Exhibit 10.38

 

L E A S E

 

This Lease is made and entered into this 15November, 2010, by and between,
LACOLA, INC. c/o Telok Management as Agent, hereinafter called “Landlord” and
Wilshire State Bank, hereinafter called “Tenant”.

 

1.               PREMISES.

 

Landlord leases to Tenant, and Tenant leases from Landlord, upon the terms and
conditions hereinafter set forth, the real property and the building thereon,
located in the City of Gardena, State of CALIFORNIA commonly known as 1701 W.
Redondo Beach Blvd., Suites A & B, Gardena, CA 90247, hereinafter referred to as
the “Premises.” The Premises consist of approximately 3,325 rentable square feet
of interior space, and are located in a multi-store shopping center, hereinafter
called the “Center”, as outlined on the Site Plan attached to this lease as
Exhibit “A.”  The statement of the rentable square footage set forth herein is
an approximation, however, Tenant and Landlord agree that it is reasonable and
it shall not be subject to re-measurement or adjustment.

 

2.               TERM.

 

The Term of this Lease is Ten (10) Years and Eight (8) Months, will commence
upon the earlier of, (a) One Hundred Fifty (150) days after the date Landlord
delivers possession of the Premises to Tenant, or (b) the date Tenant opens
business operations at Premises , hereinafter called “Lease Term Date”.

 

3.1         MINIMUM RENT.

 

(a)        Tenant’s obligation to pay rent will commence on Lease Term Date,
hereinafter called the “Rent Commencement Date”.

 

(b)        Tenant shall pay Landlord minimum guaranteed rent (“Minimum Rent”)
for the Premises in monthly payments in advance commencing on the Rent
Commencement Date and thereafter on the first (1st) day of each succeeding
calendar month as follows: “See Rent Schedule Below”. In the event that the Rent
Commencement Date is not the first (1st) day of a calendar month, Minimum Rent
will be prorated for the period from the Rent Commencement Date to the first
(1st) day of the next month.

 

(c)        The Minimum Rent will be increased in accordance with the Minimum
Rent Schedule defined herein.

 

Tenant, except as otherwise provided for herein, shall perform all of its other
obligations under this Lease commencing as of the date that possession of the
Premises is tendered to Tenant.

 

 

MINIMUM RENT SCHEDULE:

 

 

 

YEAR 1-3    @ $4,488.75per month + NNN

 

YEAR 4-10   @ 3% Rent Increase Annually        +NNN

 

3.2         PERCENTAGE RENT.

 

           (a)        In addition to the Minimum Rent to be paid by Tenant
pursuant to Paragraph 3.1, Tenant shall pay to Landlord, at the time and in the
manner herein specified, additional rent in an amount equal to N/A (%) percent
of the amount of Tenant’s gross sales made in, upon or from the Premises
(“Percentage Rent”) during each calendar month of the Lease term, less the
aggregate amount of the Minimum Rent previously paid by Tenant for said month.

 

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           (b)        Within thirty (30) days after the end of each month,
following the Rent Commencement Date, Tenant shall furnish to Landlord a
statement in writing, certified by Tenant to be correct, showing the total gross
sales made in, upon, or from Premises during the preceding calendar month, and
shall accompany each such statement with a payment to Landlord equal to said
hereinabove stated percentage of the monthly gross sales made in, upon, or from
the Premises during each calendar month, less the Minimum Rent for such prior
calendar month, if previously paid. Said statement and payment shall be made
with the next succeeding regular rental payment. Within thirty (30) days after
the end of each calendar year of the term hereof, Tenant shall furnish to
Landlord a statement in writing, certified to be correct, showing the total
gross sales by months made in, upon or from the Premises during the preceding
calendar year, at which time an adjustment shall be made between Landlord and
Tenant to the end that the total Percentage Rent paid for each such calendar
year shall be a sum equal to said hereinabove stated percentage of the total
gross sales made in, upon, of from the Premises during each calendar year of the
term hereof, less the Minimum Rent, pursuant to Paragraph 3.1 (Minimum Rent) for
each such calendar year, if previously paid, so that the Percentage Rent,
although payable monthly shall be computed and adjusted on an annual basis
Tenant’s failure to furnish such monthly or yearly reports on time or any
falsity therein shall constitute a material default by Tenant under this Lease.

 

           (c)        Within forty-five (45) days after the end of each calendar
quarter, Tenant shall sent to Landlord a copy of Tenant’s Report of Sales made
to the State Board of Equalization and to any other governmental agency or
entity, to whom sales are reported. Tenant agrees that each such statement shall
be and is hereby certified to be true and correct.

 

           (d)        The term “Gross Sales,” as used in this lease, shall
include the entire gross receipts of every kind and nature from sales and
services made in, upon, or from the Premises, whether upon credit or for cash,
in every department operating in the Premises, whether operated by the Tenant or
by a subtenant or subtenants, or by a concessionaire or concessionaires,
excepting therefrom any rebates and/or refunds to customers and the amount of
all sales tax receipts which has to be accounted for by Tenant to any
government, or any governmental agency. Sales upon credit shall be deemed cash
sales and shall be included in the gross sales for the period which the
merchandise is delivered to the customer, whether or not title to the
merchandise passes with delivery.

 

           (e)        Tenant shall keep full, complete and proper books, records
and accounts of its daily gross sales, both for cash and on credit, of each
separate department, subtenant and concessionaire operated at any time in the
Premises. Landlord and its agents and employees shall have the right at any time
and all times, during the regular business hours, to examine and inspect all of
the books and records of Tenant, including any sales tax reports pertaining to
the business of Tenant conducted in, upon or from the Premises, for the purpose
of investigating and verifying the accuracy of any statement of gross sales.
Landlord may once, in any calendar year, cause an audit of the business of
Tenant to be made by an accountant of Landlord’s selection and if statement of
gross sales previously made to Landlord shall be found to be inaccurate, then
and in that event, there shall be an adjustment and once party shall pay to the
other on demand such sums as may be necessary to settle in full the accurate
amount of said Percentage Rent that should have been paid for the period of
periods covered by such inaccurate statement or statements. Tenant shall keep
all said records for three (3) years. If said audit shall disclose an inaccuracy
in favor of Tenant of greater than a two (2%) percent error, with respect to the
amount of gross sales reported by Tenant for the period of said report, then
Tenant shall immediately pay to Landlord the cost of such audit; otherwise, the
cost of such audit shall be paid by Landlord. If such audit shall disclose any
willful or substantial inaccuracies, this Lease may thereupon be canceled and
terminated, at the option of Landlord.

 

3.3       All payments of rent shall be made in lawful money of the United
States without deduction, offset, prior notice or demand. Rent for any portion
of month shall be prorated on the basis of a thirty (30) day month.

 

4.               POSSESSION AND CONDITION OF THE PREMISES.

 

4.1       Tenant agrees to accept the Premises in their “AS IS ” condition as of
the date hereof and throughout the term of this Lease, except for the completion
of the remodeling, construction or repair, if any, which Landlord has agreed to

 

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perform pursuant to Exhibit “B” attached hereto, entitled “Building
Improvements” or “Description of Landlord’s Work” and incorporated herein.
Without limiting the foregoing, Tenant’s rights in the Premises are subject to
all municipal, county and state laws, ordinances and regulations governing and
regulating the use and occupancy of the Premises. Tenant acknowledges that
neither Landlord nor Landlord’s agent has made any representation or warranty as
to the present or future suitability of the Premises for the conduct of Tenant’s
business, or that Tenant’s proposed use of the premises or its manner of
operation are in compliance with applicable laws of governmental regulations.

 

4.2       Tenant hereby warrants that it has investigated whether its proposed
use of the Premises and its proposed manner of operation will comply with all
applicable laws, and Tenant assumes the risk that its proposed use of the
Premises and its proposed manner of operation are and will continue to be, in
compliance with all applicable laws, including, without limitation, all zoning
laws regulating the use of and enjoyment of the Premises. Tenant agrees that
under no circumstances will Tenant be released in whole or in part from any of
its obligations under this Lease as a result of any governmental authority
disallowing or limiting Tenant’s proposed use of the Premises or its manner of
operation. Additionally, Tenant agrees to install and pay for any improvements,
changes or alterations in the Premises, required by any governmental authority,
as a result of its proposed use of the Premises or its manner of operation.

 

5.               SECURITY DEPOSIT.

 

Tenant, contemporaneously with the execution of this Lease, has deposited with
Landlord the sum of FOUR THOUSAND FOUR HUNDRED EIGHTY EIGHT AND 75/100s
($4,488.75). Said deposit is being given to secure the faithful performance by
Tenant of all of the terms, covenants and conditions of this Lease by Tenant, to
be kept and performed during the term hereof. Tenant agrees that if Tenant shall
fail to pay the rent herein reserved promptly when due, said deposit may, at the
option of Landlord (but Landlord shall not be required to) be applied to any
rent due and unpaid, and if Tenant violates, beyond any applicable cure period,
any of the other terms, covenants and conditions of this Lease, said deposit may
be applied to any damages suffered by Landlord as a result of Tenant’s default,
to the extent of the amount of damages suffered.

 

Nothing in this Article 5 shall in any way diminish or be construed as waiving
any of Landlord’s other remedies by law or in equity. Should all or any part of
the security deposit be applied by Landlord as herein provided, then Tenant
shall, on the written demand of Landlord, forthwith remit to Landlord a
sufficient amount in cash to restore said security deposit to its original
amount Landlord reserves the right to increase the amount of said security
deposit so held, at the time of and in proportion to the amount of increase in
the Minimum Rent paid hereunder, should such rent be increased on any Adjustment
Date as set forth in Paragraph 3.1(C). In the event Landlord elects to exercise
such right Tenant shall be so notified, in writing, in the same manner and at
the same as Landlord’s required notice to Tenant concerning Minimum Rent
Adjustments pursuant to Paragraph 3.1(c) hereof. Should Tenant comply with all
of the terms, covenants and conditions of this lease, said security deposit
shall be returned in full to Tenant at the end of the term of this Lease.
Landlord shall have the right to Commingle or invest said security deposit, and
in no event shall Tenant be entitled to receive any interest or income thereon,
it being agreed that any interest shall be deemed to be additional rent.
Landlord may deliver the funds deposited under this Article by Tenant to the
purchaser or transferee of Landlord’s interest in the Premises in the event such
interest be sold or transferred; and thereupon Landlord shall be discharged from
further liability with respect to such deposit.

 

6.               USE AND TRADE NAME.

 

6.1       The Premises shall be used and occupied by Tenant and its approved
assignees, sublessees, licensees and concessionaires only for the purpose of
conducting therein a bank branch, general office, and all other legal uses in
accordance with all present and future zoning laws, rules and regulations of
governmental authorities having jurisdiction thereof, and subject to all
covenants, easements and rights of way of record, if any, which are presently in
existence or

 

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hereafter consented to in writing by Tenant. Tenant shall not use the Premises
for any other purpose without Landlord’s prior written consent.

 

6.2       Tenant’s consent shall not be required for the creation of any
covenants, easements or rights of way which are created or required by, or
result from the action of any governmental authority.

 

6.3       Tenant agrees (a) not to use, or suffer or permit the Premises or any
part thereof, to be used in any manner that will constitute a nuisance or an
unreasonable annoyance to the owners or occupants of the Center, or that might
injure the reputation of the Center, or for any extra-hazardous purposes, or in
any manner that might violate any policy or policies of insurance or suspend,
avoid, make inoperative or increase the rate of any fire, rental insurance, or
other insurance, at any time carried on any building in the Center or any of its
contents; (b) not to permit any auction, fire or bankruptcy sale to be conducted
in the Premises; (c) not to suffer or permit the Premises or any part thereof to
be used in any manner that will injure or impair the structural strength of said
building or annoy other tenants. The Premises and every part hereof, shall be
kept by Tenant in a clean, sanitary and wholesome condition, free from any
objectionable noises, odors or nuisances, public or private.

 

7.               COMPLIANCE WITH LAWS-SIGNS.

 

7.1       Tenant shall, at Tenant’s sole cost and expense, comply promptly with
all applicable statutes, ordinances, rules, regulations, orders, restrictions of
record, if any, and requirements in effect during the term, or any part hereof,
regulating the use or occupancy by Tenant of the Premises, provided that
Landlord shall not make or consent to any restrictions on Tenant’s authorized
use of the Premises during the term of this Lease without prior written notice
to Tenant.

 

7.2       Without Landlord’s prior written consent and approval as to form,
specification, detail and content, which approval and consent shall not be
unreasonably withheld, Tenant shall not (a) install any exterior lighting or
plumbing fixtures, shades or awnings, or any exterior decorations or signs, or
build any fences, or make any changes to the store front; (b) erect or install
any window signs, door signs, or advertising media, window or door lettering, or
placards on the exterior of the Premises; (c) keep or display any merchandise or
signs on, or otherwise obstruct the sidewalks or areaways adjacent to the
Premises; or, (d) fail to maintain the show windows and signs in a neat and
clean condition. Tenant shall not use, in the Premises or areas adjacent
thereto, any advertising or other media objectionable to Landlord or other
tenants, such as loud speakers, phonographs, or radio broadcasts that can be
heard outside the Premises.

 

7.3       Tenant may, at its own expense, erect an exterior sign on its store
front and the 3 facades of the Building, subject to Landlord’s prior written
approval of said Sign, which consent shall not be unreasonably withheld. Tenant
shall not change the color, size, location, composition, wording, or design of
any sign or advertisement on the Premises that may have been theretofore
approved by Landlord and governmental authorities without the prior written
approval of Landlord and said authorities. Tenant shall, at its own expense,
maintain and keep in good repair all installations, signs and advertising
devices which it is permitted by Landlord to maintain and shall pay all charges
required to keep them in good repair. Tenant must secure a contract for
construction and installation of its sign within thirty (30) days of execution
of this Lease. Failure to do so shall be a breach of this Lease. Tenant’s sign
must be installed and operating concurrently with its opening for business.
Tenant’s sign shall be deemed real property once installed.

 

7.4       Tenant, at Tenant’s sole cost and repair, shall have the right to
include its name on the upper-most available sign panel portion of the pylon
sign located at the entrance of the property.

 

8.               MAINTENANCE AND REPAIRS.

 

8.1       Landlord agrees to keep in good order and repair the foundations of
the Premises and the exterior roof during the term of the Lease and any extended
Option period. Landlord also agrees to provide Tenant a one (1) year warranty

 

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as set forth in Paragraph 9 of Exhibit “C” attached hereto. and to perform the
repairs set forth in Exhibit “B” attached hereto, prior to the Rent Commencement
Date of the Lease. Landlord is not obligated to make any other repairs or
alterations to the Premises.

 

8.2       Subject to the provisions of Paragraph 8.1 and paragraph 9 of
Exhibit “C” attached hereto, Tenant shall keep the Premises and every part
thereof, structural or non-structural, in good order, condition and repair,
whether or not the need for such repairs occurs as a result of Tenant’s use, any
prior use, the elements or the age of such portion of the Premises, including
without limiting the generality of the foregoing; all work done by Landlord
under Paragraph 8.1, all plumbing, heating, air conditioning, ventilating,
electrical lighting facilities (excluding Building’s main electrical panel) and
equipment from time to time within the Premises, fixtures, walls (interior and
exterior), floors, windows, doors, plate glass and sky lights located within the
Premises. Tenant shall also keep, maintain and repair all alterations,
additions, or improvements to the Premises made by Tenant as provided in
Article 9 (Alterations and Improvements) hereof Tenant shall be responsible for
obtaining and maintaining a service and repair contract for the air conditioning
unit, if any, servicing the Premises, which responsibility shall continue
throughout the existence of this Lease.

 

8.3       If Tenant fails to perform Tenant’s obligations under this Article 8,
Landlord may, at its option (but shall not be required to enter upon the
Premises after thirty (30) days’ prior written notice to Tenant of the specific
failure of Tenant under this Article 8, and provided that Tenant has not
theretofore cured such failures, put the same in good order, condition and
repair, and the cost thereof, with an overhead surcharge of ten (10%) percent of
such cost, shall become due and payable as additional rental to Landlord
together with Tenant’s next rental installment.

 

8.4       Except for the obligations of Landlord under Article 16 (Damage,
Destruction and Restoration) and Article 26 (Condemnation, Eminent Domain), it
is intended by the parties hereto that Landlord shall have no obligation in any
manner, whatsoever, to repair and maintain the Premises, nor any buildings or
improvements located thereon, nor the equipment therein, whether structural or
non-structural, all of which obligations are those of Tenant under this Lease.
Tenant expressly waives the benefit of any statute now or hereafter in effect
which would otherwise afford Tenant the right to make repairs at Landlord’s
expense, or to terminate this Lease because of Landlord’s failure to keep the
Premises in good order, condition and repair. Tenant waives the provisions of
Civil Code 1941 et. seq. and 1942 et. seq. or any similar, successor or related
provisions of the law with respect to Landlord’s obligations for tenantability
of the Premises, and Tenant’s right to make repairs and deduct the expense of
such repairs from the rent.

 

8.5       Tenant has the right to contest by appropriate judicial or
administrative proceedings, without cost or expense to Landlord, the validity or
application of any law, ordinance, order, rule, regulation or requirement
imposed by any governmental authority (hereinafter called “law”) that the
Premises be repaired, maintained, altered, or the leasehold improvements be
replaced in whole or in part, or that would affect Tenant’s use of the Premises.
In the event that such contest is finally determined in a manner adverse to
Tenant, Tenant shall undertake such repairs, maintenance, alterations, or
replacements to or of the Premises as is required by such law. Tenant agrees to
indemnify and hold Landlord harmless from and against any and all liability that
Landlord may sustain by reason of Tenant’s failure or delay in complying with
the law. Landlord may, but is not required to, contest any such law
independently of Tenant. Landlord may, and on Tenant’s notice or request shall,
join in Tenant’s contest. Rent shall not abate during the period of any such
contest.

 

9.               ALTERATIONS AND IMPROVEMENTS.

 

9.1       Tenant may, at Tenant’s sole cost and expense, during the first year
of this Lease, but subject to the conditions hereinafter stated, make initial
alterations, additions or improvements, (hereinafter collectively called
“alterations”), in, on, to or about the Premises which are required to commence
Tenant’s use, per Paragraph 6.1 subject to Landlord’s prior written approval of
Tenant’s plans, which written approval shall not be unreasonably withheld.
Tenant shall submit detailed plans, specifications and drawings necessary for
the construction of said alterations to Landlord, by certified

 

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mail, within fifteen (15) days following the date upon which Landlord delivers a
fully executed copy of this Lease to Tenant, and Landlord shall notify Tenant of
its approval or disapproval of, and any necessary changes or modifications to,
said plans within a reasonable period of time following receipt of the same, not
to exceed ten (10) days. In the event Landlord disapproves said plans, as
submitted, Tenant shall be advise of the reasons for such disapproval and shall
revise and resubmit said plans, in form and content acceptable to Landlord,
within ten (10) days following Landlord’s notice to Tenant of such disapproval.
All of the foregoing alterations shall be at the sole cost and expense of
Tenant, and shall be constructed and performed subject to the terms, covenants,
and conditions of this Lease.

 

9.2       With respect to all alterations, additions or improvements made by
Tenant in, on, to or about the Premises, whether or not pursuant to Paragraph
9.1 hereof, such alterations shall be for the purpose of facilitating Tenant’s
permitted use and shall also be subject to Landlord’s prior written approval of
Tenant’s plans, which approval shall not be unreasonably withheld, as well as
the terms, covenants and conditions of this Lease. All of the foregoing
alterations shall be at the sole cost and expense of Tenant, including the
reasonable cost for review of Tenant’s plans by Landlord or its agents. All said
alterations shall be made in compliance with applicable zoning and building
codes, and shall not diminish the fair market value of the improvements on the
Premises. Except as herein stated, Tenant shall not have the right, without
Landlord’s prior written consent, which written consent shall not be
unreasonable withheld, to demolish any part of the improvements existing on the
Premises at the date of the execution of this Lease. Tenant shall pay when due
all claims for labor and materials furnished or alleged to have been furnished
to or for Tenant at or for use in the Premises; shall take all steps necessary
to keep the Premises free from any liens, claims, or encumbrances; and Tenant
agrees to indemnify and hold Landlord, the Premises and the Center harmless from
and against any and all liability arising out of any such claims. Tenant shall
not be permitted to place any mortgage, deed of trust, or other form of lien or
encumbrance on the Premises, Tenant’s leasehold interest therein, or any portion
of the Center, for purposes of financing the construction of any such
alterations, securing the repayment of any such financing, or otherwise.

 

9.3       Before the commencement of any alterations, Tenant, at its sole cost,
shall furnish to Landlord a Performance and Completion Bond issued by an
insurance company qualified to do business in California, in a sum equal to the
cost of the alterations (as determined by the construction contract between
Tenant and its contractor) guaranteeing the completion of the alterations free
and clear of all liens and other charges, in accordance with the plans and
specifications approved by Landlord. Following approval of said plans and
specifications by Landlord, Tenant shall immediately commence said alterations
and improvements, and shall use best efforts to complete the same in an
expeditious fashion. The alterations shall be performed in a manner that will
not interfere with the quiet enjoyment of the other tenants of the Center.
Tenant shall give Landlord not less than ten (10) days’ notice, in writing,
prior to the commencement of the alterations, and Landlord shall have the right
to post Notices of Non-Responsibility in or on the Premises, as provided by law.
Tenant shall have the right, in good faith, to contest the validity of any such
lien, claim or demand, and Tenant shall, at its sole expense, defend itself and
Landlord against the same, and shall pay and satisfy any adverse judgment that
may be rendered thereon before the enforcement thereof against Landlord or the
Premises, and as a condition of contesting any such lien, Tenant shall provide
such bonds or other security as Landlord shall reasonably require. Landlord may
require Tenant to pay Landlord’s reasonable attorney’s fees and costs in
participating in any such action if Landlord participates therein at the request
of Tenant, or if Landlord is joined as a defendant in such action and Tenant’s
counsel determines that it cannot ethically or effectively represent both
Tenant’s and Landlord’s interest in such action.

 

9.4       Any alterations made shall, unless Landlord elects otherwise, remain
on, become part of, and be surrendered with the Premises on the expiration or
termination of the term, except that Landlord can elect within ninety (90) days
before the expiration of the term, or within thirty (30) days after termination
of the term, to require Tenant to remove any alterations that Tenant has made to
the Premises. If Landlord so elects, Tenant at its cost, shall restore the
Premises to the condition designated by Landlord in its election before the last
day of the term, or within thirty (30) days after notice of election is given,
whichever is later. The foregoing provision shall not apply to any trade
fixtures installed by Tenant or any subtenant which are capable of being removed
by Tenant, or any subtenant, without substantial and unrepairable damage to the
Premises, and which Tenant, or any subtenant, elects to remove upon the
termination of this Lease, provided that Tenant or any subtenant promptly
repairs, at its sole cost and expense, all damage to the remaining

 

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improvements on the Premises caused by such removal, and provided further, that
the value of the improvements remaining on the Premises following such removal,
are substantially equal to what the value of the improvements existing on the
Premises at the time of the execution of this Lease would have been, if the same
had only normal wear and tear since the date of the execution of this Lease,
and, provided further that Tenant’s right to remove such alterations shall be
suspended at any time Tenant is in default under this Lease.

 

9.5       On completion of any work of alteration, addition or improvement by
Tenant, or any subtenant, Tenant shall supply Landlord with “as built” drawings
accurately reflecting all such work.

 

10.         UTILITIES.

 

10.1     Tenant shall pay for all water, sewer, gas, heat, light, power, steam,
telephone or other utilities and services supplied to the Premises, together
with any taxes thereon. Under no circumstances shall Landlord be responsible for
any interruption, cessation, or interference with any such utility service
UNLESS CAUSED BY INTENTIONAL ACTS OF THE LANDLORD.

 

10.2     Tenant acknowledges that the Center (Shell) constructed by Landlord or
previous Landlord, of which the Premises constitutes a part, will have, unless
otherwise specifically provided for herein, two (2) separate water meters
installed to service the Center. The first such meter (“House Meter”) shall be
for monitoring water use for the Common Areas (as defined in Article 18). The
expense of operating such House Meter shall be allocated among the tenants of
the Center, and Tenant shall pay as additional rent Tenant’s Proportionate Share
of such expense in the same manner as and in accordance with the provisions of
Article 18 covering the payment of such Common Area expenses. The second such
meter (“Tenant Meter”) shall be for monitoring water use by tenants of the
Center with respect to water used within or in relation to the operation of said
tenants’ businesses at each of their respective Premises. Tenant shall pay as
additional rent Tenant’s Proportionate Share of the expense of such Tenant Meter
water use in the same manner as and in accordance with the provisions of
Article 18 covering the payment of such Common Area expenses. Tenant shall be
entitled to receive from Landlord an accounting of its usage within a reasonable
time after providing written request to Landlord.

 

10.3     Tenant acknowledges that the tenant mix and the tenants’ permitted uses
within the Center will from time to time change, and such events may result in
greater proportionate water usage by some tenants of the Center as compared to
others. Accordingly, Landlord may in Landlord’s sole discretion, and at any time
during the initial or any extended term hereof, request that Tenant purchase,
install and maintain Tenant’s own water meter (“Premises Meter”), to be used
exclusively by Tenant. Additionally, Tenant shall have the right, subject to
prior approval of Landlord, which approval shall not be unreasonable withheld,
to elect to convert Tenant’s water use from said Tenant Meter system to Tenant’s
own Premises Meter. In the event Tenant installs a Premises Meter as described
herein, whether at the request of Landlord or by election of Tenant, then Tenant
shall no longer be included in the prorata allocation of expenses relating to
the operation and use of the Tenant Meter described in Paragraph 10.2 above, but
shall remain responsible for Tenant’s Proportionate Share of such expense
relating to said House Meter described therein.

 

10.4     In the event Tenant installs a Premises Meter, whether at the request
of Landlord or at Tenant’s election, the purchase, installation and maintenance
of such Meter shall be at Tenant’s sole cost and expense, and Tenant shall be
responsible for compliance with all applicable laws, ordinances and building
codes with respect thereto. Tenant shall arrange for such Meter to be properly
registered with the appropriate branch of the Department of Water and Power or
such other governmental authority having regulatory jurisdiction over the same,
and all billing invoices, security deposits and other requirements, records or
correspondence relating to said Meter shall be the responsibility of and in the
name of Tenant. Landlord shall cooperate with Tenant to the extent reasonably
necessary to provide for the installation of said Premises Meter in cases where
such a Meter is installed, including provision of the water meter housing unit
for such Premises Meter, the water lines leading from such housing unit, through
the manifold system, to the Premises, and access to such areas to assist in the
installation of said Premises Meter.

 

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11.         REAL PROPERTY TAXES.

 

11.1     Tenant shall pay to Landlord Tenant’s proportionate share of real
property taxes applicable to the Premises during the term(s) of this Lease. Such
taxes shall be due and payable by Tenant before delinquency, but in no event
later than ten (10) days following Tenant’s receipt of a statement notifying
Tenant that such taxes are due and the amount of such taxes. If Tenant shall
fail to pay any such taxes, Landlord shall have the right to pay the same, in
which case Tenant shall repay such amount to Landlord with Tenant’s next rent
installment together with interest at the rate specified in Article 24 (Interest
and Late Charges).

 

11.2     As used herein, the term “real property tax” shall include any form of
assessment, license fee, commercial rental tax, value added tax, levy, penalty,
traffic mitigation fee, or tax (other than inheritance or estate taxes and
income taxes), imposed by any authority having the direct or indirect power to
tax, including any city, county, state or federal government, or any school,
agricultural, lighting, drainage or other improvement district thereof, as
against any legal or equitable interest of Landlord in the Premises or in the
real property of which the Premises are a part, as against Landlord’s right to
rent or other income therefrom, or as against Landlord’s business of leasing the
Premises, or any tax imposed in substitution, partially or totally, of any tax
previously included within the definition of real property tax.

 

11.3     Tenant may contest the legal validity or amount of any taxes,
assessments or charges for which Tenant is responsible under this Lease, and may
institute such proceedings as Tenant considers necessary. If Tenant protests any
such tax, assessment or charge, Tenant shall pay under protest, and in the event
Tenant shall fail to pay then Tenant shall indemnify and hold Landlord and the
Premises harmless from and against any claim or lien against Landlord or the
Premises arising out of Tenant’s failure to pay the contested taxes, assessments
or charges. In the event of such contest, Tenant shall post such security or
take such other measures as Landlord may require to free Landlord’s title of the
lien of such taxes and assessments.

 

11.4     Tenant shall furnish to Landlord, within ten (10) days written request
therefore, receipts or other appropriate evidence establishing their payment.
Upon execution hereof, or any time during the existence of this Lease, Landlord
shall have the right, upon at least ten (10) days prior written notice to
Tenant, to elect to treat Tenant’s tax payment obligations hereunder in the same
manner and as being subject to the same payment timing requirements as Tenant’s
payment obligations with respect to Tenant’s estimated Common Area expenses paid
monthly along with Minimum Rent as more specifically set forth in Article 18
hereof.

 

11.5     All payments of taxes or assessments, or both, shall be prorated for
the initial Lease year and for the year in which this Lease expires or is
terminated, based on the number of days in the tax year in question during which
the term of this Lease is in effect. Tenant shall be entitled to receive from
Landlord an accounting within a reasonable time after providing a written
request to Landlord.

 

11.6     Tenant acknowledges and understands that in the event Landlord should
at any time in the future sell the Premises, then pursuant to the California
Constitution, Paragraph XIIA (Proposition 13, Jarvis Gann Initiative) there
would probably be a substantial increase in the real property taxes assessed,
which would be prorata, borne and payable by Tenant. Landlord makes no
representations, statements or warranties to Tenant, expressly or impliedly,
that it will not sell, transfer, or otherwise effectuate a beneficial change in
ownership of the Premises or the Center at any time in the future during the
term or any extended term of this Lease, and Landlord reserves the right to do
so at its option.

 

11.7     If the Premises and/ or building, of which they are a part, are not
separately assessed, Tenant shall pay that portion of the total tax which is
equivalent to the ratio that the floor area of the Premises bears to the floor
area of the buildings that are covered by the tax bill.

 

12.         PERSONAL PROPERTY AND BUSINESS TAXES.

 

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12.1     Tenant shall pay, prior to delinquency, all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Tenant contained in the Premises. When possible, Tenant shall cause
said trade fixtures, furnishings, equipment and all other personal property to
be assessed and billed separately from the real property of Landlord.

 

12.2     If any of Tenant’s said personal property shall be assessed with
Landlord’s real property, Tenant shall pay the taxes attributable to Tenant
within five (5) days prior to the delinquency date for such payment of taxes.
Tenant hereby grants to Landlord a security interest in said personal property
as collateral and security for the performance of Tenant’s obligations to pay
said real and personal property taxes hereunder, as well as for the performance
of any and all of Tenant’s other obligations hereunder. Tenant shall not remove
from the Premises or assign, sell or otherwise encumber any such personal
property during any period in which Tenant is in default hereunder. Upon
Landlord’s reasonable request, Tenant shall cooperate with Landlord and execute
and deliver such documents to Landlord as may be reasonably required to perfect
such security interest.

 

12.3     Tenant shall pay, no less than five (5) days prior to delinquency, all
special taxes and assessments of license fees levied, assessed or imposed by any
governmental agency, by reason of Tenant’s particular use of the Premises. Upon
termination of this Lease, if Tenant shall fail to remove all such personal
property from the Premises prior to the date of such termination, Landlord may,
at its option, remove the same in any legally permissible manner that Landlord
shall choose, and Landlord may store said personal property without liability to
Tenant for loss thereof. Tenant agrees to pay Landlord within ten (10) days upon
demand any and all expenses incurred by Landlord in connection with such
removal, including court costs and attorney’s fees, as well as storage charges
for such personal property for any length of time that the same shall be so
stored whether or not in Landlord’s possession, or alternatively, Landlord may
at its option, without notice, sell said personal property, or any portion
thereof, at a private sale and without legal process, for such price as Landlord
may obtain, and apply the proceeds of such sale to any amounts due under this
Lease from Tenant to Landlord and to the reasonable expenses incident to the
removal and sale of said property.

 

13.         INDEMNITY AND DAMAGES.

 

13.1     Tenant shall indemnify and hold harmless Landlord from and against any
and all claims arising from Tenant’s use of the Premises, or from the conduct of
Tenant’s business, or from any activity, work or things done, permitted or
suffered by Tenant in or about the Premises, and shall further indemnify and
hold Landlord harmless from 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 or negligence of
Tenant’s, or any of Tenant’s agents, contractors, customers, licensees, or
employees, and from and against all reasonable costs, attorney’s fees, expenses
and liability incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against Landlord by reason of any such claim. Tenant, upon written notice from
Landlord, shall defend the same, at Tenant’s expense, by counsel reasonably
satisfactory to Landlord. Tenant, as a material part of the consideration to
Landlord, hereby assumes all risk to property or injury to persons in, upon or
about the Premises arising from any cause, other than the gross negligence or
willful misconduct of Landlord, and Tenant hereby waives all claims, in respect
thereof against Landlord, except to the extent otherwise provided in Paragraph
13.3 hereof.

 

13.2     Tenant hereby agrees that Landlord shall not be liable for injury to
Tenant’s business, or any loss of income therefrom, or for damage to the goods,
wares, merchandises or other property of Tenant, Tenant’s employees, invitees,
customers, or any other person in or about the Premises or any other
consequential damage, nor shall Landlord be liable for injury to the person of
Tenant, Tenant’s employees, agents or contractors, whether such damages or
injury is caused by results from fire steam, electricity, gas, water or rain or
from the breakage, leakage, obstruction or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether the said damage or injury results from conditions arising
upon the Premises or upon other portions of the building of which the Premises
are part, or from other sources or places where the resulting damage or injury
occurs on or about the

 

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Premises, and regardless of whether the cause of such damage or injury, or the
means of repairing the same, is inaccessible to Tenant. Tenant agrees to give
Landlord prompt notice of any such damage injury, including details as to the
persons involved, the nature and extent or any such damage or injury, including
details as to the persons involved, the nature and extent of any such damage or
injury, a statement of existing or potential claims relating thereto, and other
relevant information concerning any such damage or injury. Landlord shall not be
liable for any damages arising from any act or neglect of any other tenant, if
any, of the building in which the Premises are located, and Tenant agrees to
promptly report any such damages to Landlord. Landlord shall not be liable for
interference with light, air or other similar benefits. Landlord shall not be
liable for any damage to property entrusted to employees of the Center, not for
the loss of, or damage to, any property, by theft or otherwise, nor for any
injury or damage to person, property or Tenant’s business, resulting from
construction, repair or alteration of the Premises, improvements adjoining the
Premises or any other portion of the Center. Nor shall Landlord be liable for
any damage caused by acts or omissions of other tenants, occupants, or visitors
of the Center.

 

13.3     Nothing in Paragraphs 13.1 or 13.2 shall be construed as a waiver by
Tenant as against Landlord of, or as an agreement by Tenant to indemnify or hold
Landlord harmless from or against, any claims, costs, attorney’s fees, expenses,
liabilities, damages, losses or injuries caused by the willful or negligent act
or omission of Landlord. The provisions of Paragraphs 13.1 and 13.2 shall
survive any termination of this Lease with respect to any obligations hereunder
accruing prior to such termination.

 

14.         INSURANCE.

 

14.1     Tenant shall, at Tenant’s expense, obtain and keep in force, during the
term of this Lease, a policy of Combined Single Limit, Bodily Injury and
Property Damage Insurance, insuring Landlord and then Tenant against liability
arising out of the ownership, use, occupancy or maintenance of the Premises and
all areas appurtenant thereto. Such insurance shall be in amount not less than
one million and no/l00th ($1,000,000) dollars. Such policy contain a cross
liability clause and shall, to the extent not specifically excluded by the
Standard form policy, insure performance by Tenant of the indemnity provisions
of Article 13 (Indemnity). The limits of said insurance shall not, however,
limit the liability of Tenant hereunder. If Tenant shall fail to procure and
maintain said insurance, Landlord may, but shall not be required to, upon not
less than ten (10) days prior written notice to Tenant, procure and maintain the
same, but at the expense of Tenant. Not more frequently than once each five
(5) years, if, in the reasonable opinion of Landlord, the amount of Liability
insurance required hereunder is not adequate in comparison to that carried for
comparable properties of similar usage in the community in which the Premises
are located, Tenant shall increase said insurance coverage as reasonably
required by Landlord; provided, however, that in no event shall the amount of
the liability insurance increase be more than fifty (50%) percent greater than
the amount thereof during the immediately preceding five (5) year period of the
terms of the Lease. However, the failure of Landlord to require any additional
insurance coverage shall not be deemed to relieve Tenant from any obligations
under this Lease.

 

14.2     Landlord shall, at Landlord’s option, obtain and maintain a policy or
policies of insurance covering loss or damage to the Premises in an amount
sufficient to meet all applicable co-insurance requirements but in no event less
than ninety (90%) percent of the full replacement value of the Premises
(excluding co-insurance requirements but in no event less than ninety (90%)
percent of the full replacement value of the Premises (excluding foundations) as
the same may exist from time to time, including protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk) and sprinkler leakage,
including earthquake. Only Landlord and any of Landlord’s mortgage holders will
be the sole parties insured, billing Tenant for Tenant’s Proportionate Share of
such insurance and any deductible amounts (in the event of loss) as an expense
of maintaining the Center as set forth in Article 18 (Maintenance of Parking and
Common areas).

 

14.3     During the term of this Lease, Tenant shall keep and maintain a policy
of rental interruption insurance with Landlord as the insured, which policy
shall provide for payment to Landlord of a sum equal to 1.25 times the Minimum
Rent, plus the average monthly Percentage Rent over the preceding one year, as
described in Paragraphs 3.1 (Minimum

 

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Rent) and 3.2 (Percentage Rent), hereof, for a term of not less than six
(6) months after any casualty or destruction which results in interference with
Tenant’s business operations.

 

14.4     Insurance required of Tenant hereunder shall be issued by established
and reputable companies acceptable to Landlord. Tenant shall deliver to Landlord
copies of policies of such insurance, or certificates evidencing the existence
and amounts of such insurance, with loss payable clauses satisfactory to
Landlord, which copies shall be delivered no later than ten (10) days following
Tenant’s taking possession of the Premises, showing coverage to be effective as
of the date of such possession. No such policy shall be cancelable or subject to
reduction of coverage, or other modification except after thirty (30) days’
prior written notice to Landlord. Tenant shall, within thirty (30) days prior to
the expiration of such policies, furnish Landlord with renewals or “binders”
thereof or Landlord may order such insurance and charge the cost thereof to
Tenant, which amount shall be payable by Tenant upon demand. Tenant shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in this Article 14.

 

15.         WAIVER OF SUBROGATION.

 

Tenant hereby waives, as against Landlord, and against the officers, employees,
agents and representatives of the Landlord, any and all right to recovery for
any and all losses and damages insured against under any fire and extended
coverage insurance policy, including Tenant’s policy described in Paragraph
14.2, in force at the time of any such loss or damage. Tenant shall upon
obtaining the policies of insurance required hereunder, give notice to the
insurance carrier or carriers that the foregoing waiver of subrogation is
contained in this Lease.

 

16.         DAMAGE, DESTRUCTION AND RESTORATION.

 

16.1     DUTY TO RESTORE. If the improvements on the Premises are partially or
totally damaged by fire or other casualty so as to become partially or totally
untenantable, which damage is insured against under any policy of fire and
extended coverage insurance then covering the damaged improvements, this Lease
shall not terminate and said improvements shall be rebuilt by Landlord with
reasonable diligence utilizing the proceeds of such insurance policy, unless
Landlord elects to terminate this Lease, as provided in Paragraph 16.2 (Election
to Terminate). In the event such insurance proceeds are insufficient to cover
the cost of repair or rebuilding. Tenant shall, within fifteen (15) days of
receipt of notice therefore, contribute Tenant’s prorata share of the additional
amount necessary to complete such repairs or rebuilding.

 

16.2     ELECTION TO TERMINATE. If the improvements on the Premises are damaged
by an insured casualty to the extent of at least twenty-five (25%) percent of
their replacement cost (cost to repair or replace at the time of loss without
deduction for physical depreciation) during the term of this Lease, other than
during the last three (3) years of said term, or to the extent of at least ten
(10%) percent thereof during the last three (3) years of said term, or to any
extent by an uninsured cause at any time during the Lease term, or if, at any
time, more than twenty-five (25%) percent of the building area in the Center
(whether or not the Premises are affected), or twenty-five (25%) percent or more
of the Common Area is so damaged, Landlord shall, within not more than ninety
(90) days after such damage, notify Tenant of Landlord’s election to
(a) terminate this Lease, or (b) restore the improvements on the Premises (or
other areas, as the case may be). If Landlord elects to repair or restore the
damaged improvements, then, with respect to the Premises, Landlord, (using such
insurance proceeds as shall be sufficient for the same), and Tenant, each shall
restore said damaged improvements in the same manner and to the same extent as
work was done by each of them in the original construction and fixturizing of
the improvements. If Landlord elects not to restore, as aforesaid, this Lease
shall terminate without further liability to the parties hereto, on the date
provided in and in accordance with the provision of Paragraph 16.5, following
the giving of said notice of election by Landlord. If Landlord elects to restore
or fails to give notice of its election, as aforesaid, then this Lease shall
remain in full force and effect.

 

16.3     RENT ADJUSTMENT. If this Lease is not terminated, as provided in this
Article 16, then, during the period of repair and restoration, the fixed Minimum
Rent shall not be reduced but the Tenant shall be entitled to have the

 

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proceeds of the rental interruption insurance, provided in Paragraph 14.3,
applied to such Minimum Rent obligations.

 

16.4     TIME LIMITATION. If the damage is such that in reasonable contemplation
it cannot be repaired within six (6) months from the date of its occurrence then
Landlord shall have the right to terminate this Lease on sixty (60) days’ notice
to Tenant.

 

16.5     TERMINATION DATE. If this Lease is terminated in accordance with the
provisions of this Article 16, such termination shall become effective as of the
first day after the first calendar month after the occurrence of the casualty
causing the damage; provided, however, that Landlord shall be entitled to a sum
equal to 1.25 times the Minimum Rent for the ensuing six (6) month period as
damages, which sum may, in whole or in part, be paid by the proceeds of rental
interruption Insurance, otherwise, the parties shall be released from further
obligation to each other hereunder from and after such termination date except
for items which have theretofore accrued and are then unpaid.

 

16.6     WAIVER. In respect to any partial or total damage or destruction, which
Landlord is obligated or agrees to restore under any of the provisions of this
Lease, Tenant hereby waives the provisions of Section 1932 (2) and 1933 (4) of
the California Civil Code and any, related, similar or successor provision of
law, to the extent applicable hereto, if at all, and specifically waives
recovery for any inconvenience or annoyance occasioned by any such damage,
repair, reconstruction or restoration.

 

17.         ASSIGNMENT AND SUBLETTING.

 

17.1     Tenant shall not, directly or indirectly, nor by operation of law,
assign this Lease, or any interest herein, and shall not sublet the demised
Premises or any part thereof, nor permit any other person or entity (the Agents
and servants of Tenant excepted) to occupy or use the demised Premises, or any
portion thereof, without first obtaining the written consent of Landlord, which
consent shall not be unreasonably withheld. Tenant understands and agrees that
Tenant’s intended use of the Premises, as well as Tenant’s business expertise,
financial strength and background, and planned future business operations in and
about the Premises are of a special and unique value to Landlord, and constitute
an important and valuable part of the delicate and unique tenant mix which
Landlord has attempted to establish within the Center, and such things
constitute material consideration to Landlord for this Lease, and are hereby
deemed to be valid and commercially reasonable grounds for the exercise of
Landlord’s right to withhold its consent to any proposed assignment or
subletting under this Lease by Tenant. Any assignment or subletting without the
prior written consent of Landlord, shall be voidable at the election of
Landlord, which election can be made at any time until six (6) months after
Landlord is given written notice thereof. Landlord’s consent to any assignment
or subletting shall not relieve Tenant from each and all of Tenant’s obligations
hereunder, and Tenant shall continue to remain jointly and severally liable
hereunder with said assignee or subtenant throughout the term or any extended
term of this Lease.

 

17.2     Without limiting the generality of the foregoing the sale or exchange
or thirty (30%) percent or more of the voting stock of Tenant, if Tenant is a
corporation, or the transfer of an interest or interests equal to thirty (30%)
percent or more in the capital of profits of Tenant (whether accomplished by the
sale or exchange of partnership or by the admission of new partners), if Tenant
is a partnership, or the cumulative transfer of partnership or stock interests
in Tenant which effectively equal the foregoing (including transfer of
partnership, or the cumulative transfer of partnership or stock interest in
Tenant which effectively equal the foregoing (including transfer of partnership
interests followed by the incorporation of Tenant and subsequent stock
transfers, or transfers of stock followed by the liquidation of Tenant and
subsequent transfers of partnership interests) will be deemed to constitute an
assignment of Tenant’s interest in this Lease subject to Landlord’s consent.

 

17.3     If Tenant desires at any time to assign or otherwise transfer this
Lease or to sublet the Premises or any portion thereof, Tenant must first notify
Landlord of such desire to do so and shall submit in writing to Landlord (i) the
name of the proposed subtenant or assignee; (ii) the nature of the proposed
subtenant’s or assignee’s business to be carried on in the Premises; (iii) the
terms and provisions of the proposed sublease or assignment; and (iv) such
financial information as

 

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Landlord may reasonably request concerning the proposed subtenant or assignee.

 

17.4     As conditions precedent to Landlord’s consent to any assignment
subletting or other transfer, Landlord may require all of the following (and
Tenant hereby expressly agrees that failure to satisfy any one of the following
conditions shall constitute a commercially reasonable basis for Landlord
withholding its consent to such assignment, subletting or other transfer):

 

(a)  Tenant shall provide Landlord with evidence reasonably satisfactory to
Landlord that such transfer will not devalue Landlord’s interest under this
Lease, whether by degrading the quality of merchandising in the Premises,
decreasing the level of gross sales, or otherwise, including evidence respecting
the relevant business experience and financial responsibility of the proposed
transferee;

 

(c)  Any sublessee of part or all of Tenant’s interest in the Premises shall
agree that in the event that Landlord gives such sublessee notice that Tenant is
in monetary default under this Lease, such sublessee shall thereafter make all
sublease or other payments directly to Landlord to cure such monetary default,
which payments will be received by Landlord without any liability whether under
the sublease or otherwise (except to credit such sums against those due under
the Lease), and any sublessee shall agree to attorn to Landlord or its
successors and assigns should this Lease be terminated for any reason, except
that in no event shall Landlord or its successors or assigns be obligated to
accept such attornment; provided, however, that nothing contained herein shall
be deemed or construed as such an attornment unless Landlord specifically
elects, in writing, for such treatment.

 

(d)  Tenant shall not then be in default hereunder in any respect;

 

(e)  One executed copy of any and all written instruments evidencing or relating
to any such assignment, sublease other transfer shall be delivered to Landlord;
and

 

(f)  Tenant shall submit to Landlord the sum of five hundred ($500.00) dollars
in connection with each proposed assignment or sublease as consideration for
Landlord’s reviewing, processing and evaluating Tenant’s request for approval of
such assignment or sublease. If Landlord’s actual costs and expenses, excluding
overhead costs, exceed said $500.00 sum, Tenant shall pay to Landlord such
excess amount, within ten (10) days of Landlord’s written request to Tenant
therefore, as a condition precedent to Landlord’s approval of any such
assignment or sublease.

 

17.6     Landlord’s consent to any one transfer shall apply only to the specific
transaction thereby authorized and such consent shall not be construed as a
waiver of the duty of Tenant or any transferee to obtain Landlord’s consent to
any other or subsequent transfer or as modifying or limiting Landlord’s rights
hereunder in any way. Landlord’s acceptance of rent directly from any subtenant,
assignee or other transferee shall not be construed as, Landlord’s approval or
consent thereto nor Landlord’s agreement to accept the attornment of any
subtenant in the event of any termination of this Lease.

 

18.         MAINTENANCE OF PARKING AND COMMON AREAS.

 

18.1     Tenant shall pay to Landlord, as additional rent, Tenant’s
Proportionate Share of the Common Area expenses, as hereinafter more
particularly described. Tenant’s Proportionate Share shall be deemed to be the
ratio that the entire floor building area of the Premises exclusively occupied
by Tenant bears to the entire floor building area of the whole of the Center
rounded off to the nearest percentage point. Said areas are as follows:

 

(a)  Area occupied by Tenant: THREE THOUSAND TWENTY FIVE (3,325) SQUARE FEET

 

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(b)  Tenant’s Proportionate Share (CAM): FORTY SIX and 39/100’s (46.39%) PERCENT

 

(c)  Tenant’s Proportionate Share (Insurance): FORTY SIX and 39/100’s (46.39%)
PERCENT

 

(d)  Tenant’s Proportionate Share (Taxes): FORTY SIX and 39/100’s (46.39%)
PERCENT. If the real property taxes described in Article 11 (Real Property
Taxes) are not separately assessed (as provided in Paragraph 11.7), Landlord may
include said taxes (prorated over the tax year) as a Common Area expense.

 

18.2     Landlord covenants that the common areas and parking areas (sometimes
herein collectively referred to as “Common Areas”) now located in the Center,
shall at all times be available for the non-exclusive use of Tenant (except as
hereinafter provided) during the term of this Lease or any extension of the term
hereof; provided, that the condemnation or other taking by any public authority,
or sale in lieu or condemnation, of any or all of such areas, shall not
constitute a violation of this covenant. Landlord reserves the right from time
to time to change the entrances, exits, traffic lanes and the boundaries and
location of such areas; provided, however, that at all times the ratio between
improved and unimproved areas complies with applicable laws, and/ or is pursuant
to required governmental certifications and approvals, to the extent the same
are applicable or required. Landlord shall have the right, at Tenant’s expense
should Landlord so elect, to perform any and all construction to, in or about
the Common Areas, which it deems reasonable, for the maintenance, replacement,
refurbishment, renovation or improvement of the Common Areas, other premises or
the Center in general, and in connection therewith, Landlord shall not be liable
to Tenant by reason of any injury to or interference with Tenant’s business or
property or for any other inconvenience or damages caused thereby.

 

18.3     Landlord shall keep the Common Areas in a clean and orderly condition,
lighted and landscaped, and shall repair any damage to the facilities thereof.

 

18.4     It is understood and agreed that the word “expenses”, as used herein,
shall be construed to include but not limited to all sums expended by Landlord
in connection with said Common Areas (including administrative and professional
expenses) for all maintenance and repair, including any maintenance or repair of
the Building’s main electrical panel, resurfacing, painting, restriping,
cleaning, sweeping and janitorial services, planting, landscaping, lighting and
other utilities, directional Signs, markers, bumpers, security costs, parking
lot attendant charges, parking lot equipment fees, real and personal property
taxes and assessments or any other governmental tax, charge or levy hereinafter
imposed on or in respect of any portion of said Common Areas, and including the
cost of adequate public liability and property damage insurance on the Common
Areas (which shall be carried and maintained by Landlord).

 

Notwithstanding the foregoing, if at any time Landlord is required by any rule,
regulation or law (building regulations), to make any changes, alterations, or
improvements to the Common Area or Premises or any portion of the Center
(including, without limitation, electrical, mechanical or other systems or
components)(“required alterations”) but excluding required alterations
attributable to Tenant’s specific use and occupancy of the Premises, which
alterations shall be Tenant’s sole responsibility, all costs relating to such
required alterations fairly characterized as “expenses”, under generally
accepted accounting principles, shall be fully included in Landlord’s
reimbursable Common Area costs in the year in which such charges accrue or in
such year that Landlord pays said charges, as Landlord shall elect, and if under
generally accepted accounting principles, any portion or all of such costs must
be allocated to capital improvements to be depreciated or amortized over two
(2) or more years, Landlord shall be entitled each year to include that portion
of such capital costs in Landlord’s Common Area costs as Landlord’s accountant
reasonably determines to be a fair estimate of the depreciation or amortization
which would be chargeable for such capital improvements during such year, given
a reasonable estimate of useful life. Landlord may, however, cause any or all of
said services to be provided by an independent contractor or contractors.

 

18.5     Landlord shall furnish semi-annual statements to Tenant setting forth
the expenses for maintaining the Common

 

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Areas for the preceding semi-annual period. Landlord shall use its best efforts
to furnish said semi-annual statements to Tenant within six (6) months following
the calendar year end Tenant agrees to pay to Landlord its share of the Common
Area expenses within thirty (30) days of Tenant’s receipt of such statement.
Tenant shall pay to Landlord on the first day of each calendar month, the sum of
                          ONETHOUSAND SIX HUNDRED SIXTY TWO AND 50/100s
($1,662.50), representing estimated monthly Common Area expense payments
(includes taxes, insurance and maintenance charges) to apply toward Tenant’s
share of the Common Area expenses, and at the expiration of each semi-annual
period or each quarterly period or at anytime time during said semi-annual
period at the sole option of Landlord, the current Tenant shall pay to Landlord,
Tenant’s equal Proportionate Share of said expenses less the monthly payments
previously paid by Tenant or any previous Tenant of the Premises. If at any time
during a year Landlord determines that its estimate is too low, Landlord may,
but shall not be required to, notify Tenant of the revision of such estimate,
and thereafter for the remainder of such year, Tenant shall pay such estimated
Common Area expenses based upon such new estimate. Tenant and any assignee or
sublessee of Tenant, if applicable, understand and agree that the semi-annual
calculation and assessment of Tenant’s proportionate share of accrued but unpaid
Common Area expenses for the preceding lease year will most likely not
correspond with the effective date of the assignment or sublease involved, and
that the current Tenant shall be responsible for the payment of such accrued but
unpaid Common Area expenses, provided, however, that Landlord shall have the
right to collect such expenses on a joint and several basis, from Tenant and/ or
such assignee or sublessee of Tenant, such collection rights shall be
cumulative, and Landlord shall not be forced to make an election concerning from
whom such expenses are collected. Upon Landlord’s delivery to Tenant of the
semi-annual statement hereunder, Tenant’s estimated Common Area Maintenance
payments from that point forward shall be equal to the increased amount of its
share of the actual expenses, as set forth in said statement. By way of example,
if Tenant’s estimated Common Area Maintenance payments are $100.00 and Landlord
delivers an annual statement indicating that the actual Common Area Maintenance
charges should have been $200.00, Tenant’s estimated Common Area Maintenance
payments from that point forward shall be equal to the increased amount, i.e.,
$200.00 until the next statement is delivered by Landlord and so on, provided,
however, that such estimate as contained in any such semi-annual statement may
be updated and modified at any time during a lease year, as hereinabove
provided, and Tenant shall be obligated to pay the most currently stated amount
of such estimated Common Area expenses. During the initial year of the Lease,
Tenant shall be responsible for its pro-rata share of Common Area expenses not
to exceed $0.50 per SF per month. Additionally, the maximum amount of Tenant’s
share of Common Area Expenses shall be increased each year thereafter commencing
on the anniversary date of the Lease and each year thereafter, up to the
Tenant’s pro-rata share of the actual Common Area expenses not to exceed five
(5%) percent per annum. Further, any such Common Area expenses shall not exceed
the actual expenses in Building incurred by Landlord.

 

18.6     Tenant, for the use and benefit of Tenant, its agents, employees,
customers, licensees, and subtenants, shall have the nonexclusive right, in
common with Landlord and other present and future owners, tenants, and their
agents, employees, customers, licensees and subtenants, to use said Common Areas
during the entire term of this Lease, or any extension thereof, for ingress and
egress, roadway, sidewalk and customer automobile parking. Tenant, as the user
of said Common Areas, agrees to comply with such reasonable rules and
regulations as Landlord may adopt from time to time for the orderly and proper
operation of said Common Areas.

 

Such rules may include but not be limited to the following:

 

(a)  The regulation of the removal, storage and disposal of Tenant’s refuse and
other rubbish, at the sole cost and expense of Tenant.

 

(b)  The parking areas shall be for the exclusive use of the customers of
tenants in the Center. Landlord may, in Landlord’s sole discretion, give Tenant
and the officers, agents and employees of Tenant, or other tenants in the
Center, permission to park their cars in designated areas within the Center. If
any such car, truck or other vehicle is parked in any area within the Center
contrary to the foregoing provisions, Landlord may cause the same to be towed to
a public garage or other parking area and the expense of such towing plus
storage charges, will be paid by Tenant. Tenant further agrees to hold Landlord
and Landlord’s agents free and harmless from all cost, loss, expense or damages
of any nature

 

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whatsoever arising out of or in any way connected with such removal. In
furtherance of such restrictions, Landlord may designate from time to time
parking areas for Tenant or its employees, and Tenant shall furnish to Landlord
the motor vehicle license plate number(s) of itself and of all its employees
within five (5) days after Landlord’s written request therefore. If required by
law, Landlord may require parking charges via parking meters, a validation
system, or otherwise. Additionally, Tenant shall have the exclusive use of six
(6) reserved parking spaces closest to the Premises, and as illustrated in
Exhibit “A” herein, throughout the Term and any subsequent option period at no
additional charge to Tenant.

 

18.7     Should the Premises not be a part of a Center, or should said Premises
constitute the entirety of a Center, then Tenant shall have the exclusive use of
the areas described herein, and at Landlord’s option, shall maintain, keep,
repair and insure the same at Tenant’s sole expense.

 

19.         HOLDING OVER.

 

Should Tenant, with Landlord’s written consent, hold over after the termination
of this Lease, Tenant shall become a Tenant from month to month, only upon each
and all of the terms herein provided as may be applicable to such month to month
tenancy and any such holding over shall not constitute an extension of this
Lease. During such holding over, Tenant’s Minimum Rent as set forth in Paragraph
3.1 (Minimum Rent) of this Lease shall be one hundred fifty (150%) percent of
the sum of (i) the Minimum Rent then being paid.

 

20.         HOURS OF BUSINESS: CONDUCT OF BUSINESS.

 

Subject to the provisions of this Article 20, Tenant shall continuously, during
the entire term hereof, conduct and carry on Tenant’s business in the Premises.
Tenant shall keep the Premises open for business and cause Tenant’s business to
be conducted therein during the usual business hours of each and every business
days as its customary for businesses like character in the city in which the
Premises are located to be open for business; provided, however, that this
provision shall not apply if Tenant’s business should be temporarily
discontinued on account of strikes, lockouts, or similar Causes beyond the
reasonable control of Tenant. Tenant shall keep the Premises adequately stocked
with merchandise and with sufficient sales personnel to care for the patronage,
and to conduct said business in accordance with sound business practices. In the
event of breach by Tenant of any of the conditions in this article 20,
contained, Landlord shall have, in addition to any and all remedies herein
provided, the right, at its option to collect, not only the Minimum Rent herein
provided, but additional rent at the rate of one-thirtieth (l/30th) of the
Minimum Rent herein provided for each and every day that the Tenant shall fail
to conduct its business as herein provided.

 

21.         COMPETITION.

 

During the term of this Lease, Tenant covenants no to engage in conduct which
would diminish the gross revenues of Tenant’s business operated within the
Premises, including, but not limited to, the complete or partial ownership,
operation or control of any store or business within a radius of two (2) miles
of the Premises which is competitive with Tenant’s permitted use under this
Lease. In the event that Tenant owns, operates or controls such a competing
store or business, then such store or business will be deemed to constitute a
portion of the Premises for the purposes of Paragraph 3.2 ( Percentage Rent) if
such Paragraph is applicable hereunder, and Landlord will be entitled to
Percentage Rent on sales therefrom, or alternatively, Landlord may elect to
notify Tenant, in writing, to cease and desist any such competing conduct or
uses, and should Tenant fail to comply with such notice within ten (10) days
following Tenant’s receipt of the same, Landlord may elect to terminate this
Lease upon not less than five (5) days written notice to Tenant.

 

22.         DEFAULTS AND REMEDIES.

 

22.1     The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by Tenant:

 

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(a)  The material falsity of any financial statements of Tenant or any Guarantor
of this Lease given to Landlord as an inducement to enter into this Lease, or
Tenant’s failure, during the existence of this Lease, to produce current
financial statements as requested by Landlord or any lender of Landlord,
respecting the Center or the Premises, within ten (10) days following Landlord’s
written request to Tenant therefore.

 

(b)  The abandonment of the Premises by Tenant.

 

(c)  The failure by Tenant to make any payment of rent or any other payment
required to be made by Tenant hereunder, as and when due, where such failure
shall continue for a period of three (3) days after written notice thereof from
Landlord to Tenant. Such notice shall constitute notice under California Code of
Civil procedure Section 1161, if delivered as provided in Section 1162 of the
California Code of Civil Procedure, or any successor Code Section. In the event
Tenant so fails to make any such rental or other payments as required hereunder,
said written notice from Landlord may specify and require that all such
delinquent payments, at Landlord’s option, shall be tendered by Tenant to
Landlord in the form of a cashier’s check or money order, as a condition
precedent to Tenant’s cure of such default.

 

(d)  The failure of Tenant to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Tenant,
other than described in subparagraph (c), above, or as specifically provided for
elsewhere herein, where such failure shall continue for a period of twenty (20)
days after written notice thereof from Landlord to Tenant, provided, however,
that if the nature of Tenant’s default is such that more than twenty (20) days
are reasonably required for its cure, then Tenant shall not be deemed to be in
default if Tenant commences such cure within said twenty (20) day period and
thereafter diligently pursues such cure to completion .

 

(e)  The making by Tenant of any general assignment for the benefit of
creditors.

 

(f)  The filing by or against Tenant of a petition to have Tenant adjudged a
bankrupt or a petition for reorganization or arrangement under any law relating
to bankruptcy (unless, in the case of a petition filed against Tenant, the same
is dismissed within thirty (30) days) .

 

(g)  The appointment of a trustee or receiver to take possession of all or
substantially all of Tenant’s assets located at the Premises, or of Tenant’s
interest in this Lease.

 

(h)  The attachment, execution or other judicial seizure of all or substantially
all of Tenant’s assets located at the Premises, or of Tenant’s interest in this
Lease, where such seizure is not discharged within thirty (30) days.

 

(i)  Failure to execute and deliver within ten (10) days following Landlord’s
request therefore the subordination agreement and/or estoppel certificate
referred to in Paragraph 27.5 and 27.10, respectively.

 

22.2     In the event of any such material default or breach by Tenant, Landlord
may at any time thereafter, with or without notice or demand and without
limiting Landlord in the exercise of any right or remedy which Landlord may have
by reason of such default or breach:

 

(a)  Terminate Tenant’s right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event Landlord shall be entitled
to recover from Tenant all damages incurred by Landlord by reason of Tenant’s
default, including, but not, limited to, loans or other forms of financing, loss
of other potential tenancies within the Center, loss of sale or lease profits,
and the like, the cost of recovering possession of the premises; expenses of
reletting, including necessary renovation and alteration of the Premises;
reasonable attorneys’ fees; any real estate commission actually paid; and the
worth at the time of award determined by the court having jurisdiction thereof
of (i) the unpaid rent which had been earned at the time of termination;
(ii) the amount by which the unpaid rent, which would have been earned after
termination until the time of award, exceeds the amount of such rental loss for
the same period which the Tenant proves

 

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could have been reasonably avoided; and (iii) the amount by which the unpaid
rent, for the balance of the term after the time of such award, exceeds the
amount of such rental loss for the same period that Tenant proves could be
reasonably avoided. The worth at the time of award of the sums referred to in
clauses (i) and (ii) above, shall be computed by allowing interest from the due
date at the rate provided in Article 24 (Interest and Late Charges). The worth
at the time of award of the amount referred to in clause (iii) above, shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one (1%) percent. Landlord’s
rights hereunder shall be deemed subject to the rights granted to Tenant under
Civil Code Section 1951 et. seq. and each applicable subsection thereof.

 

(b)  Maintain Tenant’s right to possession, in which case this Lease shall
continue in effect whether or not Tenant shall have abandoned the Premises. In
such event, Landlord shall be entitled to enforce all of Landlord’s rights and
remedies under this Lease, including the right to recover the rent as it becomes
due hereunder, pursuant to Section 1951.4 of the California Civil Code or any
similar, successor or related provision of law.

 

(c)  Pursue any other remedy now or hereafter available to Landlord under the
laws of judicial decisions of the State of California.

 

(d)  The term “rent” as used in this Article 22. shall mean Minimum Rent and all
other rental or additional rent payable pursuant to any other section of this
Lease. All such sums, other than Minimum Rent, shall be computed on the basis of
the average monthly amount thereof accruing during the immediately preceding
twelve (12) month period prior to default, except that if it becomes necessary
to compute such rent before such twelve (12) month period has occurred, then on
the basis of the average monthly amount accruing during such shorter period.

 

23.         DEFAULT BY LANDLORD.

 

Landlord shall not be in default unless Landlord fails to perform obligations
required of Landlord within reasonable time, but in no event later than thirty
(30) days after written notice by Tenant to Landlord; provided, however, that if
the nature of Landlord’s obligation is such that more than thirty (30) days are
required for performance, then Landlord shall not be in default if Landlord
commences performance within such thirty (30) day period and thereafter
diligently prosecutes same to completion.

 

24.         LATE CHARGES.

 

Tenant hereby acknowledges that late payment by Tenant to Landlord of rent or
other sums due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Landlord by the terms of any mortgage
or trust deed covering the Premises. Accordingly, if any installment of rent or
any other sum due from Tenant shall not be received by Landlord or Landlord’s
designee within (10) days after such amount shall be due, Tenant shall pay to
Landlord a late charge equal to ten (10%) percent of such overdue amount. The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payments by Tenant.
Acceptance of such late charge by Landlord shall in no event constitute a waiver
of Tenant’s default with respect to such overdue amount, nor prevent Landlord
from exercising any of Landlord’s other rights and remedies.

 

25.         SAFETY AND HEALTH.

 

Tenant covenants at all times during the term of this Lease to comply with the
requirements of the Occupational Safety and Health Act of 1970, 29 U.S.C.#651
et. seq. and any analogous legislation in California (collectively the “Act”),
to

 

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the extent that the Act applies to the Premises and any activities thereon.
Without limiting the generality of the foregoing, Tenant covenants to maintain
all working areas, all machinery, structures, electrical facilities and the like
upon the Premises in a condition that fully complies with the requirements of
the Act, including such requirements as would be applicable with respect to
agents, employees or contractors of Landlord who may from time to time be
present upon the Premises (except to the extent that the particular activities
of such agents, employees or contractors of Landlord on the Premises require
safety precautions or alterations of the conditions of the Premises beyond the
requirements of such Act otherwise applicable to the Premises, in which event
Tenant shall not be obligated to undertake or provide any such additional safety
precautions or alterations of conditions), and Tenant agrees to indemnify and
hold Landlord harmless from and against any liability, claim or damages, arising
therefrom, including without limitation, reasonable attorney’s fees and court
costs incurred by Landlord in connection therewith, which indemnity shall
survive the expiration or termination of this Lease.

 

 

26.         CONDEMNATION, EMINENT DOMAIN.

 

26.1     DEFINITION. If there is any taking of, or damage to, all or part of the
Premises, or any interest therein because of the exercise of the power of
eminent domain or inverse condemnation, whether by condemnation proceedings, or
otherwise, or any transfer or any part hereof or any interest therein made in
avoidance thereof (all of the foregoing being hereinafter referred to as
“taking”) before or during the term hereof, the rights and obligations of the
parties with respect to such taking shall be as provided in this Article 26.

 

26.2     TOTAL CONDEMNATION. If there is a taking of all of the Premises, this
Lease shall terminate as of the date of such taking.

 

26.3     PARTIAL CONDEMNATION. If twenty-five (25%) percent or more of the floor
area of the Premises shall be taken, either party shall be entitled to terminate
this Lease, or, if twenty-five (25%) percent or more of the floor area of the
building of which the Premises are a part shall be taken, Landlord shall be
entitled to elect to terminate this Lease; and the terminating party shall give
the other party written notice of such election not later than thirty (30) days
after the date Landlord delivers notice to Tenant that possession or title to
the portion of the Premises taken has vested in the condemner. If neither party
gives such notice, or less than twenty-five (25%) percent of the floor area of
either the Premises or the building shall be taken, this Lease shall remain in
full force and effect and rent shall be adjusted as provided in Paragraph 26.7
hereof.

 

26.4     COMMON AREA. If twenty-five (25%) percent or more of the Common Area
within a radius of two hundred (200’) feet from the main entrance to the
Premises shall be taken, either party. shall be entitled to elect to cancel and
terminate this Lease and shall give the other party written notice of such
election not later than thirty (30) days after the date Landlord delivers notice
to Tenant that possession or title to said portion of the Common Area taken has
vested in the condemner. If neither party gives such notice, or more than
seventy-five (75%) percent of said portion of the Common Area will be available
after such taking, this Lease shall remain in full force and effect. In no event
shall Tenant have the right to terminate this Lease if Landlord provides
additional Common Area which, when combined with the remaining Common Area
provides Common Area which is at least seventy-five (75%) percent as large as
said portion of the Common Area before the taking (Applicable only to buildings
within a Center).

 

26.5     TERMINATION DATE. If this Lease is terminated in accordance with the
provisions of this Article 26, such termination shall become effective as of the
date of the order of condemnation.

 

26.6     REPAIR AND RESTORATION. If this Lease is not terminated, as provided in
this Article 26, Landlord shall, at its sole expense, restore, with due
diligence, the remainder of the improvements occupied by Tenant, so far as

 

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practicable, to a complete unit of like quality, character and condition as that
which existed immediately prior to the taking, provided that the scope of the
work shall not exceed the scope of the work done or to be done by Landlord
originally in constructing the Premises, and further provided that Landlord
shall not be obligated to expend an amount greater than that which was awarded
to Landlord for such taking.

 

26.7     RENT ADJUSTMENT. If this Lease is not terminated, as provided in this
Article 26, the fixed Minimum Rent shall be reduced by that portion which the
floor area taken from the Premises bears to Tenant’s total floor area
immediately before the taking.

 

26.8     AWARD. The total and entire award or compensation in such proceedings,
whether for a total or partial taking, or for diminution in the value of the
leasehold or for the fee or for any other reason shall belong to, and be the
property of, Landlord; provided, that Tenant shall be entitled to recover from
the condemner such compensation as may be separately awarded by the condemner to
Tenant or recoverable from the condemner by Tenant in its own right for the
taking of trade fixtures and equipment owned by Tenant in its own right (meaning
personal property, whether or not attached to real property, which may be
removed without injury to the Premises) and for the expense of removing and
relocating them, and for the loss of goodwill to the extent that it is severally
awardable.

 

27.         GENERAL PROVISIONS.

 

27.1     FORCE MAJEURE. If any party hereto shall be delayed or prevented from
the performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor troubles, inability to procure materials, restrictive
governmental laws or regulations or other cause without fault and beyond the
control of the party obligated (financial inability excepted), performance of
such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay; provided, however, nothing in this Paragraph 27.1
contained shall excuse Tenant from the prompt payment of any rental or other
charge required of Tenant hereunder except as may be expressly provided
elsewhere in this Lease.

 

27.2     CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

 

27.3     COVENANTS AND CONDITIONS. Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.

 

27.4     BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Tenant and subject to the provisions of
Article 17 (Assignment and Subletting), this Lease shall bind the parties, their
personal representatives, successors and assigns. This Lease shall be governed
by the laws of the State of California; any action brought to enforce or nullify
this Lease or the provisions hereof (with the exception of unlawful detainer
actions which may but need not be brought, in Landlord’s sole discretion, in the
county in which the Premises are located) must be brought in Los Angeles County,
State of California and in no other forum.

 

27.5     SUBORDINATION. Tenant shall at any time and from time to time, and
within ten (10) days following receipt of written notice from Landlord, execute,
acknowledge and deliver to Landlord a subordination agreement or other form of
writing evidencing Tenant’s agreement to subordinate this Lease and Tenant’s
rights hereunder to any ground lease, mortgage, deed of trust, or any other
hypothecation for security hereafter place upon the real property of which the
Premises are a part, and to any and all advances made on the security thereof,
and to all renewals, modifications, consolidations, replacements and extensions
thereof, but such subordination shall not be only on the condition that Tenant’s
rights to quiet possession of the Premises shall not be disturbed if Tenant is
not in default and so long as Tenant shall pay the rent and observe and perform
all of the provisions of this Lease on Tenant’s part to be performed, unless
this Lease is otherwise terminated pursuant to its terms. So long as Tenant is
not in default, the terms of this Lease shall not be affected by foreclosure or
other proceedings under any such mortgage or deed of trust, and

 

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Tenant agrees to attorn to the beneficiary or such other party that might
succeed to Landlord’s position under or in connection with such groundlease,
mortgage, deed of trust or other hypothecation for security.

 

27.6     ATTORNEY’S FEES. In the event of any litigation between Tenant and
Landlord to enforce any provision of this Lease or any right of either party
hereto, the unsuccessful party to such litigation shall pay to the successful
party all reasonable costs and expenses, including reasonable attorneys’ fees,
incurred therein. If Landlord, through no fault of its own, is made a party to
any litigation relating to the subject matter covered by this Lease instituted
by or against Tenant, then Tenant shall indemnify Landlord against and save it
harmless from all reasonable costs and expenses, including reasonable attorney’s
fees, incurred by it in connection therewith. In addition thereto, Tenant agrees
to pay Landlord’s reasonable costs, expenses and reasonable attorneys’ fees with
respect to:

 

(a)  Each request of Landlord for permission or consent to assign or sublet the
Premises, in whole or in part.

(b)  Each request made by Tenant to modify, amend or supplement this Lease; and

(c)  Any breach or default of Tenant which is cured prior to litigation.
Landlord shall notify Tenant of the amount of such attorneys’ fees, and Tenant
shall pay the same (as additional rent) within fifteen (15) days of such notice.

 

27.7     LANDLORD’S ACCESS. Landlord and Landlord’s agents shall have the right
to enter the Premises at reasonable times and upon reasonable notice to Tenant
for the purpose of inspecting the same and showing the same to prospective
lenders, tenants, or purchasers, or for purposes of construction or repairing a
portion of the Center (provided no such construction or repair shall
unreasonably interfere with Tenant’s business) Landlord and Landlord’s agents
shall also have the right to enter the Premises and make any repairs or
restoration as may be needed to maintain the Premises in the condition required
under Article 8 (Maintenance and Repairs) hereof, or to restore the Premises
after any damage, destruction or taking as provided in Articles 16 (Damage,
Destruction and Restoration) and Article 26 (Condemnation; Eminent Domain)
hereof, but only upon a failure by Tenant to make such repairs or restoration
when required under the terms of Article 16 (Damage, Destruction and
Restoration) hereof.

 

27.8     MERGER. The voluntary or other surrender of this Lease by Tenant, or
mutual cancellation thereof, or a termination by Landlord, shall not work a
merger.

 

27.9     NET, NET, NET LEASE. Landlord and Tenant understand and agree that this
Lease is what is commonly known in the business as a “net, net, net Lease.”
Tenant recognizes and acknowledges, without limiting the generality of any other
terms or provisions of this Lease, that it is the intent of the parties hereto
that any and all rentals in this Lease provided to be paid by Tenant to
Landlord, shall be net to Landlord, and any and all expenses incurred in
connection with the Premises and the Center, or in connection with the
operations thereon, including any and all taxes, assessments, general or special
license fees, insurance premiums, increases in interest rates on adjustable
mortgage loans or other forms of variable rate financing which may be maintained
by Landlord from time to time with respect to the Center and/ or the Premises,
public utility bills and costs of repair, maintenance and operation of the
Premises and the Center and all buildings, structures, permanent fixtures and
other improvements comprised therein, together with the appurtenances thereto,
shall be paid by Tenant, in addition to the rentals herein provided for as
Tenant’s sole and exclusive proper costs and expenses.

 

27.10   ESTOPPEL CERTIFICATE. At any time, and from time to time, Tenant shall
within ten (10) days after receiving a written notice from Landlord, execute,
acknowledge and deliver to Landlord a statement in writing certifying that this
Lease is unmodified and in full force and effect (or if modified, stating the
nature of such modification and certifying that this Lease, as so modified, is
in full force and effect) and the dates to which the rental and other charges
are paid in advance, if any, and acknowledging that there are not, to Tenant’s
knowledge, any uncured defaults on the part of Landlord hereunder, or specifying
such defaults if any are claimed. It is expressly understood and agreed that any
such statement may be relied upon by any prospective purchaser or encumbrancer
of all or any portion of the real property of which the Premises are a part.
Tenant’s failure to deliver such statement within such time shall be conclusive
upon Tenant that this Lease is in full force and effect, without modification
except as may be represented by

 

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Landlord, that there are not uncured defaults in Landlord’s performance, and
that not more than two (2) months’ rental has been paid in advance. In
furtherance of and without limiting the foregoing, Tenant hereby appoints
Landlord as Tenant’s attorney-in-fact to prepare, execute and deliver on
Tenant’s behalf such statement certifying the foregoing items. Notwithstanding
anything to the contrary set forth herein, Tenant’s failure to deliver such
statement within such time shall be a material default and breach of this Lease.

 

If Landlord desires to sell, finance or refinance the Premises, or any part
thereof, Tenant further agrees to deliver to any lender or purchaser designated
by Landlord, Tenant’s financial statements for the immediately preceding three
(3) fiscal years of Tenant.

 

27.11    SEVERABILITY. The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision thereof.

 

27.12    TIME OF ESSENCE. Time is of the essence of each and every obligation of
Tenant hereunder.

 

27.13    CAPTION. Article and paragraph captions are not a part hereof.

 

27.14    INCORPORATION OF PRIOR AGREEMENTS/AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matters mentioned herein. No prior
agreement or understanding pertaining to any matter shall be effective. This
Lease may be modified in writing only, signed by the parties in interest at the
time of the modification.

 

27.15   NOTICES. Any notices or other communication required or pertained
hereunder shall be in writing and shall be deemed to have been given, if mailed
or registered or certified postage, prepaid, on the date posted or if personally
delivered, when delivered addressed as follows:

 

 

To Landlord:

 

LACOLA INC.

 

c/o Telok Management Inc.,

 

 

 

 

 

1055 Corporate Center Drive, Ste 420,

 

 

 

 

 

Monterey Park, CA 91754

 

 

 

 

 

 

 

To Tenant:

 

WILSHIRE STATE BANK

 

1701 W. Redondo Beach Blvd., Suites A & B

 

 

 

 

 

Gardena, CA 90247

 

 

 

 

 

 

 

 

 

 

 

cc: 3200 Wilshire Boulevard, Suite 1400

 

 

 

 

 

Los Angeles, CA 90010

 

 

 

 

 

 

 

 

 

 

 

cc: Codette G. Wallace

 

 

 

 

 

Senior Vice President & Senior Legal Council

 

 

 

 

 

3200 Wilshire Boulevard, #888

 

 

 

 

 

Los Angeles, CA 90010

 

Each of the foregoing shall be entitled to specify a different address by giving
notice in writing here of to the other party.

 

27.16   WAIVER. No waiver by Landlord of any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Tenant of
the same or any other provision. Landlord’s or Tenant’s consent to or approval
of any act shall not be deemed to render unnecessary the obtaining of Landlord’s
or Tenant’s consent to or approval of any subsequent act by Tenant or Landlord,
as applicable. The acceptance of rent hereunder by Landlord shall not be a
waiver of any preceding breach by Tenant of any provision hereof, other than the
failure of Tenant to pay the particular rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of

 

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such rent. Any such waiver by Landlord as referred to herein shall not be
enforceable against Landlord unless the same shall be evidenced in writing.

 

27.17   LANDLORD’S LIABILITY. The term “Landlord” as used herein, shall mean
only the owner or owners at the time in question, if the fee title to the
Premises. In the event of a transfer of such title, Landlord herein named (in
case of any subsequent transfers, the then grantor) shall be relieved from and
after the date of such transfer, of all liability as respects Landlord’s
obligations thereafter to be performed, provided that any security deposit in
the hands of Landlord or the grantor at the time of such transfer, in which
Tenant has an interest, shall be delivered to the grantee. The obligations
contained in this Lease to be performed by Landlord shall, subject to the above,
be binding on Landlord’s successors and assigns, only during their respective
periods of ownership.

 

27.18   TRANSFER OF SECURITY DEPOSIT. In the event that Landlord sells the real
property of which the Premises is a part, Landlord may transfer and deliver any
security given by Tenant to secure the faithful performance of the provisions of
this Lease to the purchaser of the real property. Upon such transfer being made,
Landlord shall be exonerated from any further liability with respect to said
security. In the event of an assignment or sublease consented to by Landlord the
existing Tenant’s interest in the security deposit shall be deemed transferred
to such assignee or sublessee (to the prorata extent applicable), and any
deficiency between such deposit and the security deposit required of the then
current Tenant under this Lease shall be due and payable immediately upon
Tenant’s receipt of Landlord’s request therefore. Landlord shall not be
interested in or involved with any negotiations, disputes, or claims which may
arise between Tenant and any such assignee or sublessee of Tenant concerning
reimbursement for said security deposit.

 

27.19   RULES AND REGULATIONS. Tenant shall observe faithfully and comply
directly with the Rules and Regulations attached to this Lease and made a part
hereof, and such other rules and regulations as Landlord may from time to time
reasonably adopt for the safety, care and cleanliness of the Center or the
preservation of good order therein. Landlord shall not be liable to Tenant for
violation of any such Rules and Regulations, or for the breach of any covenant
or condition in any lease, by any other tenant in the Center. Tenant shall not
post or permit the placement of any signs, advertisements or notices upon any
exterior portion of the Premises (including windows), except for an entrance
door sign which shall be in style, form, color, size and configuration approved
by Landlord.

 

27.20   MUTUAL AGENCY/CO-TENANT. Each Tenant hereby appoints each remaining
Tenant as his, her or its agent, representative, and attorney in fact, to act
for and on behalf of said Tenant with respect to all matters relating to, or
arising from this Lease, the tenancy created hereby, the obligations herein set
forth, and the use and occupancy of the subject Premises, specifically
including, but not limited to the right to alter, modify, extend, supplement and
terminate this Lease, and the tenancy created hereunder. This agency shall
continue and is irrevocable at all times during the period that the Premises are
occupied by any Co-Tenant. Tenant hereby appoints each remaining Tenant as his,
her, or its agent for service of legal process, and agent for service and
receipt of notices and other communications given or made under this Lease, as
the case may be.

 

27.21   AUTHORITY OF TENANT. If any Tenant is a corporation, each individual
executing this Lease, on behalf of said corporation, represents and warrants
that he is duly authorized to execute and deliver this Lease on behalf of said
corporation, in accordance with the articles, bylaws and properly executed
resolution of the Board of Directors of said corporation that this Lease is
binding and obligatory upon said corporate Tenant, and shall deliver to
Landlord, within 3 days after execution hereof, a corporate resolution
authorizing the execution of this Lease. Tenant hereby warrants and represents
that, as a corporate Tenant, if applicable, it is now, and will continue during
the term hereof to be, a corporation in good standing under the laws of the
state of incorporation of Tenant, and qualified to do business in the state in
which the Premises are located. If Tenant is a partnership, each individual
executing this Lease on behalf of said partnership represents and warrants that
he, she, or it is duly authorized to execute and deliver this Lease on behalf of
said partnership in accordance with the terms and conditions of the partnership
agreement, and shall deliver the appropriate written partnership agreement,
certificate of partnership, and statement of partnership to Landlord
concurrently with Tenant’s execution of this Lease.

 

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27.22   NO INDUCEMENTS. TENANT WARRANTS AND REPRESENTS THAT THERE HAVE BEEN NO
REPRESENTATIONS OR STATEMENTS OF FACT WITH RESPECT TO THE PREMISES, THE CENTER,
THE SURROUNDING AREA OR OTHERWISE, WHETHER BY LANDLORD, ITS AGENTS OR
REPRESENTATIVES, ANY LEASING BROKER OR ANY OTHER PERSON, WHICH REPRESENTATIONS
OR STATEMENTS HAVE IN ANY WAY INDUCED TENANT TO ENTER INTO THIS LEASE OR WHICH
HAVE SERVED AS THE BASIS IN ANY WAY FOR TENANT’S DECISION TO EXECUTE THIS LEASE,
EXCEPT AS EXPRESSLY CONTAINED IN THIS LEASE.

 

27.23    NO CONDITIONAL PAYMENT. No payment by Tenant or receipt by Landlord of
a lesser amount than the total of all sums due hereunder shall be deemed to be
other than on account of the earliest stipulated rent, nor shall any endorsement
or statement on any check, other payments or any accompanying letter be deemed
an accord and/or satisfaction and Landlord may accept such cash and/or negotiate
such check or payment without prejudice to Landlord’s right to recover the
balance of such rent or pursue any other remedy provided in this Lease or
otherwise, regardless of whether Landlord makes any notation on such instrument
of payment or otherwise notifies Tenant that such acceptance, cashing or
negotiation is without prejudice to any of Landlord’s rights.

 

27.24   NO OPTION. The submission of this Lease by Landlord, its agent or
representative for examination or execution by Tenant does not constitute an
option or offer from Landlord to Tenant to lease the Premises upon the terms and
conditions contained herein or a reservation of the Premises in favor of Tenant,
it being intended hereby that this Lease hall become binding upon Landlord only
upon Landlord’s execution and delivery of this Lease to Tenant. The receipt
(which shall include the cashing, deposit or other negotiation of checks, money
orders and the like) of any monies by Landlord which are tendered by Tenant
along with a Tenant-executed copy of this Lease, or at any time prior to
Landlord’s delivery of a fully executed copy of this Lease to Tenant, shall not
constitute an acceptance of Tenant’s offer to lease as contained herein.

 

27.25   NO CO-TENANCY REQUIREMENT. Landlord reserves the right to select the mix
of tenancies in the Center as Landlord, in the exercise of its sole business
judgment, shall determine to best promote the interest of the Center. Tenant is
not relying on the fact, nor does Landlord represent, that any specific tenant
or kind of tenant or number of tenants shall, during the term of this Lease,
occupy any space in the Center, and Tenant acknowledges Tenant has not been
granted an exclusive use hereunder.

 

27.26   CENTER NAME CHANGE. Landlord reserves the right to change the name of
the Center from time to time during the term of this Lease.

 

27.27   BROKERS. The parties recognize as the brokers who procured this Lease as
Grubb & Ellis Company as Landlord’s broker and Travers Realty Corporation as
Tenant’s broker and agree that Landlord shall be solely responsible for the
payment of any brokerage commissions to said brokers, and that Tenant shall have
no responsibility therefore. Landlord shall pay a commission (the “Commission”)
pursuant to a separate written agreement between Grubb & Ellis Company and
Landlord. Tenant’s Broker and Landlord’s broker shall share the Commission
pursuant to a separate written agreement between Tenant’s Broker and Landlord’s
broker dated October 14, 2010 (the “Commission Agreement”).

 

27.28   RECORDATION. Tenant shall not record this Lease without the prior
written consent of Landlord.

 

27.29   IRREVOCABLE OFFER TO LEASE. For and in consideration of Landlord’s final
determination of Tenant’s desirability as a tenant in the Center, which
determination shall include, without limitation, an investigation and evaluation
of Tenant’s creditworthiness and financial strength, Tenant agrees that by
executing this Lease and delivering the same to Landlord, Tenant is extending to
Landlord an offer to enter into this Lease, which for the first fourteen (14)
days following execution and delivery of this Lease by Tenant to Landlord said
offer shall be irrevocable and thereafter,

 

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said offer shall become revocable, upon written notice from Tenant to Landlord.
In the event Tenant so revokes said offer, or should Landlord notify Tenant of
its rejection of the same, Landlord shall thereafter promptly refund and return
all deposits and other monies tendered to Landlord by Tenant. Said refund shall
be without any obligation on the part of Landlord to pay Tenant interest on said
deposit monies held by Landlord, such interest, if any, being deemed additional
consideration to Landlord for such investigation and evaluation of Tenant’s
creditworthiness and financial strength.

 

27.30   MERCHANTS’ ASSOCIATION. Should a nonprofit corporation or association
sponsored by Landlord and comprised of at least fifty (50%) percent of the
tenants at any time operating business establishments in the Shopping Center be
now or hereafter organized for the purpose, among other things, of carrying out
such common or general advertising or promotional activities or programs for the
Shopping Center and the various business establishments operated therein as a
majority of the members thereof may deem proper and expedient, then at
Landlord’s request Tenant shall at its own expense do all things necessary
promptly to become, and throughout the term hereof remain, an active member in
good standing of such corporation or association.

 

28.     TRIAL BY JURY WAIVER. Landlord and Tenant hereby waive their respective
right to trial by jury of any cause of action, claim, counter-claim or
cross-complaint in any action, proceeding and/or hearing brought by either
Landlord on any matter whatsoever arising out of or in any way connected with
this Lease, the relationship of Landlord and Tenant, Tenant’s use for occupancy
of the premises or any claim of injury or damage, or the enforcement of any
remedy under any law, statute or regulation emergency or otherwise now or
hereafter in effect.

 

29.    OPTION TO RENEW. Provided Tenant is not in default hereunder beyond any
applicable cure period, Tenant shall have the right and option to renew the term
of the Lease from the date upon which it would otherwise expire for an
additional two (2) five (5) years options to extend (“Option to Extend”). To the
extent that Tenant is in default hereunder and any applicable cure period has
not yet expired, Tenant’s attempted exercise of its Option to Extend shall not
be effective unless and until Tenant timely cures any prior default within the
applicable cure period. During the option period(s) Tenant’s Base Rent shall
commence at fair market value, but in no event less than a three percent (3%)
increase over the previous year’s Minimum Monthly Rent and no more than a ten
percent (10%) increase over the previous year’s Minimum Monthly Rent. There will
continue to be annual three percent (3%) increases of the Minimum Monthly Rent
during each year of any extended Option periods exercised by Tenant. If Tenant
desires to exercise its option to renew, it shall do so by giving written notice
of such election no earlier than nine (9) months and no later than six
(6) months prior to the date on which this Lease would otherwise expire.

 

30.   CONFIDENTIALITY. Tenant and its Employees and Agent shall not discuss, nor
divulge the terms and conditions of this Lease nor any of the negotiations
involved herein with any of the Tenants, Employees, their Agents nor any
Prospective Tenants of this shopping center. All contents herein are to be kept
in strict confidentiality.

 

31. EXHIBIT “A”. Site Plan (attached hereto).

 

32. EXHIBIT “B”. Landlord’s Work (attached hereto).

 

33. EXHIBIT “C”. Occupancy Notice (attached hereto).

 

LANDLORD AND TENANT HAVE CAREFULY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISIONS CONTAINED HEREINAN BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED
AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS
LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONBLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE
PREMISES.

 

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IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS/HER APPROVAL, AND YOU HAVE HAD THE OPORTUNITY TO DISCUSS THE
CONTENTS OF THIS LEASE WITH HIM/HER. NO REPRESENTATION OR RECOMMENDATION IS MADE
BY TELOK MANAGEMENT, INC., ITS AGENTS OR EMPLOYEES, AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING
THERETO. THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

 

 

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

 

 

LANDLORD:

 

 

 

 

 

/s/ Vanessa Wai Shan Leung

 

Date: 15th Nov., 2010

Vanessa Wai Shan Leung, Director

 

 

LACOLA INC.

 

 

By Telok Management, Inc., As Agent

 

 

TENANT:

 

 

 

 

 

/s/ Elaine S. Jeon

 

Date: 11-12-2010

Elaine S. Jeon, SVP & CDA

 

 

By:  Wilshire State Bank

 

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EXHIBIT “A”

 

SITE PLAN

 

MAKE SURE TO SHOW THE SIX PARKING SPACES THAT THEY ARE GETTING ON SITE PLAN

 

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* Tenant shall have six (6) reserved parking spaces marked “10 minute parking”
at no additional cost* as depicted on the attached Site Plan. In addition,
Tenant’s employees shall have the right to use the on-site parking on an
un-reserved basis closest to the east boundary of the property.

 

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EXHIBIT “B”

LANDLORD’S WORK

 

TENANT TAKES POSSESSION OF PREMISES “AS IS” CONDITIONS.

 

Prior to the Rent Commencement Date, Landlord, at Landlord’s sole cost and
responsibility, shall improve the following base building conditions:

 

(a.) Paint exterior façade of Building at the Premises to remove stains/dirt
marks from previous tenant’s signage; .

(b.) Trim or cut back trees at the front of the Building that obstruct street
visibility to the Premises;

(c.) Identify Tenant’s reserved parking stalls with fresh paint;

(d.) Repair any/all roof water leaks including a visible water leak at the rear
of Suite B of the Premises;

 

Landlord shall provide a Tenant Improvement Allowance (“TIA”) equal to thirty
dollars ($30.00) per rentable square feet leased by Tenant. $10,000 out of this
TIA shall be paid to Tenant within thirty (30) days of the later of a) Tenant
providing Landlord with any and all mechanic lien releases from Tenant’s
contractors, b) Tenant providing Landlord with a copy of a full set of Tenant’s
governmentally approved plans and c) Tenant opening for business to the public.
Balance of this TIA shall be given to Tenant by way of half rent abatement
beginning on the Rent Commencement Date until the full amount of the TIA is paid
in full.

 

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