrual.
Generally, interest receivable on loans placed on nonaccrual status is
reversed against interest income. Loans that are on a current payment status
or past due less than 90 days may also be classified as nonaccrual if
repayment in full of principal and/or interest is in doubt. Loans may be
returned to accrual status when all principal and interest amounts
contractually due are reasonably assured of repayment within an acceptable
period of time, and there is a sustained period of repayment performance by
the borrower, in accordance with the contractual terms of interest and
principal.

While a loan is classified as nonaccrual and the future collectibility of the
recorded loan balance is doubtful, collections of interest and principal are
generally applied as a reduction to principal outstanding. When the future
collectibility of the recorded loan balance is expected, interest income may be
recognized on a cash basis. In the case where a nonaccrual loan had been
partially charged off, recognition of interest on a cash basis is limited to
that which would have been recognized on the recorded loan balance at the
contractual interest rate. Cash interest receipts in excess of that amount are
recorded as recoveries to the allowance for loan losses until prior charge-offs
have been fully recovered.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is computed principally on the straight-line method
over the estimated useful life of each type of asset. Leasehold improvements
are amortized over the remaining term of the applicable leases or their useful
lives, whichever is shorter. Maintenance and repairs are charged to expense as
incurred; improvements and betterments are capitalized. Upon retirement or
disposition, the related costs and accumulated depreciation are removed from
the accounts, and any resulting gains or losses are credited or charged to
income.

Other Real Estate Owned

Other real estate owned is comprised of real estate and other assets acquired
through foreclosure, acceptance of a deed in lieu of foreclosure, or otherwise
acquired from the debtor in lieu of repayment of the debt. Other real estate
owned is carried at the lower of the recorded investment in the loan or the
fair value less estimated costs to sell. Upon transfer of a loan to foreclosed
status, an appraisal is obtained and any excess of the loan balance over the
fair value, less estimated costs to sell, is charged against the allowance
for loan losses. Revenues, expenses, and subsequent adjustments to fair
value less estimated costs to sell are classified as expenses for other
real estate owned. At December 31, 2002 and 2001, there were no other
real estate owned.

Income Taxes

Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. Deferred tax assets are reduced by a valuation allowance when it
is more likely than not that some portion or all of the deferred tax assets
will not be realized.

Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase, which are classified as secured
borrowings, generally mature within one day from the transaction date.
Securities sold under agreements to repurchase are reflected at the amount of
cash received in connection with the transaction. The Bank may be required to
provide additional collateral based on the fair value of the underlying
securities.

Interest Rate Risk

The Company's profitability is dependent to a large extent on its net interest
income, which is the difference between income on interest-earning assets and
expense on interest-bearing liabilities. The Company, like most financial
institutions, is affected by changes in general interest rate levels and by
other economic factors beyond its control. Interest rate risk arises from
mismatches between the dollar amount of repricing or maturing assets and
liabilities, and is measured in terms of the ratio of the interest rate
sensitivity gap to total assets. More assets repricing or maturing than
liabilities over a given time frame is considered asset-sensitive, or a
positive gap, and more liabilities repricing or maturing than assets over a
given time frame is considered liability-sensitive, or a negative gap. An
asset-sensitive position will generally enhance earnings in a rising interest
rate environment and will negatively impact earnings in a falling interest rate
environment, while a liability-sensitive position will generally enhance
earnings in a falling interest rate environment and negatively impact earnings
in a rising interest rate environment. Fluctuations in interest rates are not
predictable or controllable. The Company has attempted to structure its asset
and liability management strategies to mitigate the impact on net interest
income of changes in market interest rates.

Comprehensive Income

The income tax effects related to the components of other comprehensive income
are as follows (in thousands):
2002 2001 2000
_____________________ ______________________ _____________________

Tax Tax Tax
(Expense) (Expense) (Expense)
Gross or Benefit Net Gross or Benefit Net Gross or Benefit Net
_____ __________ ___ _____ __________ ___ _____ __________ ___

Unrealized holding gain arising
during period
$3,256 ($1,205) $2,051 $1,614 ($ 597) $1,017 $5,567 ($2,060) $3,507
Reclassification adjustments
for (gains) losses realized
in net income
(33) 12 (21) (240) 75 (165) 108 (40) 68
Cumulative effect of a change
in accounting principle for
reclassification of securities
upon adoption of FAS133
- - - 181 (67) 114 - - -
______ ______ ______ _____ ______ ______ ______ ______ ______

Other comprehensive income
$3,223 ($1,193) $2,030 $1,555 ($ 589) $ 966 $5,675 ($2,100) $3,575
====== ====== ====== ====== ====== ====== ====== ====== ======


Per Share Data

Earning per share is computed on the weighted average number of common shares
outstanding during the year. Earnings per share, assuming dilution, assumes
the maximum dilutive effect of the average number of shares from stock options.
Per share data and weighted average shares outstanding have been adjusted in
all periods presented for the stock split which was effective on January 3,
2003.

New Accounting Pronouncements

In November of 2002, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others", an
interpretation of FASB Statements No. 5, 57 and 107 and rescission of FASB
Interpretation No. 34. This interpretation elaborates on the disclosures to be
made by a guarantor in its interim and annual financial statements about its
obligations under certain guarantees that it has issued. It also clarifies
that a guarantor is required to recognize, at the inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing the
guarantee. This interpretation does not prescribe a specific approach for
subsequently measuring the guarantor's recognized liability over the term of
the related guarantee. This interpretation also incorporates, without change,
the guidance in FASB Interpretation No. 34, "Disclosure of Indirect Guarantees
of Indebtedness of Others", which is being superseded. The initial recognition
and initial measurement provisions of this Interpretation are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002.
The disclosure requirements in this Interpretation are effective for financial
statements of interim or annual periods ending after December 15, 2002. The
implication of this interpretation will not have a significant effect on the
Company's financial statements.

In December of 2002, the FASB issued Statement of Financial Accounting Standard
(SFAS) No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure an amendment of FASB Statement No. 123". Under SFAS No. 148,
alternative methods of transition are provided for a voluntary change to the
fair value based method of accounting for stock-based employee compensation.
In addition, this SFAS No. 148 amends the disclosure requirements of FASB No.
123, "Accounting for Stock Based Compensation" to require prominent disclosures
in both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reported results. As permitted by SFAS No. 123, the Bank continues to follow
the intrinsic value method of accounting for stock-based compensation under the
provision of Accounting Principles Board Opinion (APB) No. 25, "Accounting for
Stock Issued to Employees". Accordingly, the alternative methods of transition
for the fair value based method of accounting for stock-based employee
compensation provided by SFAS No. 148 do not apply to the Bank. The Bank is
required under the provisions of SFAS No. 148 amending SFAS No. 123 and APB No.
28, "Interim Financial Reporting", to provide additional disclosure in both
annual and interim financial statements. The new disclosures requirements are
included in Note 12.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This statement addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon
their acquisition. This statement also addresses how goodwill and other
intangible assets should be accounted for after they have been initially
recognized in the financial statements. Except for goodwill and intangible
assets acquired after June 30, 2001, which are immediately subject to its
provision, SFAS No. 142 is effective starting with fiscal years beginning
after December 15, 2001.

The provisions of SFAS No. 142 no longer allow the amortization of goodwill,
and certain intangible assets that have indefinite useful lives, and requires
that impairment of goodwill on those assets be tested annually. In addition,
SFAS No. 142 requires the following additional disclosures for goodwill and
other intangible assets:

- Changes in the carrying amount of goodwill from period-to-period;
- The carrying amount of goodwill by major intangible assets class, and
- The estimated intangible amortization for the next five years

The Company adopted SFAS No. 142 effective January 1, 2002. The Company
did not incur impairment losses for goodwill resulting from a transitional
impairment test. The elimination of goodwill amortization positively
impacts pre-tax net income by approximately $160,000 in fiscal year 2002.


For the year ended
December 31,
2002 2001 2000
____ ____ ____

(Dollars in Thousands,
Except Per Share Amounts)
Net income:
Income before income taxes $13,130 $9,849 $9,031
Add back:
Amortization of goodwill previously amortized - 163 199
_______ ______ ______
Income before income taxes,
excluding amortization of goodwill 13,130 10,012 9,230
Provision for income taxes 4,014 2,892 2,790
_______ ______ ______

Adjusted net income $ 9,116 $7,120 $6,440
======= ====== ======

Basic earnings per share:
Earning per shares, as reported $ 2.01 $ 1.55 $ 1.38
Goodwill amortization - .03 .03
_______ ______ ______

Adjusted earnings per share $ 2.01 $ 1.58 $ 1.41
======= ====== ======

Diluted earnings per share:
Earning per shares, as reported $ 1.92 $ 1.51 $ 1.35
Goodwill amortization - .02 .03
_______ ______ ______

Adjusted earnings per share $ 1.92 $ 1.53 $ 1.38
======= ====== ======


Reclassification

Certain reclassifications have been made to the 2001 and 2000 consolidated
financial statements to conform to the 2002 presentation.



2. Investment Securities

The amortized cost and fair values of investment securities are summarized as
follows (in thousands):

December 31, 2002
______________________________________________

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
_________ __________ __________ ________

Available for Sale Securities:
U.S. Treasury $ 39,952 $ - $ (2) $ 39,950
U.S. Government Agencies 96,084 2,931 - 99,015
Municipals 37,496 1 471 - 38,967
Corporate Stock 2,065 2,834 - 4,899
________ ______ _______ ________

$175,597 $7,236 $ (2) $182,831
======== ====== ======= ========

Held to Maturity Securities:
U.S. Government Agencies $ 80,388 $1,450 $ - $ 81,838
Municipals 7,919 262 - 8,181
________ ______ _______ ________

$ 88,307 $1,712 $ - $ 90,019
======== ====== ======= ========



December 31, 2001
______________________________________________

Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
_________ __________ __________ ________

Available for Sale Securities:
U.S. Government Agencies $ 69,371 $1,281 $ - $ 70,652
Municipals 35,723 - (82) 35,641
Corporate Stock 2,032 2,813 - 4,845
________ ______ _______ ________

$107,126 $4,094 $ (82) $111,138
======== ====== ======= ========

Held to Maturity Securities:
U.S. Government Agencies $ 9,308 $ 217 $ - $ 9,525
Municipals 15,356 451 - 15,807
________ ______ _______ ________

$ 24,664 $ 668 $ - $ 25,332
======== ====== ======= ========

The amortized cost and fair value of investment securities excluding corporate
stock at December 31, 2002, by contractual maturity, are shown below (in
thousands). Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.


Available for Sale Held to Maturity
__________________ __________________

Amortized Fair Amortized Fair
Cost Value Cost Value
_________ _______ _________ _______

Due in one year or less $40,052 $40,051 $ 1,743 $ 1,766
Due after one year
through five years 13,704 14,333 4,697 4,862
Due after five years
through ten years 20,371 21,181 3,286 3,462
Due after ten years 99,405 102,367 78,581 79,929


Gross gains of approximately $55,000, $240,000 and $7,500, respectively, and
gross losses of $22,000, $0 and $115,000, respectively, during 2002, 2001 and
2000, were realized on the sale of investment securities. In conjunction with
the January 1, 2001 adoption of Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities", the
Company transferred securities from the held-to-maturity portfolio to the
available-for-sale portfolio. These securities had a book value of $5.3
million and a fair market value of $5.5 million.

At December 31, 2002 and 2001, investment securities with an amortized cost of
approximately $88 million and $72 million, respectively, were pledged as
collateral for securities sold under agreements to repurchase, time deposits of
governmental entities, treasury tax and loan deposits and other borrowed funds.


3. Loans and Allowance for Loan Losses

The distribution of loans, by type, was as follows (in thousands):

December 31,
_____________________

2002 2001
________ ________

Commercial and financial $ 52,519 $ 52,376
Real estate and mortgage 267,560 267,230
Installment and other 31,018 32,002
________ ________

351,097 351,608
Less: Allowance for loan losses (4,751) (4,642)
Deferred loan fees (580) (715)
________ ________

Total loans, net $345,766 $346,251
======== ========

Loans on which the accrual of interest has been discontinued amounted to
approximately $0 and $834,000 at December 31, 2002 and 2001, respectively.
If non-accrual loans were on full accrual, additional interest income of
approximately $0, $57,000 and $0 would have been recorded during 2002, 2001
and 2000, respectively.

The total amount of loans to directors and executive officers amounted to
$6.5 million and $6.6 million at December 31, 2002 and 2001, respectively.
Transactions for loans to directors and executive officers for the years
ended December 31, 2002 and 2001 were as follows (in thousands):

2002 2001
______ ______

Balance, beginning of period $6,636 $8,273
Loans and advances 350 409
Payments (457) (2,046)
______ ______

Balance, end of period $6,529 $6,636
====== ======

Transactions in the allowance for loan losses for the years ended December
31, 2002, 2001 and 2000 were as follows (in thousands):

2002 2001 2000
____ ____ ____

Balance, beginning of year $4,642 $3,806 $3,279
Provision charged to operations 170 875 435
Loans charged off (67) (82) (22)
Recoveries 6 43 114
______ ______ ______

Balance, end of year $4,751 $4,642 $3,806
====== ====== ======


4. Premises and Equipment and Lease Commitments

Premises and equipment were as follows (in thousands):

December 31,
______________
Estimated
2002 2001 Useful Life
____ ____ ___________

Land $5,381 5,382 -
Buildings 6,646 6,646 40 years
Leasehold and other property improvements 2,241 2,192 3 to 10 years
Furniture and equipment 4,825 4,599 3 to 7 years
Other 110 25 3 years
_______ _______

19,203 18,844
Less: accumulated depreciation
and amortization (6,612) (6,290)
_______ _______

$12,591 $12,554
======= =======


The Bank leases office and parking spaces for various banking facilities. The
leases have initial terms expiring in 2007 through 2012 and are renewable by
the Bank for up to 5 years. Under these leases, rents will increase annually,
either at fixed rates or at rates based on various escalation clauses. On
certain leases, in addition to the base rate payment, the Bank pays a monthly
allocation of the building's operating expenses. Rental expense was
approximately $461,000, $443,000 and $400,000 in 2002, 2001 and 2000,
respectively. As of December 31, 2002, future minimum rental commitments for
all noncancelable operating leases with initial or remaining terms in excess
of one year were as follows (in thousands):


Year Ending December 31,
2003 $407
2004 391
2005 400
2006 410
2007 284
Thereafter 1,100
______

$2,992
======

5. Securities Sold Under Agreements To Repurchase

Interest expense on securities sold under agreements to repurchase aggregated
$1.0 million, $1.9 million and $2.6 million for the years ended December 31,
2002, 2001 and 2000, respectively.

The following sets forth information concerning securities sold under
agreements to repurchase for the periods indicated:

As of and For The Years Ended
December 31,
_____________________________

2002 2001 2000
____ ____ ____

(Dollars in Thousands)

Maximum amount of outstanding agreements
at any month-end during the year $64,585 $62,534 $52,319
Average amount outstanding during the year 55,644 52,234 45,429
Weighted average interest rate for the year 1.77% 3.68% 5.80%

The entire $53.7 million portfolio of securities sold under agreements to
repurchase outstanding at December 31, 2002 matures in January, 2003.


6. Interest Expense

Interest expense on interest-bearing checking, money market, savings and time
deposits was as follows for the years ended December 31, 2002, 2001 and 2000
(in thousands):

2002 2001 2000
_______ _______ _______

Interest-bearing checking $ 417 $ 564 $ 596
Money market 1,065 1,396 1,396
Savings 277 408 445
Time 8,911 12,075 11,041
_______ _______ _______

$10,670 $14,443 $13,478
======= ======= =======

Certificates of deposit in denominations of $100,000 or more were
approximately $150 million and $96 million at December 31, 2002 and 2001,
respectively. Interest expense for such certificates of deposit was
approximately $3.9 million, $5.1 million and $4.5 million in 2002, 2001
and 2000, respectively.



7. Other Non-Interest Expense

Some of the more significant expenses included in other expenses in the
consolidated statements of income for the years ended December 31, 2002,
2001 and 2000, were as follows (in thousands):

2002 2001 2000
____ ____ ____

Administrative service charges $ 238 $ 230 $ 187
Security 153 159 136
Donations 115 51 39
Armored carrier and courier 115 113 111
State fees and assessments 106 98 89
FDIC insurance 79 78 77
Postage 58 59 62
Dues and subscriptions 56 58 56
Advertising 46 20 125
Other 232 221 220
______ ______ ______

$1,198 $1,087 $1,102
====== ====== ======


8. Income Taxes

The components of the net deferred tax asset as of December 31, 2002 and 2001,
were as follows (in thousands):

2002 2001
____ ____
Deferred tax assets:
Goodwill amortization $1,139 $1,303
Allowance for loan losses 1,613 1,559
Depreciation of fixed assets 226 268
Investment in securities 161 161
Non-accrual interest - 22
Other 13 23
______ ______

Total deferred tax asset (included in other assets) 3,152 3,336
______ ______

Deferred tax liabilities:
Unrealized gain on investment securities 2,518 1,326
______ ______

Total deferred tax liability
(included in other liabilities) 2,518 1,326
______ ______

Net deferred tax asset $ 634 $2,010
====== ======


The components of the provision (benefit) for income taxes for the years ended
December 31, 2002, 2001 and 2000 were as follows (in thousands):


2002 2001 2000
______ ______ ______

Current-federal $3,111 $2,861 $2,216
Current-state 719 307 490
Deferred-federal 165 (304) 9
Deferred-state 19 (32) 1
______ ______ ______

$4,014 $2,832 $2,716
====== ====== ======


The following table reconciles taxes at the federal statutory rate with the
effective rate for 2002, 2001 and 2000:

2002 2001 2000
____ ____ ____

Federal statutory rate 34% 34% 34%
Goodwill amortization - 1% 1%
State taxes 3% 4% 4%
Tax-exempt investment income (6%) (8%) (9%)
Other, net - (1%) -
____ ____ ____
Effective tax rate 31% 30% 30%
==== ==== ====


9. Earnings Per Share

The following table reconciles the weighted average shares (denominator) used
to calculate basic and diluted earnings per share (in thousands, except per
share amounts):



For the Year Ended December 31, 2002
______________________________________

Income Shares Per Share
(Numerator) (Denominator) Amount
_________ ___________ ______

Basic EPS $9,116 4,542 $2.01
Effect of Dilutive Options - 211 (0.09)
______ _____ _____

Diluted EPS $9,116 4,753 $1.92
====== ===== =====


For the Year Ended December 31, 2001
______________________________________

Income Shares Per Share
(Numerator) (Denominator) Amount
_________ ___________ ______

Basic EPS $7,017 4,519 $1.55
Effect of Dilutive Options - 136 (0.04)
______ _____ _____

Diluted EPS $7,017 4,655 $1.51
====== ===== =====



For the Year Ended December 31, 2000
______________________________________

Income Shares Per Share
(Numerator) (Denominator) Amount
_________ ___________ ______

Basic EPS $6,315 4,578 $1.38
Effect of Dilutive Options - 107 (0.03)
______ _____ _____

Diluted EPS $6,315 4,685 $1.35
====== ===== =====



10. Employee Benefit Plan

The Bank has a qualified contributory profit sharing plan covering
substantially all eligible employees. The Bank's contributions to the plan
were approximately $167,000, $154,000 and $149,000 in 2002, 2001 and 2000,
respectively.


11. Commitments and Contingencies

The Bank is involved in litigation arising from the ordinary course of
business. In the opinion of management, the outcome of this litigation
will not have a significant effect on financial position or results of
operations.

The Company and the Bank have entered into employment agreements with four
officers. The terms of the agreements range from one to three years.
Compensation and benefits under these agreements are determined by the Board
of Directors. Compensation and benefits are provided in certain defined
circumstances, including change in control of the Company.


12. Stock Transactions

On November 18, 2002, the Company's Board of Directors authorized a five-for-
four stock split, to be effective on January 3, 2003. Earnings per share
amounts have been restated to retroactively reflect this transaction.

In March 1994, the Board of Directors adopted two stock option plans; the 1994
Outside Director Stock Option Plan and the 1994 Performance Stock Option Plan,
which were approved by the shareholders in April 1994. Under the terms of the
plans, the option price is not less than the fair market value of the common
stock on the date of the grant. On April 15, 1999, the shareholders approved
amendments to both plans which increased the number of shares reserved for the
grant of options by 150,000 for each plan. The maximum number of shares that
may be issued under the Outside Director Stock Option Plan and Performance
Stock Option Plan are 348,814 and 652,690, respectively. Options granted
under the Outside Director Stock Option Plan are immediately exercisable and
are for a term of ten years. At December 31, 2002 and 2001, there were
54,571 and 68,348 shares available, respectively, for future option grants
under the Outside Director Stock Option Plan. Options granted under the
Performance Stock Option Plan are not exercisable for a period of one year
from the date of grant and are for a term of ten years. At December 31,
2002 and 2001, there were 207,089 and 177,653 shares available,
respectively, for future option grants under this plan. The current status
of options outstanding and the activity for 2002, 2001 and 2000 are
presented below:


Outside Director Performance
Stock Option Plan Stock Option Plan
____________________ ____________________

Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Options Price Options Price
_______ ________ _______ ________

Options outstanding,
December 31, 1999 171,878 $12.27 259,716 $11.09
Granted 38,750 14.00 44,356 14.00
Exercised - - (14,928) 8.68
_______ ______ _______ ______

Options outstanding,
December 31, 2000 210,628 12.58 289,144 11.78
Granted 37,500 16.68 48,126 16.68
Exercised - - (16,137) 10.91
_______ ______ _______ ______

Options outstanding,
December 31, 2001 248,128 13.19 321,133 12.69
Granted 37,500 22.80 41,875 22.80
Exercised (17,963) 15.47 (25,032) 13.51
_______ ______ _______ ______

Options outstanding,
December 31, 2002 267,665 14.61 337,976 14.11
======= ====== ======= ======
Options exercisable,
December 31, 2002 267,665 $14.61 296,101 $12.89
======= ====== ======= ======



Summarized below is information about stock options outstanding and exercisable
at December 31, 2002:

Outside Director Stock Option Plan
_____________________________________________________

Outstanding Exercisable
_______________________________ ____________________

Exercise Price Number of Average Average Number of Average
Range Shares Life(1) Price(2) Shares Price(2)
_____ ______ ______ _______ ______ _______

$ 6.94- 9.70 72,948 2.5 $ 8.46 72,948 $ 8.46
$ 9.71-13.50 23,156 4.5 11.58 23,156 11.58
$13.51-18.00 134,061 7.1 16.19 134,061 16.19
$18.01-22.80 37,500 9.5 22.80 37,500 22.80
_______ _______

267,665 267,665
======= =======

Performance Stock Option Plan
_____________________________________________________

Outstanding Exercisable
_______________________________ ____________________

Exercise Price Number of Average Average Number of Average
Range Shares Life(1) Price(2) Shares Price(2)
_____ ______ ______ _______ ______ _______

$ 6.94- 9.70 106,977 2.3 $ 8.21 106,977 $ 8.21
$ 9.71-13.50 28,747 4.5 11.58 28,747 11.58
$13.51-18.00 160,377 7.2 16.24 160,377 16.24
$18.01-22.80 41,875 9.5 22.80 - -
_______ _______

337,976 296,101
======= =======

(1) Weighted average contractual life remaining in years.
(2) Weighted average exercise price.


Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation," became effective for the year ended December 31, 1996.
This pronouncement encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options and other equity
instruments to employees based on the new fair value accounting rules. The
Company has determined not to recognize such compensation expense.

The compensation expense, net of income tax effect, if recognized, would have
resulted in a decrease in the pro forma amounts indicated below, for the years
ended December 31, 2002, 2001 and 2000:

2002 2001 2000
____ ____ ____

(In Thousands, Except Per Share Amounts)
Net earnings - as reported $ 9,116 $ 7,017 $ 6,315
Net earnings - pro forma 8,890 6,838 6,135
Earnings per share (diluted) - as reported 1.92 1.51 1.35
Earnings per share (diluted) - pro forma 1.87 1.47 1.31


The weighted average fair value of options granted during 2002, 2001 and 2000,
were $4.52, $4.16 and $4.29, respectively. The weighted average fair value of
each option grant was estimated as of the date of grant using the Modified
Black-Scholes option-pricing model with the following weighted average
assumptions for 2002, 2001 and 2000, respectively: dividend yield of 2.62%,
3.42% and 4.24%; expected volatility of 21.6%, 23.3% and 24.5%; risk-free
interest rate of 2.45%, 3.30% and 6.35%; and expected life of 9.5 years for
each of the three years.



13. Commercial Bankshares, Inc. (Parent Company Only) Financial Information


Condensed Balance Sheets
(In Thousands)

December 31,
____________________

2002 2001
_______ _______
Assets:
Cash and cash equivalents $ 2,616 $ 2,467
Investment in banking subsidiary 53,511 46,273
Other investments 2,861 2,840
Goodwill, net 253 253
Other assets 1,039 17
_______ _______

Total assets $60,280 $51,850
======= =======

Liabilities and stockholders' equity:
Other liabilities $ 1,675 $ 1,725
Stockholders' equity 58,605 50,125
_______ _______

Total liabilities and stockholders' equity $60,280 $51,850
======= =======




Condensed Statements of Income
(In Thousands)

Years ended December 31,
_____________________________

2002 2001 2000
______ ______ ______
Income:
Interest on investments $ 118 $ 112 $ 157
Security gains - 240 -
Other 100 200 150
______ ______ ______

Total income 218 552 307
______ ______ ______

Expenses:
Amortization of goodwill - 163 163
Other 77 64 55
______ ______ ______

Total expenses 77 227 218
______ ______ ______

Income before income taxes and equity in
undistributed earnings of subsidiary 141 325 89
Provision for income taxes 21 173 56
______ ______ ______

Income before equity in undistributed
earnings of subsidiary 120 152 33
Equity in undistributed earnings of subsidiary 8,996 6,865 6,282
______ ______ ______

Net income $9,116 $7,017 $6,315
====== ====== ======









Condensed Statements of Cash Flows
(In Thousands)

Years ended December 31,
________________________

2002 2001 2000
____ ____ ____

Cash flows from operating activities:
Net income $9,116 $7,017 $6,315
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Equity in undistributed earnings of subsidiary (8,996) (6,865) (6,282)
Depreciation and amortization - 163 163
Gain on sale of investment securities - (240) -
Change in other assets 77 (201) 638
Change in other liabilities (82) 39 (289)
______ ______ ______

Net cash provided by (used in) operating activities 115 (87) 545
______ ______ ______

Cash flows from investing activities:
Proceeds from maturities of investment
securities held to maturity - - 2,300
Proceeds from sales of investment
securities available for sale - 243 -
______ ______ ______

Net cash provided by investing activities - 243 2,300
______ ______ ______

Cash flows from financing activities:
Proceeds from exercise of stock options 612 176 129
Purchase of treasury stock (64) (132) (5,046)
Dividends received from subsidiary 2,776 4,050 2,860
Management fee received from subsidiary (100) 250 100
Dividends paid (3,190) (2,920) (2,672)
______ ______ ______

Net cash provided by (used in) financing activities 34 1,424 (4,629)
______ ______ ______


Increase (decrease) in cash and cash equivalents 149 1,580 (1,784)
Cash and cash equivalents at beginning of year 2,467 887 2,671
______ ______ ______

Cash and cash equivalents at end of year $2,616 $2,467 $ 887
====== ====== ======


14. Regulatory Matters

Capital Requirements

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory -- and possibly additional discretionary -- actions
by regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk-
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Total and Tier I capital (as defined in the regulations) to risk-
weighted assets (as defined) and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 2002, that the
Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2002, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum Total risk-based, Tier I risked-
based, and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the institution's category.



The Bank's actual capital amounts (dollars in thousands) and ratios are also
presented in the table. No amount was deducted from capital for interest-rate
risk.



To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
_____________ __________________ __________________

Amount Ratio Amount Ratio Amount Ratio
______ _____ ______ _____ ______ _____

As of December 31, 2002:
Total capital (to risk weighted assets):
Commercial Bankshares, Inc.
$59,662 14.62% > $32,639 > 8.00% N/A N/A
Commercial Bank of Florida
55,490 13.48% > 32,928 > 8.00% $41,160 10.00%

Tier I capital (to risk weighted assets):
Commercial Bankshares, Inc.
53,636 13.15% > 16,319 > 4.00% N/A N/A
Commercial Bank of Florida
50,739 12.33% > 16,464 > 4.00% 24,696 6.00%

Tier I capital (to total assets):
Commercial Bankshares, Inc.
53,636 7.66% > 21,015 > 3.00% N/A N/A
Tier I capital (to average assets):
Commercial Bank of Florida
50,739 7.48% > 20,340 > 3.00% 33,900 5.00%


As of December 31, 2001:
Total capital (to risk weighted assets):
Commercial Bankshares, Inc.
$53,093 13.54% > $31,375 > 8.00% N/A N/A
Commercial Bank of Florida
50,159 12.72% > 31,541 > 8.00% $39,427 10.00%

Tier I capital (to risk weighted assets):
Commercial Bankshares, Inc.
47,185 12.03% > 15,687 > 4.00% N/A N/A
Commercial Bank of Florida
45,517 11.54% > 15,771 > 4.00% 23,656 6.00%

Tier I capital (to total assets):
Commercial Bankshares, Inc.
47,185 8.24% > 17,173 > 3.00% N/A N/A
Tier I capital (to average assets):
Commercial Bank of Florida
45,517 8.19% > 16,667 > 3.00% 27,778 5.00%



Dividends

Dividends paid by the Bank to the Company are subject to the financial
condition of the Bank and practical business considerations relating to
utilization of funds. In addition, banking regulations limit the amount of
dividends that may be paid without prior approval of the Bank's regulatory
agency. Dividend payments are generally limited to earnings of the Bank, as
defined for regulatory purposes, for the current period and the full two
preceding years. At January 1, 2003, the Bank could have paid dividends to
the Company aggregating $22.1 million without prior regulatory approval.
Future dividends will be dependent on the level of earnings of the Bank.

Cash dividends declared by the Company totaled $3.3 million and $3.0 million
in 2002 and 2001, respectively. Dividends declared but not yet paid amounted
to $867,000 and $758,000 at December 31, 2002 and 2001, respectively.



15. Financial Instruments With Off-Balance-Sheet Risk and With Concentrations
of Credit Risk

Off-Balance-Sheet Risk

The Bank is a party to financial instruments with off-balance-sheet risk which
are created in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to extend
credit and standby and commercial letters of credit. These instruments
involve, to varying degrees, elements of credit and interest rate risk in
excess of amounts recognized in the consolidated balance sheets. The Bank
uses the same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments.

Commitments to extend credit generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Total commitments to
extend credit at December 31, 2002 and 2001 were $32 million and $30 million,
respectively. The Bank evaluates each customer's credit-worthiness on a case-
by-case basis. The amount of collateral obtained, if deemed necessary by the
Bank upon extension of credit, is based on management's credit evaluation.

The Bank is a party to financial instruments with off-balance sheet credit risk
which arise in the normal course of business and which involve elements of
credit and liquidity risk. Amount such financial instruments are commercial
letters of credit and standby letters of credit. A summary of the Bank's
outstandings at December 31, 2002 is as follows:

Commercial letters of credit $ 137,000
Standby letters of credit $4,100,000

Commercial letters of credit and standby letters of credit include exposure to
some credit loss in the event of nonperformance by the customer. The Bank's
credit policies and procedures to approve letters of credit are the same as
those for extensions of credit that are recorded on the balance sheet. While
a significant portion of outstanding commercial letters of credit is utilized,
the major portion of such utilizations is on an immediate payment basis. The
remainder is secured by collateral or the goods acquired by the customer with
the letter of credit. There are no loan commitments to extend credit.

Standby letters of credit represent irrevocable guarantees by the Bank for the
performance of specified financial obligations and arise in the normal course
of business. These financial instruments have fixed maturity dates, and, since
many of them expire without being drawn, they do not generally present a
significant liquidity risk to the Bank. As of December 31, 2002, the Bank's
standby letters of credit have an aggregate carrying value of $4.1 million,
range in term from three days to 352 days, and are generally secured by
collateral or the goods acquired by the customer for which the standby letter
of credit was issued.

Concentrations of Credit Risk

The Bank primarily grants loans for which South Florida real estate is the
collateral. The borrowers' ability to honor their contracts is substantially
dependent upon the general economic conditions of the region. As of
December 31, 2002, the Bank's ten largest loan relationships had an aggregate
balance of $57 million, representing 16% of net loans. As of December 31,
2001 the Bank's ten largest loan relationships had an aggregate balance of
$50 million, representing 14% of net loans.


16. Disclosure About Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of
each significant class of financial instrument for which it is practicable to
estimate that value.

Cash and Due from Banks and Federal Funds Sold

For these short-term instruments, the carrying amount is a reasonable estimate
of fair value.

Investment Securities

The fair value of investment securities equals quoted market price, if
available. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar securities. Note 2 to the Consolidated
Financial Statements provides information on estimated fair values at December
31, 2002 and 2001.

Loans

A significant portion of loans is comprised of prime-based loans and treasury
bill-based loans. The fair value of these types of loans is the carrying
amount of the loan. At December 31, 2002, variable rate loans amounted to
approximately $294 million or 84% of total loans. Fixed rate loans maturing
within the next year totaled $12 million or an additional 4% of total loans.
At December 31, 2001, variable rate loans amounted to approximately $272
million or 78% of total loans. Fixed rate loans maturing within the next
year totaled $22 million or an additional 6% of total loans. The fair value
of these types of loans is the carrying amount of the loan. Market value of
fixed rate loans with maturities in excess of one year, representing
approximately 12% of the loan portfolio as of December 31, 2002 and 16% as
of December 31, 2001, approximates carrying value based on terms and maturity
of those loans and current borrowing rates.

Deposit Liabilities and Short-term Borrowed Funds

The fair value of demand, savings, interest-bearing checking and money market
deposits and of borrowings under repurchase agreements is the amount payable on
demand (carrying amount). The fair value of fixed maturity certificates of
deposit is estimated using the rates currently offered for deposits of similar
remaining maturities. At December 31, 2002, the fair value of time deposits
approximates carrying value, which includes time deposits of $187 million due
within twelve months, or 60% of total time deposits. At December 31, 2001,
time deposits of $204 million due within twelve months represented 91% of total
time deposits.


Commitments to Extend Credit and Standby Letters of Credit

The fair value of commitments is estimated using the fees currently charged to
enter into similar agreements, taking into account the remaining terms of the
agreements and the present creditworthiness of the counter parties. The fair
value of letters of credit is based on fees currently charged for similar
agreements. At December 31, 2002, a significant portion of the letter of
credit portfolio is scheduled to expire within twelve months. The fair value
of these commitments approximates the committed amounts.





COMMERCIAL BANKSHARES, INC.

DIRECTORS OFFICERS

Cromwell A. Anderson Jack J. Partagas Joseph W. Armaly
Retired Attorney President and Chairman and
Chief Operating Officer Chief Executive Officer
Joseph W. Armaly
Chairman of the Board and Sherman Simon Jack J. Partagas
Chief Executive Officer Investments President, Secretary,
and Chief Operating
Officer
Richard J. Bischoff Michael W. Sontag
Attorney General Contractor Barbara E. Reed
Real Estate Investor Senior Vice President
and Chief Financial
Robert Namoff Officer
Chief Executive Officer Martin Yelen
Allied Universal Corp. Retired Attorney






COMMERCIAL BANK OF FLORIDA
OFFICERS

Joseph W. Armaly Chairman and CEO
Jack J. Partagas President and COO
Bruce P. Steinberger Executive Vice President
Barbara E. Reed Senior Vice President and CFO
David E. DiMuro Senior Vice President
Phillips G. Gay, Jr. Senior Vice President
Hal Kaufman Senior Vice President
Joseph Kertis, Jr. Senior Vice President
Dennis G. Longo Senior Vice President
John M. Maroon Senior Vice President
Tony Maroon Senior Vice President
Raul M. Zarranz Senior Vice President
William S. Dieterle Director of Internal Audit
Stephen W. Armaly Vice President
Sherryl Bowein Vice President
Ralph E. Coman Vice President
Elena Correa Vice President
Valerie Dacks Vice President
Sherri Feinstein Vice President and Controller
Susan Ferbin Vice President
Diana C. Goudie Vice President
Nancy Hernandez Vice President
Mary Lou Hutcheson Vice President
Paul Larkin Vice President
Alfred P. Lettera Vice President
Wendy Robinson Vice President
Robert D. Singleton Vice President
Fay Marie Stephens Vice President
Pamela Tucker Vice President
Deborah Winkles Vice President
Constance Bauer Assistant Vice President
Lourdes Beck Assistant Vice President
Ann Bovard Assistant Vice President
Luis A. Castillo Audit Manager
Nora Clavijo Assistant Vice President
Mari M. Colina Assistant Vice President
Anne E. Cook Assistant Vice President
Mercedes De Quesada Assistant Vice President
Peter Fernandez Assistant Vice President
Carlos A. Grosso Investment Officer
Theresa Hilson Assistant Vice President
C. Margaret Humphrey Assistant Vice President
Geraldine T. Kitchell Assistant Vice President
Wendy M. Knowles Assistant Vice President
Sue Marchetti Assistant Vice President
Cristina Ojeda Assistant Vice President
Lidia Perez Assistant Vice President
Margaret Rizzotto Assistant Vice President
Mary Robbins Assistant Vice President
Marisella Salado Commercial Loan Officer
Linda Schubowsky Assistant Vice President
Terri Stockwell Assistant Vice President
Delia Yepez Assistant Vice President
Aurora Franquiz Mortgage Loan Specialist
Aletha Jackson Assistant Cashier
Carol Paul Lewis Assistant Cashier
Ileana Medina Loan Operations Officer
Alice Milhet Assistant Cashier
Ruben Molina Assistant Cashier
Brenda Paul Assistant Cashier
Damien Ramirez Commercial Loan Officer
Laurie Taylor Assistant Cashier
Rose Torres MIS Officer
Linda K. Wood Installment Loan Officer
James F. Zimny, Jr. Accounting Officer







SUBSIDIARY BANK LOCATIONS

PERRINE/CUTLER RIDGE MIAMI BEACH
19455 S. Dixie Highway 425 41st Street
Miami, FL 33157 Miami Beach, FL 33140
(305) 234-6090 (305) 531-4435


PINECREST/THE FALLS MEDLEY/HIALEAH GARDENS
13001 S. Dixie Highway 11590 N.W. South River Drive
Miami, FL 33156 Medley, FL 33178
(305) 378-2000 (305) 883-1110


KENDALL NORTH MIAMI
10899 Sunset Drive 12255 N.E. 16th Avenue
Miami, FL 33173 North Miami, FL 33161
(305) 274-2000 (305) 891-6950


SOUTH MIAMI/CORAL GABLES HALLANDALE
1533 Sunset Drive 1448 E. Hallandale Beach Blvd.
Coral Gables, FL 33143 Hallandale, FL 33009
(305) 663-6030 (954) 454-3551


BRICKELL PEMBROKE PINES
501 Brickell Key Drive 176 S. Flamingo Road
Miami, FL 33131 Pembroke Pines, FL 33027
(305) 374-1100 (954) 437-8100


MAIN OFFICE POMPANO BEACH
1550 S.W. 57th Avenue 300 E. Sample Road
Miami, FL 33144 Pompano Beach, FL 33064
(305) 267-1200 (954) 943-6550


MIAMI SPRINGS CORAL SPRINGS
69 Westward Drive 1999 University Drive
Miami Springs, FL 33166 Coral Springs, FL 33071
(305) 883-0883 (954) 753-7555



Annual Meeting
Thursday, April 24, 2003, at 10:00 a.m.
1550 S.W. 57th Avenue
Boardroom
Miami, Florida 33144

Transfer Agent
Mellon Investor Services

Independent Certified Public Accountants
PricewaterhouseCoopers LLP
Miami, Florida

For Financial Information, Contact
Barbara E. Reed
Senior Vice President and Chief Financial Officer
(305) 267-1200

Form 10-K
Copies of the Corporation's Annual Report on Form 10-K as filed with
the Securities and Exchange Commission are available on request by
calling or writing to the attention of Shareholder Relations at
1550 S.W. 57th Avenue, Miami, FL 33144, (305) 267-1200.

Web Page
www.commercialbankfl.com












Exhibit 21.1

Subsidiaries of Commercial Bankshares, Inc.:

Commercial Bank of Florida, a Florida chartered banking corporation (100%)

















Exhibit 23.1


Consent of Independent Certified Public Accountants

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8/S-3 (No. 33-96606) of Commercial Bankshares, Inc. of our
report dated January 15, 2003 relating to the financial statements, which
appears in the Annual Report to Shareholders, which is incorporated in this
Annual Report on Form 10-K.


PricewaterhouseCoopers LLP
Miami, Florida
March 17, 2003













Exhibit 99.1

EXHIBIT 99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-
Oxley Act of 2002

In connection with the Annual Report of Commercial Bankshares, Inc., (the
"Company") on Form 10-K for the year ended, December 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Joseph W. Armaly, Chief Executive Officer of the Company, certify, pursuant
to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d),
as applicable, of the Securities Exchange Act of 1934, as amended; and

2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company
as of the dates and for the periods expressed in the Report.



/s/ Joseph W. Armaly
_______________________

Joseph W. Armaly
Chief Executive Officer
March 17, 2003


The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.













Exhibit 99.2

EXHIBIT 99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, As Adopted Pursuant To Section 906 of the Sarbanes-
Oxley Act of 2002

In connection with the Annual Report of Commercial Bankshares, Inc., (the
"Company") on Form 10-K for the year ended, December 31, 2002 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Barbara E. Reed, Chief Financial Officer of the Company, certify, pursuant to
18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d),
as applicable, of the Securities Exchange Act of 1934, as amended; and

2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company
as of the dates and for the periods expressed in the Report.



/s/ Barbara E. Reed
______________________

Barbara E. Reed
Chief Financial Officer
March 17, 2003

The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.