EXHIBIT 10.33
AIR COMMERCIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE — GROSS
1 .Basic Provisions (“Basic Provisions”).
     1.1 Parties: This Lease (“Lease”), dated for reference purposes only
May 13, 2005. is made by and between Scheu and Scheu and Southwest Community
Bank a California Banking Corporation (“Lessee”), (collectively the “Parties”,
or individually a “Party”).
     1.2(a) Premises: That certain portion of the Project (as defined below),
including all improvements therein or to be provided by Lessor under the terms
of this Lease, commonly known by the street address of 8250 White Oak Avenue,
Suite 100 located in the City of Rancho Cucamonga ,County of San Bernardino
State of California , with zip code 91730 as outlined on Exhibit B attached
hereto (“Premises”) and generally described as (describe briefly the nature of
the Premises): a commercial / office building space of 2,557 rentable square
feet, located within the White Oak Corporate Center, as shown on Exhibits B and
C attached to this lease agreement.
In addition to Lessee’s rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to any utility raceways of the
building containing the Premises (“Building”)and to the Common Areas (as defined
in Paragraph 2.7 below), but shall not have any rights to the roof, or exterior
walls of the Building or to any other buildings in the Project. The Premises,
the Building, the Common Areas, the land upon which they are located, along with
all other buildings and improvements thereon, are herein collectively referred
to as the “Project.” (See also Paragraph 2)
     1.2(b)Parking: 10 unreserved vehicle parking spaces . (See also
Paragraph 2.6)
     1.3 Term: five (5 years and                      months (“Original Term”)
commencing August 01, 2005 (“Commencement Date”) and ending July 31, 2010
(“Expiration Date”). (See also Paragraph 3)
     1.4 Early Possession : June 01, 2005 (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3)
     1.5 Base Rent: $ 3,964.00 per month (“Base Rent”), payable on the first day
day of each month commencing August 01, 2005 — . (See also Paragraph 4)
þ If this box is checked, there are provisions In this Lease for the Base Rent
to be adjusted.
     1.6 Lessee’s Share of Common Area Operating Expenses:                     
percent (5.7%)(“Lessee’s Share”). Lessee’s Share has been calculated by dividing
the approximate square footage of the Premises by the approximate square footage
of the Project. In the event that that size of the Premises and/or the Project
are modified during the term of this Lease, Lessor shall recalculate Lessee’s
Share to reflect such modification.
     1.7 Base Rent and Other Monies Paid Upon Execution:
          (a) Base Rent: $ 3,964.00 for the period August01, 2005 through
August 31, 2005.
          (b) Common Area Operating Expenses: $ none for the period n/a
          (c) Security Deposit: $4,561.00 (“Security Deposit”). (See also
Paragraph 5)
          (d) Other: $ none for n/a .
          (e) Total Due Upon Execution of this Lease: $8,525.00
     1.8 Agreed Us: full service bank branch with ATM. service and related bank
/ financial uses. (See also Paragraph 6)
     1.9 Insuring Party. Lessor is the “Insuring Party”. (See also Paragraph 8)
     1.10 Real Estate Brokers: (See also Paragraph 15)
          (a) Representation: The following real estate brokers (the “Brokers”)
and brokerage relationships exist in this transaction (check applicable boxes):
þ Delmar Commercial Real Estate Services, Inc. represents Lessor exclusively
(“Lessor’s Broker”);
þ Delmar Commercial Real Estate Services, Inc. represents Lessee exclusively
(“Lessee’s Broker”); or
o                                          represents both Lessor and Lessee
(“Dual Agency”).
     (b) Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in a
separate written agreement (or if there is no such agreement, the sum of n/a or
n/a% of the total Base Rent for the brokerage services rendered by the Brokers).
     1.11 Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by n/a (“Guarantor”). (See also Paragraph 37)
     1.12 Attachments. Attached hereto are the following, all of which
constitute a part of this Lease:
þ an Addendum consisting of Paragraphs 50 through 63
þ a site plan depicting the Premises;
þ a site plan depicting the Project;
þ a current set of the Rules and Regulations for the Project;
o a current set of the Rules and Regulations adopted by the owners’ association;

                     
/MF/
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o a Work Letter;
þ other (specify): OPTION (S) TO RENEW, LESSEE CORPORATE RESOLUTION TO LEASE
2. Premises.
     2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental. and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of size set forth in this Lease, or that may have been
used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less. NOTE: Lessee is advised to verify the
actual size prior to executing this Lease.
     2.2 Condition. Lessor shall deliver that portion of the Premises contained
within the Building (“Unit”) to Lessee broom clean and free of debris on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start
Date”), and, so long as the required service contracts described in
Paragraph 7.1(b) below are obtained by Lessee and in effect within thirty days
following the Start Date, warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
loading doors, sump pumps, if any, and all other such elements in the Unit,
other than those constructed by Lessee, shall be in good operating condition on
said date, that the structural elements of the roof, bearing walls and
foundation of the Unit shall be free of material defects, and that the Unit does
not contain hazardous levels of any mold or fungi defined as toxic under
applicable state or federal law. If a non-compliance with such warranty exists
as of the Start Date, or if one of such systems or elements should malfunction
or fail within the appropriate warranty period, Lessor shall, as Lessor’s sole
obligation with respect to such matter, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, malfunction or
failure, rectify same at Lessor’s expense. The warranty periods shall be as
follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to the
remaining systems and other elements of the Unit. If Lessee does not give Lessor
the required notice within the appropriate warranty period, correction of any
such non-compliance, malfunction or failure shall be the obligation of Lessee at
Lessee’s sole cost and expense (except for the repairs to the fire sprinkler
systems, roof, foundations, and/or bearing walls — see Paragraph 7).
     2.3 Compliance. Lessor warrants that to the best of its knowledge the
improvements on the Premises and the Common Areas comply with the building codes
that were in effect at the time that each such improvement, or portion thereof,
was constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances in effect on the Start Date (“Applicable
Requirements”). Said warranty does not apply to the use to which Lessee will put
the Premises, modifications which may be required by the Americans with
Disabilities Act or any similar laws as a result of Lessee’s use (see
Paragraph 49), or to any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements, and especially the
zoning are appropriate for Lessee’s intended use, and acknowledges that past
uses of the Premises may no longer be allowed. If the Premises do not comply
with said warranty, Lessor shall, except as otherwise provided, promptly after
receipt of written notice from Lessee setting forth with specificity the nature
and extent of such non-compliance, rectify the same at Lessor’s expense. If
Lessee does not give Lessor written notice of a non-compliance with this
warranty within 6 months following the Start Date, correction of that
non-compliance shall be the obligation of Lessee at Lessee’s sole cost and
expense. If the Applicable Requirements are hereafter changed so as to require
during the term of this Lease the construction of an addition to or an
alteration of the Unit, Premises and/or Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of the
Unit, Premises and/or Building (“Capital Expenditure”), Lessor and Lessee shall
allocate the cost of such work as follows:
          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures
are required as a result of the specific and unique use of the Premises by
Lessee as compared with uses by tenants in general, Lessee shall be fully
responsible for the cost thereof, provided, however, that if such Capital
Expenditure is required during the last 2 years of this Lease and the cost
thereof exceeds 6 months’ Base Rent, Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after receipt of
Lessee’s termination notice that Lessor has elected to pay the difference
between the actual cost thereof and the amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall. however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.
          (b) If such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
the portion of such costs reasonably attributable to the Premises pursuant to
the formula set out in Paragraph 7.1(d); provided, however, that if such Capital
Expenditure is required during the last 2 years of this Lease or if Lessor
reasonably determines that it is not economically feasible to pay its share
thereof, Lessor shall have the option to terminate this Lease upon 90 days prior
written notice to Lessee unless Lessee notifies Lessor, in writing, within
10 days after receipt of Lessor’s termination notice that Lessee will pay for
such Capital Expenditure. If Lessor does not elect to terminate, and fails to
tender its share of any such Capital Expenditure, Lessee may advance such funds
and deduct same, with Interest, from Rent until Lessor’s share of such costs
have been fully paid. If Lessee is unable to finance Lessor’s share, or if the
balance of the Rent due and payable for the remainder of this Lease is not
sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the
right to terminate this Lease upon 30 days written notice to Lessor.
          (c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change In intensity
of use, or modification to the Premises then, and in that event, Lessee shall
either: (i) immediately cease such changed use or intensity of use and/or take
such other steps as may be necessary to eliminate the requirement for such
Capital Expenditure, or (ii) complete such Capital Expenditure at its own
expense. Lessee shall not have any right to terminate this Lease.
     2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised by
Lessor and/or Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical, HVAC and fire sprinkler
systems, security, environmental aspects, and compliance with Applicable
Requirements and the Americans with Disabilities Act), and their suitability for
Lessee’s intended use, (b) Lessee has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to its occupancy of the Premises, and (c) neither Lessor,
Lessor’s agents, nor Brokers have made any oral or written representations or
warranties with respect to said matters other than as set forth in this Lease.
In addition, Lessor acknowledges that: (i) Brokers have made no representations,
promises or warranties concerning Lessee’s ability to honor the Lease or
suitability to occupy the Premises, and (ii) it is Lessor’s sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.
     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.
     2.6 Vehicle Parking. Lessee shall be entitled to use the number of Parking
Spaces specified in Paragraph 1.2(b) on those portions of the Common Areas
designated from time to time by Lessor for parking. Lessee shall not use more
parking spaces than said number. Said parking spaces shall be used for parking
by vehicles no larger than full-size passenger automobiles or pick-up trucks,
herein called “Permitted Size Vehicles.”

                     
/MF/
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Lessor may regulate the loading and unloading of vehicles by adopting Rules and
Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size
Vehicles may be parked in the Common Area without the prior written permission
of Lessor. In addition:
     (a) Lessee shall not permit or allow any vehicles, except temper,’ parking
by en armored vehicle, that belong to or are controlled by Lessee or Lessee’s
employees, suppliers, shippers, customers, contractors or invitees to be loaded,
unloaded, or parked in areas other than those designated by Lessor for such
activities.
     (b) Lessee shall not service or store any vehicles in the Common Areas.
     (c) If Lessee permits or allows any of the prohibited activities described
in this Paragraph
     2.6, then Lessor shall have the right, without notice, in addition to such
other rights and remedies that it may have, to remove or tow away the vehicle
involved and charge the cost to Lessee, which cost shall be immediately payable
upon demand by Lessor.
     2.7 Common Areas - Definition. The term “Common Areas” is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Project and interior utility raceways and installations within the Unit
that are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other tenants of the Project and their
respective employees, suppliers, shippers, customers, contractors and invitees,
including parking areas, loading and unloading areas, trash areas, roadways,
walkways, driveways and landscaped areas.
     2.8 Common Areas - Lessee’s Rights. Lessor grants to Lessee, for the
benefit of Lessee and its employees, suppliers, shippers, contractors. customers
and invitees, during the term of this Lease, the non-exclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the right to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur, then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.
     2.9 Common Areas - Rules and Regulations. Lessor or such other person(s) as
Lessor may appoint shall have the exclusive control and management of the Common
Areas and shall have the right, from time to time, to establish, modify, amend
and enforce reasonable rules and regulations (“Rules and Regulations”) for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees. Lessee agrees to abide by and conform to all such Rules and
Regulations, and shall use its best efforts to cause its employees, suppliers,
shippers, customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the non-compliance with said Rules and
Regulations by other tenants of the Project.
     2.10 Common Areas - Changes. Lessor shall have the right, in Lessor’s sole
discretion, from time to time:
     (a) To make changes to the Common Areas, including, without limitation,
changes in the location, size, shape and number of driveways, entrances, parking
spaces, parking areas, loading and unloading areas, ingress, egress, direction
of traffic, landscaped areas, walkways and utility raceways:
     (b) To close temporarily any of the Common Areas for maintenance purposes
so long as reasonable access to the Premises remains available;
     (c) To designate other land outside the boundaries of the Project to be a
part of the Common Areas:
     (d) To add additional buildings and improvements to the Common Areas;
     (e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Project, or any portion thereof; and
     (f) To do and perform such other acts and make such other changes in, to or
with respect to the Common Areas and Project as Lessor may, in the exercise of
sound business judgment, deem to be appropriate.
3. Term.
     3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.
     3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease
(including but not limited to the obligations to pay Lessee’s Share of Common
Area Operating Expenses, Real Property Taxes and insurance premiums and to
maintain the Premises) shall be in effect during such period. Any such early
possession shall not affect the Expiration Date.
     3.3 Delay In Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease or change the Expiration
Date. Lessee shall not, however, be obligated to pay Rent or perform its other
obligations until Lessor delivers possession of the Premises and any period of
rent abatement that Lessee would otherwise have enjoyed shall run from the date
of the delivery of possession and continue for a period equal to what Lessee
would otherwise have enjoyed, but minus any days of delay caused by the acts or
omissions of Lessee. If possession is not delivered within 60 days after the
Commencement Date, Lessee may, at its option, by notice in writing within
10 days after the end of such 60 day period, cancel this Lease, in which event
the Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee’s right to
cancel shall terminate. Except as otherwise provided. if possession is not
tendered to Lessee by the Start Date and Lessee does not terminate this Lease,
as aforesaid, any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms hereof,
but minus any days of delay caused by the acts or omissions of Lessee. If
possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.
     3.4 Lessee Compliance. Lessor shall not be required to tender possession of
the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.
4. Rent.
     4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
(“Rent”).
     4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the
term hereof, in addition to the Base Rent, Lessee’s Share (as specified in
Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:
     (a) “Common Area Operating Expenses” are defined, for purposes of this
Lease, as all costs incurred by Lessor relating to the ownership and operation
of the Project, including, but not limited to, the following:

                     
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               (i) The operation, repair and maintenance, in neat, clean, good
order and condition, but not the replacement (see subparagraph (e)), of the
following:
                    (aa) The Common Areas and Common Area improvements,
including parking areas, loading and unloading areas, trash areas, roadways.
parkways. walkways. driveways, landscaped areas, bumpers, irrigation systems,
Common Area lighting facilities. fences and gates, elevators, roofs, and roof
drainage systems.
                    (bb) Exterior signs and any tenant directories
                    (cc) . Any fire sprinkler systems.
               (ii) The cost of water, gas, electricity and telephone to service
the Common Areas and any utilities not separately metered.
               (iii) Trash disposal. pest control services, property management,
security services. owner’s association dues and fees, the cost to repaint the
exterior of any structures and the cost of any environmental inspections.
               (iv) Reserves net aside for maintenance and repair of Common
Areas and Common Area equipment.
               (v) Any increase above the Base Real Property Taxes (as defined
in Paragraph 10).
               (vi) Any “Insurance Cost Increase” (as defined In Paragraph 8).
               (vii) Any deductible portion of an insured loss concerning the
Building or the Common Areas.
               (viii) Auditors’, accountants’ and attorneys’ fees and costs
related to the operation, maintenance, repair and replacement of the Project.
               (ix) The cost of any Capital Expenditure to the Building or the
Project not covered under the provisions of Paragraph 2.3 provided: however,
that Lessor shall allocate the cost of any such Capital Expenditure over a
12 year period and Lessee shall not be required to pay more than Lessee’s Share
of 1/144th of the cost of such Capital Expenditure in any given month.
               (x) Any other services to be provided by Lessor that are stated
elsewhere in this Lease to be a Common Area Operating Expense.
     (b) Any Common Area Operating Expenses and Real Property Taxes that are
specifically attributable to the Unit, the Building or to any other building in
the Project or to the operation, repair and maintenance thereof. shall be
allocated entirely to such Unit. Building, or other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Project.
     (c) The inclusion of the improvements. facilities and services set forth In
Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to
either have said improvements or facilities or to provide those services unless
the Project already has the same, Lessor already provides the services, or
Lessor has agreed elsewhere in this Lease to provide the same or some of them.
     (d) Lessee’s Share of Common Area Operating Expenses Is payable monthly on
the same day as the Base Rent is due hereunder. The amount of such payments
shall be based on Lessor’s estimate of the annual Common Area Operating
Expenses. Within 60 days after written request (but not more than once each
year) Lessor shall deliver to Lessee a reasonably detailed statement showing
Lessee’s Share of the actual Common Area Operating Expenses incurred during the
preceding year. If Lessee’s payments during such year exceed Lessee’s Share,
Lessor shall credit the amount of such over-payment against Lessee’s future
payments. If Lessee’s payments during such year were less than Lessee’s Share.
Lessee shall pay to Lessor the amount of the deficiency within 10 days after
delivery by Lessor to Lessee of the statement.
     (e) Except as provided in paragraph 4.2(a)(viii), Common Area Operating
Expenses shall not include the cost of replacing equipment or capital components
such as the roof, foundations, exterior walls or Common Area capital
improvements, such as the parking lot paving, elevators, fences that have a
useful life for accounting purposes of 5 years or more.
     (I) Common Area Operating Expenses shall not include any expenses paid by
any tenant directly to third parties, or as to which Lessor is otherwise
reimbursed by any third party, other tenant or insurance proceeds.
          4.3 Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. All monetary amounts shall be rounded to the nearest whole dollar. In the
event that any statement or invoice prepared by Lessor is inaccurate such
inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay
the amount set forth in this Lease. Rent for any period during the term hereof
which is for less than one full calendar month shall be prorated based upon the
actual number of days of said month. Payment of Rent shall be made to Lessor at
its address stated herein or to such other persons or place as Lessor may from
time to time designate in writing. Acceptance of a payment which is less than
the amount then due shall not be a waiver of Lessor’s rights to the balance of
such Rent, regardless of Lessor’s endorsement of any check so stating. In the
event that any check, draft, or other instrument of payment given by Lessee to
Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of
$25 in addition to any Late Charge and Lessor, at its option, may require all
future Rent be paid by cashier’s check. Payments will be applied first to
accrued late charges and attorney’s fees, second to accrued interest, then to
Base Rent and Common Area Operating Expenses, and any remaining amount to any
other outstanding charges or costs.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee’s faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion to the increased Base Rent as the
Initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor’s reasonable judgment. to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor’s reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and
otherwise within 30 days after the Premises have been vacated pursuant to
Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit
not used or applied by Lessor. No part of the Security Deposit shall be
considered to be held in trust. to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease.
6. Use.
     6.1 Use, Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which Is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance. or that disturbs occupants of
or causes damage to neighboring premises or properties. Other than guide, signal
and seeing eye dogs. Lessee shall not keep or allow in the Premises any pets,
animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or
delay Its consent to any written request for a modification of the Agreed Use.
so long as the same will not impair the structural integrity of the Building or
the mechanical or

                     
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electrical systems therein, and/or is not significantly more burdensome to the
Project. If Lessor elects to withhold consent. Lessor shall within 7 days after
such request give written notification of same, which notice shall include an
explanation of Lessor’s objections to the change in the Agreed Use.
     6.2 Hazardous Substances.
          (a) Reportable Uses Require Consent. The term “Hazardous Substance” as
used in this Lease shall mean any product, substance, or waste whose presence,
use, manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either:
(i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous Substances without the express prior
written consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, no long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.
          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shalt immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.
          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee’s expense, comply with all Applicable Requirements and take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties. that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.
          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys’ and consultants’ fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from areas outside of the Project not caused or contributed
to by Lessee). Lessee’s obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.
          (e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee. its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which suffered as a direct result of Hazardous Substances on the
Premises prior to Lessee taking possession or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees. Lessor’s
obligations, as and when required by the Applicable Requirements, shall include,
but not be limited to, the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease.
          (f) (t) investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to Lessee taking possession, unless
such remediation measure is required as a result of Lessee’s use (including
“Alterations”, as defined in paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor’s agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor’s investigative and remedial responsibilities.
          (g) (g) Lessor Termination Option. If a Hazardous Substance Condition
(see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is
legally responsible therefor (in which case Lessee shall make the investigation
and remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13). Lessor may, at Lessor’s option, either
(i) investigate and remediate such Hazardous Substance Condition, if required,
as soon as reasonably possible at Lessor’s expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee. within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor’s desire to terminate this Lease as of the date
60 days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee’s commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within the
time provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.
     6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise
provided In this Lease, Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to such Requirements, without regard to whether said
Requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor’s written request, provide Lessor
with copies of all permits and other documents. and other information evidencing
Lessee’s compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice. citation,
warning, complaint or report pertaining to or Involving the failure of Lessee or
the Premises to comply with any Applicable Requirements. Likewise, Lessee shall
immediately give written notice to Lessor of: (i) any water damage to the
Premises and any suspected seepage, pooling, dampness or other condition
conducive to the production of mold; or (ii) any mustiness or other odors

                     
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that might indicate the presence of mold in the Premises.
     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in
Paragraph 30) and consultants shall have the right to enter into Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable notice, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a Hazardous Substance condition (see Paragraph 9.1) is found to
exist or be imminent. or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS) to Lessor within
10 days of the receipt of written request therefor.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
     7.1 Lessee’s Obligations.
          (a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable
Requirements), 7.2 (Lessor’s Obligations). 9 (Damage or Destruction), and 14
(Condemnation). Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility Installations (intended for Lessee’s exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee. and whether or not the
need for such repairs occurs as a result of Lessee’s use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities. boilers, pressure vessels. fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights but excluding any items which are the responsibility of
Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices,
specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee’s obligations shall Include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair.
          (b) Service Contracts. Lessee shall, at Lessee’s sole expense, procure
and maintain contracts, with copies to Lessor, In customary form and substance
for. and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, if any, if and when Installed on the
Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) clarifiers, and (iv) any other equipment, if reasonably required by
Lessor. However, Lessor reserves the right. upon notice to Lessee, to procure
and maintain any or all of such service contracts. and Lessee shall reimburse
Lessor, upon demand, for the cost thereof.
          (c) Failure to Perform. If Lessee fails to perform Lessee’s
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days’ prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee’s
behalf. and put the Premises in good order, condition and repair, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.
          (d) Replacement. Subject to Lessee’s indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee’s failure to exercise and perform good maintenance
practices, if an item described in Paragraph 7.1(b) cannot be repaired other
than at a cost which is in excess of 50% of the cost of replacing such item,
then such item shall be replaced by Lessor, and the cost thereof shall be
prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (le. 1/144th of the cost per month). Lessee shall pay interest on
the unamortized balance but may prepay its obligation at any time.
     7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls. structural
condition of interior bearing walls. exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls norshall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.
     7.3 Utility Installations; Trade Fixtures; Alterations.
          (a) Definitions. The term “Utility Installations” refers to all floor
and window coverings, air and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can
be removed without doing material damage to the Premises.. The term
“Alterations” shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by addition or deletion.
“Lessee Owned Alterations and/or Utility Installations” are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a).
          (b) Consent. Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor’s prior written consent. Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside. do not involve puncturing,
relocating or removing the roof or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3 month’s
Base Rent in the aggregate or a sum equal to one month’s Base Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee’s:
(i) acquiring all applicable governmental permits. (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements In a prompt and expeditious manner,
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month’s Base Rent, Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installation and/or upon Lessee’s
posting an additional Security Deposit with Lessor.
          (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic’s or
materialmen’s lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim
or demand. then Lessee shall, at its sole expense defend and protect itself.
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require. Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, Claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action,

                     
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Lessee shall pay Lessor’s attorneys’ fees and costs.
     7.4 Ownership; Removal; Surrender; and Restoration.
          (a) Ownership. Subject to Lessor’s right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.
          (b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than 90 and not later than 30 days prior to the end of the term of this
Lease, Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease. Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.
          (c) Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. “Ordinary
wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if
this Lease is for 12 months or less, then Lessee shall surrender the Premises in
the same condition as delivered to Lessee on the Start Date with NO allowance
for ordinary wear and tear. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as the removal
of any storage tank installed by or for Lessee. Lessee shall also completely
remove from the Premises any and all Hazardous Substances brought onto the
Premises by or for Lessee, or any third party (except Hazardous Substances which
were deposited via underground migration from areas outside of the Premises)
even if such removal would require Lessee to perform or pay for work that
exceeds statutory requirements. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. Any personal property of Lessee not
removed on or before the Expiration Date or any earlier termination date shall
be deemed to have been abandoned by Lessee and may be disposed of or retained by
Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
     8.1 Payment of Premium Increases.
          (a) As used herein, the term “Insurance Cost Increase” is defined as
any increase in the actual cost of the insurance applicable to the Building
and/or the Project and required to be carded by Lessor, pursuant to Paragraphs
8.2(b), 8.3(a) and 8.3(b), (“Required Insurance”), over and above the Base
Premium, as hereinafter defined, calculated on an annual basis. Insurance Cost
Increase shall include, but not be limited to. requirements of the holder of a
mortgage or deed of trust covering the Premises, Building and/or Project,
increased valuation of the Premises, Building and/or Project, and/or a general
premium rate increase. The term Insurance Cost Increase shall not, however,
include any premium increases resulting from the nature of the occupancy of any
other tenant of the Building. If the parties insert a dollar amount in
Paragraph 1.9, such amount shall be considered the “Base Premium.” The Base
Premium shall be the annual premium applicable to the 12 month period
immediately preceding the Start Date. If, however, the Project was not insured
for the entirety of such 12 month period, then the Base Premium shall be the
lowest annual premium reasonably obtainable for the Required Insurance as of the
Start Date, assuming the most nominal use possible of the Building. In no event,
however, shall Lessee be responsible for any portion of the premium cost
attributable to liability insurance coverage in excess of $2,000,000 procured
under Paragraph 8.2(b).
          (b) Lessee shall pay any Insurance Cost Increase to Lessor pursuant to
Paragraph 4.2. Premiums for policy periods commencing prior to, or extending
beyond, the term of this Lease shall be prorated to coincide with the
corresponding Start Date or Expiration Date.
     8.2 Liability Insurance.
          (a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000. Lessee shall add Lessor as an additional insured by means of an
endorsement at least as broad as the Insurance Service Organization’s
“Additional Insured-Managers or Lessors of Premises” Endorsement and coverage
shall also be extended to include damage caused by heat, smoke or fumes from a
hostile fire. The policy shall not contain any intra-insured exclusions as
between insured persons or organizations. but shall include coverage for
liability assumed under this Lease as an “insured contract” for the performance
of Lessee’s indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. Lessee shall provide an endorsement on its liability
policy(ies) which provides that its insurance shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.
          (b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.
     8.3 Property Insurance — Building, Improvements and Rental Value.
          (a) Building and Improvements. Lessor shall obtain and keep in force a
policy or policies of insurance in the name of Lessor, with loss payable to
Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full insurable
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by any Lender, but in no event more than the commercially
reasonable and available insurable value thereof. Lessee Owned Alterations and
Utility Installations, Trade Fixtures, and Lessee’s personal property shall be
insured by Lessee under Paragraph 8.4. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision In lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence.
          (b) Rental Value. Lessor shall also obtain and keep in force a policy
or policies in the name of Lessor with loss payable to Lessor and any Lender,
insuring the loss of the full Rent for one year with an extended period of
indemnity for an additional 180 days (“Rental Value insurance”). Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next 12 month period.
          (c) Adjacent Premises. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings In the Project if said increase is caused by Lessee’s acts,
omissions, use or occupancy of the Premises.
          (d) Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Les Owned Alterations and Utility Installations
unless the item in question has become the property of Lessor under the terms of
this Lease.

                     
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     8.4 Lessee’s Property; Business Interruption Insurance.
          (a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.
          (b} Business Interruption—Lessee-shall-obtain
and-maintain-loss-of-income-and-extra-expense insurance-in the amounts as will
reimburse-Lessee-for-direct-or indirect-loss-of-earnings attributable-to
all-perils-commonly-insured against-by-prudent lessees-in-the-business of
Lesseeor attributable-to-prevention-of access-to-the-Premises-as-a result
of-such perils
          (c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee’s property, business operations or
obligations under this Lease.
     8.5 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a “General Policyholders
Rating” of at least A-, VI, as set forth in the most current issue of “Best’s
Insurance Guide”, or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor. Lessee shall. at least 10 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or “insurance binders”
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease. whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.
     8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, no long as the insurance is not invalidated thereby.
     8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct,
Lessee shall indemnify, protect. defend and hold harmless the Premises, Lessor
and its agents, Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising
out of, involving, or in connection with, the use and/or occupancy of the
Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified.
     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee’s employees, contractors, invitees, customers, or any other
person In or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas. water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other defects
of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting
fixtures, or from any other cause, whether the said injury or damage results
from conditions arising upon the Premises or upon other portions of the
Building, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor nor from
the failure of Lessor to enforce the provisions of any other lease in the
Project. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee’s business or for
any loss of income or profit therefrom.
     8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on
its part to obtain or maintain the insurance required herein will expose Lessor
to risks and potentially cause Lessor to incur costs not contemplated by this
Lease, the extent of which will he extremely difficult to ascertain.
Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or
certificates evidencing the existence of the required insurance, the Base Rent
shall be automatically increased, without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/costs that Lessor will incur by
reason of Lessee’s failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.
9. Damage or Destruction.
     9.1 Definitions.
          (a) “Premises Partial Damage” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in 3 months or less from the
date of the damage or destruction, and the cost thereof does not exceed a sum
equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total. Notwithstanding the foregoing, Premises Partial
Damage shall not include damage to windows, doors, and/or other similar items
which Lessee has the responsibility to repair or replace pursuant to the
provisions of Paragraph 7.1.
          (b) “Premises Total Destruction” shall mean damage or destruction to
the improvements on the Premises, other than Lessee Owned Alterations and
Utility Installations and Trade Fixtures, which cannot reasonably be repaired in
3 months or less from the date of the damage or destruction and/or the cost
thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
          (c) “Insured Loss” shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures. which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.
          (d) “Replacement Cost” shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Applicable Requirements, and without
deduction for depreciation.
          (e) “Hazardous Substance Condition” shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
premises which requires repair, remediation, orrestoration.
     9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage
(but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
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not sufficient to effect such repair, the Insuring Party shall promptly
contribute the shortage in proceeds as and when required to complete said
repairs. In the event, however, such shortage was due to the fact that, by
reason of the unique nature of the improvements, full replacement cost insurance
coverage was not commercially reasonable and available, Lessor shall have no
obligation to pay for the shortage in insurance proceeds or to fully restore the
unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within 10 days following receipt of
written notice of such shortage and request therefor. If Lessor receives said
funds or adequate assurance thereof within said 10 day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received. Lessor may nevertheless elect by written notice to
Lessee within 10 days thereafter to: (i) make such restoration and repair as is
commercially reasonable with Lessor paying any shortage in proceeds, in which
case this Lease shall remain in full force and effect, or (ii) have this Lease
terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of
any funds contributed by Lessee to repair any such damage or destruction.
Premises Partial Damage due to flood or earthquake shall be subject to
Paragraph 9.3, notwithstanding that there may be some insurance coverage. but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.
     9.3 Partial Damage — Uninsured Loss. If a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee’s expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.
Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee’s commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.
     9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction occurs, this Lease shall terminate 60 days following
such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.
     9.5 Damage Near End of Term. If at any time during the last 6 months of
this Lease there is damage for which the cost to repair exceeds one month’s Base
Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective
60 days following the date of occurrence of such damage by giving a written
termination notice to Lessee within 30 days after the date of occurrence of such
damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable
option to extend this Lease or to purchase the Premises, then Lessee may
preserve this Lease by, (a) exercising such option and (b) providing Lessor with
any shortage in insurance proceeds (or adequate assurance thereof) needed to
make the repairs on or before the earlier of (i) the date which is 10 days after
Lessee’s receipt of Lessor’s written notice purporting to terminate this Lease,
or (ii) the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall. at Lessor’s commercially reasonable expense. repair such damage as soon
as reasonably possible and this Lease shall continue in full force and effect.
If Lessee fails to exercise such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee’s option shall be extinguished.
     9.6 Abatement of Rent; Lessee’s Remedies.
          (a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.
          (b) Remedies. If Lessor shall be obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within 90 days after such obligation shall accrue, Lessee may, at
any time prior to the commencement of such repair or restoration, give written
notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to terminate this Lease on a date not less than 60 days
following the giving of such notice. If Lessee gives such notice and such repair
or restoration is not commenced within 30 days thereafter, this Lease shall
terminate as of the date specified in said notice. If the repair or restoration
is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.
     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant
to Paragraph 6.2(g) or Paragraph 9. an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security
Deposit as has not been, or is not then required to be. used by Lessor.
     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
10. Real Property Taxes.
     10.1 Definitions.
          (a) “Real Property Taxes.” As used herein, the term “Real Property
Taxes” shall include any form of assessment; real estate, general. special,
ordinary or extraordinary, or rental levy or tax (other than inheritance,
personal income or estate taxes); improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the Project,
Lessor’s right to other income therefrom, and/or Lessor’s business of leasing,
by any authority having the direct or indirect power to tax and where the funds
are generated with reference to the Project address and where the proceeds so
generated are to be applied by the city, county or other local taxing authority
of a jurisdiction within which the Project is located. The term “Real Property
Taxes” shall also include any tax, fee, levy, assessment or charge, or any
increase therein: (i) imposed by reason of events occurring during the term of
this Lease, including but not limited to, a change in the ownership of the
Project, (ii) a change in the Improvements thereon, and/or (iii) levied or
assessed on machinery or equipment provided by Lessor to Lessee pursuant to this
Lease.
          (b) “Base Real Property Taxes.” As used herein, the term “Base Real
Property Taxes” shall be the amount of Real Property Taxes, which are assessed
against the Premises, Building, Project or Common Areas in the calendar year
during which the Lease is executed. In calculating Real Property Taxes for any
calendar year, the Real Property Taxes for any real estate tax year shall be
included in the calculation of Real Property Taxes for such calendar year based
upon the number of days which such calendar year and tax year have In common.
     10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3,
Lessor shall pay the Real Property Taxes applicable to the Project, and said
payments shall be included in the calculation of Common Area Operating Expenses
in accordance with the provisions of Paragraph 4.2.
     10.3 Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the taxassessor’s records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the

                     
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exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.2
hereof, Lessee shall, however, pay to Lessor at the time Common Area Operating
Expenses are payable under Paragraph 4.2, the entirety of any increase in Real
Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or
Utility Installations placed upon the Premises by Lessee or at Lessee’s request
or by reason of any alterations or improvements to the Premises made by Lessor
subsequent to the execution of this Lease by the Parties.
     10.4 Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and Improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor’s work sheets or such other information as
may be reasonably available. Lessor’s reasonable determination thereof, in good
faith, shall be conclusive.
     10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible. Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property of Lessor. If any of Lessee’s said property shall be
assessed with Lessor’s real property, Lessee shall pay Lessor the taxes
attributable to Lessee’s property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee’s property.
11. Utilities and Services. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
the Premises, together with any taxes thereon. Notwithstanding the provisions of
Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor determines that
Lessee is using a disproportionate amount of water, electricity or other
commonly metered utilities, or that Lessee is generating such a large volume of
trash as to require an increase in the size of the trash receptacle and/or an
increase in the number of times per month that it is emptied, then Lessor may
increase Lessee’s Base Rent by an amount equal to such increased costs. There
shall be no abatement of Rent and Lessor shall not be liable in any respect
whatsoever for the inadequacy, stoppage, interruption or discontinuance of any
utility or service due to riot, strike, labor dispute, breakdown, accident,
repair or other cause beyond Lessor’s reasonable control or in cooperation with
governmental request or directions.
12. Assignment and Subletting.:flit
     12.1 Lessor’s Consent Required.
          (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, “assign or assignment”) sublet all
or any part of Lessee’s interest in this Lease or in the Premises without
Lessor’s prior written consent. Such consent shall not unreasonably withheld or
delayed.
          (b) Unless Lessee is a corporation and its stock is publicly traded on
a national stock exchange, a change in the control of Lesseeshall constitute an
assignment requiring consent. The-transfer, on-a-cumulative-basis, of
25%-or-more-of-the voting-control-of Lessee-shall constitute a change
in-control-for this purpose.
          (c) The involvement of Lessee or its assets in any transaction, or
series of transactions (by way of merger, sale, acquisition,financing, transfer,
leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee’s assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease to which Lessor may withhold its consent. “Net Worth of
Lessee” shall mean the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles.
          (d) An assignment or subletting without consent shall, at Lessor’s
option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable
Breach without the necessity of any notice and grace period. If Lessor elects to
treat such unapproved assignment or subletting as a noncurable Breach, Lessor
may either: (i) terminate this Lease, or (ii) upon 30 days written notice,
increase the monthly Base Rent to 110% of the Base Rent then in effect. Further,
in the event of such Breach and rental adjustment, (i) the purchase price of any
option to purchase the Premises held by Lessee shall be subject to similar
adjustment to 110% of the price previously in effect, and (ii) all fixed and
non-fixed rental adjustments scheduled during the remainder of the Lease term
shall be increased to 110% of the scheduled adjusted rent.
          (e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.
          (f) Lessor may reasonably withhold consent to a proposed assignment or
subletting if Lessee is in Default at the time consent is requested.
          (g) Notwithstanding the foregoing, allowing a diminimus portion of the
Premises, ie. 20 square feet or less, to be used by a thirdparty vendor in
connection with the installation of a vending machine or payphone shall not
constitute a subletting.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
          (a) Regardless of Lessor’s consent, no assignment or subletting shall
: (i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Rent or for the performance of any other obligations to be
performed by Lessee.
          (b) Lessor may accept Rent or performance of Lessee’s obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor’s right to exercise its remedies for Lessee’s Default or Breach.
          (c) Lessor’s consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.
          (d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee’s obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor’s remedies against any other
person or entity responsible therefore to Lessor, or any security held by
Lessor.
          (e) Each request for consent to an assignment or subletting shall be
in writing, accompanied by information relevant to Lessor’s determination as to
the financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, If any, together with a fee of $500 as
consideration for Lessor’s considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36)
          (f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment, entering into such sublease, or entering into
possession of the Premises or any portion thereof, be deemed to have assumed and
agreed to conform and comply with each and every term, covenant, condition and
obligation herein to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.
          (g) Lessor’s consent to any assignment or subletting shall not
transfer to the assignee or sublessee any Option granted to the original Lessee
by this Lease unless such transfer is specifically consented to by Lessor in
writing. (See Paragraph 39.2)
     12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein: (a) Lessee hereby
assigns and transfers to Lessor all of Lessee’s interest in all Rent payable on
any sublease, and Lessor may

                     
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collect such Rent and apply same toward Lessee’s obligations under this Lease;
provided, however, that until a Breach shall occur in the performance of
Lessee’s obligations, Lessee may collect said Rent. In the event that the amount
collected by Lessor exceeds Lessee’s then outstanding obligations any such
excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing
or any assignment of such sublease, nor by reason of the collection of Rent. be
deemed liable to the sublessee for any failure of Lessee to perform and comply
with any of Lessee’s obligations to such sublessee. Lessee hereby irrevocably
authorizes and directs any such sublessee, upon receipt of a written notice from
Lessor stating that a Breach exists In the performance of Lessee’s obligations
under this Lease, to pay to Lessor all Rent due and to become due under the
sublease. Sublessee shall rely upon any such notice from Lessor and shall pay
all Rents to Lessor without any obligation or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.
          (b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.
          (c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor.
          (d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor’s prior written consent.
          (e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee,
13. Default; Breach; Remedies.
     13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A “Breach” is defined as the occurrence of one or
more of the following Defaults, and the failure of Lessee to cure such Default
within any applicable grace period:
          (a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
          (b) The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of 3 business days following
written notice to Lessee.
          (c) The commission of waste, act or acts constituting public or
private nuisance, and/or an illegal activity on the Premises by Lessee, where
such actions continue for a period of 3 business days following written notice
to Lessee.
          (d) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the service contracts, (Hi) the
rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate, (v) a requested subordination, (vi) evidence concerning any
guaranty and/or Guarantor, (vii) any document requested under Paragraph 41,
(viii) material data safety sheets (MSDS), or (ix) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this Lease, where any such failure continues for a period of 10 days following
written notice to Lessee.
          (e) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof,
other than those described in subparagraphs 13.1(a), (b), (c) or (d), above.
where such Default continues for a period of 30 days after written notice;
provided, however, that if the nature of Lessee’s Default is such that more than
30 days are reasonably required for its cure, then it shall not be deemed to be
a Breach if Lessee commences such cure withinsaid 30 day period and thereafter
diligently prosecutes such cure to completion.
          (f) The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors:
(ii) becoming a “debtor” as defined in 11 U.S.C. § 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within 60 days); (Hi) the appointment of a trustee or receiver to take
possession of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where possession is not restored to Lessee
within 30 days: or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this subparagraph is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.
          (f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.
          (g) If the performance of Lessee’s obligations under this Lease is
guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor’s
liability with respect to this Lease other than in accordance with the terms of
such guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a
bankruptcy filing. (iv) a Guarantor’s refusal to honor the guaranty, or (v) a
Guarantor’s breach of its guaranty obligation on an anticipatory basis, and
Lessee’s failure, within 60 days following written notice of any such event, to
provide written alternative assurance or security, which, when coupled with the
then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.
     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee’s behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and
expenses incurred by Lessor in such performance upon receipt of an invoice
therefor. In the event of a Breach. Lessor may, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:
          (a) Terminate Lessee’s right to possession of the Premises by any
lawful means. in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (H) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys’ fees. and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to
recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein. or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit or to perform or quit

                     
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given to Lessee under the unlawful detainer statute shall also constitute the
notice required by Paragraph 13.1. In such case, the applicable grace period
required by Paragraph 13.1 and the unlawful detainer statute shall run
concurrently, and the failure of Lessee to cure the Default within the greater
of the two such grace periods shall constitute both an unlawful detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in this Lease
and/or by said statute.
          (b) Continue the Lease and Lessee’s right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor’s interests, shall not
constitute a termination of the Lessee’s right to possession.
          (c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee’s right
to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises,
     13.3 Inducement Recapture. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus. inducement or consideration for Lessee’s entering into this Lease,
all of which concessions are hereinafter referred to as “Inducement Provisions”,
shall be deemed conditioned upon Lessee’s full and faithful performance of all
of the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect. and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The acceptance by Lessor of rent or the cure of the Breach which initiated the
operation of this paragraph shall not be deemed a waiver by Lessor of the
provisions of this paragraph unless specifically so stated in writing by Lessor
at the time of such acceptance.
     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor 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 upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due,
then. without any requirement for notice to Lessee, Lessee shall immediately pay
to Lessor a one-time l ate charge equal to 10% of each such overdue amount or
$100, whichever is greater. The parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee’s Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected. for 3 consecutive installments of Base Rent. then
notwithstanding any provision of this Lease to the contrary, Base Rent shall. at
Lessor‘s option, become due and payable quarterly in advance.
     13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within 30 days following the date on which it was due for non-scheduled
payment, shall bear Interest from the date when due, as to scheduled payments,
or the 31st day after it was due as to non-scheduled payments. The interest
(“Interest”) charged shall be computed at the rate of 10% per annum but shall
not exceed the maximum rate allowed by law. Interest is payable in addition to
the potential late charge provided for in Paragraph 13.4.
     13.6 Breach by Lessor.
          (a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than 30 days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed: provided, however, that if the nature of Lessor’s obligation
is such that more than 30 days are reasonably required for its performance, then
Lessor shall not be in breach if performance is commenced within such 30 day
period and thereafter diligently pursued to completion.
          (b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within 30 days after receipt of said
notice, or if having commenced said cure they do not diligently pursue it to
completion, then Lessee may elect to cure said breach at Lessee’s expense and
offset from Rent the actual and reasonable cost to perform such cure, provided
however, that such offset shall not exceed an amount equal to the greater of one
month’s Base Rent or the Security Deposit, reserving Lessee’s right to
reimbursement from Lessor for any such expense in excess of such offset. Lessee
shall document the cost of said cure and supply said documentation to Lessor.
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively “Condemnation”), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than 10% of the floor area of the Unit, or more than 25%
of Lessee’s Reserved Parking Spaces, is taken by Condemnation, Lessee may, at
Lessee’s option, to be exercised in writing within 10 days after Lessor shall
have given Lessee written notice of such taking (or In the absence of such
notice, within 10 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning aulhonty takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages: provided,
however, that Lessee shall be entitled to any compensation for Lessee’s
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation. Lessor shall repair any damage to the Premises caused by such
Condemnation.
15. Brokerage Fees.
     15.1 Additional Commission. In addition to the payments owed pursuant to
Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires from Lessor any rights to the Premises or other premises owned by
Lessor and located within the Project, (c) if Lessee remains in possession of
the Premises. with the consent of Lessor, after the expiration of this Lease, or
(d) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then, Lessor shall pay Brokers a fee in accordance
with the schedule of the Brokers in effect at the time of the execution of this
Lease.
     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s
Interest in this Lease shall be deemed to have assumed Lessor’s obligation
hereunder. Brokers shall be third party beneficiaries of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts
due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts
to Lessee’s Broker when due, Lessee’s Broker may send written notice to Lessor
and Lessee of such failure and if Lessor fails to pay such amounts within
10 days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee’s Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor’s Broker for the limited purpose of collecting any
brokerage fee owed.
     15.3 Representations and Indemnities of Broker Relationships. Lessee and
Lessor each represent and warran the other that it has had no dealings with any
person. firm, broker or finder (other than the Brokers, if any) in connection
with this Lease, and that no one other than said

         
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named Brokers is entitled to any commission or finder’s fee in connection
herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend
and hold the other harmless from and against liability for compensation or
charges which may be claimed by any such unnamed broker, finder or other similar
party by reason of any dealings or actions of the indemnifying Party, including
any costs, expenses, attorneys’ fees reasonably incurred with respect thereto.
16. Estoppel Certificates.
          (a) Each Party (as “Responding Party”) shall within 10 days after
written notice from the other Party (the “Requesting Party”) execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current “Estoppel Certificate” form published by the
AIR Commercial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
          (b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such 10 day period, the Requesting Party may execute
an Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party,
(ii) there are no uncured defaults in the Requesting Party’s performance. and
(Hi) if Lessor is the Requesting Party, not more than one month’s rent has been
paid in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party’s Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
          (c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee’s financial statements for the past 3 years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein net forth.
17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee’s interest in the prior lease. In the event of a
transfer of Lessor’s title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15. upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined.
18. 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 hereof.
19. Days. Unless otherwise specifically indicated to the contrary, the word
“days” as used in this Lease shall mean and refer to calendar days.
20. Limitation on Liability. The obligations of Lessor under this Lease shall
not constitute personal obligations of Lessor, or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease. and shall not seek recourse against Lessor’s
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.
     21. Time of Essence. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective,
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the use, nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and attorneys’
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker’s liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.
23. Notices.
     23.1 Notice Requirements. All notices required or permitted by this Lease
or applicable law shall be in writing and may be delivered in person (by hand or
by courier) or may be sent by regular, certified or registered mail or U.S.
Postal Service Express Mail, with postage prepaid, or by facsimile transmission,
and shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease
shall be that Party’s address for delivery or mailing of notices. Either Party
may by written notice to the other specify a different address for notice.
except that upon Lessee’s taking possession of the Premises, the Premises shall
constitute Lessee’s address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.
     23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card. or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given 72 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.
     24. Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor’s
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor’s consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.
     25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.
          (a) When entering into a discussion with a real estate agent regarding
a real estate transaction, a Lessor or Lessee should from the outset understand
what type of agency relationship or representation it has with the agent or
agents in the transaction. Lessor and Lessee acknowledge being advised by the
Brokers in this transaction, as follows:
               (i) Lessor’s Agent. A Lessor’s agent under a listing agreement
with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or
subagent has the following affirmative obligations: To the Lessor: A fiduciary
duty of utmost care, integrity, honesty, and loyalty in dealings with the
Lessor. To the Lessee and the Lessor: a. Diligent exercise of reasonable skills
and care in performance of the agent’s duties. b. A duty of honest and fair
dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the properly that are not
known to. or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal either Party any

         
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confidential information obtained from the other Party which does not involve
the affirmative duties set forth above.
               (ii) Lessee’s Agent. An agent can agree to act as agent for the
Lessee only. In these situations, the agent is not the Lessor’s agent. even if
by agreement the agent may receive compensation for services rendered, either in
full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations. To the Lessee: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee
and the Lessor: a. Diligent exercise of reasonable skills and care in
performance of the agent’s duties. b. A duty of honest and fair dealing and good
faith. c. A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the
diligent attention and observation of, the Parties. An agent is not obligated to
reveal to either Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth above.
               (iii) Agent Representing Both Lessor and Lessee. A real estate
agent, either acting directly or through one or more associate licenses, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee. In a dual
agency situation, the agent has the following affirmative obligations to both
the Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee. b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (I) or
(ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or
that the Lessee is willing to pay a higher rent than that offered. The above
duties of the agent in a real estate transaction do not relieve a Lessor or
Lessee from the responsibility to protect their own interests. Lessor and Lessee
should carefully read all agreements to assure that they adequately express
their understanding of the transaction. A real estate agent is a person
qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional.
          (b) Brokers have no responsibility with respect to any default or
breach hereof by either Party. The Parties agree that no lawsuit or other legal
proceeding involving any breach of duty. error or omission relating to this
Lease may be brought against Broker more than one year after the Start Date and
that the liability (including court costs and attorneys’ fees), of any Broker
with respect to any such lawsuit and/or legal proceeding shall not exceed the
fee received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker’s liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.
          (c) Buyer and Seller agree to identify to Brokers as “Confidential”
any communication or information given Brokers that is considered by such Party
to be confidential,
26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.
27. 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.
28. Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
     30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as “Lender”) shall have no liability or obligation to perform any of
the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.
     30.2 Attornment. In the event that Lessor transfers title to the Premises,
or the Premises are acquired by another upon the foreclosure or termination of a
Security Devise to which this Lease is subordinated (i) Lessee shall, subject to
the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and
upon request, enter into a new lease, containing all of the terms and provisions
of this Lease, with such new owner for the remainder of the term hereof, or. at
the election of the new owner, this Lease will automatically become a new lease
between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved
of any further obligations hereunder and such new owner shall assume all of
Lessor’s obligations, except that such new owner shall not: (a) be liable for
any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (b) be subject to any offsets or defenses
which Lessee might have against any prior lessor. (c) be bound by prepayment of
more than one month’s rent, or (d) be liable for the return of any security
deposit paid to any prior lessor.
     30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee’s subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a “Non-Disturbance Agreement”) from the Lender which Non-Disturbance
Agreement provides that Lessee’s possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease, Lessor
shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.
     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination. attornment and/or Non-Disturbance Agreement provided for herein.
31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys’ fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment. The term, “Prevailing Party" shall include, without limitation, a
Party or Broker who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or the abandonment by
the other Party or Broker of its claim or defense. The attorneys‘ fees award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys‘ fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach ($200 is a reasonable minimum per
occurrence for such services and consultation).

         
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32. Lessor’s Access; Showing Premises; Repairs. Showing Premises; Repairs.
Lessor and Lessor’s agents shall have the right to enter the Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable prior notice for the purpose of showing the same to prospective
purchasers, lenders, or tenants, and making such alterations, repairs,
improvements or additions to the Premises as Lessor may deem necessary or
desirable and the erecting, using and maintaining of utilities, services, pipes
and conduits through the Premises and/or other premises as long as there is no
material adverse effect on Lessee’s use of the Premises. All such activities
shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor’s prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.
34. Signs. Lessor may place on the Premises ordinary “For Sale” signs at any
time and ordinary “For Lease” signs during the last 6 months of the term hereof.
Except for ordinary “For Sublease” signs which may be placed only on the
Premises, Lessee shall not place any sign upon the Project without Lessor’s
prior written consent. All signs must comply with all Applicable Requirements.
35. Termination: Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies Lessor’s failure within 10 days following any such event
to elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor’s election to have such event constitute the
termination of such interest.
36. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs
and expenses (including but not limited to architects’, attorneys’, engineers’
and other consultants’ fees) incurred in the consideration of, or response to. a
request by Lessee for any Lessor consent, including but riot limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor’s consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor’s consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.
37. Guarantor.
     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in
the form most recently published by the AIR Commercial Real Estate Association,.
     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor
fails or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor’s behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) an Estoppel Certificate, or
(d) written confirmation that the guaranty is still in effect.
38. Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee’s part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.
39. Options. If Lessee is granted an option, as defined below, then the
following provisions shall apply. SEE ADDENDUM TO LEASE
     39.1 Definition. “Option” shall mean: (a) the right to extend the term of
or renew this Lease. or to-extend-or-renew-any lease-that we see
on-other-property-of-Lessor; (b)-the right of-first-refusal-or first
offer-to-lease-either-the- Premises-or-other-property- of Lessors-(c)
the-right-to purchase or the right of first refusal-to-purchase the-Premise
or-other-property-of Lessor.
     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.
     39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the prior
Options have been validly exercised.
     39.4 Effect of Default on Options.
          (a) Lessee shall have no right to exercise an Option: (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given 3 or more notices of separate Default, whether or not the Defaults
are cured, during the 12 month period immediately preceding the exercise of the
Option.
          (b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee’s inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
          (c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee’s due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term or completion of the
purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), or (ii) if
Lessee commits a Breach of this Lease.
40. Security Measures. Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.
41. Reservations. Lessor reserves the right: (i) to grant, without the consent
or joinder of Lessee, such easements, rights and dedications that Lessor deems
necessary, (ii) to cause the recordation of parcel maps and restrictions, and
(iii) to create and/or install new utility raceways, so long as such easements,
rights, dedications, maps, restrictions, and utility raceways do not
unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate such rights.
42. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment “under protest” and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. A Party who does not initiate
suit for the recovery of sums paid “under protest” within 6 months shall be
deemed to have waived its right to protest such payment.
43. Authority.: Multiple Parties; Execution.
          (a) If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf of such entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each Party shall, within
30 days after request, deliver to the other Party satisfactory evidence of such
authority.

         
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          (b) If this Lease is executed by more than one person or entity as
“Lessee”, each such person or entity shall be jointly and severally liable
hereunder. It is agreed that any one of the named Lessees shall he empowered to
execute any amendment to this Lease, or other document ancillary thereto and
bind all of the named Lessees, and Lessor may rely on the same as if all of the
named Lessees had executed such document.
          (c) This Lease may be executed by the Parties in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
44. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
45. Offer. Preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.
46. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee’s obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.
47. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT
OF THIS AGREEMENT.
48. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease · is Ris not attached to this Lease.
49. Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee’s specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee’s use of
the Premises requires modifications or additions to the Premises in order to be
in ADA compliance, Lessee agrees to make any such necessary modifications and/or
additions at Lessee’s expense.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE 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 REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES. ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR
COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITH THE
AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE’S
INTENDED USE. WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN
CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY
WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED.
 
The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

             
Executed at: Upland, California
      Executed Calrsbad    
On: 5-20-05
      On: May 18, 2005    
 
           
By LESSOR:
      By LESSEE::    
Scheu and Scheu
      Southwest Community Bank    
 
      a California a Banking Coporation    
By: /Mary Lou Flowers/
      By: /Frank J. Mercardante/           Name Printed: Mary Lou Flowers   Name
Frank J. Mercardante    
 
            Title: Authorized Agent for Lessor   Title: Chief Executive Officer
   
 
           
By:
 
 
  By:    
Name Printed:
 
 
  Name Printed:   Stuart McFarland
Title:
 
 
  Title:   Chief Operating Officer
 
           
Address:
  P.O. Box 250   Address:   5810 ElCamino Real
 
  Upland, Ca 91785       Suite D                    
 
          Carlsbad, Ca 92008
 
           
Telephone
  (909) 982-8933   Telephone:   (760) 918-2612
Facsimile : (909) 982-7943
      Facsimile:       ( )    
Federal ID No
      Federal ID No.              

         
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Broker:
  Broker:
Delmar Commercial. Real Estate Services, Inc.
  Delmar Commercial Real Estate Services, Inc.
 
   
 
   
Att: Steve Wheatley
  Alt: Robert Jimenez
Title:
  Title:
 
 
 
Address: 10300 Fourth Street, Suite 100
  Address: 10300 Fourth Street, Suite 100
Rancho Cucamonga, CA 91730
  Rancho Cucamonga, CA91730
Telephone: (909) 945-4589
  Telephone: (909 ) 945-4598
Facsimile: (909 ) 989-8987
  Facsimile: (909 ) 989-8987
Federal ID No
  Federal Id No:
 
   

These forms are often modified to meet changing requirements of law and needs of
the industry. Always write or call to make sure you are utilizing the most
current form: AIR COMMERCIAL REAL ESTATE ASSOCIATION, 700 South Flower Street,
Suite 600, Los Angeles, CA 90017. (213) 687-8777.
© Copyright 1998 By AIR Commercial Real Estate Association.
All rights reserved.
No part of these works may be reproduced in any from with out permission in
writing.

         
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ADDENDUM TO LEASE AGREEMENT
BY AND BETWEEN
SCHEU and SCHEU AS LESSOR,
AND
SOUTHWEST COMMUNITY BANK AS LESSEE
DATED MAY 13, 2005

50.   White Oak Corporate Center Rules and Regulations, Exhibit “A” attached
hereto, shall be incorporated into this Lease, and each of its provisions shall
be deemed both a covenant and a condition.

51.   Subject to the provisions of Paragraph 6. Use, Lessee shall have the sole
responsibility to secure any and all governmental approvals relating to Lessee‘s
use of the Premises, including, but not necessarily limited to, a Certificate of
Occupancy and/or Business License issued by the City of Rancho Cucamonga. Lessee
shall secure approvals as soon as reasonably possible and hold Lessor harmless
from any costs and fees incurred in the process, and from any fines or penalties
arising from Lessee’s non-conformance with applicable laws or regulations,

52.   All payments and correspondence to Lessor will be made to Scheu and Scheu,
P.O. Box 250, Upland, CA 91785, until further notice provided for herein above
in Paragraph 23.

53.   Sign Installation: A sign shall he installed at Lessee’s expense in
accordance with the Uniform Sign Code established for the premises. Lessee shall
not place, or permit to be placed, any sign, marquee or awning on any part of
the Premises, or so affixed to the Premises without written consent of Lessor:
Lessee, upon request of Lessor, shall immediately remove any sign or decoration
which Lessee has placed or permitted to be placed in, on or about the exterior
of the Premises, or which may be visible from the exterior of the Premises,
which in the opinion of Lessor is objectionable or offensive, or otherwise
incompatible with the signing standards of the building of which the Premises
are a part and adjacent buildings and improvements of the Lessor. And, if Lessee
fails to remove said objectionable, offensive or incompatible sign on demand of
Lessor, Lessor may enter said Premises and remove the same. Upon written consent
by Lessor to erect sign, such sign must be placed within the area so designated
for sign, and such sign must comply with the format and standards outlined by
Lessor. A copy of the sign format and standard is available from Lessor. A sign
described in the “Sign Criteria and Approval Form” shall be installed upon the
leased Premises in the described proper manner within 45 days of Occupancy of
the premises and at the sole cost of Lessee. If said sign is not so installed,
the lessor shall have the right to install a sign of Lessor’s design and charge
Lessee for all costs associated with such sign. Charges for said sign shall be
payable by Lessee within ten (10) days of presentation of billing by Lessor to
Lessee. Such payment shall be considered additional rent and shall be
collectable as such. Lessee shall, at Lessee’s termination, pay all costs to
remove signage and repair damage to the building, and/or glass, caused by
removal of Lessee’s sign.   54.   PARKING AREAS, SERVICE AREAS AND COMMON AREAS:
      The parking spaces referenced in Paragraph 1.2(b) are unreserved and as
such Lessee shall not post a sign, nor paint
the asphalt or curb, to create any exclusive parking spaces; provided, however
Lessee may designate up to four striped parking spaces at the northwest area of
the premises for “20 minute parking”. No automobiles or motor vehicles shall he
parked and left unattended in any part of the common area or service yard not
striped and designated for parking. Lessee shall not store in the parking,
service or common area any material, supplies, equipment or machinery outside
the Premises whether open, or in tanks, bins or other container devices, and
shall not otherwise obstruct parking, service or common area.   55.   MINI
BLINDS:       All window coverings shall comply with the following make, model
number and coloring: To be determined.   56.   OUTSIDE WORK:       Except for
that work that is performed by Lessee to light maintain and / or service its ATM
machine which is permitted under this lease agreement, no work shall be
permitted on the sidewalks, roofs, streets, driveways, parking or landscaped
area. This includes, but is not limited to, assembly, construction, mechanical
work, painting, drying, layout, cleaning, or repair of goods or materials.
Violation of this paragraph shall constitute a material breach of this Lease.  
57.   ADDITIONAL EARLY POSSESSION PROVISIONS:       Lessee understands that if
Early Occupancy causes delay in the construction of any Tenant Improvements,
that such delay will not be a cause for forgiveness of any rent due. It is
further understood that any improvement of the leased Premises by the Lessee
which may result in the delay in construction of Tenant Improvements, or in the
obtaining of a building permit without prior written consent of Lessor. is
hereby prohibited and shall be a material breach of this lease.       In the
event Lessee takes possession of the Premises prior to completion of building
shell construction, Lessee agrees to hold Lessor harmless from any and all
claims for damages to goods, equipment or inconvenience.       Any Early
Possession being provided in this Lease shall be construed as Additional
Consideration for Lessee executing this Lease. Lessee and Lessor herein agree
that said Additional Consideration for Early Possession is equal

 

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to the pro-rata rent due for the same period immediately following such Early
Possession credit. In the event Lessee defaults during the Term of this Lease,
Lessee understands and agrees that Lessor shall be entitled to recover this
Additional Consideration as additional damages.
Except in the case of a delay caused by the Lessee, should Lessor be unable to
deliver possession of the leased premises to Lessee by the early possession date
as stated in paragraph 1.4 of the Lease Agreement, the Commencement Date of the
lease as stated in paragraph 1.3 of the lease shall be extended the same amount
of days from the original date of early possession to the actual date of early
possession so that Lessee receives a total of not less than sixty (60) days of
early possession without the requirement of paying the base rental rate.

58.   NON-DISCLOSURE OF RENT       Except as may be required by applicable laws,
rules or regulations which may from time he applicable to Lessee, at no time
during the term of this Lease, or any Option thereof, shall Lessee disclose the
terms and conditions of this Lease to any third (3rd) party (i.e., any party not
affiliated with Lessor or Lessee’s business) without prior written consent of
Lessor. In the event Lessee makes an unauthorized disclosure to a third (3rd)
party without prior consent of Lessor, Lessor has the right to increase Lessee’s
gross monthly rental to an amount equal to an average of the prevailing rent of
the existing tenants located in comparable space at the White Oak Corporate
Center.   59.   ADDITIONAL INSURED:       To clarify the “Additional Insured”
endorsement referred to in Paragraph 8.2(a) the words “Managers or Lessors of
Premises” shall he changed to “Landlord Parties”. “Landlord Parties” shall be
defined as the Owner/Landlord, any Lender whose loan is, secured by a lien
against the Center, the Manager, the respective affiliates, subsidiaries,
successors, assigns, heirs, officers, directors, shareholders, partners,
members, employees, agents and contractors.   60.   WI-FI ACESS:   A.   Wi-Fi  
    Tenant shall have the right to install a wireless intranet, Internet, and
communications network (“Network”, also known as “Wi-Fi”) within the Premises
for the exclusive use of Tenant and its employees, clients and customers,
subject to this Clause and all the other applicable clauses of this lease.   B  
No solicitation       Tenant shall not solicit, suffer or permit other tenants
or occupants of the White Oak Corporate Center to use the Network or any other
communications service, including, without limitation, any wired or wireless
Internet service that passes through, is transmitted through, or emanates from
the Premises.   C   Interference       Tenant agrees that Tenants communications
equipment and the communications equipment of Tenants service providers and
contractors located in or about the Premises or installed in the White Oak
Corporate Center to service the Premises, including, without limitation, any
antennas, switches, or other equipment (collectively, “Tenant’s Communications
Equipment”) shall be of a type and, if applicable, a frequency that will not
cause radio frequency, electromagnetic. or other interference to any other party
or any equipment of any other party including, without limitation. Landlord,
other tenants, or occupants of the White Oak Corporate Center or any other
party. In the event that Tenants Communications Equipment causes or is believed
to cause any such interference, upon receipt of notice from Landlord of such
interference. Tenants will take all steps necessary to correct and eliminate the
interference. If the interference is not eliminated within 24 hours (or a
shorter period if landlord believes a shorter period to be appropriate) then,
upon request for Landlord, Tenant shall shut down the Tenants Communications
Equipment pending resolution of the interference, with the exception of
intermittent testing upon prior notice to and with the approval of Landlord.

Arbitration
If there is a dispute between Landlord and Tenant as to any such interference,
then, and only in such event, either party may submit such dispute to expedited
arbitration in accordance with California Law, except that the chosen
arbitrator(s) shall be (an) engineer(s) having at least Five (5) years of
experience in telecommunications.
Acknowledgement Tenant acknowledges that Landlord has granted and/or may grant
lease rights, licenses, and other rights to various other tenants and occupants
of the White Oak Corporate Center and to telecommunications service providers.

61.   RENT ESCALATIONS:       The monthly rent will be increased each twelve
(12) months as listed below:

August 1, 2006 through July 31, 2007 monthly Base Rent shall be $4,083.00
August 1, 2007 through July 31, 2008 monthly Base Rent shall be $4,205.00
August 1, 2008 through July 31, 2009 monthly Base Rent shall be $4,33I.00
August 1, 2009 through July 31, 2010 monthly Base Rent shall be $4,461.00

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62. TENANT IMPROVEMENTS: LESSEE, or LESSEE’s General Contractor, Thomas G.
Matliock & Associates, at LESSEE’s cost and expense, shall construct Tenant
Improvements per a space plan mutually acceptable to Lessor and Lessee;
provided, however. LESSOR shall pay to LESSEE as a “TENANT IMPROVEMENT
ALLOWANCE:’ the sum of $89,495.00 which is equal to $35.00 per square foot of
space being leased by LESSEE. Any costs for Tenant Improvements above the total
amount of $35.00 per square foot shall be paid by Lessee. No construction may
begin on Tenant Improvements, including installation of ATM machine on exterior
of building, prior to the completion of the building shell and all labor and
material liens are removed from title. LESSEE shall cause a “Notice of
Non-Responsibility” in favor of LESSOR. to be recorded and posted per
requirements of California Mechanics Lien Laws prior to commencement of Tenant
Improvements.
63. SECTION 12 AMENDMENT: Provisions of Section 12 to the contrary
notwithstanding, Lessor’s consent shall not be required in connection with the
sale or merger of Lessee in a transaction approved by applicable Banking
regulators except that any said sale or merger which causes a material change or
modification of the use clause, Section 1.8 of the lease, shall be subject to
Lessor’s consent, which shall not be unreasonably withheld or delayed.
THIS SPACE
BLANK
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EXHIBIT “A”
WHITE OAK PROFESSIONAL CENTER RULES AND REGULATIONS

1.   No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed, or affixed on or to any part of the outside or
inside of the building without the prior written consent of Lessor. Lessor shall
have the right to remove any such sign, placard, picture, advertisement, name or
notice without notice to, and at the expense of, Lessee. Lessee will provide
approved sign at Lessee’s cost. All approved signs or lettering on doors shall
be printed, painted, affixed or inscribed at the expense of Lessee by a person
approved by Lessor. Lessee shall not place anything or allow anything to be
placed near the glass of any window, door, partition or wall which may appear
unsightly from outside the Premises; provided, however, that Lessor may furnish
and install a building standard window covering at all exterior windows. Lessee
shall not, without prior written consent of Lessor, cause or otherwise sunscreen
any window.

2.   The sidewalks, exits and entrances shall not be obstructed by any of the
Lessees or used by them for any purpose other than for ingress and egress from
their respective Premises.

3.   No storage will be allowed outside the buildings or any of the common area.
This includes supplies, materials, goods, pallets, dunnage and vehicles. All
trash must be placed in trash receptacles. Violation will be remedied at
Lessee’s expense.

4.   Lessee shall not alter any lock or install any new or additional locks or
any bolts on any windows of the Premises without Lessor’s prior written consent,
which Lessor shall not unreasonably withhold.

5.   The bathroom toilets, urinals, wash basins and other apparatus shall not be
used for any purpose other than for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein, and the expense of any
breakage, stoppage, or damage resulting from the violation of this rule shall be
home by the Lessee who, or whose employees or invitees shall have caused it.

6.   Lessee shall not overload the floor of the Premises or in any way deface
the Premises or any part thereof. Equipment exceeding 1,000 lb /sq. 11. must be
approved by Lessor.

7.   Lessor shall have the right to prescribe the weight, size and position of
all safes and other heavy equipment brought into the building and also the times
and manner of moving the same in and out of the building. Safes or other heavy
objects shall, if considered necessary by Lessor, stand on supports of such
thickness as is necessary to properly distribute weight. Lessor will not be
responsible for loss of or damage to any such safe or property from any cause,
and said damage done to the building by moving or maintaining any such safe or
other property shall be repaired at the expense of the Lessee.

8.   Lessee shall not use, keep or permit to he used or kept, any foul or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Lessor or other
occupants of the building by reason of excess noise, odors, and/or vibrations,
or interfere in any way with other Lessees or those having business therein, nor
shall any animals or birds be brought in or kept in or about the Premises or the
building.

9.   No cooking or showering shall be done, or permitted by any Lessee, on the
Premises. The Premises may not be used for any improper, objectionable, or
Immoral purpose, nor shall the space be used as a residence, living quarters, or
overnight lodging. An electric coffee pot, small refrigerator or household
microwave oven may he used on the Premises, solely as a convenience during
normal business hours.

10.   Lessee shall not use or keep in the Premises or the building any kerosene,
gasoline or inflammable or combustible fluid or material, or use any method of
heating or air conditioning other than that supplied by Lessor, without Lessor’s
prior written consent.

11.   Lessor shall have the option to direct electricians as to where and how
telephone and other wires are to be introduced. No boring or cutting for wires
will be allowed without the prior consent of the Lessor. which Lessor shall not
unreasonably withhold or delay.

12.   The Lessor shall in no case he liable for damages for any error with
regard to the admission to or exclusion from the building of any person. In case
of invasion, mob, riot, public excitement, or other commotion, the Lessor
reserves the right to prevent access to the building during the continuance of
the same by closing of doors or otherwise, for the safety of the Lessees and
protection of property in the Premises and the building.

13.   Any vending machine of any description installed, maintained or operated
upon the Premises shall he for the sole use of Lessee and its patrons and
employees, and Lessee shall assume all liability for such.

14.   In the event the name and/or street address of the building, of which the
Premises are a part, is changed by either Lessor or any government agency,
Lessor shall have no liability to Lessee in connection with such.

15.   Lessee shall not disturb, solicit, or canvass any occupant of the building
and shall cooperate to prevent the same.

16.   Without the written consent of Lessor, Lessee shall not use the name of
the building in connection with or in promoting or advertising the business of
Lessee except as Lessee’s address.

     17. All doors in the Premises shall be kept locked when the Premises are
not in use.

18.   There shall be no overnight parking of automobiles, trucks, vans,
trailers, or any other vehicles outside the building.

19. Lessee shall not affix any wall covering, nor glue or nail any mirror or
paneling on any wall of the premises without Lessor’s prior written
authorization.

20.   Lessee shall not grant permission to any car washing vendor to operate
within the common areas or the premises.

 

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EXHIBIT B
SITE PLAN / LEASED PREMISES
[Detail not copied]

 

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EXHIBIT C

FLOOR PLAN
[Detail not copied]

 

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ADDENDUM
OPTION TO EXTEND

         
Dated:
  May 13, 2005    
By and Between
  Lessor) Scheu and Scheu    
 
  (Lessee) Southwest Community Bank    
Address of Premises:
  8250 White Oak Avenue, Suite 100    
 
       
 
  Rancho Cucamonga, Ca 91730    
 
       

Lessee hereby grants to Lessee the option to extend the term of this lease for
two (2) additional sixty (60) month periods commencing when the respective prior
term expires under the same terms and conditions as contained in this Lease,
except for the monthly rent which shall be negotiated at the time the option is
exercised. To exercise such option Lessee, shall notify Lessor in writing of
Lessee’s intent to exercise such option no later than two hundred forty
(240) days and no sooner than one hundred eighty (180) days prior to the
expiration of the initial term of this Lease. The monthly rental rate and annual
rental escalations during the option period shall be at the then fair rental
value, i.e., prevailing market rate for the Premises. If within thirty (30) days
after exercise of this option, Lessor and Lessee have not agreed upon a rental
rate, the rental rate shall be set by arbitration through appraisers. In such an
event, each of the parties within ten (10) days shall select and be responsible
for the payment of an MAI real estate appraiser with at least five (5) years of
full-time commercial appraisal experience in Western San Bernardino County to
act as arbitrators to appraise and set “the rates,” as outlined above, for the
Premises. The two appraisers appointed by the parties as stated in this
paragraph shall meet promptly and attempt to set “the rates.” If either party
does not appoint an appraiser within ten (10) days after the other party has
given written notice of the name of its appraiser, the single appraiser
appointed shall be the sole arbitrator and shall set “the rates”; the cost of
this appraiser shall be divided equally between Lessor and Lessee. If Lessor and
Lessee are unable to agree within thirty (30) days after the appraiser(s) have
been appointed, they shall within ten (10) days thereafter jointly select a
“final” appraiser meeting the qualifications stated in this paragraph. The cost
of this “final” appraiser shall be equally divided between Lessor and Lessee. If
Lessor and Lessee are unable to agree on the “final” appraiser’s “rate” within a
ten 10) day period, an agreement by and between any two of the three appraisers
shall set “the rates.” However, in no event shall the monthly rent be less than
that which was due for the last full month immediately preceding the renewal
period. Lessee’s Option to Renew shall be subject to the condition that at the
expiration of the original term or any extension thereof, Lessee shall not have
been in default in performance in any of the terms, covenants and conditions of
the Lease. This option does not grant Lessee any further Option to Renew.